Project Europe in disarray

S P Seth

At a time when the erstwhile political fringe is tending to become the mainstream, the failure of Italy’s ruling Democratic Party (PD) recently to win referendum on constitutional reform is another blow. Italy’s youngest ever Prime Minister, Matteo Renzi (at 41), had tied his political destiny to the outcome of the referendum, vowing to resign if it failed. And failed it did by a wide margin. Renzi took office in 2014 as an anti-establishment “demolition man”, promising to overhaul country’s creaking institutions, including its Senate, that tended to slow down or block momentous political decision-making. In the process, he himself has fallen a prey to the new political forces that have come to regard him and his politics as ‘the establishment’, needing an overhaul or overthrow. The referendum largely became a vote on Renzi government’s failure to kick start the country’s economy, which has continued to suffer from enforced economic austerity that has become a hallmark of European Union’s emphasis on structural economic reforms.

Germany takes the lead in enforcing economic austerity insisting on benchmark economic reforms, no matter how unpalatable these are among the people of affected countries like Italy, Greece Spain and Portugal. Which has created an economic divide between EU’s well-off northern members, like Germany, Holland and the likes, and its not so well off southern members. An important, if not determining, component of the fringe increasingly becoming the mainstream is growing disillusionment, frustration and anger with the EU to enforce economic austerity and orthodoxy. Its result is continuing economic suffering with high unemployment, especially among youth. At the same time, the austerity path doesn’t seem to be showing any way forward, with more of the same for many people.

As with Britain where people voted to exit EU as there was a growing sense of loss of national sovereignty, the same is happening in Italy, Greece and in some other EU members. Many people feel that quitting EU and reclaiming their national sovereignty might be the way to go. Which is not to say that this is going to be a solution for their economic problems but at the present time, when there doesn’t seem any way out, venting spleen on EU does seem an alternative path. Even though Italy’s referendum was about constitutional reform and a growing feeling that Prime Minister Renzi was seeking to wrest more powers by weakening the Senate, the anti-EU sentiment was clearly an important factor as evidenced by the success of the anti-euro 5-Star Movement. Its leader, Beppe Grillo, is calling for new elections as soon as possible. His party now has claimed the anti-establishment banner, which in Europe also translates into anti-euro message.

The one result, though, will be more economic uncertainty. Italian banks have a high proportion of bad debts and they very badly need to raise new capital to stave off collapse. Its third largest bank, Monte dei Paschi di Sienna, for instance, immediately needs to raise capital to avoid calamity. The political uncertainty caused by Prime Minister Renzi’s resignation, on top of Brexit and anti-EU commotion elsewhere in Europe, is creating a crisis for Europe. For instance, three EU countries, France, Germany and Holland, are due for elections next year and all three have strong anti-EU political parties. In France, the final contest is likely to be between the ultra right National Front led by Marine Le Pen and the right wing Republican Party candidate, Francois Fillon. And in Holland, Geert Wilders-led rabid right-wing Freedom Party, with its anti-EU and anti-Muslim message, is stirring up the pot.

Which brings us to the potency of the anti-EU message, combined with anti-Muslim and immigration rhetoric. So much so that even Europe’s most liberal leader, Chancellor of Germany, Angela Merkel, is feeling the need to respond to the widespread anxiety in her country from the influx of about 1 million refugees from Syria and elsewhere. Merkel is seeking her fourth term as chancellor in next year’s election and has, more or less, ruled out having more refugees in her country. And, at the same time, she has come out against full veil worn by some Muslim women in public places. Her message is still moderate and symbolic in response to challenge from right wing Alternative for Germany party. But this shows that the project Europe that sought to unite Europe to put behind all those wars of the twentieth century, is under tremendous pressure from resurgent radical nationalism that seeks to take Europe back to the bad old days of divisions and worse.

The question that arises is: why is EU under threat when, not so long ago, it was a model of regional integration? The simple answer is two-fold. The first is that the generous provision of subsidies for its relatively poor southern member states did wonders for their economies. And second, it was further reinforced with generous loans to continue the economic momentum. And this was also good for Germany, EU’s richest economy, as this led to export-led growth in that country with demand from seemingly new riches of its Mediterranean member states. But with the 2008 financial crisis and its continuing aftermath, the huge debt from generous debts became unsustainable. And the EU, led by Germany, insisted on economic austerity on debt-ridden EU members to sort out their structural problems, which are still plaguing the European Union.

