Who is in charge of the clattering train? That question, often put by Winston Churchill, needs to be answered with the utmost urgency by the European authorities if they are to avert disaster.
Someone has to take charge. Christine Lagarde, the President of the European Central Bank, instead said during yesterday’s press conference in Frankfurt:
“I really would like all of us to join forces, I very much hope that the fiscal authorities appreciate that we will only deal with this shock if we come together.”
In other words, they have not yet come together. Lagarde also made this unguarded comment:
”We are not here to close spreads, this is not the function or the mission of the ECB. There are other tools for that and there are other actors to actually deal with those issues.”
She implied that the ECB is indifferent to the widening gap between Italian and German bond yields. Later she tried to repair the damage by saying: “I am fully committed to avoid any fragmentation in a difficult moment for the euro area.”
No doubt she is fully committed, but what can she actually do?
Meanwhile in Brussels, Ursula von der Leyen, the new President of the European Commission, promises on Twitter to “use all the tools at our disposal” to contain the spread of the Coronavirus and ensure that the European economy weathers the storm.
But what are the tools at her disposal? In the words of Ambrose Evans-Pritchard, who knows Brussels well:
“The EU’s legalistic spending machinery will limit any fiscal punch and slow the roll out of crisis measures. There are still no eurobonds, no shared budget, and no mutualised pan-eurozone deposit insurance for banks, which leaves vulnerable Italy in the worst of all worlds: deprived of sovereign economic instruments yet without EU fiscal support to compensate.”
No wonder the Italians, doing all they can as a nation to meet the crisis, have chided the EU for being slow to come to their aid.
The usual assumption, when Europe is in crisis, is that Germany will mount a rescue mission. But in this crisis, Angela Merkel has so far shown zero leadership.
Her natural game is to hold back, to wait and see which way things are moving, to intervene only when her services are acknowledged to be indispensable.
The German tradition of consensus politics entails long periods of immobility, with decisive action out of the question until everyone has talked the subject through with impressive thoroughness, but at almost unbearable length.
Some of the federal states – Bavaria, North Rhine-Westphalia, Schleswig-Holstein – have decided the epidemic demands action. Others, such as Berlin, refuse to see the need for a significant response.
Michael Müller, the Mayor of Berlin, is well aware that many Berliners are more worried by the climate crisis, and reckon the Coronavirus is “not a serious problem“, for it will only kill old people and those who have cancer, and might even do the planet some good.
Von der Leyen recently met Greta Thunberg, and was reproached by her young visitor for unveiling a climate law which will only make the EU carbon neutral by 2050.
Meanwhile the Dublin Government has decided to shut schools, universities and childcare facilities until the end of March: noticeably different to the sombre but more gradual approach commended yesterday afternoon by Boris Johnson and the British Government’s scientific advisers.
Different nation states can and do vary in their responses to the epidemic, and those in charge will be held accountable for the decisions they are now making, especially if those decisions turn out to be wrong.
If Donald Trump’s attempts to downplay the danger prove mistaken, he will lose in November.
But who will be held responsible in the EU? No answer to that question can be given, for no one is in charge.
At the end of the poem quoted by Churchill comes an answer of sorts: “Death is in charge of the clattering train.”