ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021

Assessment Of EU’ Economic and Health Response to the Covid- 19 Pandemic Within the Framework of Liberal Intergovernmentalism And Neofunctionalism Theoretical Approaches

1 A Trivun Sharma A University of Warsaw, Poland

Received: February 11, 2020 | Revised: February 25, 2021 | Accepted: February 28, 2021

DOI: 10.33445/sds.2021.11.1.14

Abstract The principle aim of this article is to analyze EU’s response to the COVID-19 pandemic within the ambit of measures incorporated to tackle the economic fallout and health related problems. The article makes use of two important theories of European integration, i.e., liberal intergovernmentalism and neofunctionalism in its explanatory capacity to describe actions taken by both the member states and the supranational institutions in mitigating the adverse effects of the pandemic. The article argues that while no one theory completely explains the European response to the pandemic, both the theories offer different perspective in how the EU member states reacted, within the power of their national capabilities and the collective response measures initiated at the level of EU supranational institutions. Key words: Liberal intergovernmentalism, Neofunctionalism, EU, COVID-19, European Integration.

Introduction On 24 January 2020, the first case of corona European integration itself. The pandemic hit at virus was reported in France, signaling that the the time when the EU had only sparsely virus had travelled continents and made its way to recovered from the effects of the Eurozone, Europe. With little over a month, Italy had issued migration, and refugee crisis only to find itself a decree, implementing strict public health tediously involved in negotiations with the UK measures including social distancing, starting from over a post-Brexit partnership (Bongardt and areas most affected by the virus to issuing a Torres, 2020, p. 130). This meant that the Union nation-wide lockdown on 9 March 2020. Two days was distracted in as far as addressing the initial later the Director General of the World Health common problems related to Covid-19 Organization (WHO) declared Covid-19 a global pandemic were concerned. Therefore, in the pandemic and the lockdown measures immediate period following the outbreak, EU implemented in Italy were quickly followed up in member states responded by taking matters Spain, France, and other European nations. Within into their own hands, with each formulating its a span of few months the corona virus had own strategy, without given much thought for reached crisis level in Europe. other fellow Europeans. Just like the previous crises, the Covid-19 Unilateral actions and uncoordinated pandemic represented another challenge that national responses were exemplified by chaos not only shook the resolve of EU’s collective and kneejerk reactions that led to border measures but also tested the resilience of closures and imposition of export bans on

1 Corresponding author: PhD Scholar at the Faculty of Political Science and International Relations, University of Warsaw, e-mail: [email protected], ORCID ID: 0000-0003-1679-3538

131 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 essential medical equipments. Italy found to its secure favourable conditions on pricing and shock that its request for medical supplies and liability and helped avoid vaccine nationalism or protective gear under the special European the political fallout of it undermine solidarity Crisis Mechanism was rejected as Germany, within the bloc (Lehne, 2021). France and Czech Republic announced bans on From an economic perspective as Tobias exports of protective gear to avoid domestic Tesche suggests in his paper, the major problem shortages. In particular Germany, the largest concerning the EU was that the strongest producer and exporter of medical devices and economies would be able to withstand the equipment in Europe, only eased it ban economic fallout from the crisis and would following the threat of infringement emerge even stronger from the shock, proceedings by the European Commission. The compared to weaker economies which would political implication of these uncoordinated find their economic position further weakened national actions was that Italy was more happy (Tesche, 2020, p. 1). The European Central Bank welcoming medical supplies and protective (ECB) played a crucial role in mitigating the gears from China than seeing its membership financial risk, by acting as the lender of last dividend pay off with fellow European member resort through its pandemic emergency states (P.C and Sharma, 2020, p. 3). purchase programme (PEPP) and pandemic Initially the European Commission responded emergency long-term refinancing operations by temporarily limiting the institutional (PELTROS). Furthermore, after a few rounds of constraints on member states to formulate their failed talks, the Finance Ministers of the own strategy to handle the pandemic. Eurozone (the Eurogroup) agreed on a three- Nevertheless, there was a broad consensus part approach to mitigate the crisis. These among countries that a unified European effort include, help for the member states through the to mitigate the socio-economic fallout of the European Stability Mechanism (ESM), aiding the pandemic was warranted. To respond to the companies through the European Investment shortages of medical equipment and protective Bank (EIB) and helping the workers through the gear the European Commission acted by first Support to mitigate Unemployment Risks in an implementing an EU-wide export ban on some Emergency programme (SURE). Furthermore, a medical protective equipment to keep sufficient French – German compromise in May 2020, also stock of supplies within the bloc and then by gave green light to the Commission’s revamped