Walter Baier: Reshaping Europe and Left-Wing Strategy in the Post-Pandemic Era
01 Introduction It is widely believed that the COVID-19 pandemic has inaugurated a New Era. We concur with this view, as it is difficult to imagine the world returning to its previous state. Our perspective is that the world will not return to the status quo; COVID-19 did not cause, but rather accelerated, the "key factors" determining global development in the coming years. This applies particularly to a world system in which the end of unilateral U.S. hegemony is imminent. The goal of this article is to attempt to elucidate this issue from the perspective of Europe and its integration process.
On December 31, 2019, China informed the World Health Organization (WHO) of "pneumonia of unknown cause" occurring in Wuhan; on January 12, 2020, China shared the full genome sequence of the novel coronavirus (SARS-CoV-2) with the Global Initiative on Sharing All Influenza Data (GISAID) and the WHO. This means that by February 13, 2020, when the health ministers of EU member states met in Brussels, they had sufficient information and time to react; yet they failed to take timely preventive measures to stop the development of the pandemic. Subsequently, these countries—whose healthcare systems had been weakened by decades of austerity—could only allow the pandemic to spread rapidly.
In mid-March, although the European Central Bank (ECB) responded to the imminent crisis by launching a €120 billion bond-buying program, EU finance ministers merely agreed to temporarily suspend the Fiscal Compact [1]. This meant they only proposed a makeshift solution to address problems that would not even exist without the Fiscal Compact itself. The "flagship program" of free movement of persons within the EU, granted by the Schengen Agreement, was suspended—not due to a collective decision to temporarily close borders, but because of a lack of consensus among individual European governments during the decision-making process. In early March, Germany even banned the export of protective medical equipment; this was not only a mockery of European "solidarity" but also a violation of the supposedly sacrosanct rules of the EU Single Market.
From this, it is evident that the COVID-19 pandemic exposed the sharp contradictions of EU treaties: the EU requires member states to adopt social and medical policies but restricts their fiscal foundations through EU legislation—primarily the Stability and Growth Pact (i.e., the Fiscal Compact). This has damaged the EU's reputation, especially in those countries relatively severely affected by the pandemic, making their post-disaster recovery even more difficult. This existential crisis is relentlessly exposing the EU's structural flaws: (1) the erroneous prioritization of European treaties; (2) a primary focus not on the well-being of the people, but on the smooth operation of the market; (3) an incorrect division of powers between EU institutions, which replaces the principle of democratic parliamentary will-formation at the national level with opaque interactions between European-level governments and the EU bureaucracy.
As of the writing of this article, the acute phase of the COVID-19 pandemic in the EU appears to have ended. Almost all countries have lifted restrictions on the free movement of citizens and public life, including most economic activities. Although there are fears of a resurgence of the pandemic in autumn and winter, the focus of attention is now on the economic crisis, the scale and duration of which remain uncertain. Famous economists warn that this could be the largest economic crisis of capitalism in peacetime to date. Based on its economic governance and the prevailing neoliberal economic supply-side theories, we have reason to believe that the EU is not prepared to protect its people from the effects of the economic crisis.
At a time when Europe should be united to stem this "carnival of nationalism," the reality is that the crisis is being exploited by radical right-wing parties. Nationalist ideology holds that global crises can be resolved through nations competing with one another for scarce resources. This is completely irrational, particularly for the small and medium-sized nations of the EU. The more absurd the nationalist viewpoint becomes, the greater the temptation toward autocratic modes of governance. Facts prove that the EU's illiberal democracy may be a shortcut to autocracy.
For example, a political and cultural "backlash" has already occurred, manifested in an increase in domestic violence and a reduction in women's public discourse. Paradoxically, the pandemic has instead proven the extreme importance of care work, which is currently performed primarily by women. European left-wing parties need to face this grim situation head-on. "Capitalism is encountering its systemic limits"; however, for this statement to be more than mere ideological self-affirmation, we also need to discuss the choices currently facing the European people and the possible paths toward a new mode of production and culture.
02 How Will Europe Face the Recession? The European economic recession is an established fact; it remains unclear whether it will lead to a prolonged Great Depression. In the last financial crisis, despite the casualties, there was no collapse of capitalism. On the contrary, the world's wealthiest strata were even able to push their wealth levels to unimaginable new heights and exerted a firmer grip than ever over the people and the state through financial markets. Compared to previous recessions, the current one did not originate from the collapse of an overinflated financial sector, but was triggered by a sudden rupture in the supply and demand sides and value chains of the real economy.
