key: cord-0059517-g6bazun1
authors: Fukuda, Koji
title: European Governance After the Brexit and the COVID-19 Shocks: A New Phase of Solidarity and Integration in the EU from the Japanese Perspective
date: 2020-08-09
journal: Brexit and After
DOI: 10.1007/978-981-15-7969-1_9
sha: a798c578fc413e19c1a72e0699aa89b4b4a19eda
doc_id: 59517
cord_uid: g6bazun1

Britain’s decision to withdraw from the EU and the new coronavirus infection “COVID-19” has had a considerable impact not only on the EU itself but also on Japan and the rest of the world. The purpose of this chapter is to sketch out the dynamic between the EU and its member states in European Governance post-Brexit and after the global public health crisis, that accompanies the explosive spread of new-type pneumonia, to clarify the actual status of the EU. In response to COVID-19, the President of the European Commission, Dr. Von der Leyen is advancing reforms based on the Green Deal policy and the “Digital Europe” strategy will strongly promote. It is to be hoped that the EU’s capacity for integration and the relationship of mutual trust between the organization and its citizens. It will be fundamentally enhanced by the new framework of social solidarity. The current economic and public health crisis can only be effectively addressed by coordinated democratic and scientific solutions at global level in cooperation with citizens. Although the adoption of this range of measures will present the EU with an opportunity to regain a sense of solidarity and to rediscover its “raison-d’être”, it may also be one of the most arduous challenges that the organization has faced since its foundation.

The Brexit and the rapid spread of new coronavirus infection have had a considerable impact not only on the EU itself but also in Japan and the rest of the world. They have emboldened Euro sceptics in each of the union's member states, causing concerns of an anti-EU domino effect. European integration is a social experiment at regional level that has created a shared framework for globalization. As election results in various European member states have made clear, a split is developing between European citizens who support the unity or the EU, thus embracing globalization, and those who put their own nation first, anti-globalists who are opposed to European integration. In other words, in the EU forces promoting integration and favoring solidarity coexist with forces of resistance. This situation stems from the diverse nature of individual member state governments and domestic frameworks, which has created tension between supporters of integration and fragmentation.

The purpose of this chapter is to sketch out the dynamics between the EU and its member states in European governance post-Brexit and after the global public health crisis, that accompanies the explosive spread of new-type pneumonia, to clarify the actual status of the EU. With regard to further integration and consider the disparities and the poverty between nations and classes, caused by this social upheaval divided my paper into three parts.

First, in order to analyze the political and economic impact of Brexit and the COVID-19 (New Coronavirus Pandemic) on Europe, I will give a general outline of neoliberal globalization and European Integration from a new political-economy perspective. Second, I will discuss the trickledown hypothesis, labor market reforms, the issue of poverty, and the future of social solidarity in the EU, focusing on the communality of entities such as families and small regional societies. This approach does not merely focus on the relationship between national governments, shareholders, and employers but includes multiple stakeholders, bringing the distributive relationship between labor and management into the scope of consideration. Third, I will analyze the disparities within the EU single market, treating them, as a bundle of diverse frameworks, Finally, I will recommend a direction for the reform of EU integrated governance, including the adjustment and control of member states domestic frameworks, employment systems, social security and public health policy systems.

A consideration of the referendum results in Britain, which led to Brexit, 1 and the results of the Presidential and Parliamentary French elections, suggests that divisions among citizens, i.e., social cleavages between generations, regions, and income/education brackets, are common to these member states and are increasingly manifesting themselves, and that widening disparities and increasing poverty lie behind the rise of populism and the increasing incidence of home-grown terrorism. 2 The multiple risks facing the EU (the Eurozone crisis, the migration/refugee crisis, and the new coronavirus crisis, etc.) should also be considered in the light of social exclusion.

The UK instituted a system of social welfare with the Elizabethan Poor Law as its starting point and provided a model for the world with its creation of a welfare state following World War II. However, after Margaret Thatcher took power in 1979, she joined with other neoconservative political leaders, including the US President Ronald Reagan and Japanese Prime Minister Yasuhiro Nakasone, in advancing a process of neoliberal globalization. Seeking to realize "small government" in order to reduce government fiscal responsibilities, within the G7 framework. These leaders implemented policy packages designed to increase the international competitiveness of corporations, encompassing a number of structural reforms: deregulation, privatization, the reduction of corporate taxes, labor market reforms, the implementation of austerity budgets, and welfare cuts.

