Feb 26, 2024

The EU Is Close to Another Hamiltonian Moment

In 2020, the European Union spent big and agreed on a common vaccine strategy to survive the pandemic. Today, French President Emmanuel Macron believes EU cash and a common plan to arm Kyiv is what is needed to keep Russia at bay. 

An illustration of Emmanuel Macron at the Arc de Triomphe
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One of the characteristics of the European Union is that before it achieves its greatest successes, it usually lives through absolute low points.

Remember how in 2020 EU solidarity faltered within days of the coronavirus arriving on the continent? Italy was the first European victim of the pandemic. In late February, Rome asked fellow EU countries to help with masks. Paris responded by nationalizing all medical protective equipment. This prompted Berlin to ban the export of masks. When push comes to shove European’s motto seemed to be “None for all, all for themselves.”

But then followed one of the EU’s greatest moments. By July 2020, two truly historic things had happened: One, EU leaders set up the €750 billion COVID-19 recovery fund. For the first time, Europeans agreed to shoulder the financial costs of a major crisis together. Two, the European Commission was tasked with buying vaccines for all Europeans, making sure EU residents from Lisbon to Tallinn would get the jabs quickly.

Four years later, in February 2024, there is again much doom and gloom in Europe. Ukraine is on the defensive. Kyiv lacks ammunition and arms. In the United States, Congress is blocking a $60 billion aid package. Europe is still producing too little  artillery rounds. It almost seems as if the blame game has already begun. German Chancellor Olaf Scholz publicly criticized other EU members for delivering too little military aid to Kyiv.

Yet, 2024 might turn out to be another 2020. At their last meeting before the summer break, the chances are that the EU leaders will pat themselves on their shoulders amazed that they just agreed to set up a €100 billion EU fund to boost Ukraine and European defense.

Preparing the Terrain

In 2020, Macron’s push for the COVID-19 recovery fund worked for three reasons.

First, in public, Macron did not put himself at the helm of the campaign. It was then Italian Prime Minister Giuseppe Conte who was giving live interviews to the website of Germany’s tabloid BILD, asking for the EU to take on common debt to help his country fight the pandemic.

Today, it is Estonia’s Prime Minister Kaja Kallas who is crossing the continent arguing in interviews that the EU should raise €100 billion in debt to support Kyiv and boost the continent’s defense capabilities. In his speeches, Macron calls for a “collective step change” by Europeans to save Ukraine. But he always emphasizes that the fund he supports is really Kallas’ idea.

Second, in 2020 Macron was successful because he cobbled together a coalition of nine countries backing Conte’s campaign. Most importantly, the coalition included countries with low public debt levels, such as Luxembourg and Slovenia. This denied Berlin the possibility to dismiss the initiative as one from the EU’s over-indebted south.

Today, Macron is again trying to assemble a group of EU nations that defies easy classification. The French president is spending a lot of time talking to Poland and visiting the EU’s Nordic countries. Perhaps Macron will even ask the United Kingdom, which left the EU in 2020, to associate itself with the plan, as Michel Duclos from the Institut Montaigne proposes.

But what is sure: The action is just about to start.

This Monday, Macron gathered 20 EU heads of state and government in Paris, including Chancellor Scholz, to discuss how to help Ukraine more. In March, European Commission President Ursula von der Leyen will present her EU defense strategy. Last week, the she previewed the strategy, saying “We need more investment, more coordinated, and more European.” 

Normative Power of the Factual

Third, the COVID-19 fund happened because alternative options had already proved to be a failure. EU leaders first tried to help overindebted Italy with cheap loans. But it was soon clear that only grants would calm financial markets. In the face of the “normative power of the factual” the ideological opposition to EU debt faltered.

The same may well be happening now. Allowing the European Investment Bank to invest in defense is good. Topping up the European Peace Facility that reimburses EU member states for arms donations to Ukraine is better. But just as loans did not stare down markets in 2020, these half-measures are simply not enough to stare down Russian President Vladimir Putin in 2024.