Theoretically, people expected economies to return to normal quickly after the acute phase of the COVID-19 pandemic ended. In reality, however, the real economy—already affected by geopolitical tensions prior to the outbreak—was already in a downturn. Central banks were correct in attempting to use expansionary monetary policy to stimulate investment and the real economy, but whether this approach can be sustained effectively is doubtful. Most importantly, given digitalization and the environmental crisis, the capitalist economy is at a tipping point of comprehensive transformation, which requires strategies other than neoclassical economics.
Meanwhile, unemployment has reached alarming levels. According to International Labour Organization (ILO) data, 2.7 billion workers globally have been affected by partial or full lockdown measures. The social time bomb created by millions of temporary labor relations in Europe, which are unprotected by labor laws and social welfare, is in danger of exploding. To prevent lockdowns from causing adverse social and economic effects, governments have passed unprecedented special programs. For instance, in late March 2020, the German government enacted a series of measures providing total financial support equivalent to 10% of GDP. Economists expect the debt-to-GDP ratio of Eurozone member states to rise by 10 to 15 percentage points. The European Commission has confined itself to ex-post confirmation of national decisions. In contrast, the ECB's actions at least indicate a willingness to purchase sovereign bonds at a total price of €7500 billion, which can temporarily alleviate national debts.
Clearly, the impending crisis could eventually evolve into a threat to the EU and its integration process. Relying solely on transitional monetary policy instruments is far from enough; strong fiscal stimulus measures are needed, and these cannot be left to member states to resolve alone. European Commission President Ursula von der Leyen proposed a €7500 billion European development plan, "NextGenerationEU." When the plan was finalized, controversy remained among member states on several issues—for example, how to raise funds and the proportion of subsidies versus repayable loans provided to the countries most affected by the crisis. However, the plan was ultimately rejected by the relevant countries because their sovereign debt already exceeded sustainable levels, leaving them unable to bear further borrowing. Therefore, without significant spending cuts, today's COVID-19 crisis will ultimately lead to a future national debt crisis and an austerity crisis.
The impact of debt accumulation clearly differs across countries; economic powers benefit, while weak nations face discrimination. The impact of debt accumulation is also staggering: although Germany's share of the EU economy is only 26%, it has so far accounted for 50% of the spending by EU member states to respond to the crisis. Consequently, the debt issue will further exacerbate inequalities between Southern and Eastern Europe and the EU's economic powerhouses. Furthermore, there are some significant impacts that are difficult to predict. Structural economic transformation will change the positions of industries, regions, and nations in global capitalist competition, alter their financial influence, and add new contradictions and rivalries to the existing East/West and North/South divides—it may even affect the core values of European integration. Additionally, the economic reconstruction following the end of acute COVID-19 transmission must be combined with the ecological transformation of industry and the adjustment of the economy's energy base, which will require unprecedented investment. Therefore, the financing of private and public debt, which grew substantially again during the crisis, will be a key issue in the post-pandemic period. Solving this problem is also the most important task currently facing the Left.
In this context, the debate over the mutualization of European debt, which already emerged during the 2007 financial crisis, has heated up again. The proposal for European debt mutualization is to issue Eurobonds, utilizing the collective fiscal strength of Eurozone member states to provide low-interest loans, and distributing these loans to countries proportionally according to the impact of the pandemic and the degree of economic recession. However, the German government flatly rejected this proposal, thereby casting a shadow over the prospects of European integration in the post-pandemic era. Although Eurobonds could alleviate the problem, the widespread problem of high national indebtedness—and its negative impact on the distribution of material and political resources between states and classes—will persist unless there is a significant reduction in European debt and a change in the distribution of resources and income.
Proposals to finance national debt through inflation will meet strong political opposition in some EU member states. The alternatives are either to shift the burden onto the populace through austerity and privatization programs, as in the last crisis, or to make the wealthy (who hold the largest share of loans) bear the interest burden of public budgets through debt relief, confiscatory taxation, and capital gains taxes. At the same time, capital controls must be implemented, and claims against pension and health insurance funds must be guaranteed. This should be accomplished through the public sector taking over these funds; it must be enacted by member states while requiring support and coordination at the supranational level.
In the coming months, even mainstream economists will repeatedly assure everyone that they never supported neoliberalism; the Left can construct a strategy within the fissures of this crisis of public discourse. We know from the last financial crisis that such a "window of opportunity" will remain open until the ruling classes of the major European powers reach a consensus on how to deal with the crisis. Therefore, the Left should avoid becoming a liberal mainstream Left. This is not a battle of "-isms." This crisis raises questions about the hegemony of social interests, which is crucial in responding to the crisis.