In 1985, Jacques Delors, President of the European Commission, published the White Paper "Completing the Internal Market", encouraging the EU to proceed on its course of neoliberal globalization. Appealing to "Social Europe," Delors stressed that both economic policy and social policy were essential to market unification, and that it would be necessary to realize a balance between the two. 3 However, the actual EU integration process gave most weight to economic policy, resulting in the focus on social values gradually receding. Against the background of intensifying neoliberalism, the EU and its member states embraced a philosophy of market fundamentalism, and an American-style concept, the supremacy of the shareholder, came to dominate the EU thinking.

With intensifying globalization under the regime of financial capitalism, there was minimal consideration of societal benefit as a whole, or for the public good. Share price-linked incentives, such as stock options that must be cashed within a fixed time period, spurred corporate managers to pursue short-term profits. With globalization as the rallying cry, economic organizations, corporate managers, and investors called on governments to reduce corporate taxes, shifted their production bases offshore, used tax havens in order to avoid or reduce their tax burden to the greatest extent possible, and devoted themselves to boosting share prices, reaping enormous profits in short periods. Placing its faith in the trickledown effect, the concept that as the rich get richer, benefit will trickle down to the poorer social strata, the second Abe administration also adopted a policy of supporting big companies and global investors. One of the effects of the trickledown theory, a theory often asserted within the neoliberal framework, is to legitimize the maintenance and expansion of the entrenched interests of the wealthy; however, there is no evidence to support the existence of any trickledown effect. The Nobel Prize-winning economist Joseph Eugene Stiglitz has strongly criticized the fact that under neoliberal policy, the US taxation and regulatory systems, rather than increasing welfare throughout society as a whole, have been politically manipulated in a manner that impoverishes 99% of US citizens. The fact that no trickledown effect has occurred in Japan, or in the European member states which implemented neoliberal reforms, was demonstrated by a research report based on a survey of the actual status of the OECD in December 2014, 4 making dear the theory's failure. 5 A consideration of the social reality of European member states shows that labor market reforms in each country that emphasized "labor flexibility" and prioritized employer profits have not led to employment creation and have resulted in a lack of social protection and safety net. As a result, economic growth has diminished, and unemployment has increased. Robert Boyer, an economist of the "regulation school," has pointed out that policies designed to increase labor market fluidity have been a total failure in European member states with poor social protection. 6 European member states experiencing debt crises applied severe fiscal austerity programs in exchange for the provision of fiscal support by the troika (the EU, the IMF, and the ECB), but the expected fiscal reconstruction has not manifested itself, there is, rather, concern that the economies will fall into a state of deflation, referred to as "Japanization" due to Japan's unsuccessful struggle with its deflationary economy since 1998. In Japan, around 40% of university graduates' experience difficulty in finding regular and stable employment; unwillingly forced to take irregular employment, their low incomes make it difficult to form life plans, including plans for to marry and have children. The impoverishment of young workers is weakening the ability to secure funds for social security and is even generating fears regarding the collapse of the social security system itself. The result of the implementation of common neoliberal policies in Japan, the USA, and Europe against the background of increasing globalization has been the magnification of social disparities. What this means is that while some of the wealthy with unearned income may have become wealthier, huge number of workers have been laid off or experienced pay cuts. Working conditions have declined, and workers have had no choice but to take low-wage work, contributing to social destabilization. Moreover, since 2016, a number of papers with titles such as "The Death of Social Europe" 7 have been published which requestion the rationale for the existence of the EU. Enabling us to understand this situation, the next section will look at the problem of economic disparities in relation to fiscal expenditure in European member states, via an international comparison based on OECD statistics.

