Since coronavirus has flipped over global trade and economic system as well as eroded health and mobility rights of human race across the world irrespective of nationality and ethnicity, many international leaders have equated the financial crisis stoked by the disease with the Second World War, prefiguring its serious economic fallouts as “unprecedented” or the “great global struggle.”
Contrary to the first wave of the fatal respiratory illness, when the anxious European Union (EU) states took a unilateral decision and shut the borders, banned medical equipment exports and stockpiled protective gears for their citizens, the bloc is trying to demonstrate a pan European solidarity and forge a united front against the active virus.
Last month, envoys of the EU’s 27 member nations adopted measures to control Covid-19 in the peninsula. They agreed to safeguard the health and wellbeing of people by classifying the region in color zones – green, orange and red, on the basis of new notified cases and infection and testing rate, accepting their right to travel within the region that it said is crucial for safely rebuilding the economy.
EU’s sinking economy
While the EU is exerting sterling efforts to cap the spread of the virus, it shouldn’t be resting on its laurels by just ensuring cross-border travel to keep the economy moving. The alliance needs to show no laxity on growth and must pull out all the stops, which could help to achieve its pre-crisis level amid signs of slower than expected recovery.
The International Monetary Fund (IMF) recently forecasted that Spain, Italy, France and the Union’s economic driving force Germany could see a slump of 12.8%, 10.6%, 8.3% and 6.0% percent respectively in 2020. These estimates for the leading European economies are far worse as compared to its global projection of 4.4% contraction in the year.
For 2021, the international financial watchdog expects the global economy to bounce back with 5.2% growth. This prophecy for worldwide economic expansion, though, matches the Fund’s latest projection for the EU in the next year; however, is still weaker than its erstwhile estimate of 6.0% in June.
It is not just the responsibility of the EU to save the longtime relationship with the US. Washington should also play its part to strengthen ties with Brussels through deepening trade cooperation, reviving economic growth, upholding multilateralism
A potential slowdown in growth solicits the EU to inject greater emphasis on expanding consumption, the backbone of its economy. The governments should encourage European consumers, holding billions of euros in cash or bank deposits, to freely practice their spending spree that historically accounted for more than half of the region’s output.
Stressing on the role of people in remaking the economy, chief European economist at Capital Economics Andrew Kenningham told DW, “If that (household consumption) collapses because people just decide to save their money, then that will affect the number of jobs, amount of output in the economy.”
Brussels has so far funneled more than €13 billion toward healthcare and through policy stimuli to vanquish the Covid-19 and support the economy and maintain employment. But, without a more collaborative and sprightly endeavor to inveigle consumers jack up their spending, it would be a difficult task to improve the economic outlook in the short run.
In an interview with US broadcaster CNBC in October, German Finance Minister Olaf Scholz urged European leaders to team up if they were to increase the economic growth and return to the pre-crisis levels by 2022 or a bit earlier.
Owing to Trump’s flagrant criticism of EU and fragmentation of multilateral treaties, Brussels-Washington bilateral relations have reached a tipping point
Describing it as a “Hamiltonian moment” – a deal struck by the first US Treasury Secretary in 1790 to convert the debts of individual states into joint obligations of the federal union, he also saw the recent increase in economic growth an opportunity for closer fiscal union.
Nevertheless, in order to fully harness the lucky break, the EU should redouble its efforts to boost international trade, promote multilateralism, protect international rules-based system and pursue a balanced foreign policy. The bloc is trying to press ahead on all these crucial issues but as the US could conceive these empathic measures a threat to its global leadership, Brussels is likely to face indignation from Washington.
Due to the sizzling nature of the US, the scholar Michel Smith, years before, had defined America as a “warrior state” that has been championing a “sovereignist” diplomacy and foreign policy to dominate the world through use of force. He characterized the EU a “trading state,” which believed in multilateral negotiations and institutional engagement.
Under Trump, the US bullying of the international nations and leaders including the EU’s is in its heyday. Over the last four years, the US president has labeled EU ““basically a vehicle for Germany”, termed NATO obsolete, declared “The Germans are bad, very bad”, identified American primal ally “the biggest foe” and scrapped several transatlantic accords.
Owing to Trump’s flagrant criticism of EU and fragmentation of multilateral treaties, Brussels-Washington bilateral relations have reached a tipping point. American experts are now pinning hopes on Joe Biden to repair the damage with his senior policy adviser Tony Blinken calling for an end to the “artificial trade war” that has been contaminating the economic relations, costing jobs and increasing costs for consumers.
It is not only EU’s responsibility to save the long-time relationship with the US. Washington should also play its part to strengthen ties with Brussels through deepening trade cooperation, reviving economic growth, upholding multilateralism – crux of Europe’s approach to foreign policy – and supporting international institutions.
A chronological downward spiral of the US favorability across the Europe – a scenario that matched the grim ratings of March 2003 among French and Germans – necessitates the White House to quickly remodel its EU policy, aimed at leeching off partisan trade advantages and hamstringing the economy of an ally, which has invariably stood by Washington for peace and justice in the world.
The writer is an international commentator and opinion contributor to CGTN, New Straits Times and The Express Tribune, partner of The International New York Times. He writes on economy, geopolitical issues and regional conflicts. The views expressed in this article are writer’s own and do not necessarily reflect the editorial policy of Global Village Space.