The problem with project Europe, as John Lanchester points out in his analysis of EU in the New Yorker is that, “There has never been a popular appetite for the idea of Europe: it was always an elite project.” The phrase, “Ever closer Union” in the foundational document of the EU in the 1957 Treaty of Rome, according to Lanchester, “is just stated as a goal, without any explanation either of what it means or why it would be a good thing for most Europeans. It was an end in itself.” Nevertheless, when the global financial crisis hit and indebted EU members were hit with debt repayment and putting their economic house in order by further squeezing their already squeaky economies, they seemed to have hit the end of the road, economically speaking. And as with Britain, which although was not member of the common currency, there seemed to be a growing sense that even though EU was not a political union its constituent units seemed to have surrendered their sovereignty to it. In the meantime, the rising tide of Middle Eastern refugees was further compounding this sense of losing control. Hence this elite idea of Europe imposed from above is now in disarray, with more trouble ahead from growing right wing political forces that will further test it in the forthcoming elections next year in France, Germany and Holland.

Note: This article first appeared in the Daily Times.

Contact: sushilpseth@yahoo.com.au

US: rise of populism

S P SETH

First Brexit, the referendum in Britain to leave the European Union, and now Donald Trump’s election as US president, show how far populism has come up in developed (for want of a better word) western societies. It is the world that prided itself on ‘Enlightenment’, meaning the triumph of reason over ignorance and prejudice, even though it also coincided with European colonialism and worse. This too perversely became, in the eyes of many, a part of the ‘Enlightenment’ process of ‘civilizing’ the rest of the world. And even when colonialism came to an end, with or without the civilizing mission, it took a new and different form. And this was because the old type of colonialism of ruling over distant people and lands was no longer profitable and feasible for a number of reasons, chief among them the weariness and destruction wrought by WW11.

Precisely because of this, there was a need to create a new international order where old colonial powers, led by a new imperial centre, the USA, continued to exercise their dominance economically, politically and militarly. But the challenge to this dominance came in the form of Cold War pitting the west against the Soviet Union, which the US and its allies portrayed as a struggle between good and evil--- between the ‘free world’ and ‘iron curtain’. The ‘free world’ was built on democracy and ‘free’ trade, a sort of ideal global society with free movement of capital but restricted movement of labour to maintain and enrich western countries.

However, the stupendous task of reconstruction after WW11 required importing labour that was in short supply, which led to regulated immigration. It served two purposes. First, it filled acute labour shortages. And, at the same time, it kept a lid on excessive wage growth. This was largely fine with the first generation of imported labour as they kept their heads down and worked hard to enrich their new societies. In the process, they didn’t make extravagant demands by generally living in their ghettoes. But, it started to change with the second and third generations, particularly in Europe, as they were much more conscious of discrimination in all aspects of life. Even as this was happening, the al Qaeda inspired 9/11 terrorist bombing in the US added a new and much more dangerous dimension to a growing crisis in western societies, where its immigrant population was starting to loom large and was seen as threatening its privileged white population.

About the same time, the so-called ‘free trade’ wasn’t entirely working to the advantage of advanced industrial economies. China’s entry into the World Trade Organization enabled it to flood the world with cheaper goods, particularly to the US in early stages, with growing trade balances in China’s favour. It was a boon for consumers in western countries, but it also led to the de-industrialization of vast swathes of regions in the US with the shifting of industrial production by increasing number of US corporations to China to partake of the low costs of production and exporting them back to the home country. In the process, all sorts of dodgy tax evasion practices became the hall-mark of these companies, thus depriving the US of much-needed tax receipts even as it was accumulating a huge debt by way of trade surpluses in favour of China.

It affected the poorer and middle classes in two ways. First, with de-industrialization, unemployment increased and even where workers were able to hold their jobs, their incomes were largely stagnant. The unemployment indeed was even worse, going by under-employment and because many people had stopped looking for work when there was not much work available anyway.  Combined with the global financial crisis, when those responsible for bringing the financial system into virtual ruin, like banks, insurance companies and the likes, were not only rescued but even prospered at the cost of the taxpayers, there was an overwhelming sense of despair among many people.

