The EU is undermining its democracies while funding its autocracies
Mixed message risks undermining European project.
R. Daniel Kelemen is professor of political science and law at Rutgers University. Jacob Soll is university professor and professor of philosophy, history and accounting at the University of Southern California.
As the European Union struggles to agree on a joint response to the coronavirus crisis, calls for solidarity are colliding with the reluctance of wealthier northern states to come to the aid of struggling states in the south.
And yet, these so-called northern frugals — which includes Germany and the Netherlands — seem perfectly content to finance autocratic, anti-democratic governments in Hungary and Poland.
This hypocrisy — claiming “moral hazard” when it comes to Southern Europe, but continuing to shower generous subsidies on governments flouting democratic values — is sending messages that could undermine European integration for a generation.
If the EU wants to come out the other side of this pandemic stronger and more united, its leaders urgently need to reverse course and show more solidarity with those struggling most to cope with the consequences of COVID-19 while standing up to the autocrats it has been appeasing.
The rise of authoritarianism in Europe threatens the EU more than deficits in the south ever have.
The first step to recovery for the EU is to abandon the misguided narratives that have animated these debates.
The politics of fiscal solidarity in the EU have for too long been poisoned by a narrative that depicts it as a morality play, pitting frugal “northern saints” against profligate “southern sinners.”
There is a popular myth in the north that the region’s taxpayers have been saddled with bailing out the south. Quite to the contrary, the so-called bailouts have been enormously profitable.
Creditor countries, such as Germany, earned billions in interest payments from loans made to Southern European debtor countries during the eurozone crisis. They also benefited as the flight to safety during the crisis led to sharp decreases in their borrowing costs.
More generally, membership in the EU’s single market and the euro has served the creditor countries’ interests well. Outside the eurozone, countries like Germany would have seen their currencies appreciate dramatically and their exports suffer. Instead, the euro helped make them more globally competitive.
What’s more, southern governments have in fact undertaken enormous fiscal consolidation since the eurozone crisis. Ironically, or, perhaps instructively, austerity measures imposed to satisfy the EU’s fiscal rules included severe cuts to health care systems that have left them unprepared to cope adequately with the coronavirus pandemic.
Leaving countries like Italy and Spain to respond to the crisis alone will saddle them with unmanageable sovereign debt, further undermining their competitiveness. And yet this is essentially what the supposedly saintly northern countries are ready to ask of the south.
When it comes to the defense of democratic values in countries like Hungary and Poland, a similarly false narrative has taken hold. Apologists for inaction claim that while these developments are unfortunate, it is inappropriate for the EU to intervene in domestic politics — and that, in any case, the EU lacks the necessary tools.
This logic is particularly risible given that some of the governments in the European Council who claim the EU cannot intervene to defend democracy are the same ones who have demanded for years that the EU intervene with a heavy hand to impose austerity on the south.
The truth is that the EU has a compelling interest in defending democracy at the national level and powerful tools at its disposal.
The rise of authoritarianism in Europe threatens the EU more than deficits in the south ever have, as defiance of the law by autocratic regimes in Hungary and Poland threatens the legal order that holds the union together.
Not only can these countries undermine the EU from within, they support other far-right, authoritarian parties across the EU — including in Southern Europe — and inspire aspiring autocrats in other states to follow their playbook.
The EU has enormous financial leverage over the governments in Budapest and Warsaw. It simply chooses not to use it. Poland is consistently the biggest net beneficiary of the EU’s budget. For instance, it netted €12 billion in 2018. Hungary ranked just behind Poland as a beneficiary of EU largesse, netting €5 billion in 2018, more than 4 percent of its GDP.
During the eurozone crisis, states seeking bailouts from the European Stability Mechanism had to agree to close supervision by the Troika. By contrast, the generous structural funds countries like Poland and Hungary receive from the EU come with few strings and little monitoring, enabling autocratic leaders to misuse them to finance their patronage networks.
A Union that imposes austerity on democrats while it subsidizes autocrats sets itself on a road to perdition.
The EU has the authority to temporarily suspend funding regimes that violate the rule of law. Instead, it keeps the money flowing. While Hungarian and Polish citizens deserve support, EU funds should be promoting democracy and civil society, not bolstering authoritarian regimes and lining the pockets of their cronies.
In March, just as the regimes in Poland and Hungary were taking new steps to dismantle the rule of law and democracy, the EU announced plans to redirect unspent structural funds to the coronavirus response, sending Poland an influx of €7.4 billion and Hungary €5.6 billion. Meanwhile Italy, which was burdened with far more COVID-19 cases and deaths, received only €2.3 billion.
It is high time the EU gets its priorities straight. A Union that imposes austerity on democrats while it subsidizes autocrats sets itself on a road to perdition.