Crisis in the eu: vectors of development

Abstract. The article examines in detail the current development trends of the European Union in the context of combating the coronavirus pandemic. The author demonstrates the current state of affairs in the EU in health care, economy, social sphere. Provides data on further GDP growth and the welfare of the entire eurozone in the current crisis. In addition, the analysis of the EU foreign policy in the context of global instability, tension with the “centers of global power” (USA, China, Russia) was carried out. Special attention is paid to the further development strategy with Central Asia and Kazakhstan.

Introduction

The crisis caused by the coronavirus pandemic has led to significant negative economic and social consequences and health problems in the European countries. Currently, the main focus of the EU’s domestic policy remains on combating the spread of COVID-19, restoring and restarting the economy. The main challenge for the countries of the region is implementation of a coherent policy.

Besides, the European Union is facing new challenges in the foreign policy. Transatlantic tensions in NATO, the declining global influence of the United States, the growing role of China and difficult relations with the Russian Federation are forcing the EU to transform its foreign policy. Announced in July this year, the motto of Germany`s presidency in the Council of Europe, “Together for Europe’s recovery”, implies not only measures to save the economies of the EU countries, but also the intention to take the position of a key geopolitical player in the rapidly changing global world order.

Domestic policy

Health Policy

A special feature of the European Union is that the health policy in general is the prerogative of national governments of member states, including the power to impose a state of emergency and anti-epidemic measures. The political powers of EU institutions are limited to a coordinating role.

However, there are still significant differences between European countries in financing and quality of healthcare. Thus, while the leading countries in terms of healthcare spending are France and Germany with 11.3% of GDP, the least-expenditure countries are Luxembourg with 5.5% of GDP and Romania with 5.2% of GDP.

With the spread of the coronavirus in the EU in February–March this year, the primary measures of European States were taken at the national level, including closure of borders (provided for in EU treaties in emergency situations) and a temporary ban on the export of medical equipment, which caused criticism of EU countries for focusing on their own interests and EU institutions for inaction in the first weeks of the pandemic.

The introduction of large-scale EU measures to combat coronavirus was in mid-March this year, including allocation of 37 billion euro of budget funds to support healthcare, business and labor, adoption of an agreement on joint procurement of protective equipment between 25 European countries, allocation of 47.5 million euro for 17 research projects in the field of antiviral vaccines and testing.

Also, at the suggestion of the European Commission (EC), the first joint strategic medical equipment reserve (rescEU stockpile) within the EU Civil Protection Mechanism was established in March this year to assist EU states in the fight against coronavirus, including the provision of equipment for laboratories, artificial ventilation devices, reusable masks, drugs and vaccines. The equipment is distributed according to country needs by the Emergency Response Coordination Centre.

Economic policy

In the third quarter of 2020, EU GDP decreased by 3.9% indicating a recession in the region. Besides, relative to the second quarter, GDP increased by 12.1%. Currently, the largest GDP growth is in France (18.2%), Spain (16.7%) and Italy (16.1%). According to IMF forecasts, EU GDP growth will reach 5.3% in 2021 [1] [2].

The EU’s measures aimed at stabilizing the economic situation is primarily in launching the ECB’s quantitative easing program to ensure the economy’s liquidity through retirement of securities, providing the ECB with concessional loans to banks in the euro area, suspending the European Commission’s restrictions on national budget deficits and the level of public debt, as well as restrictions on state aid to European companies.

The Emergency Program to support the

European economy in the amount of 540 billion euro presented by the European Commission, the European Investment Bank and the European Stability Mechanism (ESM) in April this year includes three components:

  • Support to Mitigate Unemployment Risks in an Emergency or SURE in the amount of 100 billion euro of targeted compensation to employers (including Italy, Spain);
  • the program of concessional lending in the amount of 200 billion euro to support small and medium-sized businesses;
  • 240 billion euro in the form of borrowed funds to prevent the default of the most affected countries (Italy, Spain) [3].

A large-scale plan for the recovery of the EU economy due to COVID-19 Next Generation EU within the EU Budget adopted along with the long-term EU budget for 2021–2027 in the amount of 1.1 trillion euro in July 2020 is aimed at providing additional budget funds by temporarily increasing the maximum contribution of member countries from 1.2% to 2% of GNI and issuing securities.

