Europe Before the Crisis: Joint Debt as a Solution?

The European integration process seems to be inseparably linked to crises. At least, that's how Jean Monnet, the founding father of the European Union, described it when he emphasized the necessity that Europe is the sum of its solutions from crisis situations. A conceptual scenario for the year 2025 hints at such a crisis on the eastern edge of the EU, where the US might hesitate to intervene. One solution could be agreeing on jointly issued debt – a tool that has previously been successfully born out of necessity. Yet ironically, France, Monnet's homeland, could pose the biggest hurdle in this. So far, there has always been a lack of willingness for coherent and farsighted reforms in stable times. Ambitious projects like the Banking Union have repeatedly been diluted by the refusal of wealthier countries to share their fiscal power – with Germany often leading the resistance. However, crises demonstrate: reforms are feasible. In 2012, the European Stability Mechanism was created. And in 2022, amidst the pandemic, the Union issued around 800 billion euros in EU-wide debt to support member states in rebuilding. With the possible election of Friedrich Merz as German Chancellor, the willingness for further joint financial projects could be hindered. His party traditionally opposes pooling EU resources. Combined with France's political uncertainty – triggered by Michel Barnier’s resignation – the risk is growing that the key eurozone players will act more cautiously. And yet: a comeback by Donald Trump in the White House could escalate things to the point where a breakthrough becomes possible. A potentially disadvantageous termination of the Russian war in Ukraine negotiated by him could prompt Kremlin leader Vladimir Putin to threaten other states on the NATO border. The EU would need to respond promptly and arm up. Another 500 billion euros in defense spending might be necessary to ensure security in Europe. Joint debt appears to be a viable solution. The current rise in defense spending to over 300 billion euros is mainly borne by a few states like Germany and Poland. Europe-wide efforts could distribute the burden fairly and provide economic advantages through joint procurement from defense firms. Problems will persist: Political power struggles and discussions on the allocation of funds between major defense industries like France and more cost-effective products elsewhere in the EU are to be expected. Countries with a pro-Russian stance like Hungary could argue that such measures violate European treaties. Nonetheless, France is one of the first countries to support the idea of a joint EU defense bond. Projects such as an intergovernmental fund, similar to the ESM, could pave the way. Even non-EU countries like the United Kingdom or Norway could join in, opening up additional sources of financing. The energy crisis of 2022 already demonstrated that the EU is capable of quickly changing its course. In the face of a new crisis, Merz could emerge as a convincing advocate for joint debt if the situation becomes severe enough. Jean Monnet could be proved right once again.