Although the ecological crisis has temporarily faded from public discourse, the epochal challenge it presents remains. Alternative choices based on the interests of the majority must link the resolution of this severe crisis with a social-ecological transformation. The decisive criterion is not reaching consensus among the broad goals already existing in various sectors of Europe, but forming an agreement on the instruments for achieving those goals. The issue lies in the power balance between institutions and classes. We must have the courage to explore topics such as the new role of the state, the socialization of property and the financial industry, capital controls, economic democracy, and the improvement of the status of wage-earners at the corporate, municipal, national, and EU levels. This is our only way to utilize the opportunity to expand social space within the context of a new hegemony.
03 Market, Democracy, Dilemma At the end of 2019, the European Commission and the European Parliament pledged to hold a conference with citizen participation to discuss the future of Europe. Due to the COVID-19 pandemic, this process was indefinitely postponed. Since the financial crisis, a crisis of integration has been the theme of European policy. In 2017, the European Commission published the White Paper on the Future of Europe, revealing five scenarios for the EU's future; its primary author was Jean-Claude Juncker, then President of the Commission but now increasingly forgotten. In September of the same year, French President Emmanuel Macron proposed the "Initiative for Europe" in a keynote speech at the Sorbonne, calling for the elimination of unemployment, ecological transformation, the implementation of financial transaction and digital taxes, the establishment of minimum standard wealth tax rates, the promotion of social integration, a significant increase in the EU budget, and the democratization of EU institutions. In his call to rebuild Europe, Macron did not overlook various EU deficits! But shortly thereafter, when the German and French heads of government met in Paris for the 55th anniversary of the signing of the Élysée Treaty, the closing remarks made no mention of Macron's proposal. Consequently, before the European Parliament elections, the relevant discussions had already ground to a halt.
The "flagship projects" on which member states might reach an agreement are armament programs and the expansion of Frontex [2]. While military spending and measures against refugees are clearly feasible, the Banking Union remains stalled, as the financial obligation of large banks to fund European deposit insurance has been sidelined. The European Green Deal, proposed by the European Commission in 2019 to address the climate crisis, is similarly disappointing in its scope and methods of financing. The failure of the EU in social and climate policy is unsurprising, as the integration of capitalist states within the Union is primarily realized through the market, which naturally cannot satisfy the needs of society as a whole. Milestones in the EU's development, such as the Treaty of Rome, the Single European Act, the Maastricht Treaty, and the Lisbon Treaty, have continuously deepened the market-economy character of the Union. Even Macron referred to the domestic market as the "true soul of Europe," a sharp contrast to the innovative posture he struck during his speech at the Sorbonne. However, the proposition of integration via the market encountered resistance from "anti-social tendencies" from the very beginning. This resistance arose because European institutions prioritized political decisions of central planning, advocating for the integration of the economy into policy goals through state and supranational institutions. Therefore, the history of European integration is also a history of conflict between market integration and centrally planned political decision-making. In 1951, the establishment of the European Coal and Steel Community (ECSC) replaced the International Authority for the Ruhr, which had placed West Germany's heavy industry under Allied control after the war. Beyond achieving trade in heavy industrial products without tariff barriers, this move established High Authorities with extensive economic control. In 1984, the "politics-market" conflict reached its climax when the first directly elected European Parliament accepted the Draft Treaty Establishing the European Union, written under the guidance of Altiero Spinelli. It stipulated that the European market economy should be subordinated to social objectives, specifically including the realization of full employment, overcoming inequality, environmental protection, and cultural progress. Furthermore, initiatives to further strengthen and develop EU cooperation turned toward the European Parliament, yet in this process, the powers of national parliaments were not restricted or constrained. What followed ran contrary to Spinelli's aspirations. In 1985, heads of state and government adopted the Single European Act, which set the goal of rapidly and comprehensively achieving the European Internal Market, marking the victory of the market-economy orientation. In 1992, following the consolidation of neoliberalism and fundamental changes in the global economic and geopolitical landscape, heads of state and government met for a summit in Maastricht and adopted the now-famous "convergence" criteria to establish the Economic and Monetary Union, consolidating this victory. In 2005, heads of state proposed a new conception in the Draft Treaty establishing a Constitution for Europe, but it was ultimately rejected by the French and Dutch publics, and conflict erupted once more. Two years later, because the Lisbon Treaty bypassed popular referendums, the failed constitution was finally adopted at an intergovernmental conference; however, this did nothing to enhance the standing of the EU.
