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European Recovery

Let the Member States do what they have to

The President of the European Commission recently apologised to Italy for the slow response of the European Union to the coronavirus pandemic....

Italian calls for assistance through the EU civil protection mechanism fell on deaf ears as unprepared governments scrambled to respond to domestic needs. The crisis has clearly demonstrated the essential role of the nation-state.

Like the Chinese Communist Party, EU institutions are now trying to use this crisis to their advantage. Proposals to shift further power to the European level, mutualise debts, and increase the EU budget are under consideration right now. Commissioner Valdis Dombrovakis pledged billions towards a recovery programme and the Commission proposed billions in loans to neighbouring countries and those lined up for accession.

Meanwhile, hard-hit countries push for grants from the EU budget instead of loans. Shifting the burden of the recovery onto the countries that are net payers of the EU budget is inefficient and will exacerbate divisions previously laid bare during the euro and migration crises.

What the European Union actually needs to do is take a step back and admit that it should refrain from efforts to micro-manage either the response or the recovery just because it feels like it ought to, especially when it finds itself at odds with the wishes of the member states themselves. Instead, the European Union should be looking at ways of easing the burden on businesses and member states economies.

Brussels is already Europe’s red-tape factory, spitting out legislation and decrees that hamper growth and economic opportunity. Now Europe’s most vulnerable enterprises risk passing out from the chokehold of regulation.

Early on, the European Commission criticised EU member states for creating systems of employment protection and financial support to companies that risked collapse. Thousands of livelihoods would have been lost had these measures not been introduced. Eurocrats in Brussels hid behind the same rule book they so often disregard at their own convenience and plainly stated that state aid should be off the table.

It was only as the crisis worsened, and millions of Europeans risked losing their jobs on a scale never before seen in human history, that the Commission finally admitted that Member States should be able to do more and started waving through State Aid proposals from all EU Member States. Whether they will continue to do so as large scale employers such as airlines and catering companies risk going under unless bailed out, or in some cases nationalised outright, is to be seen.

Struggling companies and soaring unemployment are not the only reason to step aside.  NATO Secretary-General Jens Stoltenberg highlighted in April that “the geopolitical effects of the pandemic could be significant.” He warned that “some allies (are) more vulnerable for situations where critical infrastructure can be sold out.” The EU and the Member States should heed this warning, reassess relations with China and fiercely resist attempts by the Chinese Communist Party to exploit this crisis. China cannot be allowed to continue buying up European critical infrastructure and companies.

The EU must also recognise that this crisis affects supply chains globally and that Europe’s supply chains and markets are not as well-adjusted as those beyond our shores. Therefore, member states must be allowed to tender contracts for medical supplies from outside the European Union just as freely as from within. Flexibility regarding procurement rules is vital not only to keep our citizens safe but also to rebuild our economy.

The answer to getting the economy up and running again is to make it as easy as possible for businesses to grow. Instead of re-hashing contentious debates on debt mutualization and impeding national governments response to the crisis, the EU should focus on slashing the regulatory burden when we eventually exit this crisis and open up our societies.

The Commission must recognise that the Better Regulation Agenda has failed and that it must be relaunched with vigour in combination with a total review of all regulation at European level. The promise of a “one in – one out” approach to legislation from the Von der Leyen Commission is not good enough. The Commission needs to recognize that European economies face international competition. Learn from the US which has drastically decreased regulations and improved business conditions in recent years.

What the European Union really should do is get out of the way whilst people start to go back to work and businesses reopen and drive the economy forward, hopefully to new highs. To paraphrase a popular early 19th-century American motto: that European Commission is best which interferes least.