Following the collapse of Lehman Brothers in 2008, economic and financial crises intensified globally, and the effects of the Eurozone crisis, originating in Greece, are still being felt. Furthermore, it is feared that the new coronavirus crises after 2020 will cause economic damage that far exceeds the Lehman shock and lead to the Great Depression. The negative effects of globalization have extended throughout Europe, and as a result, economic growth has slowed, which together with declining birth rates and aging populations, is making it fiscally difficult to continue to provide social security, medical and the other social services even in the traditionally wealthier European member states. NPM reforms, which reconsider the powers of administrative authorities, have been pushed through in many member states even as the scope and provision of social services have been narrowed down. There has been a trend toward the outsourcing and privatization of services, representing a change from public assistance to mutual assistance, or even self-assistance. As a result, new-type pneumonia crises caused medical collapse in Italy and France. The OECD researchers have analyzed the relationship between trends in the Gini coefficient, macroeconomics, and government expenditure, and compared the percentage of GDP represented by fiscal expenditure (by purpose) from the governments of the major EU member states and Japan (see Figs. 1 and 2). The OECD indexed social security-related public and private expenditure under the category social expenditure," and conducted international comparisons (see Fig. 3 ).

What these data show, first, is that there is no correlation between economic growth and the size of government. If we focus next on factors related to social justice (economic disparities and poverty), a clear correlation emerges. Neoliberalism stresses that if social security is made increasingly comprehensive and governments become too large, this will lead to fiscal collapse. However, in the USA and Japan, the Gini coefficient (an index of inequality in disposable income) and the relative poverty rate are high, public debt is becoming increasingly severe, and disparities are growing. Comparing Gini coefficients, the coefficients for Japan, at 0.341, and Britain, at 0.349, are both considerably higher than the OECD average of 0.32, and poverty among the elderly is immense (see Fig. 2 ).

Not only is Japan's society aging, but the systems in place are extremely inefficient from the perspective of preventing poverty. In northern and western European countries, such as Germany and Sweden, which practice big government, Gini coefficients are generally low, with economic disparities and poverty controlled. There are few deaths in Germany and recovered relatively quickly even in times of New Coronavirus crises. The same was true in Estonia, Iceland, Lithuania, and Latvia (see Figs. 4 and 5) . The management of poverty and economic disparities is dependent on whether or not a government is able to display appropriate government functions. Factors related to disparities and poverty are strongly correlated with small governments; under small government, both the Gini coefficient and the relative poverty rate are high, indicating a tendency towards the impoverishment of citizens under regimens of fiscal austerity. By contrast, big government is largely successful in controlling disparities and poverty. In sum, we can assert that in countries with low Gini coefficients and countries with low economic disparity, the poverty rate is low, with these countries resistant to divisions among citizens and avoiding populism. 8 In the USA as well as Italy, where economic disparities are large, there were many victims of the New Coronavirus Pandemic.

The elections in Europe have largely been completed, signaling that the EU integration process is entering a new phase and experiencing a demand for the strengthening of social policies and policies promoting social cohesion in order to control economic disparities and poverty, and the implementation of reforms in order to promote income redistribution at a regional level through public policy. It will be vital to adjust, coordinate, and achieve cooperation between EU policy and domestic policy, realizing a policy that controls disparities and division within the populace. What will be required in order to increase the EU's 'integration ability' will be the involvement of not only the first and second sectors but also of the third, civic sector, the European civil society, in the EU policy process. These three sectors need to create a system that bolsters solidarity at the regional level and facilitates the implementation of fiscal policy, increasing the income of the middle class. These measures will generate a dynamism that increases consumption, creating a virtuous cycle with economic growth.

Since the novel coronavirus epidemic, later named COVID-19, was first reported in December 2019 in Wuhan, China, this new form of pneumonia has spread beyond national borders worldwide, posing a significant threat to humanity. According to a study by John Hopkins University, as of June 3, 2020, there were 6.4 million infected people worldwide and more than 380,000 dead. In mid-January 2020, the WHO stated that there was "no evidence of coronavirus transmission from person to person." However, it became clear on March 12 that human-to-human transmission had indeed taken place, and the WHO Director-General Dr. Tedros Adhanom Ghebreyesus declared that the new corona infection was officially a "pandemic."

The new-variant pneumonia has continued to rage across Europe since March 2020 and is having a serious impact on society and the economy there. The UK Prime Minister Boris Johnson, who finalized Brexit at the end of January 2020, was himself infected with the new corona virus in March. Fortunately, after treatment, which included several days in an intensive care unit, he was discharged and able to resume his duties.