launching a joint public procurement long term-EU budget and EU recovery programme with member states for testing kits instrument that included over €360 billion in and respiratory ventilators (Bayer, Deutsch, loans and €312 billion in grants to help Hanke Vela and Tamma, 2020). immediate the recovery process of economic A similar approach was adopted by the and social damage brought by the pandemic European Commission to procure vaccines. (Tesche, 2020, p. 2 and European Commission, Although like much of the health care, 2020). vaccinating policy remains a state prerogative. The response to the corona virus pandemic The European Commission right from the start by both the EU member states and by EU pushed hard for adopting a joint vaccine institutions represent an interesting case of procurement policy. Despite initial problems, understanding and assessing European the commission was able to get all the 27 integration. While initial unilateral actions taken member states on board for its vaccination by member states demonstrated the lack of strategy and was able to negotiate contracts integrated efforts, the careful intervention by with 6 pharmaceutical companies to secure 2.3 EU supranational institutions like the ECB and billion doses. By collectively pooling its efforts European Commission not only strengthened the EU was able to use its market power to the resolve of EU’s collective efforts but by doing

13 2 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 so also improved its image and boosted public adverse effects of the pandemic. To analyse trust. Two important theories form the these actions the article would focus on only the theoretical foundation which can be used to economic and health related responses. The explain European integration: Liberal article does not make the claim that the Intergovernmentalism and Neofunctionalism. coronavirus crisis has deepened European The article would build on the theoretical integration rather it focuses on analysing how foundation of these two theories to explain different measures taken by both the EU European responses to the corona virus member states and supranational institutions pandemic. Both the theories would be use in correspond to the larger debate of European their explanatory capacity to describe the integration from the perspective of both the actions taken by the member states and the theories. supranational institutions in mitigating the Material and methods As a theory of European integration liberal range powers. The founding members of the intergovernmentalism provides a state centric European project failed the essential test of view of understanding the integration process. legitimacy in defending their populations It focuses on the role of nation states within the against foreign occupation. Nevertheless, it did European integration process. Liberal not abolish deeply rooted nations, neither did it Intergovernmentalists view integration as a erode the geopolitical suspicion that persisted zero-sum game in which each state tries to among the nation states of Europe. This meant achieve its goals through bargaining and that the idea of integration stood in contrast to negotiations. They argue that because of the national diversity and when different ideas of limited nature of integration itself, integration is history and sovereignty were to collide, limited to policy areas that do not touch differences were likely to occur. Therefore, fundamental issues of national sovereignty. In integration found its roots mostly in the economic other words, they argue that European sphere where collective gains could be achieved, integration as a whole is driven by the interests leaving tricky issues of sovereignty to nation states and actions of nation states (Cini, and Borragan, (Hooghe, and Marks, 2019, p. 1115). 2000, p. 87). Andrew Moravcsik a popular Co-operation for Liberal proponent and the originator of the Intergovernmentalists within the EU is Intergovernmentalists approach argued that, essentially the result of pragmatic thinking. It is European integration can best be explained as a required to find common solutions to resolve series of rational choices made by national common problems. Co-operation for them is not leaders. These choices responded to constraints a product of idealism or ideology but is an and opportunities stemming from the economic essential measure that governments undertake interests of powerful domestic constituents, the to confront issues that challenge the core relative power of each state in the international interest of the state. In this sense, as Jensen system, and the role of international institutions explains European integration is largely seen as in bolstering the credibility of interstate a normal or even a mundane exercise on part of commitments (Moravscik, 1998, p.18). the nation states. For them there is nothing Scholars of liberal intergovernmentalism also special about it other than the fact that co- view regional integration as a response to the operation since the end of World War II has shifts in the global balance of power. Taking become highly institutionalized. They also argue European integration as an example, they argue that European integration is just one example in that the bipolar nature of Cold War geopolitics a general phenomenon of global co-operation diminished the role of European nations to mid- that occurs simultaneously on variety of levels

