George Pagoulatos GEORGE PAGOULATOS

Health crisis speeding up developments

COMMENT

A woman on an electric scooter wearing a protective face mask buys eggs at the Varvakeios market in Athens, Tuesday.

TAGS: Coronavirus, Politics, Economy, Finance

We are experiencing what experts agree is the biggest pandemic since the 1918 Spanish flu and the worst economic crisis since the Great Depression. It’s an almost impossible combination, especially if you’ve just emerged from the biggest recession since World War II. Confinement intensifies the experience, even though its scenes play out only on the screens that connect us to the outside world. Days seem to drag along, yet we count the time in weeks.

The coronavirus crisis has become the ultimate accelerator. Procedures that once inched along have suddenly adapted to the aggressive pace of the virus’ spread. In just a few short weeks, our once ill-reputed state is being equipped with effective crisis management mechanisms and the country with digital systems and functions that would have otherwise taken years to implement.

Our habits are adapting with equal rapidity. Teleworking has become the new normal. Millions of people across the globe have discovered that they can hold professional meetings, conferences, classes and lectures on their computers, without having to use a car or public transportation. The advantages in saving time, money and the environment are so evident that they must be preserved. Like every leap in a technological adjustment, the initial transition is the hard part, and we’re already over that. Teleworking will become an important collateral advantage of this terrible pandemic, just as the expanded use of plastic money and internet banking arose out of capital controls.

In Europe, the seismic legacy of the last decade’s euro crisis left two deep rifts. One is in the incomplete architecture of the common currency, which demands damage control and a closer fiscal union. Supranational institutions like the European Commission and the European Central Bank have both called for such measures. The pandemic saw the ECB leaping to action, unleashing heavy artillery that took three years to mobilize in the last crisis. The pressure for a Eurobond (or European Recovery Fund?) is stronger than ever.

Another rift is forming in the euro’s foundations: nationalist reactions from forces that refuse to share any more of their powers with Europe or prefer to go it alone. The internal dynamic in Italy will fast head in this direction if the EU fails to embrace the most vulnerable economies. Once steadfast beliefs are being revised in an instant. Those who had hastened to dismiss the state as obsolete, the market as wise and self-sufficient and private initiative as the only lever to mobilize the economy are now having to think again. The Bank of England has agreed to directly finance the UK government to cover immediate needs and soon the developed world will remember that it has an until recently obsolete arsenal of post-war fiscal interventions and restrictions that can be used for dealing with the enormous debts lurking down the line.

On the other side of the Atlantic, US President Donald Trump’s smug unilateralism is accelerating two more developing trends. One concerns the efforts of China – a totalitarian yet effective regime – to fill in the void of American withdrawal and European division by adding soft power to its economic clout. The second concerns deglobalization. Multinationals have already started rehoming from China, while global production chains are being disrupted and “diversified.” Recent national and European efforts to become self-sufficient for basic medical and other products are accelerating this process.

The enemies of open societies, meanwhile, have received a new boost. Hungary’s Viktor Orban had already started consolidating his powers by undermining independent institutions like the media and justice. The pandemic provided him with the perfect excuse to promote himself into the role of the European Union’s first dictator. In neighboring Turkey, President Recep Tayyip Erdogan is unfolding his sultanic ambitions on an economy propped up on shaky ground that is giving way under the weight of the pandemic and leading the country to the brink of a crash similar to that two decades ago.

The crisis is allowing underlying weaknesses to spin out of control. But it is also awakening reflexes for self-preservation, accelerating the decision-making process and prompting actions of collective emancipation. It is challenging delusions, complacency and procrastination. It is revealing truths we refused to see and giving rise to aspects of our collective selves we never knew we had.


George Pagoulatos is professor of European politics and economy at the Athens University of Economics and Business and director general of the Hellenic Foundation for European & Foreign Policy (ELIAMEP).

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