How Europe has mishandled the pandemic

LOOK AROUND the world at the devastation wrought by the covid-19 pandemic and something odd stands out. The European Union is rich, scientifically advanced and endowed with excellent health-care and welfare systems and a political consensus tilted strongly towards looking after its citizens. Yet during the pandemic it has stumbled.

In the brutal and blunt league table of fatalities, the EU as a whole has done less badly than Britain or America, with 138 recorded deaths per 100,000, compared with 187 and 166 respectively—though Hungary, the Czech Republic and Belgium have all fared worse than either. However, it is in the grip of a vicious surge fuelled by a deadly variant. That underlines the peril of Europe’s low rate of vaccination. According to our tracker, 58% of British adults have had a jab, compared with 38% of Americans and just 14% of EU citizens. European countries are also behind on the other criterion of a covid-19 scorecard, the economy. In the last quarter of 2020 America was growing at an annualised rate of 4.1%. In China, which suppressed the virus with totalitarian rigour, growth was 6.5%. In the euro area the economy was still shrinking. A year ago Pedro Sánchez, Spain’s prime minister, called covid-19 the worst crisis to afflict the EU since the second world war. How has its response gone so wrong?

Part of Europe’s problem is demography. EU populations are old by global standards, making them more susceptible to the disease. Other less well understood factors, such as crowded cities, may also make Europeans vulnerable. The cross-border mobility that is one of the EU’s great achievements probably worked in favour of the virus, and no one will want to curb that when the pandemic eases.

But part of Europe’s problem is politics. Jean Monnet, a French diplomat who helped found the European project, famously wrote that “Europe will be forged in crisis.” When things are at their worst, those words are seized on to suggest the EU will snatch victory from the jaws of defeat. Sure enough, during the euro crisis the European Central Bank (ECB) eventually saved the day with new policies; likewise, the migration crisis of 2015 greatly enhanced Frontex, the EU’s border-security force.

However, Monnet’s dictum is also a source of complacency. The civil war in Yugoslavia in the 1990s led to the declaration that “This is the hour of Europe”. Years of carnage followed. Likewise, last year’s decision to give the European Commission sole responsibility for buying and sharing out covid-19 vaccines for 450m people has been a buck-passing disaster.

It made sense to pool the research effort of 27 countries and their funds for pre-purchasing vaccines, just as Operation Warp Speed in America brought together 50 states. However, the EU’s bureaucracy mismanaged the contract negotiations, perhaps because national governments generally oversee public health. The project was handled chiefly by the commission president, Ursula von der Leyen, who gleefully called the decision to expand her empire a “European success story”.

Hardly. Her team focused too much on price and too little on security of supply. They haggled pointlessly over liability should vaccines cause harm. Europe dithered in the August holidays. It was as if the Monnet-like forging of an ever-closer union was the real prize and the task of actually running vaccination a sideshow. Subsequent bickering, point-scoring and the threatened blockade of vaccine exports have done more to undermine faith in vaccination than restore the commission’s reputation. Were she still a member of a national government it is hard to see how Mrs von der Leyen could stay in her post.

Europe has also fallen short economically. Again, it has used the pandemic to make institutional progress, by creating a meaty new instrument known as the Next Generation EU fund, or NGEU. Worth €750bn ($880bn), this is targeted mainly at weaker countries that need it most. More than half the money is grants not loans, lessening the effect on national debt. It is also being paid for by raising debt for which the union as a whole is jointly liable. That is welcome, because it creates a mechanism which severs the link between raising money and the creditworthiness of national governments. In future crises that could protect euro-zone countries from capital flight.

As with vaccines, however, triumph at the NGEU’s creation belies its slow execution. The first money is still months from being paid out, as member states scrap with the commission over their individual programmes. By the end of next year, only a quarter of the fund will have been disbursed.

This lack of urgency is a symptom of a much bigger problem: the neglect of the underlying health of Europe’s economies. Even with its new money, the EU budget will account for just 2% of GDP in the next seven-year fiscal period. At the national level, where governments typically spend about 40% of GDP, Europeans have been culpably overcautious.

The consequences will be profound. By the end of 2022, America’s economy is expected to be 6% larger than it was in 2019. Europe, by contrast, is unlikely to be producing any more than it did before the pandemic. True, Joe Biden’s $1.9trn stimulus after nearly $4trn in the Trump era risks overheating the economy, but Europe lies at the other extreme. Its budget deficits for 2021 average perhaps half of what America is planning. After the combination of the financial crisis and covid-19, the EU’s output will be 20%, or €3trn, smaller than if it had kept up the growth it managed in 2000-07. The EU has suspended its deficit-limiting fiscal rules. Thanks in part to the ECB’s monetary activism, European governments have the fiscal space to do more. They should use it.

Ever-smaller union

Europe can take comfort from the fact that the vaccination programme will catch up over the summer. Across the continent, Euroscepticism has been in decline during the pandemic, and politicians who used to flirt with leaving, like Matteo Salvini or Marine Le Pen, have changed their tune. But, inexorably, the EU is falling behind China and America because it fails to grapple competently with each successive crisis. In a dangerous and unstable world, that is a habit it needs to change. ■

Dig deeper

All our stories relating to the pandemic and the vaccines can be found on our coronavirus hub. You can also listen to The Jab, our new podcast on the race between injections and infections, and find trackers showing the global roll-out of vaccines, excess deaths by country and the virus’s spread across Europe and America.