(CN) — The coronavirus pandemic is not just infecting hundreds of thousands of Europeans — it's also attacking the pulmonary system of Europe's politics and economies and badly sickening the European Union, a massive but fragile experiment in multinational democracy and borderless landscapes where people and goods move with few restraints.
The big political problem is economic: How is Europe going to overcome the gigantic economic toll this pandemic is wreaking on European economies, some of the world's largest?
A foretaste of the damage came on Wednesday when the European Trade Union Confederation announced 1 million people had lost their jobs in the EU in the past two weeks. Recession, shuttered shops and businesses, sagging inflation and rising unemployment are now inevitable, economists warn.
Behind the dramatic deaths of more than 30,000 Europeans and scenes of a desolate and traumatized continent, a nasty fight has erupted inside Europe over whether the coming avalanche of new debt countries will need to take on should be shared across the EU or left up to each nation to handle on its own.
At its core, it's an argument about whether Germany and the Netherlands, Europe's financially stronger countries, should help bail out financially weaker countries — Italy, Spain, France, Greece, among others.
But this fight isn't just about credit, debt, euros, interest rates, maturities, guarantees – the stuff of accounting and balance sheets. It's a fight that dredges up historical grievances between north and south and sparks simmering national hostilities on a continent still riven by rivalry, discord and bigotry.
“This is in many ways an existential debate for the whole of Europe,” said Erik Jones, a professor of European studies and international political economy at the Johns Hopkins School of Advanced International Studies in Italy.
The debate comes down to a proposal made by Italian Prime Minister Giuseppe Conte to issue government bonds at the EU level to allow countries like his borrow money at the lowest possible interest rates and with favorable conditions. It's a strategy where government bonds are backed by the EU as a whole, allowing each borrower to benefit from the powerful credit rating of countries such as Germany and the Netherlands.
His proposal was quickly backed by eight other EU countries in southern and eastern Europe and now it's supported by 14 of the 19 nations that use the euro as currency, the so-called eurozone.
But Conte’s plan hit a brick wall: Politicians in the Netherlands and Germany see this as a scheme by other countries to burden them with debt.
“Corona bonds? Never!” Dutch Prime Minister Mark Rutte reportedly said during a teleconference with other EU leaders.
Later, in talking with reporters, the Dutch leader said he could not “foresee any circumstances in which the Netherlands will accept Eurobonds.”
His use of the term Eurobonds refers to pleas European nations such as Italy made for a similar program of EU-level bonds to get over the sovereign debt crisis following the 2008 financial meltdown. But Eurobonds weren't issued then and instead countries like Italy, Greece and Spain were forced into years of budget cuts to reduce their debts and borrow money on the international market at high prices. Now, with the virus ravaging Europe, many point to those budget cuts as having seriously damaged Europe's health care systems and set it up for failure in this health crisis.
The Netherlands’ tough position — despite the catastrophic circumstances – is also backed by Germany, Finland and Austria, a group known as the “frugal four.” The small island nation of Malta has not taken a position.
Making the fight worse, Dutch Finance Minister Wopke Hoekstra reportedly suggested during a teleconference with other EU leaders and ministers that countries like Spain should be investigated for not building up a rainy-day fund to handle a crisis.
Follow @cainburdeau