According to the plan, assistance in the amount of 750 billion euro, including

390 billion euro in the form of grants (through bond issues) and 360 billion euro of loans under the European Recovery Plan will be used to as a kick-start for the economy by stimulating private investment, supporting investment, reforms and industries of member states and national health systems.

The grants are intended to boost the economies of the EU countries most affected by the pandemic, including Italy – 81.8 billion euro, Spain – 77.3 billion euro, France – 39 billion euro, Poland – 38 billion euro, Greece – 32 billion euro.

Social policy

The application of measures against the coronavirus pandemic, in addition to the economy, has had an unprecedented impact on the labour market. In September 2020, the unemployment rate in the EU reached 8.3% (in September 2019, the unemployment rate was 7.5%) and the total number of unemployed in September was about 15 million people (compared to the previous month, there is an increase by 42 thousand people).

The crisis has a negative impact on the situation of the most vulnerable groups of the EU population. The proportion of people experiencing serious financial difficulties in the EU is 5.6% of the population, or about 24 million people. However, in OECD countries, more than one in three people do not have sufficient funds to support their families financially for at least three months in the event of a sudden loss of income. According to a survey by the European Foundation for the Improvement of Living and Working Conditions conducted in April 2020, almost 40% of European residents report a deterioration in their financial situation compared to the situation before

the pandemic.

In this regard, most EU countries have introduced or expanded measures to support employees and companies within proven national short-time work schemes (STW schemes), which differ in the duration of support and the amount of salary compensation.

The European Union plans to provide further support and financial assistance to implementation of STW schemes of national governments through the SURE credit scheme (Support to Mitigate Unemployment Risks in an Emergency). Along with this, since May this year, the European Commission is considering the project of Start Unconditional Basic Incomes throughout the EU, the implementation of which will guarantee funds to every citizen, reduce differences between regions and promote greater socio-economic cohesion of the EU countries.

EU foreign policy in the context of current challenges

Over the past few years, the perception of the United States as a global leader has decreased among the leading EU member

QUARTERLY ANALYTICAL REVIEW

4 (80)/2020

47

states. The four-year period of D. Trump’s leadership in the White House caused irritation in Europe primarily among the locomotives of the EU, Germany and France, and also plunged the transatlantic partnership into a dead end. To date, Germany and its leader A. Merkel are active promoters of the post-American world concept in the EU. “We grew up in the certain knowledge that the United States wanted to be a world power. Should the US now wish to withdraw from that role of its own free will, we would have to reflect on that very deeply.” The German Chancellor’s fears are explained by a well- justified phobia of the possibility of a further breakup of the EU, especially against the background of Brexit, which has seriously reduced stability within the Union. The COVID-19 pandemic has demonstrated the unwillingness of member countries to take a consolidated approach to solving common problems.

Today, Germany and France, in addition to the primary tasks of getting the EU out of the economic crisis caused by the pandemic, put the strengthening of the EU’s leadership in the international arena at the forefront. In addition to France and Berlin, the former Merkel ally and current President of the European Commission Ursula von der Leyen shows ambitions in this issue, who, upon taking office, promised to make the European Commission a geopolitical structure, where Brussels will take a more assertive position. The new leadership of the European Commission and Germany`s political elite, being the locomotive of European integration, are ready to take responsibility and lead the European Union in terms of its transformation and strengthening in the current difficult period of uncertainty.

According to Brussels, strengthening of the foreign policy course should be based on the following steps:

  • increase in external impact costs by up to 30%;
  • changing the mechanism for making decisions on foreign policy within the EU (instead of the current approval by 28 members, it is proposed to make decisions by majority);
  • creation of a pan-European army (in addition to NATO);
  • creation of the European Security Council (as a regulator of the EU foreign policy) [4].

At the same time, an important factor is the factor of skepticism among many Western experts about the possibility of reformatting the EU’s foreign policy towards a more rigid course. As is commonly known, the EU was initially formed as a peace project, where so-called soft power always prevailed, and as practice shows, during various crises, the EU failed to show sufficient firmness and flexibility, and diplomatic efforts often did not justify their effectiveness in difficult situations.