The large-scale cross-border movement of people has become a reality since the creation of the Schengen Area, which comprises 22 EU Member States and several EEA countries that are not EU members. All these countries are bound by the Schengen Agreement, which abolishes immigration checks to form one economic space. However, with the spread of the new corona infection, each Schengen country was forced to strictly curtail such movement by introducing lockdowns, entry bans, and other border blocking measures. Indeed, with the reinstatement of border inspections, the Schengen Agreement is now only allowed to operate in the event of "exceptional circumstances." It can be said that the above-mentioned measures present a serious threat to the idea of and the "raison d'être" for European integration.

First, an overview of the legal basis of infectious disease control and public health policies in the EU is necessary, starting with the Single European Act in July 1987 on Health (Article 100a). It is important to consider Public health policy (Articles 3 and 129) as stipulated by the treaty on European Union (Maastricht), "Disease prevention and elimination of health hazards" (Article 152) as described in the EU (Amsterdam) Treaty in May 1999, and the role of the European Centre for Disease Prevention and Control (ECDC), which was set up in May 2005. The impact of the EU (Lisbon) Treaty and that of the European Charter of Fundamental Rights (Article 35), which came into force in December 2009, also need to be assessed. The Lisbon Treaty is highly significant as it designated public health policy as a "shared power" jurisdiction area between the EU and its Member States.

Second, the EU's first policy response to and measure against COVID-19, the activation of the "EU Civil Protection Mechanism" in January 2020, needs to be discussed. During the coronavirus outbreak which affected the occupants of the Diamond Princess cruise liner in Yokohama, Japan in February 2020, the Directorate General for Civil Protection and Humanitarian Assistance (ECHO) became the core for coordination among Member States including Italy, Germany, France, the UK and Ireland, resulting in 71 EU citizens being returned to European countries on February 21.

Third, it should be noted that the EU has provided a valuable contribution to the international community during the COVID-19 crisis. For example, via joint investment between the EU central authorities and the Member States, it has provided relief supplies such as medical devices and personal protective equipment to China. It has also provided financial assistance to the value of e114 million to the WHO, and e15 million to Africa (European Commission, Press release, 24 Feb. 2020, .

Fourth, regarding the EU's measures to support its Member States, The European Commission set up the COVID-19 Headquarters on March 2. In the European Parliament in April, the President of the European Commission, Dr. Ursula Gertrud Von der Leyen apologized on behalf of the EU to Italy, where the spread of the infection had been particularly rapid, for failing to provide the necessary assistance. Following that, the EU set aside e100 million to fund vaccine research and e37 billion for a "Corona Corresponding Investment Initiative." In addition, the European Central Bank (ECB), in order to respond to the profound risk to monetary union, provided e7500 billion for a new Pandemic Emergency Purchase Program (PEPP). Furthermore, "the European Commission has pledged e300 million to Gavi, the Vaccine Alliance, for the period 2021-2025." 9 According to the EU, the total amount dedicated to emergency economic stimulus measures is equivalent to 7.3% of Euro area GDP.

Finally, let us compare the EU countries' COVID-19 policy responses. The number of Polymerase Chain Reaction (PCR) tests varies from country to country, and the actual number of infected people cannot be accurately determined. The cause of death has not been consistently identified in terms of a fatality rate (the number of fatalities per 100,000 people), and it is not uncommon for pneumonia to be given as the name of the disease. It is simply not possible to compare the number of deaths and the mortality rate per 100,000 population across the various Member States. However, the mortality rate can be estimated to some extent and may serve as an indicator of medical exhaustion and medical collapse in each country. As of May 27, 2020, fatality rates for selected European countries are as follows; Belgium 82.8, Spain 58.1, England 57.7, Italy 55.2, France 42.9, Sweden 43.2, Germany 10.2, There is a particularly marked difference between 5.1 in Estonia and 1.2 in Latvia. 10 There are various causes of this mortality gap, including differences in political and medical systems, differences in bioethics, differences in virus types (S type, K type, L type, etc.), differences in genetic factors, and differences in lifestyle and habits. It may be beneficial at this point to investigate the factors described by Professor Shinya Yamanaka, the Nobel Prize winning scientist and academic, as "Factor X". Regarding Scandinavian countries, only Sweden experienced a high fatality rate due to differences in bioethics, such as the attitude to euthanasia, and because the severe urban blockades set up in other member countries were not introduced there. The fact that shops, elementary schools, and secondary schools continued to function as normal might have had an adverse effect on the country's infection rate. As a background factor, it should be mentioned that in Nordic countries such as Finland and Estonia, e-government, remote work and IT-based work are operating successfully, and both the infection rate and the fatality rate appear to be low. 11

