NO. 26 JUNE 2020 Introduction Friends in Need The Corona Pandemic Changes the Landscape of Groups and Coalitions in the EU Kai-Olaf Lang and Nicolai von Ondarza The corona pandemic and its economic and social consequences are testing EU cohe- sion as well as the balance of power in the Union. The belated – or lack of – reaction by the EU during the crisis has reinforced the national sovereignty of the member states and the dominance of the intergovernmental method in moments of crisis. One of the palpable consequences has been an alteration in the “North-South divide” resulting from a European policy offensive by Spain and Italy, a stronger “southern orientation” by France, and a simultaneous crumbling of the “New Hanseatic League”. During the corona crisis, institutionalised groups of member states have acted pri- marily as interest groups that exacerbate differences rather than overcome them. Germany, which will assume a special mediating role as the Presidency of the Council from 1 July 2020, has to act as a bridge builder. To contain the corona pandemic and its as masks or protective clothing. Also, eco- secondary effects, the EU and its member nomic aid packages initially were mainly states, after a brief period of shock, adopted launched on the national level, whereas a series of exceptional measures that deeply the EU appeared to be hesitant and only intervene in public life and the economy. temporarily relaxed the rules, for example Through that process, they have exposed – on restrictions for state aid. Dutch vetoes and partially shifted – the power structures. against Eurobonds underline once again Divisions in the Union have become visible, that the EU can only take fundamental with some keeping their traditional con- decisions if all governments agree. stellations and others changing markedly. Step by step, the Commission and the Firstly, the crisis has shown that the Council have partially succeeded in regain- national sovereignty of the member states ing a coordinating role and reinstating remains intact. Health policy is not an EU some of the core facets of the single market. competence. The initial restrictions to con- But also in the mid- to long-term response tain the pandemic, therefore, were imposed to the pandemic, the intergovernmental by the nation-states or sometimes, as in institutions, and thus the national govern- Germany, the federal states. To date, only ments, have so far been setting the agenda. member states are capable of solidarity in The central body for the EU’s reaction has the form of providing medical goods such been the European Council, in which the heads of state and government have thus estimated to be particularly hard hit eco- far agreed in four video summits – as far nomically. Different levels of fiscal flexi- as politically possible – on joint action, for bility have also led to substantially different example on the closure of the EU’s external capacities for setting up national economic borders, the short-time working allowance emergency measures. Italy and – above (SURE), and a new recovery fund. At the all – Spain are on the political offensive in ministerial level, the Eurogroup was the looking for more economic and financial main body negotiating the economic re- support from the EU. sponse. The European Parliament, on the A letter from nine states calling for more other hand, was only involved to a limited financial solidarity and the issuance of extent in the EU’s response to the pan- Eurobonds has shown that the traditional demic in making some adjustments to the economic South has expanded, as Ireland, EU budget and approving emergency legis- Belgium, Luxembourg, and Slovenia also lation. Although the EU Commission may offered their political support. The Baltic in the long-term gain new responsibilities, states and Slovakia, which in the financial such as management of the recovery fund, crisis were strict opponents of risk-sharing the ground-breaking decisions have been and clearly assigned to the “financial North”, taken by the governments in the European are at least open to the concerns of the Council and Council of Ministers. nine. Thus, the “New Hanseatic League” is also crumbling, at least temporarily. In 2018, this grouping brought together eight New and Old Coalitions small and medium-sized northern Europe- an states (the Netherlands, Finland, Ireland, Given the primacy of member states, “intra- Denmark, Sweden, and the three Baltic European diplomacy” in bi- and mini-lateral states) that, until recently, were united in formats has become increasingly important their support for liberal economic policies for EU decision-making (see SWP Aktuell and the further development of the Euro- 7/2018). Initially, national actions and travel zone being based on budgetary discipline. restrictions also affected intergovernmental A prerequisite for the re-emergence formats in the EU. Especially in regional of the South was not least the resolution groups, the lack of agreement on border of Franco-Italian tensions following the closures led to the suspension or