Geopolitics

Next On COVID-19 Calendar: Our Summer Vacations At Risk

Quarantines, closed borders, grounded airlines, crowded beaches ... It may be a summer to forget, that we'll always remember.

On the beach of La Concha, in San Sebastian, Spain

PARIS — After Spring break and Easter holidays were largely canceled amid lockdown measures and travel bans around the world, should we also start to worry about our summer vacations?

EU Commission President Ursula von der Leyen advised against making plans for the summer, telling Germany daily Bild "no one can make reliable forecasts for July and August at the moment". Across the Atlantic, top U.S. health official, Dr Anthony Fauci said on CBS summer travel "can be in the cards' but only if the country manages to prevent a second wave of infections.

For those looking to travel abroad (maybe you bought tickets months ago?), some countries might not allow tourists to enter at all. According to ABC, Spain, one of the worst-hit countries, is thinking about closing its borders this summer to prevent a second wave, despite the fact that the tourism sector makes up 12% of the country's GDP.

Several countries have already begun to explicitly encourage people to stay closer to home than usual. French cabinet minister Elisabeth Borne said last week: "Now is not the time to buy a ticket to go to the other side of the planet (...) But we can encourage French people to enjoy our beautiful country for the next holidays, which will also help the tourism industry." Australia and Italy are also putting in place incentives for residents to plan domestic holidays, with various bans on international travel potentially remaining in place until 2021.

A deserted beach in Barcelona, Spain — Paco Freire/SOPA Images via ZUMA

And even if borders are slowly reopened and travel restrictions lifted in the coming months, getting to your chosen holiday destination may not be easy. The crisis is taking a huge toll on the airline sector, with some industry analysts forecasting a round of major bankruptcies by May.​ Already, EasyJet's fleet has been grounded to a halt for two weeks in the UK while Air France expects more than 90% of its capacity to remain suspended at least until the end of May.

It's a question of survival for businesses, and responding to a pent-up demand from the public.

CEO of consulting firm Protourisme Didier Arino told Le Figaro that there will be few airplanes in the sky this summer, as "companies are planning to use only 50% of their capacity, for five months." In the U.S., the CDC has extended the No Sail Order for cruise ships carrying more than 250 passengers, for at least until mid-July.

For sun worshipers, after a long winter and months cooped up in quarantine, there is just one thing on their mind: the beach. Italy's Culture and Tourism Minister Dario Franceschini was asked last week if people will be able to go to the beach. "Sure! Of course it depends on how well we follow the (quarantine) measures now," he was quoted in Il Messaggero. "Then we'll let the scientists guide us on the right safety practices to deal with crowds."

Italian news site Linkiesta interviewed Marco Beoni who runs the "La Giunca" beach club in Sabaudia, south of Rome, who expects sunbathers will be itching to get to the seaside. But Beoni is already preparing a whole new approach to welcoming them, including fewer umbrellas to better regulate the space between people, special early hours restricted for senior citizens, repeated disinfecting of tables and beach chairs, as well as required testing of lifeguards and other beach personnel.

It's a question of both the survival of his own business, and responding to a pent-up demand from the public: "What's important is to be there this summer to save our business, " he said. "But we don't want to rush into a reopening, and make sure that all the safety measures are in place." So, you may have your summer after all, though it will be unforgettable for all the wrong reasons.


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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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