Ana Botin: the EU’s shared purpose requires shared financing
The writer is executive chairman of Santander
Thousands of deaths. A record rise in unemployment. The statistics tell the grim story of the impact of coronavirus on Spain and elsewhere. Societies’ fabric and political bonds are being stretched. This is the EU’s biggest test yet.
The European Central Bank and regulators have implemented important and timely measures to ensure that there is ample liquidity across the EU by buying public and private debt. The European Commission is creating a shared €100bn fund to safeguard employment.
But these steps are sadly the exceptions to the rule. All too often, national interest has trumped the need for Europe-wide action. Nation states have defaulted to their traditional positions, exposing the political faultlines across the continent.
So now, at the very moment the EU is facing one of its biggest economic — and political — challenges, many in Europe seem to have forgotten a basic principle on which the bloc has grown and thrived. For more than six decades, a shared sense that we are stronger by acting together has contributed to the advancement of peace, reconciliation, democracy and human rights. Our achievements rest on that principle.
When EU finance ministers meet today, they must agree on a common plan. Failure to act together now may well undermine the public’s faith in that approach, and with it all that has been achieved. A poll last month found that 88 per cent of Italians feel Europe is failing to support Italy in the crisis, while only 4 per cent believe that it is doing enough. Two-thirds of Italians regard EU membership as a disadvantage.
The longer the lockdown continues, the greater the size of the “bridge financing” needed. A small or medium-sized enterprise with three or four workers — the vast majority of companies across Europe — cannot survive for more than a few weeks with no revenues. Banks want to help business — and we are doing all we can. We have conserved capital precisely for systemic shocks like this. And Santander has led the way in cutting senior executives’ compensation and scrapping dividend policy. This will give us even more firepower. But banks cannot do it alone.
This is why we need a new EU-wide scheme, based on a simple concept: we are all in this together. We are all one Europe, and we need to avoid what happened in 2012, when one of our SME customers in Valencia had to close shop because it did not have the same access to financing as a competitor in Munich, despite being equally productive.
That situation was repeated all over Europe; Spanish citizens may not accept such tough medicine again this time. At times like these, those countries with the broadest shoulders should carry more of the burden.
We need a national government guarantee in every country for all companies, but especially SMEs. The German scheme announced on Monday places cash in the hands of businesses, with banks helping to ensure the funds are delivered now. This is the benchmark. For those EU members that cannot offer programmes of this scale due to fiscal constraints, Brussels should step in to make them possible. We must ensure money gets to people and businesses who need it in a way that is simple, direct and fast. That is the imperative.
Alongside this, we need to get people back to work quickly. The immediate priority must be to accelerate testing for the virus. Europe’s network of businesses should be asked to test workers, so we can identify who has had it and who can safely return to work.
Our world will not return to a pre-coronavirus existence. We need to think fast and think big. If not a coronabond, maybe it is time to consider a common bond, backed by the EU.
Organisations — be they private or public — are tested in crises. When faced with tough decisions that require compromise and radical action, it is quickly apparent whether shared principles are truly shared, and common values are really held by all.
The EU now faces such a moment of truth. The test is very simple: do all member states believe that we are “in this together”? I believe in Europe and want the EU to prosper once this crisis has passed. So I hope the answer is “yes”. But the clock is ticking.