The latest climax in the struggle between market and democracy occurred in 2015, when the Syriza [3] government in Greece attempted to break free from the shackles of neoliberal austerity policies. But its efforts to seek alternative solutions to the crisis were suppressed by creditors, and the harshness of the austerity program imposed upon it terrified many Europeans (schemes implemented in Ireland and Portugal were even more severe), while simultaneously reawakening long-standing divisions within the radical left regarding its attitude toward the EU.
The question that both the European Left and various national left-wing movements must answer is what scale and form European cooperation and integration should take in order to combat contemporary capitalism. The answer depends on different focuses regarding Europe as a whole and individual countries, as well as the developmental situation in each nation.
The right of states to withdraw from the EU or the Eurozone is beyond doubt. Although fragmentation trends are growing, an unordered breakup of EU member states or other components is unlikely, at least under conditions of peace. A more probable scenario is the re-emergence of old conflicts between the German-led Central European bloc and the French-led Southern and Western European blocs. Whether the new European order constructed after such a conflict would favor the stability of social and political relations in various countries remains highly questionable.
In fact, the long-term disillusionment of many countries toward the EU has evolved into a conviction that the Union is "unreformable." We cannot ignore this change in sentiment, nor can we use compromises to paper over differences in perspectives on the EU, as this constitutes the starting point for current strategic discussions.
If the strategic task is to restore popular sovereignty—to respond with solidarity rather than mutual antagonism when facing financial market processes—then we must defend the people's democratic self-determination and their control over the state. This means that every progressive government has the right to break through those rules that hinder its national and social well-being. Consequently, we must call for the Stability and Growth Pact, which lost its vitality during the pandemic crisis, not to return once the crisis ends, and it must be abolished. In its place, EU financial instruments—the European Central Bank, the European Investment Bank, and the European Stability Mechanism (ESM)—must fund national programs to reconstruct healthcare and social systems and complete the ecological transition of the economy.
By mobilizing the necessary fiscal capacity beyond the scope of the current EU budget to strengthen social infrastructure, rebuild European industry, achieve ecological transition, eliminate regional disparities, and establish efficient energy and transport networks—all of this requires long-term, resilient supranational cooperation. To prevent market mechanisms from interfering with this process, fairly close supranational political cooperation is also required.
The Left should construct a strategic plan for this cooperation. Today's EU is a strange hybrid: on one hand, it is a free trade and single currency area with a bureaucracy that has proven unable to take effective action in a crisis; on the other hand, the parliament lacks the power to manage the market and the bureaucracy. This raises the question of political hegemony. As a force seeking hegemony, the European Left also needs to remain active on the European political stage. To achieve political hegemony, it is necessary to fight for the expansion of democracy. The liberal view that the European democratic deficit lies in a lack of European public opinion is untenable. More accurately, the influence of European civil society, trade unions, and social movements on European policy is limited. Beyond structural neoliberalism and the undemocratic character of the EU, the decisive factor remains the hierarchy of member states determined by economic and political weight.
One could say that the fundamental strength of the Left originates from the nation-state. In any case, it is strategically necessary to protect it from the destructive effects of a market economy that has lost control. It must be emphasized that in all imaginable systems of European cooperation/integration, nation-states remain economic and political forces with their own rights, and will remain so for the foreseeable future. This needs to be reflected in a system with clear, transparent, and effective jurisdictions, with checks and balances between these jurisdictions and the EU. However, due to the uneven political development and influence of various countries, the excessive weight of certain powerful states in European policy becomes a brake on social change. This has led us into a stalemate.
The only way to overcome this stalemate is to diffuse democratic principles to all levels of decision-making, which means that at the European level, diverse political parties need to cooperate or compete with one another to increase their influence. In the long process of reconstructing Europe in the post-capitalist era, one of the necessary steps is to establish a sovereign, freely elected parliament that interacts with trade unions and social, ecological, and civic movements. The European Parliament must replace the European Council—composed of heads of state and government—and become the decision-making center for EU affairs. A key factor in this is the intervention of political parties at the level of European institutions. The Party of the European Left should seriously study ways to improve European institutions and call for various parties to participate in European Parliament elections based on European lists.
04 The Dilemmas of Pan-Europeanism
Brexit will not only change the lives of 3.5 million EU citizens in the UK and 1.2 million UK citizens in EU member states, but also the entire EU. The UK is the EU's third-largest economy and one of the five permanent members of the UN Security Council. The far-reaching trade agreements it is negotiating in parallel with the United States reflect the geopolitical significance of Brexit. In negotiations, the EU has emphasized trade and competition, while the UK appears not to prioritize these aspects. The European Commission holds unrealistic expectations regarding the UK's degree of dependence on the EU. Thus, we cannot judge the Commission's actual negotiating capacity based solely on this.