13 3 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 starting from regional to international. Liberal War II came together in a new form of Intergovernmentalists continue to see co- supranational co-operation which was reflected operation among governments occurring on in the formation of European Coal and Steal issues that are fundamentally important to the Community and later the European Economic core interest of the state. They do not see Community (EEC). For Haas, the new co- integration heading inexorably towards a operation in Europe, necessitated by the direction of some sort of European political formation of regional organizations meant a community or a federal state (Jensen, 2000, p. 89). departure from the realist approaches of Liberal Intergovernmentalists describe thinking which dominated international integration crises as having characteristics of relations at the time. His theory focused on the heightened interdependence, which remains importance of supranational co-operation and asymmetrical in nature. Crises do not have the new institutions, along with the role elites same effect on all social groups and states. played in creating consensus for making While some are highly affected by the crisis supranational co-operation possible. It also other tend to remain relatively unaffected. This marked an important step towards a more unevenness creates asymmetry whereby progressive understanding of coordination national interests remain the outcome of how which saw co-operation in one sector laying the seriously and adversely a particular state is groundwork for more co-operation in another affected by the crisis. Though crises create (MacRae, 2016, pp. 58-59). In his 1958 book, opportunities for co-operation they have Hass defined integration as a process whereby important distributional implications since the political actors in several distinct national burdens of adjustments are unequally settings are persuaded to shift their loyalties, distributed among nation states. Asymmetrical expectations, and political activities toward a interdependence and unequal distribution of new center, who institutions possess or demand the burdens of adjustments gives rise to jurisdiction over preexisting national states intergovernmental bargaining whereby each (Hass, 1958, p. 16). state bargains to achieve the integration Although for neofunctionalists, integration outcome that maximize their own interest. starts in economic areas where gains are Intergovernmentalists argue that those which mutual, the success in one area often increases have likely suffered the most from the crisis and the chances of further integration in many other require immediate support of other member areas. Contrary to the viewpoint of Liberal states and those states that stand to gain the Intergovernmentalists, who argue that most out of the integration and lose the most integration is rooted in the country’s pursuit of from disintegration are more likely to national economic interest, neo-functionalist compromise to achieve integration, compared suggest that economic integration is a path to states that are least affected by the crisis and towards political integration (Spolaore, 2013, p. are more or less happy with the status quo 132). In arguing this, neofunctionalism takes (Schimmelfennig, 2018, p. 973). direct inspiration from Jean Monnet’s strategy Neo-Functionalism on the other hand argues of delegating only some specific functions to that European integration is not primarily driven supranational institutions (mostly in technical by nation states, rather integration is pushed by and economic areas) with the idea, that over elites and interest groups that transcend time, it would lead to more institutional national boundaries (Spolaore, 2013, p. 132). integration through a positive/negative For neo-functionalists, the theory is functionalist mechanism. since it refers to the dynamic nature of Put simply, a positive mechanism has a transferring specific functions to supranational learning curve. As politicians and specific institutions. Ernst Haas, the originator of the interest groups observe the benefits of neo-functionalist theory used it to explain how integration only in some specific areas, they six European countries at the end of the World would want to replicate the positive experience 13 4 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 in other areas, hence more integration. Spolaore neofunctionalists scholars argue that both argues that this was the central idea of the supranational actors and institutions play an Schuman declaration which stated that, Europe important role as far as integration is concerned. will not be made all at once, or according to a The central premise of elite socialization is that, single plan. It will be built through concrete over time officials involved in the policy planning achievements. A negative mechanism on the process of supranational institution will develop other hand works by generating problems and loyalties that will be more European in nature. crises. Since integration is only in some specific For instance, as Jensen explains, European areas, with important complementary features commission officials are expected to hold a missing, it creates pressure for more integration. European view while approaching any problem, Such incompleteness rather than being a bug so as to eliminate any nation bias and ensure acts as an important feature for supranational form of governance (Jensen, neofunctionalism (Spolaore, 2013, p. 133). 