It seemed like there were two parallel universe in the US, one where the rich and the powerful ruled and prospered and felt virtuous and others they regarded as whiners and contemptible. Mitt Romney, as presidential candidate in 2012, and Hillary Clinton during her 2016 candidacy, aptly described this divide in their own self-virtuous way. Romney had said, patronizingly, that 47 per cent of the people in the US had come to depend on welfare and paid no tax. And Clinton talked of Donald Trump’s supporters as a ‘basket of deplorables’, which didn’t go well with many Americans not necessarily supporters of Trump. In other words, many aggrieved voters with varying degree of grievances, chief among them economic insecurity for which they blamed anyone and everyone, found in Trump an aggregator and articulator of their anxious state of mind.

In her profile of a small West Virginia Logan County, which once used to solidly vote Democratic and now turned to Trump, New Yorker reporter Larissa MacFarquhar has a local history professor, Brandon Kirk, give his own take on supporting Trump, which is an interesting insight into the sort of people, across the board, falling for populism. As MacFarquhar reports that like everyone in West Virginia, where Logan County is, Kirk is distressed by the poverty he sees around him, and he thinks Trump’s protectionism by way of slapping high tariffs on exports from China, Mexico and elsewhere is worth trying. And Kirk also likes building a big wall to seal off the immigration route from Mexico.

His reasoning is multi-pronged. MacFarquhar quotes him at length to give a sense of what has motivated so many people to vote for Trump. According to Kirk, despite the craziness of the idea of building a wall, “You’ve got to have something big you build… there is a grandness to it. And I think it could do a lot of good. I think it would deter illegal immigration. I think it surely would help with the illegal drug trade… I think a wall would help with control…” And he is worried about the direction the country is taking. He adds, “For me as a historian, it is the heritage. I like borders, whether it is a country or a locality. You’re open to diversity, you welcome people, but you don’t want to give up everything you are. And that can happen. History teaches that mass migrations of people, they caused great stress for the Roman Empire, maybe caused it to collapse.”

Here then we have it: a profound sense of disquiet and despair among many Americans that unless something big is done to retake charge of the country, its people might lose everything they prize, and Trump is the guy who is promising to make “America Great Again.”

Note: This article first appeared in the Daily Times.

Contact: sushilpseth@yahoo.com.au

Trump and the world

S P SETH

Donald Trump’s victory is raising all sorts of questions about where we go from here? Trump prides himself on being a shrewd and successful businessman, though his self-image is controversial. The governing principle of his business strategy is that all dealings are transactional. Which means that the US can’t/won’t underwrite the security of its friends and allies with its own check book. In other words, like in any transactional dealing, the US allies must pay the US to do their job. It would mean that all the security arrangements and alliances, like NATO and alliances with countries like Japan, South Korea, Australia and others, might have to be renegotiated, if Trump stands by what he said during the election. Or else, these allies and Middle Eastern potentates, like Saudi Arabia, might have to fend for themselves.

There is an element of myth in Trump’s formulation of transactional relationships. Because, even if the US is bearing much of the financial burden of its security alliances, it has been doing so for reasons of maintaining its global power. But, as with most other things, Trump is not bothered by the complexity of international relations.

As well as shaking up US’ traditional relationships, Trump has indicated a radical review of US’ relations with Putin’s Russia. He praised Putin during his election campaign as a strong leader, and was helped by alleged Russian hacking of the emails of the Democratic National Committee (DNC), which WikiLeaks revealed. In his post-election interview with the Wall Street Journal, Trump clearly indicated his preference for cooperation with Russia to destroy IS. He reportedly said, “I’ve had an opposite view of many people regarding Syria. My attitude was that you’re fighting Syria, Syria is fighting [IS], and you have to get rid of [IS].” He added, “Russia is now totally aligned with Syria…Now we’re backing rebels against Syria, and we have no idea who these people are.”

If this projected new policy were to be translated into practice, it will signal a reversal of the old US-led western policy of innate hostility towards Russia/old Soviet Union with prospects of re-evaluating the NATO alliance, which is now encircling Russia in the east with a string of new members that were earlier either part of the Soviet Union or its Warsaw Pact allies. The continuing crisis in Ukraine is an offshoot of the western policy to hem in Russia. Russian occupation of Crimea, and its support of the separatist cause in eastern Ukraine, has put it under western economic sanctions.