obstruc- change of government in Rome. A bilateral tion of cross-border cooperation. The dif- summit at the end of February was a strik- ferent levels of intensity of the epidemic in ing expression of the new solidarity. The particular countries, the varying number of more active role of the Sánchez government cases, as well as the asynchronous progress in European policy also contributed to the of the pandemic and distinct containment greater visibility of the South. By contrast, strategies have “split” many established the old North has been put on the defensive groups. However, there has also been a and, apart from the sustained rejection of revival of various groupings. Eurobonds, has in principle accepted the First, the coronavirus pandemic has need for support. However, the advances deepened the North-South divide in the EU and simultaneous expansion of the former and the Eurozone. Measured by the case South are primarily being driven by (sup- numbers of officially infected people and posedly) economic necessities and an en- deaths, Italy, Spain, and France have been thusiastic narrative of solidarity. It is note- particularly hard hit. The severity of the worthy that France is not dissociating itself crisis also applies to the economic impact: from the southern solidarity camp (as Ger- Due to a combination of severe lockdown many did from the Hanseatic group in the measures as well as accounting for large past), but rather is acting as an integral part segments of the tourism and service indus- of it – or even as its spokesperson. Despite tries, southern European countries are also all this, neither the cohesion nor the asser- SWP Comment 26 June 2020 2 tiveness of the heterogeneous South can used their tried and tested cooperation be taken for granted. structures. The affirmation of cooperation In the Visegrád group, there was little is also a reaction to Sweden’s special path, coordination in fighting the corona crisis. which has differed from the restrictive Although the heads of government were approaches of other countries in the region still emphasising their willingness to co- (and in Europe). In political terms, this operate at a summit meeting in early signals that all countries are sticking to the March, the borders between the four coun- goal of a “green, competitive, and socially tries, for example, were closed without any sustainable Nordic region”. Nevertheless, in discernible coordination. At the same time, an usual regional differentiation, Denmark however, they still managed to coordinate opened its borders to Germany and (non- foreign policy priorities in the form of aid EU) Norway in June 2020, but not to Sweden. for the Eastern Partnership and for border In contrast, the Baltic states have established security and the containment of the corona- a common “travel bubble” to restore the virus in Libya. With regard to negotiations flow of people and goods, while continuing on the Multiannual Financial Framework controls with other EU countries. (MFF) and the recovery fund, the Visegrád The Weimar Triangle was in a phase of countries want to avoid what they consider cautious reactivation before the outbreak an undue redirection of EU funding from of the pandemic. In January, the Secretaries eastern to southern member states. How- of State for Europe met and underlined ever, differences are visible, with the Czech their willingness to revive trilateral consul- Republic and Hungary arguing heavily tations. There was improved communica- against the recovery fund in its currently tion and even joint initiatives in some areas proposed shape, and Poland taking a rather (e.g. the declaration of the three agriculture positive attitude. ministers in October 2019; an initiative for That means that the informal group of the reform of competition policy, which main beneficiaries of cohesion policies was supported by Italy). President Macron’s which is calling for an “ambitious Europe” visit to Warsaw in February did not bring through an increased EU budget can be about a breakthrough in the difficult bi- driven apart. In contrast, the “frugal four” lateral relations between Poland and France, (Netherlands, Sweden, Austria, Denmark) but it opened the door for the first “Weimar are insisting on budgetary discipline, even summit” since 2011. However, due to the after the outbreak of the pandemic. They pandemic, it is by no means certain when also prefer loans instead of subsidies for this summit will take place. crisis-stricken countries. But even among Hence, the landscape of groups and mini- the four, cohesion is waning, with Sweden lateral cooperation in the EU has changed and Denmark signalling more openness during the pandemic: Financial-economic to grants as part of the EU recovery fund. interest groups have come to the fore, The BeNeLux Union remains divided on whereas regional groups have concentrated economic policy issues, with Belgium and on themselves or been fragmented by bor- Luxembourg in favour of instruments such der-related issues and European policy as Eurobonds, but the Netherlands relent- questions.