2000, p. 77). Similarly, supranational interest Neofunctionalism scholars also understand groups are organised interest groups comprising that integration is a continuous process that mostly of corporations and business groups, evolves over time and develops a dynamic of its that have their own interest in making sure own. They differentiate between the level/ supranational institutions work. Jensen explains depth and scope/breadth of integration as that these interest groups generally tend to Bergmann explains. The level of integration replicate the development of economic and captures the degree to which an issue or policy political integration in one given region to is governed by supranational institutions and another in a bid to form their own supranational rules, while scope of integration pertains to the organisation. For instance, national industrial breadth of issues dealt with at the European and employers’ organisation established the level (Bergamann, 2018, pp. 1255-1256). common European organization called, Neofunctionalists describe actors to be BUSINESSEUROPE in 1958 much at the same rational, in so far as they seek to maximize their time as the European Economic Community was interest but also showcase the capacity to learn established (Jensen, 2000, p. 78). For and change their preferences. Hass, described neofunctionalists the formation of this aspect in his book, stating that, states, supranational interest groups is important as instead of struggling for power, are expected to these groups put pressure of national defend their preferences and to cooperate when governments to expedite the overall integration cooperation is deemed necessary for their process. realization. State preferences are seen as Likewise, the concept of spillover refers to a resulting from changing domestic competitions phenomenon whereby integration in one for influence; there is no fixed and knowable particular area spreads across to other policy national interest. Preferences of political actors areas and accelerates the process of integration, are formulated on the basis of the values held; thereby maximizing efficiency. According to they, in turn, determine an actor's sense of Lindberg spillover, in its most general interest (Hass, 1958, p. xiv). formulation refers to a situation in which a given Furthermore, there are three important action, related to a specific goal, creates a aspects of neofunctionalism that expand and situation in which the original goal can be explain the study of integration: spillover effect, assured only by taking further actions, which in elite socialization, and supranational interest turn create a further condition and a need for groups. more action, and so forth (Lindberg, 1994, p. Elite socialization and supranational interest 107). There are different types of spill overs. groups are based on an important assumption of However, the three important ones are neofunctionalism which contends that states functional spill over, political spillover and are not the primary drivers of the integration cultivated spillover. Functional spillovers occur process. In explaining both of these aspects, when co-operation in one area functionally 13 5 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 leads to co-operation in other. As Jensen points explain the European response to the pandemic, out, the functional consequence of establishing primarily in the economic and healthcare sector. a Single Market was that member states ended The reason for choosing economy and health up accepting regulations of certain aspects of care is simple. The corona virus pandemic working environment at the European level, started as a health problem but swiftly even though such an acceptance was necessarily snowballed into becoming an economic not that case when the idea of single market was problem of equal proportions. The European incorporated. Political spillovers occur when response to manage both the economic fallout there is consensus among the political elites or of the crisis and associated healthcare concerns interest groups that certain amount of gave rise to debates of a disintegrated Europe. supranational co-operation is required to Nevertheless, since the initial months of the resolve a particular problem. In this kind of a pandemic, European response not only became spillover, interest groups tend to focus more on more coordinated but also effective. From a European solution than on a national one, theoretical preceptive, the overall measures suggesting that their chances of succeeding taken resembles an interesting of integration increases when working on a European rather which warrants deeper analysis. The method of than a national solution. Similarly, cultivated research used in this paper is descriptive, since spillover refers to situations wherein it focuses on describing the response measures cooperation or integration is facilitated by taken by both the EU institutions and member supranational actors for instances the European states from the theoretical perspective of liberal commission to drive forward the integration intergovernmentalism and neofunctionalism. In process (Jensen, 2000, pp. 75-76). addition to that a qualitative assessment based Having elaborated on the two important on analysing information from both the primary theories of European integration it is important (EU institutional bodies) and secondary sources to analyse which of these theories can help is also done. Results and discussion The economic recession triggered by the European Financial Stability Facility (EFSP) and COVID-19 pandemic quickly hit Europe, as ESM is an integrative step in the area of majority of governments enforced strict Economic and Monetary Union of the European lockdowns measures closing schools, offices, Union (EMU). Since the 2008-2009 eurozone and businesses. As people lost their jobs and financial crisis highlighted the fact that a many businesses faced the risk of bankruptcy, monetary union without a banking union would governments were left with little option but to be problematic as it would leave the onus on indebt themselves to support healthcare sector, national governments to regulate and rescue businesses, and people. From a neofunctionalist banks from bad debts, the intergovernmental perspective a crisis provides an opportunity for ESM mechanism was set up to provide governments to further integrate based on necessary lending to governments in need of either the pre-existing mechanisms or the need financial help (Niemann, Ioannou, 2015, p. 196 to create new