Defense and security issues

The EU defense and security sector is going through a difficult stage in its development. Brussels is increasingly sending signals about the need to create a strategic autonomy that would be able to turn the EU into an independent entity, not only from the point of view of the single market, but also as the owner of a powerful military and defense potential [5].

According to various experts, the starting point of current security problems in the EU is considered to be 2014 (Russia’s annexation of Crimea and the beginning of a protracted military campaign in Eastern Ukraine). The Russian factor is pushing countries such as Georgia, Moldova and Ukraine to join NATO. However, Europe understands that these aspirations to join NATO will only aggravate the security

QUARTERLY ANALYTICAL REVIEW 4 (80)/2020

49

The current stage of the European security architecture is undergoing structural changes and is characterized by increased efforts to create an independent center of power. Besides, the existing hotbeds of tension within the EU itself are increasingly forcing active followers of the European integration (Germany, France) to return to the financial issue of reforms, which is difficult to implement during the COVID-19 pandemic due to lack of investments in the defense budget. Opponents in this issue are traditionally left-wing parties and the states of Southern and Eastern Europe that are most affected by the pandemic and which are currently more concerned about economic recovery.

Tension with the world’s “centers of power” (USA, China, Russia)

The current crisis agenda between the US and China and the sanctions isolation of the Russian Federation make it difficult for Brussels to build a dialogue with each of these countries. However, not all EU states are ready to follow a common European course in relations with the world’s “centers of power”. The United States, China, and Russia continue to develop bilateral affairs with individual European countries becoming less involved in the dialogue with Brussels.

The USA. A topical issue for Europe today is the future policy of the new US administration and the future of the transatlantic partnership, one of the main pillars of the existing world order. In recent years, Trump`s administration has demonstrated its alienation and disregard for traditional partnerships. The demands of the head of the White house to force European leaders to increase military spending in NATO, threats to impose sanctions on construction of Nord Stream 2,and the latest decision to withdraw the part of the military forces from Germany demonstrated Washington’s aloofness from the alliance with Brussels.

Knowing about the political views of Biden from the Democratic Party and his strategy for resuming a comprehensive dialogue with the EU, Brussels positively perceived the results of the US presidential election. Besides, according to experts, the European Union should not make premature conclusions on this issue, and without looking back at its overseas neighbor, continue to build a new configuration of its foreign policy course.

The PRC. In light of the cooling of affairs with Washington and the crisis in China–United States relations, the EU is not yet closed from cooperation with Beijing. China, in its turn, against the background of the emerging trend of anti-Chinese policy of the United States, is ready to actively move towards a close partnership with the EU. Earlier, the parties successfully agreed on a new impetus in bilateral trade outlining a major investment deal (due to the pandemic, the summit in Leipzig scheduled for autumn was canceled, as was the signing of the agreement on mutual investment). In 2019, the European Union, against the background of Washington’s trade war with Beijing, managed to achieve concessions regarding the access of European companies to the Chinese market. However, according to experts, it is not known whether the EU will be able to influence China in case of noncompliance with its obligations.

The country’s political system, disregard for human rights and the state’s influence on the economy still remain a stumbling block on the path to a close economic partnership with Beijing. Besides, Brussels is concerned about the repressive policy of the Chinese authorities in relation to Hong Kong with permanent pressure on the existing liberal system.

The RF. Cooperation with the Russian Federation remains uncertain. Relations between the EU and Russia have always been cyclical, from a constructive dialogue to tough confrontation. The German Chancellor, reviewing the EU agenda during her presidency of the Council of Europe, described the current relations between Brussels and Moscow as a “critical and constructive dialogue” aimed at “peaceful coexistence”. According to experts, antiRussian sanctions are an obstacle to constructive cooperation, while there is still a dialogue between the two countries. The EU accounts for almost half of Russia’s trade.

Today, Brussels considers close cooperation with Beijing and Washington as a priority, despite all the difficulties of the dialogue. Relations with the Russian Federation are not considered as a priority. The reason for this is the militaristic orientation of the Russian policy, which is regarded in the West as a challenge to the global world order.

