We are only at the beginning of this crisis, in all of its dimensions, and particularly on the economic and social fronts. Many sectors, such as tourism, transportation and entertainment, will only recover in a very long time; many jobs will be destroyed. In contrast, other sectors are insufficiently developed and cruelly lacking in production. Therefore, we must act now to give the economy a new direction and to harness new engines of development.
This is true everywhere in the world, and particularly in Europe, which produces a large number of goods and services that will be less needed for a long time to come. Furthermore, Europe has lost an essential part of its sovereignty in sectors that many are now discovering to be key; because Brussels has put the mantra of competition ahead of the requirements of autonomy.
The European Union is not yet equal to these new challenges. And it is normal: health is not a Community policy as defined by Member States; and the Union’s budget is limited to one percent of GDP. And yet, with these meagre resources, and though taken by surprise, the current leaders of the Union, in particular the Commission and the Central Bank, are performing miracles. National governments are also doing a lot, in a more fragmented manner.
As such, the federalists have rightly come up with an old idea, Eurobonds, which would enable the European Union to support Member States that have difficulty obtaining low-interest financing.
This proposal has led to, once again, deep division between the countries of the South (this time, France rightly lined up beside them), and the others, not at all determined to finance the less prosperous states. Among the most vehement, we find the Germans and the Dutch; either because they do not want to give their populist oppositions an opening; or because populist parties are already members of the ruling coalition.
In fact, this is an outdated debate. And we have to think quite differently about the issues before us.
Firstly, because the European Central Bank now has the means and the intention to act as guarantor of a decrease in the yield spread of the loan to each Member State; secondly, because governments are very active in supporting their own businesses; and thirdly, because the European Investment Bank (EIB) and other European instruments, including the European Safe Bond (ESB), are about to enter the fray.
It is an opportunity to change the paradigm and think about a completely different solution, which would not just be financial but also political in the noblest sense. A solution that would make it possible to strengthen solidarity between the Member States, get the economy moving again, and resolve the problems of sovereignty.
To achieve this, the Union would have to equip itself with the means to regain its autonomy in the key sectors of tomorrow’s world, those that I call the “industries of life”: health, food, hygiene, water, housing, digital, energy, education, research, distribution, environmental protection, security, information and a few others. We cannot continue to depend on non-European suppliers in these essential sectors; and we will have to accept paying more for these products and services, as a price for our autonomy. This will create jobs to compensate for those lost elsewhere, and new sources of profitable investment.
One way of initiating this policy, which can only be a common one, would be for the European Union to issue a massive loan, (for example, an initial amount of 200 billion euros). But not a so-called “coronabond,” which would aim to finance the entire economy, but rather a “lifebond,” (a “life eurobond,” which could also be called a “sovereign bond”), which would only finance life industries (and the conversion of less essential industries to these sectors), to ensure the autonomy of the Union.
These resources would be managed on the model of what is being prepared, albeit at a slow pace, for a Europe of Defence. An ad hoc institution would decide on the rules for the distribution of this funding among the various countries and companies, on the basis of tender offers, as massively and rapidly as possible. Even the countries that are most reluctant to show European solidarity would have a selfish interest in this.
We urgently need to take action; to get out of the shock and emergency; to show that there is light at the end of the tunnel. And to move forward.
j@attali.com