ones – depending on the and Glencross, 2013, pp. 4-5). From a shortcomings. Particularly, the concept of neofunctionalist perspective, ESM is the spillover, can be used to offer insights into such spillover, triggered by the eurozone financial explanations. In the case of EU’s response to the crisis (Schimmelfennig, 2014, pp. 326-329). covid-19 economic recession the use of Hence, using the neofunctionalist approach it institutions like EIB, ESM and SURE offer can be suggested that based on pre-existing different explanations of the spillover effect mechanism for instance the ESM, further triggered by collective measures. integration during the economic management Neofunctionalism suggest that the creation of covid-19 pandemic would also trigger as of crisis management mechanism such as the spillovers. Indeed, such a spillover did occur 13 6 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 when the eurozone countries decided to use the response measures to tackle situations in which ESM mechanism and apply for loans amounting eurozone countries face the likelihood of high to 2 percent of their GDP. The usage of the ESM interest rates) was the most likely spillover, as it mechanism for health-related purposes was would merely have to be extended (Zeevaert, necessitated and agreed by both the member 2020). Nevertheless, the discussions and states and supranational elites making it the debates that followed regarding the recovery case of political spillover (European Council, measures divided members states into two 2020, and European Stability Mechanism, 2020). opposing camps with Southern eurozone Similarly, the EIB’s decision to allocate 200 countries arguing for the issuance of corona billion euros for SMEs (Small and Medium Size bonds and the Northern member states enterprises) along with the SURE programme stressing for the use of ESM for loans for non- which would lend 100 billion euros to member health related purposes. The eurozone states backed by a system of guarantees countries instead of extending the ESM represents a case for cultivated spillovers. While mechanism (as should have been the case) or proposing both of these mechanisms, it was the issuing the corona bonds (as insisted by supranational institutions and their elites that southern eurozone economies) opted for the took the charge. In the case of the EIB’s Commission financing the recovery package mechanism the idea of giving out Europe-wide through borrowing on capital markets with the loans was proposed by the supranational body EU budget. itself, while it was the European commission The agreement on the proposal and the that proposed the SURE programme despite it European commission special role in financing it, being limited in its power. Infact, after proposing may incite a neofunctionalist explanation of a the SURE instrument, von der Leyen tweeted, spillover as suggested by some scholars (Picek, stating that, this is European Solidarity in Action 2020, pp. 327-329). But it is important here to (Valero, 2020, and European Commission, remember that the recovery package was highly 2020). The SURE mechanism did raise the level influenced in both its scope and operation by of interdependence and integration among the Franco-German recovery plan proposal and member states. Along with the EIB mechanism the strict negotiations among EU member states and the commission’s early decision to use the who were divided in so far as common solution so-called escape clause to halt the enforcement was concerned (Salvati, 2020, p. 13). Therefore, of the Stability and Growth Pact (SGP) in the while neofunctionalism explains some of the early pandemic months both these measures measures adopted by supranational institutions mark the most concert efforts taken by the using spillovers, it faces limitations in explaining European Commission to not only manage the why member states opted for a new and fallout at the European level but also ensure the untested borrowing mechanism instead of using public credibility in the way of effective the ESM loans (Zeevaert, 2020). In this regard, functioning of supranational institutions neofunctionalism does not accurately explain (Fleming, Khan, 2020, and Salvati, 2020, p. 12). the overall European response to the economic As such as Neofunctionalism can be used to fallout of the crisis as a spillover towards more explain the possible measures taken by the integration resulting for already existing supranational institutions in managing the integration mechanism. economic fallout of the crisis, where its faces From liberal intergovernmentalism limitations are in explaining the debates that led perspective corona virus recession did represent to members states agreeing on the mechanism a significant challenge not just for the member for financing the recovery of their economies. states but also for the supernational institutions Following the neofunctionalist expectation, as who had to deal with the economic and social Zeevaert argues, since the existing institutions fallout of the pandemic. Nevertheless, liberal determine the occurrence of a spillover – using intergovernmentalism explains that not all EU the existing ESM (which was formed as a member states suffered the same from the 13 7 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 pandemic. As Sapir has shown that EU member health-related purposes and the EIB states were hit differently by the pandemic mechanism. There are two important reasons representing asymmetric shocks, based on pre- for this. First compared to the recovery fund, existing social and economic situations within amount of the funds available in ESM and EIB the countries (Sapir, 2020, pp. 3-7). Given this loans was relatively small and second, these asymmetry, liberal intergovernmentalism can funds did not come with any harsh be used to explain why