Of course, it is Europe that will continue to suffer the worst economic consequences of the war in Ukraine. The greater proximity to the scene of the conflict and the closer trade and energy links are the most obvious explanations, but also the greater commitment that the EU is showing by reinforcing its new personality on the global stage, including the commitment of resources. Something sufficiently explicit since the emergence of that other trauma that was and continues to be the pandemic. Not only is it difficult to overlook this greater application of the European institutions in the management of global crises, but its economic importance will undoubtedly be favorable in the medium and long term.
It is a fact that, perhaps more explicitly than in other economies, the succession of economic indicators, and the expectations deduced from some of them, point to a clear interruption in the recovery. They continue to be subject to an unequivocally adverse global environment, especially for the definitive normalization of the international production of goods, and its logistics, to which the particular complications that have recently arisen in the Chinese economy contribute in a very significant way.
We are facing a deterioration in the living conditions of the majority of European citizens without the room for maneuver of economic policies allowing its rapid neutralization. The national public budgets do not have much more room and the ECB’s monetary policy is picking up the expansive candles maintained during the management of the no less singular previous crises. Faced with these adverse conditions, the EU is carrying out an unprecedented deployment of actions, aimed at managing, but also at laying preventive foundations, at strengthening a greater federalization of responses.
The evidence has once again been reinforced that Europe, the strengthening of its integration, the maturity of its cooperation mechanisms, its ability to influence the improvement of well-being, are significantly enhanced in times of adversity. It is in those crises that are truly threatening, even to community identity itself, when the EU generates responses that break inertia and transmit more directly cooperative impulses in the management of contemporary crises, but laying the foundations to address a more complex globalization dynamic.
The decisions adopted in response to the pandemic and the war in Ukraine represent advances in areas such as fiscal coordination that are likely to federalize their use for the management of other problems. The creation of the Next Generation fund and its capture directly in the financial markets by the European institutions is the most emblematic episode, but it is not the only one. Actions against the invasion of Ukraine have been swift and unanimous in all areas in which they have been raised, from economic sanctions to refugee management, through the strengthening of defensive cooperation.
It is true that the provision of federal response mechanisms in the face of exceptional situations could have been detected in a preventive manner, as has been the case with the energy or food vulnerability revealed by the Russian invasion of Ukraine. But once again the answer is being correct in terms of strengthening the foundations of integration. The package designed to deal with the energy crisis released in the middle of this month could have been designed long ago, and in fact, some of its elements already were. It has been necessary for more than half of the rise in inflation to be the exclusive responsibility of the increase in energy prices, as well as the highest rise in German industrial prices in April, the highest since 1949. Some of the highly relevant decisions incorporated in the energy package are basically aimed at reducing dependency and strengthening the provision of common mechanisms, such as gasification plants that enhance the connection between European economies, without neglecting that unequivocal commitment to investment in renewable sources. Putin has illustrated the EU’s energy vulnerabilities, but has also accelerated the provision of clear safeguards in this regard. He is also accelerating the reduction of the financing of the war from those 100,000 million euros per year that the whole of the EU transferred in payments for imports of fossil fuels.
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The food crisis stems from the fact that Ukraine is the world’s largest grain exporter. The most important consequence will not be so much the absence of cereals as the evolution of their prices and the impact on an inflation rate that has already become the main drag on growth. But it should be borne in mind that, thanks to its agricultural policy, the EU is an important breadbasket. Despite the fact that its purchases of wheat and corn from the Ukraine are considerable, the balance in cereals is clearly in excess thanks to that cushion that the CAP allows with its traditional claims of self-sufficiency. But also because of the support actions for the exit of the immobilized grain in the Ukraine due to the Russian blockade of the Black Sea ports.
Cooperation and integration dynamics have also been strengthened in defense matters, another area in which for years there has been warning of the advisability of greater cooperation. And, of course, the reaction has been exemplary in the management of refugee movements.
The EU is doing all of this while at the same time strengthening its autonomy in a geopolitical scenario where hegemonies are changing significantly. The final results cannot be fully identified, nor can their eventual economic consequences. But it is a fact that Europe is reinforcing its predicament.
As it could not be otherwise, Spain has shown signs of supporting this dynamic of greater and better quality of integration. It did so from the start of the pandemic by proposing initiatives to coordinate the purchase of medical supplies or the most ambitious ones that helped to found the Next Generation EU, but also in subsequent decisions related to streamlining procedures or the eventual modification of the treaties. That the Commission itself illustrates with Spanish initiatives some advances in the realization of community investment plans is an objectively favorable fact. It shouldn’t hurt us to admit — today it is with this government, but tomorrow it may be the same with another — that these signals are unequivocally favorable to the necessary participation of private, Spanish and foreign investment in these modernizing projects.
They are also necessary conditions to exorcise financial risks such as those that occurred in the financial crisis of 2008. The differential attention that the ECB will pay to the risks of financial fragmentation, to the excessive differentiation in the prices of sovereign debt within the monetary area, it is also a reinforcing element of that safety net in that complicated transition to lower rates of economic growth with higher interest rates.
For the Spanish economy, this close link to the dynamics of European decision-making has been a successful bet. And in the maintenance of the committed reformist tensions, this condition of a country in the front line will continue to be validated by the commitment to greater economic integration, but also political.
Europe is today more attractive and profitable than when it tried to combat the 2008 crisis. Its credibility is greater and, most likely, its leading role in the new global scenario will be. These assumptions do not neutralize the short-term economic forecasts that the Commission has just released, but they allow them to be assumed as a lesser evil. The medium term is hopeful, also for Spain if it continues to strengthen its anchorage.
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