A key demand from the UK side is that its financial services firms should continue to have unhindered access to the EU market. This would come at the expense of other British sectors, such as fishing. Furthermore, Brexit has exacerbated disintegration tendencies within the UK, with Scotland planning an independence referendum to re-join the EU, which will fuel existing separatist tendencies elsewhere in Europe. At the same time, the danger of an outbreak of hostilities in Northern Ireland cannot be underestimated; Brexit may jeopardize the fulfillment of the Belfast Agreement.
Whenever a treaty for a UK-EU partnership is concluded, it must undergo a complex approval process by the European Council, the European Parliament, and the UK Parliament, and may also require ratification by the parliaments of EU member states. This process could extend into 2021 or even longer. The Left certainly favors a fair and just agreement between the UK and the EU. But the success of negotiations is not guaranteed; if negotiations break down amidst mutual recriminations, it will only benefit nationalists on both sides of the English Channel. Brexit reminds us once again that Pan-Europeanism is not limited to the actual borders of the EU; we must view the actually existing Union in a brand-new way.
The EU is not a universal European entity, nor will it be for the foreseeable future. EU member states face obvious fiscal deficit crises, making it impossible for the EU to address European cooperation or integration issues in a monopolistic form. Therefore, the view that the EU's "final state" is one of constant expansion modeled after the United States is actually misleading. The recent strategic failure of the EU in Ukraine has already demonstrated the dangers of this incremental expansion model.
05 Europe's Position in the World
The 2020 COVID-19 pandemic clearly demonstrated that the greatest threat facing humanity is not war, but social and ecological issues; people worldwide are increasingly aware of this problem.
Protection against military aggression is first and foremost a political task, which includes strengthening international law and cooperative organizations. The withdrawal of the US and Russia from the Intermediate-Range Nuclear Forces Treaty (INF) and the impending expiration of the Strategic Arms Reduction Treaty (START) will trigger the danger of nuclear weapons of mass destruction spinning out of control, posing a persistent threat to Europe. Ending the arms race and addressing the ecological crisis require international cooperation on a global scale, and Europe must redefine its role. This requires a revival of those cooperative mechanisms that have, in the public eye, disappeared behind the EU: the UN Economic Commission for Europe (UNECE), the Council of Europe, and the Organization for Security and Co-operation in Europe (OSCE)—to which all countries on the continent belong.
The COVID-19 pandemic and the global ecological crisis show that the neoliberal world market project has failed as a model of civilization, causing heavy losses not only in the Global South but also in the developed world, including Europe. Yet at the same time, necessary global transformations are hitting a wall in an unstable and turbulent global political and military order. In this context, we must interpret Donald Trump's presidency more as a consequence of the crisis of US hegemony than its cause. While Trump attempted to use "scapegoating" [4] to distract from his government's poor response to the crisis and accused China of a lack of cooperation, the Financial Times reported on ongoing cooperation between Chinese and American scientists in investigating the origins of the virus. Shortly thereafter, Trump even turned his sights on the World Health Organization. Under current expanding tensions, the EU must remain vigilant regarding the unstable and irrational stance of the United States.
Ironically, just as the COVID-19 outbreak in Europe highlighted the importance of strengthening international cooperation, the European Commission attempted to cater to the aggressive mindset from across the Atlantic by declaring China a "systemic threat." Although we by no means advocate for an uncritical position of support toward China's actions—and it remains difficult for a pluralistic European Left committed to the values of democratic socialism to fully identify with China's ideological model—China is nonetheless not only the world's most populous country but also the European Union's largest trading partner. Furthermore, the political and military conflicts induced by the confrontational policies of the U.S. President jeopardize both global trade and the global cooperation necessary to address the ecological crisis.
Consequently, Europe requires a realistic approach based on the interests of the people. China is a global power and exerts a significant influence on Europe. Rather than viewing China’s cooperation with Central and Eastern European countries [5] and its dialogue with EU member and non-member states as a threat, the EU should grasp the political and economic opportunities therein to explore new forms of international cooperation. The EU-China Summit, originally scheduled to be held in Germany in the autumn of 2020, was postponed due to the COVID-19 pandemic. This summit should not merely be a diplomatic event; it should also serve as an opportunity for a broad discussion on how these two major forces can develop diplomatic relations and build a more peaceful, equal, and unified world.