Impact on Central Asia and Kazakhstan

Central Asia is traditionally on the radars of leading players. First of all, these are Russia and China, which are actively implementing their economic projects here. So far, the EU strategy has looked rather faded against their background. According to experts, the EU did not take into account the specifics of the region as a whole and the policy of a single country. In this regard, intensification of relations among the Central Asian countries mainly takes place within a bilateral dialogue with individual EU member states and not with the European Union itself.

The current crisis conditions open up new opportunities for cooperation between the EU and Central Asia. First of all, in the postcoronavirus period, the sphere of medical cooperation, pharmaceutical field, exchange of experience, development of vaccines, etc. is becoming more active. In this regard, taking into account the new realities, there is a high probability of revising the new EU strategy in Central Asia in the direction of more substantive interaction in the medical sphere and overcoming the economic crisis.

One of the most effective steps to strengthen the impact on Central Asia was the assistance package allocated by Brussels in the summer of this year called Central Asia COVID-19 Crisis Response (the total budget of the program is 3 million euro, of which 1.6 million euro is allocated to Kazakhstan). This measure should be viewed from the point of view of the Brussels humanitarian project, which is designed to strengthen the EU’s role in Central Asia and identify claims to leadership in the fight against the COVID-19 pandemic.

The current processes in the EU related to the review of foreign policy and its further activation may in the future strengthen the influence of Brussels on Central Asia and Kazakhstan. A key role in this issue can be played by the active leadership of the European Commission, which should solve the main problem of the EU related to disunity within the Union itself and the need to develop a more effective strategy for Central Asia, which would include closer interaction with the united front.

Conclusion

The COVID-19 crisis has highlighted the problems of EU institutions and political leaders in coordinating efforts to implement common policies in the socio-economic and healthcare sectors, as well as the existing differences between the donor countries of North–Western and the beneficiary states of South–Eastern Europe.

In the context of the ongoing pandemic, the key challenge for the European Union is to ensure implementation of a coherent policy in restoring the pan-European economy, combating the spread and consequences of COVID-19 and distributing assistance to different European countries in terms of economic development.

According to European experts, the potential risks for the EU in the crisis due to COVID-19 are primarily related to the possible strengthening of the role of national governments and shifting away from market policies and, as a result, the growth of internal conflicts within the European Union. Based on the situation with the UK’s exit from the EU and uncertainty in relations with the United States, the European Union will continue to actively strengthen its policy of greater independence in its foreign policy. Besides, contradictions remain within Europe, which include unwillingness of many member states to sacrifice their national interests in favor of the common EU policy. In this regard, despite recent tendencies indicating activation of the European Union in the international arena and its claims to a leading role in a changing world, the EU still cannot be considered as a consolidated player.

 

REFERENCES:

  1. Greer. S, de de Ruijter. A. EU health law and policy in and after the COVID-19 crisis // European Journal of Public Health. August 2020. Vol. 30. Issue 4. P. 623-624.
  2. Eurostat [Electronic resource]. URL: https://ec.europa.eu/eurostat/web/ covid-19/overview (access date: 05.10.2020).
  3. International Monetary Fund [Electronic resource]. URL: https://www. imf.org/external/index.htm (access date: 05.10.2020).
  4. European Commission [Electronic resource]. URL: https://ec.europa. eu/jrc/en/news/jrc-analyses-covid-19-impact-economy-and-labour- markets-help-guide-eu-response (access date: 12.10.2020).
  5. EU’s strategic agenda for 2019-2024 [Electronic resource]. URL: https://www.consilium.europa.eu/en/eu-strategic-agenda-2019-2024/ (access date: 25.10.2020).
  6. Fiott D. Strategic autonomy: towards ‘European sovereignty’ in defence// [Electronic resource]. URL: https://www.iss.europa.eu/sites/ default/files/EUISSFiles/Brief%2012__Strategic%20Autonomy.pdf (access date: 02.11.2020).
  7. Estimated military spending of NATO countries [Electronic resource]. URL: https://www.statista.com/chart/14636/defense-expenditures-of- nato-countries/ (access date: 02.11.2020).
Year: 2020
City: Almaty