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