member states differed conditionalities which limited the need for strict when it came to financing the recovery plan for bargaining. However, when it came to the the pandemic suggesting that negotiations were debates over the recovery fund, not only was the outcome of each states’ bargaining position the amount significant but more importantly, relative to the other. member states had different plans on how the Since the crisis hit all European states at some financing of the recovery plan should be carried propositions, they all had a domestic interest in out. The debate also brought to light the formulating a joint European response which north/south divide between the different would address the common concerns of trade, economies of the Eurozone which predated the economy, and tourism. Particularly within the economic recession triggered by covid-19 eurozone, countries had a common interest in pandemic (Pérez, 2019, p. 991-995). The making sure that member states do not suffer southern eurozone economies of Italy, Spain from overtly high interest rates, since default by and Greece faced the risk of high interest rates one would result in loss of trust and even higher on their government bonds and so were hesitant interest rates for other member countries to agree and comply by the strict conditionalities looking for international financing (Zeevaert, that the proposed ESM loans for non-health 2020). Therefore, using liberal related purposes would have carried. Instead, intergovernmentalism it can be argued that they argued for the issuance of corona bonds- a since all member states had an interest in sort of joint debt issuance for the eurozone accessing quick and cheap ESM loans for countries. Southern eurozone economies financing their public health services, they all favoured the option of corona bonds because agreed to this mechanism without much unlike the ESM loans it did not come with strict bargaining. Similar, was also the case with the EU oversight over national spending and EIB loans for businesses and the SURE cumulatively taking into account the whole of programme for protecting jobs of workers who eurozone, it would have amounted to lower would otherwise have faced economic interest rates. Suggesting this option nine difficulties because of layoffs. Without eurozone governments including Italy France, incorporating such mechanisms members states Spain and Greece wrote a proposal to EU council without have faced great difficulty in keeping President Charles Michel to consider their their businesses afloat and unemployment preferred option for financing the recovery numbers down, inevitably affecting the overall fund. The plan was rejected since countries like inter-European trade. Liberal Germany, Austria, the Netherlands, and Finland intergovernmentalism does not negate the role objected the joint debt issuance option fearing of supranational institutions like the European that they would have to pay higher interest rates commission and the EIB in supporting such if common corona bonds were to be issued. mechanisms, rather it focuses on the role of Furthermore, the Dutch and German economist nation states and their common interest in were not very fond of the idea of debt determining the outcome. mutualization in the first place, arguing that It is important here to point out that when such a measure would have a negative effect of using liberal intergovernmentalism to explain encouraging irresponsible spending. Even the member states behaviour over the financing of public opinion in countries in Germany and the recovery fund it stands in sharp contrast to Austria was opposed to the idea of putting their the cooperation reached over the ESM loans for hard-earned tax euros on-line to help countries 13 8 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 that were seen as comparatively more Ruijter and Greer, 2020, p. 34). In other areas of spendthrift (Sharma, 2020). health, including management of infectious Hence based on member states different disease, procurement of pharmaceuticals and interests and bargaining positions liberal the overall crisis response, EU’s powers are intergovernmentalism can be used to explain limited to supporting the national policies of why the final outcome of the recovery fund did member states while simultaneously not favour either the ESM mechanism or the encouraging co-ordination. These restrictions corona bonds but instead choose the option of limit EU’s actions which was reflective in its EU budget channeled recovery fund with initial health policy response to the Covid-19 commission doing the hard borrowing. pandemic. Neither did the EU had the necessary Countries like Germany, the Netherlands and stockpiles of essentials medical equipments to Austria were relatively less affected by the respond to the requests of the member states, economic fallout of the pandemic and since nor was it able to stop the unilateral measures Germany’s powerful position in the eurozone of export bans forced by national governments mattered, they had a strong bargaining position to retain the stock of supplies they had. As which was shown in their rejection of corona Brooks and Geyer have argued, while frustrating bonds. Yet, despite this, because of the high cost it may seem for the supranational institutions to associated with an economic crisis in the be limited in their power, the response reflected eurozone and the political implication of an exit, the design and intention of the member states they needed to help the hardest hit economies. (Brooks, and Geyer, 2020, p. 1057). The southern European countries, hit hardest by When the pandemic hit Europe, EU had two the pandemic, were in a weaker position, lacking main governance frameworks through which it the bargaining power to convince the northern formulated its initial health response