If Trump were to go ahead with overhauling US-Russia relations, even insisting that NATO members should adequately contribute to their defense, it would create a seismic change in the old western alliance system that has underpinned post-war strategic order. And Putin is all for it. In a telephonic conversation with Trump, Putin expressed his “willingness to build a partnership dialogue with the new administration on the principles of equality, mutual respect and non-interference in the internal affairs of each other.” Trump’s response was equally enthusiastic and he said he was looking forward to “a strong and enduring relationship with Russia.”

However, a new US-Russian era of the kind envisaged by the two leaders will not be easy to bring about because of the old thinking and institutional strait-jacket in which their mutual relations have been stuck after WW11. Imagine the Pentagon and the State department rewriting the strategy book to coopt Russia as a virtual ally, and turning the western world upside down! It will arouse powerful opposition from the Congress, notwithstanding the fact that the Republican Party will be controlling both the House of Representatives and the Senate. Already, there are moves to further sanction Russia for its role in Syria.

There are other problems too. For instance, Trump would like to cancel the US-Iran nuclear deal. However, Russia is unlikely to go along with this. Moscow is reportedly in talks with Iran for a $10 billion arms deal to provide advanced weapons-- tanks, artillery systems, planes and helicopters. Iran, like Russia, is helping the Assad regime in Syria against the rebels and IS. Which is broadly also Trump’s goal, but how to mesh it with ripping US’s nuclear deal with Iran?

At the same time, Trump’s stated hostility to China as a currency ‘manipulator’ and his threat to impose 45 per cent tariffs on Chinese exports into the US might create difficulties with Russia, as the two countries are virtual strategic partners against the backdrop of China’s problems in South China Sea and Russia’s Ukrainian intervention.   

Trump’s election has bolstered up extreme right forces in Europe opposed to regional and global integration. And some of them are supportive of Putin’s leadership. Take the case of Marine Le Pen, the leader of France’s National Front that gained more than a quarter of the vote in last year’s regional elections, and hopes to be France’s Donald Trump in the next year’s presidential election. Interestingly, France’s National Front borrowed money from a Russian-owned bank as Marie Le Pen admitted in 2014. Russia has also reportedly lent money to a number of European extreme right wing parties, such as Golden Dawn in Greece, Italy’s Northern League, Hungary’s Jobbik, and the Freedom Party of Austria.

Marine Le Pen, leader of France’s National Front, has said that her presidency, if she won next year’s election, would feature a new friendship with Vladimir Putin, hinting an end to sanctions against Russia after it occupied Crimea and started supporting separatism in Ukraine. She reportedly said on BBC’s Andrew Marr Show that her party’s borrowing money from a Russian bank had been necessary as “French banks won’t lend to the National Front, [and] it’s a way they have found to stifle democracy.” She made a strong plea that, “If we want a powerful Europe, we had better negotiate with Russia and cooperate with them, have commercial agreements with them.” And she added, “The model defended by Vladimir Putin, which is reasoned protectionism, looking after the interests of his country, is one that I like.”

Donald Trump’s successful election campaign, based on populism of all sorts, is tending to make it mainstream thinking in a number of European countries, where Brexit had given it respectability. And here in Australia, both the governing conservative coalition and the opposition Labour Party are selectively seeking to appeal to the right wing nutters. As one letter writer wrote in the Sydney Morning Herald, “There has never been a more exciting time to be a right-wing nutter.”

Note: This article was first published in the Daily Times.

Contact: sushilpseth@yahoo.com.auTrump and the world

S P SETH

Donald Trump’s victory is raising all sorts of questions about where we go from here? Trump prides himself on being a shrewd and successful businessman, though his self-image is controversial. The governing principle of his business strategy is that all dealings are transactional. Which means that the US can’t/won’t underwrite the security of its friends and allies with its own check book. In other words, like in any transactional dealing, the US allies must pay the US to do their job. It would mean that all the security arrangements and alliances, like NATO and alliances with countries like Japan, South Korea, Australia and others, might have to be renegotiated, if Trump stands by what he said during the election. Or else, these allies and Middle Eastern potentates, like Saudi Arabia, might have to fend for themselves.

There is an element of myth in Trump’s formulation of transactional relationships. Because, even if the US is bearing much of the financial burden of its security alliances, it has been doing so for reasons of maintaining its global power. But, as with most other things, Trump is not bothered by the complexity of international relations.