The EU mechanism is a hybrid system of government that fuses with, and functions in tandem with, the government systems of member states. Its particular characteristic can be described as "multi-level governance." In order to resolve issues of poverty and economic disparity in EU member states, we can point to the importance of maintaining and strengthening integration through network governance, via the hybrid EU system, while maintaining economic systems based on market principles. Involving European civil society in the process of integration, rebuilding the solidarity of the union based on the principle of communality, of either a family or small region, is needed.

The discussion above has shown that countries with low levels of economic disparity (low Gini coefficients) feature comprehensive social security systems, a high level of investment in education and public investment, and low poverty rates. Compared with continental European countries, the USA, Britain, and Japan have high Gini coefficients despite the low unemployment rates, high poverty rates, and a high degree of social inequality. Additionally, analysis of the relationship between trends in economic growth rates and economic disparities has shown that it is precisely neoliberal reforms and policies based on market fundamentalism that have worsened the fiscal problems in the considered countries. The facts are that, as a result of neoliberal reforms, the USA has become a debtor nation facing the possibility of fiscal collapse and Japan's tax revenues have been drastically reduced, its deflationary economy further indicative of the fact that financial factors have a significant effect on economic disparity and poverty. As Joseph E. Stiglitz has pointed out, the reduction of poverty and the elimination of disparities do not only promote social stability; fair income distribution boosts people's desire to work and their desire to save, spurring economic growth.

The High Representative of the Union for Foreign Affairs and Security Policy, Josep Bourrell observed that "COVID-19 will reshape our world. We do not yet know the crisis will end. But we can be sure that by the time it does, our world will look very different." 12 In response to COVID-19, the President of the European Commission, Dr. Von der Leyen is advancing reforms based on the Green Deal policy and the "Digital Europe" strategy in line with UN SDGs. The aim is to promote a circular economy and secure a competitive advantage for European industry through the global acceptance of EU regulations. She will strongly promote "a European Green Deal" and "a Europe fit for the digital age." It is to be hoped that the EU's capacity for integration and the relationship of mutual trust between the organization and its citizens will be fundamentally enhanced by the new framework of social solidarity (see: Urusula von der Leyen, A Union that strives for more. My agenda for Europe). It will be essential to redesign taxation and social security systems to make economic growth and income redistribution possible, and, looking towards the dispersion of risk through solidarity, the realization of sustainable and inclusive growth that benefits every member of society.

Many EU institutions have launched measures to support Member States and European citizens, including the EEAS's "COVID-19 Pandemic: European Regulatory Response", ECHO's Cyber Security, the COVID-19 Hacker Countermeasures, and Europol's Corona Crisis-Related Crime Countermeasures. 13 It is necessary to demonstrate the purpose of the existence of the EU by ensuring the objectivity of the media, promptly publicizing the scientific facts related to COVID-19 objectively, all the while insisting on accuracy and transparency. The current economic and public health crisis can only be effectively addressed by coordinated democratic and scientific solutions at global level in cooperation with citizens. Although the adoption of this range of measures will present the EU with an opportunity to regain a sense of solidarity and to rediscover its "raison-d'être," it may also be one of the most arduous challenges that the organization has faced since its foundation.

Britain alone!

Brexit: Why Britain voted to leave the European Union

The politics of crisis in Europe

The death of social Europe

Institutional reform and European governance

The global economic crisis and the future of labor market policy regime: Implications for economic governance in the European Union and Japan

European governance after the "Brexit" shock: From the Japanese perspective. USJI Voice

Growth, employment and social security governance in the EU and Japan

Euroscepticism and the rising threat from the left and right

Koji Fukuda is Professor of International Public Administration at the School of Political Science and Economics, Waseda University in Japan. He is also Director of the Waseda Institute for European Union Studies, President of Japan Association of Global Governance and former President of EUSA Japan. He received a Ph

Fellow at the College of Europe in Bruges. He co-edited the European Governance After Nice (Routledge, 2003) His is the author of many books including Envisioning Reform: Enhancing UN Accountability in the Twenty-first Century