Despite election results, reason still rules Europe

By Anatole Kaletsky
May 30, 2014

anatole -- french student

When can a vote of 25 percent be described as a “stunning victory” or even a “political earthquake”?

According to the European establishment, it’s when these votes go to a rabble of odd-ball extremists, ranging from overt racists and even disciples of Adolf Hitler to unreconstructed Stalinists and comically naïve anarchists.

However, the most alarming symptom of political breakdown revealed by the European parliament election is mainstream politician’s hysterical reaction to a perfectly predictable — and justifiable — upsurge of populist anger after the euro crisis.

anatole -- unemploymentAfter all, people have suffered five years of unnecessary hardship as a result of misguided economic policies. Why then should anyone be surprised that tens of millions of voters decided “to give their governments a kicking” as British Prime Minister David Cameron put it? Especially when the European elections provided an ideal opportunity for people to vent their anger with national governments, with no risk of letting the populists get anywhere near true power.

While the media were banging on about the shock and devastation of Sunday’s supposed political earthquake, this benign, and perfectly plausible, interpretation was quietly adopted by financial markets and the European business community.

Sober analysts noted that out of the 751 seats in the European parliament, an overwhelming majority of 467 were won by the three main blocs of conventional pro-European Union parties — the center-right European People’s Party, the center-left Socialists and the center-center Liberals. Another 53 seats are held by the even more pro-European Greens and 45 by the British Conservatives and allies.

This left only about 140 seats, less than 20 percent of the total, to genuinely euro-sceptical and populist groups — ranging from the neo-fascist Golden Dawn in Greece to the French National Front and UK Independence Party to the neo-communist German Linke. None of these parties can work together, even for tactical gains.

UKIP, for example, will not cooperate with the French National Front — which it considers racist. The National Front will not cooperate with Golden Dawn, which it regards as fascist. Germany’s anti-euro Alternative will not cooperate with UKIP — which it considers too extreme.

As a result, there will probably be no major disruption or change in the workings of European institutions. The chances are that mainstream politicians will respond to the upsurge of populism defensively — circling their wagons around existing EU institutions and sticking more doggedly to outdated treaties.

anatole -- greece golden dawnMoreover the fact that Germany was the country where the anti-EU vote proved weakest and where the governing coalition retained the strongest public support will reinforce the German government’s self-confidence in dictating terms to the rest of Europe. The most likely scenario, therefore, is that Germany will continue to thwart any serious efforts to reform the misguided fiscal and monetary rules that caused the euro crisis and will probably condemn Europe to long-term stagnation. Aggravated by an ever-widening division between creditor and debtor countries.

There, is however, a more hopeful possibility. While EU institutions are not seriously threatened by the outcome of this election, some national governments are – especially President Francois Hollande’s Socialists in France. If the French mainstream parties start to feel a genuine existential threat from the upsurge of the National Front, they could try to learn from the one government that has managed not just to hold its own against the populists, but to gain massively at their expense.

Italy’s center-left Democrats, under the new leadership of Matteo Renzi, did far better than any other national ruling party. Its 41 percent vote almost doubled the share in last year’s domestic election. This massive pro-government swing crushed the populist anti-euro Five Star Movement from more than 30 percent last year to just 21 per cent. It also forced Silvio Berlusconi’s Forz Italia into a humiliating third place, with just 17 percent, its worst performance for 20 years in a nationwide poll.

Renzi’s popularity was partly attributable to novelty and personal charisma. Yet there are clear lessons from his success that mainstream politicians in other countries could emulate if they want to reverse populism, xenophobia and anti-EU sentiment.

The main lesson from Italy is that governments must offer voters immediate relief from the fiscal austerity imposed during the euro crisis by the dreaded “Troika” of the European Commission, the European Central Bank and the International Monetary Fund. Renzi’s first action as prime minister was to promise Italians that there would be no further tax increases and then quickly translate these promises into legislation, though Italy’s budget deficits were overshooting EU-mandated targets.

anatole -- french votersThe European Commission and the ECB have criticised this budgetary back-sliding. Renzi has made clear, however, that he would respond to such concerns not with further emergency austerity measures, but with long-term structural reforms, including gradual labor liberalization, privatization and restructuring bureaucracy.

A second lesson follows from this: Though Renzi has not yet faced that long-term structural reforms, they are more important than fiscal targets. For Europe’s economic governance will have to be reconsidered if the euro is to survive.