to eurozone members to agree for corona bonds. pandemic. First- the health security framework Hence, what emerged was a compromise, which was set up by the 2013 decision on serious wherein the north was able to avert the joint cross border threats to establish a set of mutualization of debt via corona bonds while structure for emergency planning, making sure the long-term financing of recovery preparedness, and response. Second – the Civil fund was channelled through the EU budget Protection Mechanism (CPM) – formulated to while the southern countries were able to get ensure co-operation between member states in cheap loans and grants without having to agree the event of a disaster. Brooks and Geyer to the ESM mechanism. suggest that EU’s response in the first phase of In the case of EU’s response to the health the crisis through both these frameworks was crisis, its ability to act effectively and decisively intended and expected, nevertheless given the is curtailed by the limited competence powers limited scope of EU’s health related powers, the assigned to it by the Union’s founding treaties. capacity and reach of both these frameworks Public health remains the prerogative of the remained insufficient. member states and hence, EU’s power is only The Health Threats Decision as a mechanism limited to supporting competences as adopted after the Swine Flu outbreak mentioned in the Lisbon treaty which states categorised the roles of various EU level that, the Union can carry out actions to support, institutions and the role of member states in coordinate or supplement Member States emergency planning and preparedness; actions in the protection and improvement of surveillance and data collections; and crisis human health (Roloff, 2020, p. 29). The current response and coordination. Member states after treaties allow the EU to harmonise national laws every 3 years, report on their emergency in few selected areas, mainly organs and planning and preparedness with the substances of human origin, blood and blood Commission facilitating discussion of these derivatives, pharmaceuticals, and measures in provisions within the Health Security Committee the veterinary and phytosanitary fields (Brooks, (HSC). Similarly, the responsibility of 13 9 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 surveillance and data collection is managed by and Greer suggest that since co-operation under the European Centre for Disease Prevention and the CPM mechanism depends on willingness and Control (ECDC). ECDC collects data through ability of the member states to make updates from the EU/EEA countries, WHO, the contribution, it does not work well when all European Surveillance System and through member states experience shortages at the email exchanges with international stakeholder same time and become fearful for themselves (ECDC, 2020). In the event of a crisis, an alert is (Brooks, Ruijter and Greer, 2020, p. 40). In the raised through the Early Warning and Response current situation as the pandemic unfolded it System, initiating the assessment of the risk or Europe, member states were either already hit the crisis. The ECDC then starts co-ordination of by the virus or were fearful that the virus would the national response via the HSC mechanism. In soon reach their borders and so responded in a the initial months of the COVID-19 pandemic, knee-jerk reaction by safeguarding the medical co-ordination meetings brought little results, as supplies for themselves, a fact severely they were poorly attended and many of the highlighted by Italy’s request for medical member states had failed to report on their supplies. Therefore, liberal response plans as required by the HSC stated intergovernmentalism explains why in the early above. The inconsistency in the information and stages of the pandemic member states acted the lack of clarity on the preparedness and unilaterally as per their health policies and response data limited the scope of ECDC national contingency regulations. guidance and unearthed the overall weakness of Nevertheless, in the second phase of EU’s the surveillance system (Brooks, and Geyer, response which began after government eased 2020, p. 1058). lockdown measures while still maintaining social Similarly, in the case of Joint Procurement distancing, the EU began to play a more active Agreement (JPA) which necessitated the role, with its resolve for collective actions collective purchase of medicines, laboratory stressing the need for more integrative policies equipments and supplies, and personal (Fournier and Meyer-Resende, 2020). As travel protective equipment and gear, EU’s role and and export bans were lifted, the European response remained limited. As McEvoy and Ferri commission organised collective procurements have argued, JPA is a centralised procurement and proposed a common exit strategy which was mechanism which the Commission uses to agreed by member states. Moreover, the HSC manage calls for competition notices and the mechanism also returned to action as acceptance and evaluation of submitted bids. coordination between supranational bodies and The commission does not use EU funds to buy national governments began to improve. From a medical equipments on behalf of any neofunctionalist approach the phase 2 of EU’s participating member state. Instead, the response measures, exposed the weakness of member state expresses their interest on their unilateral measures and highlighted the need preferred contractors and once the contracts for collective actions. are finalised, may proceed to purchase under Among the integrative measures announced the negotiated terms (McEvoy and Ferri, 2020, by the European Commission, the EU4health p. 855). In other words, JPA resembles an programme announced in May is the most intergovernmental mechanism on procurement. important one as it