The good news is that over the past few months Macron and other EU leaders have begun to realize that Poland was right all along. Putin thinks in the long term. He won’t stop at Ukraine. In a not too distant future, China and the US might very well face off each other in the Pacific. This is when Putin will strike again.

Beyond helping Kyiv resist today, the EU thus has to get ready to defend its members tomorrow. And every country doing its own national Zeitenwende is no replacement for collectively building that European pillar of NATO. If you plan and spend together, you move from an addition to a multiplication of production and defense capabilities. After all, three plus three is six. But three times three is nine.

It really is a no-brainer. Yet world history is full of plans that seemed inevitable, but never made it to reality. Ultimately, as in 2020, much comes down to Germany.

How to Get Berlin on Board

Within the German “traffic light” coalition, the Greens already signaled they are on board. Chancellor Scholz and his Social Democrats (SPD) are more difficult. Scholz’ “name and shame” strategy of criticizing others for providing few arms to Ukraine reveals that Scholz has an odd idea of European leadership. But more importantly, the strategy won’t go anywhere.

There are reasons why notably the southern Europeans, who have starved their militaries in recent decades, can’t deliver. The French for their part refute the argument that they are giving little. It is hard to know for sure, as Paris is not publishing any data on its arms transfers to Kyiv. Paris is, however, right to point out that Ukrainian President Volodymyr Zelensky has never publicly criticized France for being hesitant or stingy on arms shipments.

Still, the German chancellor can change tack. In 2020, when he was finance minister in Angela Merkel’s government, Scholz was initially opposed to the French-Italian push for a pandemic recovery fund. But once momentum built up, he firmly swung behind the plan. Scholz even celebrated the naissance of the fund as Europe’s “Hamiltonian moment.”

There is another reason why Scholz might be won over. If the EU would finance Ukraine aid, this would free up fiscal space for his coalition in the national budget. €8 billion are earmarked for Ukraine in Germany’s 2024 budget. With elections in 2025, Scholz could use every euro to deliver a fiscal boost to a stagnating economy. (Moreover, Scholz is famous for promising the Germans another Wirtschaftswunder. Well, the 1950s and 1960s “economic miracle” was not only fueled by Germans buying washing machines, but also by Bonn spending big to build a new army from scratch to confront the Soviet threat.)

And what about the third coalition partner, the pro-business Free Democrats (FDP)? With them, it all comes down to opposition leader Friedrich Merz of the Christian Democrats (CDU/CSU). Merz regularly criticizesScholz for prioritizing liaising with the US instead of also building a trio with France, the UK (and now Poland?) to coordinate Ukraine policy. Macron has noted this and recently invited Merz to the Élysée Palace. In an op-ed this weekend, the CDU leader even called for an EU defense union and more arms “made in Europe” (music to French ears). 

Thus, if Merz decides to swing behind the plan, the FDP can probably be won over, since the danger of the CDU attacking it on fiscal policy grounds would then be diminished.

Déjà Vu

There are plenty of reasons to be skeptical of Macron’s calculated optimism. Common debt issuance by the EU has always been a big no-no for Merz, it might prove a step too far. In the Netherlands, far-right politician Geer Wilders, while unable so far to put together a government, is certain to want to veto such a fund. Hungary’s Viktor Orbán has been arguing for years that the EU must build its own army, but he might again pose an obstacle.

But one thing is certain: The chances are never so high that the EU is gearing up to surpass and surprise itself as when the commentariat turns gloomy about its future. Sure, a €100 billion fund would by no means be enough to get Europe ready to defend itself. But it would be a serious start … and another Hamiltonian moment. History doesn’t repeat itself, but let’s hope for a déjà vu.

Joseph de Weck is INTERNATIONALE POLITIK QUARTERLY’s Paris columnist and author of Emmanuel Macron. The revolutionary president.

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