Though the acute phase of the euro crisis may be over, the single currency has been revealed as a fundamentally unstable system. For the euro to be viable in the long-run, national debt burdens will have to be shared or mutually-guaranteed; banks will have to be jointly backed by? all euro-zone nations, and the ECB will have to become a lender of last resort in sovereign bond markets, like the Federal Reserve and the Bank of England.

Unfortunately, all of these reforms have been ruled out by the German government and the German courts have ruled them incompatible with the German constitution and the Maastricht Treaty.

But if Europe desperately needs reforms that are incompatible with the German constitution and the EU treaties, then the rational response is surely to revise the German constitution and the EU treaties. Not to impose a ban on any discussion of reforms.

True believers in the “European project” now talk about responding to the upsurge of populist anger by revising the EU treaties and national constitutions to reflect the lessons of the euro crisis. But transforming national politicians into genuinely European leaders will require a bigger earthquake than this week’s election.

 

PHOTO (TOP): A French student shouts slogans as he participates in a demonstration to protest against the results by France’s far-right National Front political party in the European election in Paris, May 29, 2014. REUTERS/Philippe Wojazer

PHOTO (INSERT 1): Members of the 22M Marches for Dignity organization protest against the country’s unemployment rate in an unemployment office in Gijon, northern Spain, April 30, 2014. The signs read, “Debt default” (R) and “Public services” (L). REUTERS/Eloy Alonso

PHOTO (INSERT 2): A girl sings the national anthem with supporters of the far-right Golden Dawn party during a pre-election rally in Athens, May 23, 2014. REUTERS/Yorgos Karahalis

PHOTO (INSERT 3): French students protest against the results by France’s far-right National Front political party in the European election in Paris May 29, 2014. REUTERS/Philippe Wojazer

5 comments

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The criticism of the German supreme court describes the core
problem of the EU: No further devolution of sovereign power
without democratic control.

But EU structures are genuinely undemocratic, because smaller members did not and will not accept any democratic EU.

I think the German supreme court is right to strike down any further devolution of power until the EU members agree to give themselfes a truly democratic constitution.
Otherwise democracy is going to die in the legal and bureaucratic labyrinths in Brussels.

Posted by DonnyBurger | Report as abusive

?

Posted by DonnyBurger | Report as abusive

You are missing the point, The 25% is not highly significant for the reason they may or may not work together. They are significant for an entirely different reason. For example, one of the three main parties are going to table a bill to change the law on X. If your small party vote with us for our bill we will include in it something you want, or we will vote with you on something else etc … If they get three or four of the oddball parties to vote with them, they can gain a majority vote, as their are three main parties all trying to get the oddball parties to vote with them, the oddballs have a lot of leverage to get things they want.

Posted by -DanDeLion- | Report as abusive

Sensibilities of a Situation of Ordinary People.

Europe is about to speak to the world!

It has realised that the European Union cannot prosper without strong leadership. If the EU does not spread beyond idle rhetoric, it will die at home. People! I hope you will lead it with the dignity of the people in mind. The austerity is the ulcer of the country, any nation who is prepared to sacrifice its founding democratic principles with complete acquiescence is no custodian of the country. The European people must not forget that they are the direct heir of individual liberty and freedom, and as an heir will inevitably support those who best represent it, the European Union.

The equality of destitute peoples, the fusion of great European interests, the suppression of frontiers.

Europe will become a single One Nation country and anyone, where ever he travels, will always find himself in a common land of opportunity.

To achieve this sacred aim many labours will be necessary, but I say it here and now, victory will one day be won without the cuts of austerity.

If the country is a furnace, it is also a forge! From the spark of the European Union I had a vague feeling of light growing within me, bringing to us echoes of a tumbling throne. Let us build the European Union now.

Shaheeb Inayat Sher

Posted by ShaheebSher | Report as abusive

CONCLUSION :- ” Downward trend in world economy is likely to be in mild form during
November, 2014 to April, 2015, to grow somewhat intense during May, 2015
to October, 2015, becomes harsh during November, 2015 to July, 2016.
Such areas of life as minerals and metals, foodcrops, energy resources , defence and security of nations are likely to bear the brunt of these trends.
Collective wisdom in decision making, communication systems, aviation industry, and the cinema , music and TV industries are also , in addition, likely to be touched by these trends.
Countries or regions whose names begin with the letters B , E , EU, N, O, P, U or V may need to implement multilevel approach to challenges during this period”.

This is the substance or salient feature of my article – ” Stressful times ahead for world economy in 2015 and 2016″ published online on June 2, this year with astrologyweekly.

Posted by kushalkumar | Report as abusive