showcases an important The CPM, EU’s second crisis – response effort made by the European Commission is governance framework on the other hand reversing the pre-existing plan which would functions like a match-making service. Under have placed health under the European Social the CPM mechanism, the EU co-ordinates by Fund with the allocated funding of €413 million collecting donation of earmarked resources in the new Multi-annual financial framework from countries that have excess and gives it to (European Commission, 2020). The new those that are in dire need, while adding some EU4Health programme with the funding of €5.1 European reserves via RescEU. Brooks, Ruijter billion- an unprecedented sum for health policy- 140 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 underlines the commission’s plan for a strong public health emergency and activate EU’s governance mechanism and effective decision emergency response mechanisms for instance, making by strengthening health systems, stockpile or procurement of necessary medical increasing preparedness for countering cross- equipment. On November 25, the European border health threats, and making medicines Commission also adopted the Pharmaceutical and medical equipments available and Strategy for Europe, with the purpose of affordable (European Council and Brooks, and creating a future proof regulatory framework Geyer, 2020, p. 1060). The commission aimed at supporting industries in promoting highlights that the objectives of the EU4Health research and technologies- helping patients to programme are based on a general need for fulfil their therapeutic needs and addressing structural formation and systemic reforms of market failures. Furthermore, the EU Vaccine health systems across the Union. Brooks and Strategy, adopted in June, gives power to the Geyer suggests that if objectives of the EU’s executive to sign Advance Purchase programme are stretched to the fullest, the new Agreements (APAs) with pharmaceutical provisions would mark a significant expansion in companies, on behalf of member states, and the EU’s health activity, into politically sensitive then coordinate the supply and distribution of and substantively complex areas. For the vaccines. This marks a significant change, a kind viewpoint of neofunctionalism theory, such an of spillover, since the JPA earlier only allowed for expansion of activity would serve as an example EU to provide for collective purchase but did not of spillover, with supranational institution – the give the Commission a role in distribution. While European commission driving the integration. suggesting these proposals, as argued by the In addition to the EU4Health programme, European commission the idea was on the one several other initiatives have also been hand to reflect on the experiences of the first announced with the main aim of integrating stage of the coronavirus pandemic and on the EU’s overall health policy. Acting on the other to ensure a more integrative response to communication on short-term health the EU’s long term health challenges preparedness published in July, the European (Szymańska, Nicolas, European Commission and Commission in November, presented a set of Brooks, and Geyer, 2020, pp. 1060-1061). proposals expanding the legal mandate of the Therefore, with regards to the broader issue of ECDC extending its role to the production of European integration, the crisis has unfolded guidelines on issues relating to not only risk into two initial phases with the phase I period assessment but also risk management (ECDC, showcasing the dynamics of intergovernmental 2020). The Commission also proposed for and nationalistic response while the phase II regulation on serious cross border threats to paving the way for more integrative and health allowing it to quickly declare an EU-wide collective health response policies. Conclusions Liberal intergovernmentalism and collective response measures at the level of EU Neofunctionalism are the two most supranational institutions. In the case of fundamental theories used to explain the nature economic response to the covid-19 pandemic, of European integration. In this article, both the neofunctionalism explains how cultivated theories have been used in their explanatory spillover, pushed forward by EU supranational capacity to offer insights into the early dynamics institutions have led to more integrative of European integration resulting out of this responses which was seen in the use of EIB crisis. While no one theory completely explains business loans and the SURE unemployment the European response towards the pandemic, reinsurance loans. As such the theory faced both the theories offer different perspective on limitation in explaining the divergent viewpoints how the EU member states reacted, within the of member states when it came to the issue of power of their national capabilities and financing of the EU recovery fund with one 14 1 ISSN 2522-9842 Journal of Scientific Papers “Social Development and Security”, Vol. 11, No. 1, – 2021 group of states suggesting the furthering of the intergovernmentalism on the other hand may ESM mechanism for non-health relations loans not offer as nuanced an explanation of and other favouring the use of corona bonds. integration as neofunctionalism does, but it Similarly, in the case of health-related response, focuses on the important element of state neofunctionalists explanation can only be used bargaining and national interest which highlight to explain the phase II of the European health an important factor that in time of crisis, it is the response to the pandemic when the initial knee member state bargaining position and national jerk reactions of the member states were interest that determine the nature and scope of somewhat curtailed. 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