As well as shaking up US’ traditional relationships, Trump has indicated a radical review of US’ relations with Putin’s Russia. He praised Putin during his election campaign as a strong leader, and was helped by alleged Russian hacking of the emails of the Democratic National Committee (DNC), which WikiLeaks revealed. In his post-election interview with the Wall Street Journal, Trump clearly indicated his preference for cooperation with Russia to destroy IS. He reportedly said, “I’ve had an opposite view of many people regarding Syria. My attitude was that you’re fighting Syria, Syria is fighting [IS], and you have to get rid of [IS].” He added, “Russia is now totally aligned with Syria…Now we’re backing rebels against Syria, and we have no idea who these people are.”

If this projected new policy were to be translated into practice, it will signal a reversal of the old US-led western policy of innate hostility towards Russia/old Soviet Union with prospects of re-evaluating the NATO alliance, which is now encircling Russia in the east with a string of new members that were earlier either part of the Soviet Union or its Warsaw Pact allies. The continuing crisis in Ukraine is an offshoot of the western policy to hem in Russia. Russian occupation of Crimea, and its support of the separatist cause in eastern Ukraine, has put it under western economic sanctions.

If Trump were to go ahead with overhauling US-Russia relations, even insisting that NATO members should adequately contribute to their defense, it would create a seismic change in the old western alliance system that has underpinned post-war strategic order. And Putin is all for it. In a telephonic conversation with Trump, Putin expressed his “willingness to build a partnership dialogue with the new administration on the principles of equality, mutual respect and non-interference in the internal affairs of each other.” Trump’s response was equally enthusiastic and he said he was looking forward to “a strong and enduring relationship with Russia.”

However, a new US-Russian era of the kind envisaged by the two leaders will not be easy to bring about because of the old thinking and institutional strait-jacket in which their mutual relations have been stuck after WW11. Imagine the Pentagon and the State department rewriting the strategy book to coopt Russia as a virtual ally, and turning the western world upside down! It will arouse powerful opposition from the Congress, notwithstanding the fact that the Republican Party will be controlling both the House of Representatives and the Senate. Already, there are moves to further sanction Russia for its role in Syria.

There are other problems too. For instance, Trump would like to cancel the US-Iran nuclear deal. However, Russia is unlikely to go along with this. Moscow is reportedly in talks with Iran for a $10 billion arms deal to provide advanced weapons-- tanks, artillery systems, planes and helicopters. Iran, like Russia, is helping the Assad regime in Syria against the rebels and IS. Which is broadly also Trump’s goal, but how to mesh it with ripping US’s nuclear deal with Iran?

At the same time, Trump’s stated hostility to China as a currency ‘manipulator’ and his threat to impose 45 per cent tariffs on Chinese exports into the US might create difficulties with Russia, as the two countries are virtual strategic partners against the backdrop of China’s problems in South China Sea and Russia’s Ukrainian intervention.   

Trump’s election has bolstered up extreme right forces in Europe opposed to regional and global integration. And some of them are supportive of Putin’s leadership. Take the case of Marine Le Pen, the leader of France’s National Front that gained more than a quarter of the vote in last year’s regional elections, and hopes to be France’s Donald Trump in the next year’s presidential election. Interestingly, France’s National Front borrowed money from a Russian-owned bank as Marie Le Pen admitted in 2014. Russia has also reportedly lent money to a number of European extreme right wing parties, such as Golden Dawn in Greece, Italy’s Northern League, Hungary’s Jobbik, and the Freedom Party of Austria.

Marine Le Pen, leader of France’s National Front, has said that her presidency, if she won next year’s election, would feature a new friendship with Vladimir Putin, hinting an end to sanctions against Russia after it occupied Crimea and started supporting separatism in Ukraine. She reportedly said on BBC’s Andrew Marr Show that her party’s borrowing money from a Russian bank had been necessary as “French banks won’t lend to the National Front, [and] it’s a way they have found to stifle democracy.” She made a strong plea that, “If we want a powerful Europe, we had better negotiate with Russia and cooperate with them, have commercial agreements with them.” And she added, “The model defended by Vladimir Putin, which is reasoned protectionism, looking after the interests of his country, is one that I like.”

Donald Trump’s successful election campaign, based on populism of all sorts, is tending to make it mainstream thinking in a number of European countries, where Brexit had given it respectability. And here in Australia, both the governing conservative coalition and the opposition Labour Party are selectively seeking to appeal to the right wing nutters. As one letter writer wrote in the Sydney Morning Herald, “There has never been a more exciting time to be a right-wing nutter.”