Europe’s Winter of Discontent

Europe’s Winter of Discontent

Domestic political turmoil in the European Union’s four largest economies spells trouble ahead.

January 9, 2019

This article appears in the Winter 2019 issue of The American Prospect magazine. Subscribe here

The European Union’s troubles continue. When Emmanuel Macron was elected president of France in 2017, with strong support from German Chancellor Angela Merkel, the opportunity seemed ripe for real reform of the EU. But since then, things have not gone well at home for either Merkel or Macron, and that opportunity has slipped away. In the meantime, Italy elected a populist coalition that lost no time before entering into direct confrontation with the European Commission. And as the Brexit tragedy heads toward a climax, it is clear only that the stage will be littered with bodies before it ends, but the dénouement remains murky.

Political turmoil in these four countries spells trouble for the European Union, the world’s second-largest economy, of which these “big four” countries account for the lion’s share. To assess the implications, let us survey the political landscape.

 

START WITH GERMANY. At the end of October, Angela Merkel announced that she would step down as chair of the Christian Democratic party (CDU) in December and seek no further elective office. Commentators who had previously been trumpeting the two recent electoral debacles that led to this announcement, first in Bavaria and then in Hesse, abruptly changed their tone to praise the dignified ending Merkel had devised for her own story. It was as if everyone sought to paraphrase Shakespeare, to the effect that nothing in her tenure became her like the leaving of it.

Such a dismissive judgment hardly does justice to the woman who has dominated her party for the past 18 years and who reigned as chancellor for 13 and still counting. Although she pledged only not to run again in 2021, when her term is up, some think she cannot survive that long once she relinquishes the party chair.

Bernd von Jutrczenka/picture-alliance/dpa/AP Images

Germany’s Green party leaders Annalena Baerbock and Robert Habeck represent generational change in Germany’s leadership.

 

But the doomsayers may be wrong. The number of politicians who have underestimated the deliberate and soft-spoken chancellor in the past is legion. Outmaneuvering countless adversaries, she moved her party decisively to the center, where she governed in successive coalitions with junior partners to both her left and her right. And she may have outmaneuvered her rivals again by setting herself up as the only currently credible guarantor of stability. Germans may have grown impatient with the chancellor they call Mutti (“mommy”), but they are not yet ready to leave the cozy home she has made for them. In the contest to succeed her as leader of the CDU, her handpicked successor, Annegret Kramp-Karrenbauer, defeated her principal challenger, Friedrich Merz—a financier whom Merkel drove from a party leadership position a decade ago.

Under Merkel’s leadership, Germany recovered from the post-reunification slump of the early 1990s that had made it the “sick man of Europe” and became once again the dominant power in the European Union. But her single-minded dedication to honing Germany’s competitive edge in order to maintain the export-led growth that made this recovery possible narrowed her vision and made her less effective as a European leader and reformer than she might have been. Or rather, more accurately, it made her more perversely effective than she should have been in enforcing German dogma on economies to which it was not at all suited, imposing a decade of austerity and hindering recovery from the Great Recession in much of the continent. Habitually cautious, her one impulsive act—the decision to open the gates to refugees from the Syrian carnage—fueled the rise of a formidable adversary in the xenophobic Alternative für Deutschland (AfD).

Ultimately, however, it was not the AfDthat did her in but the passing of the postwar baby boom generation to which she belonged, coupled with fears that Germany’s current prosperity cannot last. The fears are not irrational. The high-flying German auto industry lags in the crucial areas of battery technology and self-driving vehicles. The recent scandal around tampering with emissions tests on diesel vehicles undermined confidence in Germany’s vaunted engineering prowess, and talk of a partial or total ban on the use of diesel automobiles worries citizens who paid good money for their precious but polluting rides. Meanwhile, German infrastructure is crumbling. Roads, bridges, and railways stand in urgent need of repair. And despite the introduction of Germany’s first-ever minimum-wage law under Merkel, inequality has increased.

But generational change was an even more potent factor in sealing Merkel’s fate than economic and technological change. She is hardly the only European leader to have succumbed to the advent of a new era. At 64, she is the last of her cohort to lead one of continental Europe’s Big Three economies. In France, François Hollande (who was born, as Merkel was, in 1954), Nicolas Sarkozy (born in 1955), and Alain Juppé (born in 1945) have all been sidelined, eclipsed by Emmanuel Macron, who was still in diapers when they first entered the political arena in the 1970s. Italy, too, has witnessed a remarkable rejuvenation of its political class, with Silvio Berlusconi (born in 1936) at long last rendered irrelevant by the youthful Matteo Salvini (age 45) and Luigi Di Maio (a full 50 years younger than Berlusconi).

 

IT IS COMMONPLACE these days to present these dramatic generational shifts as the consequence of a populist wave sweeping the democratic world in response to havoc wreaked by irresistible economic, demographic, and political change: globalization, immigration, and forfeiture of sovereignty to unelected and unaccountable technocrats. Clearly, these powerful forces cannot be discounted, but their effects are compounded by widespread impatience with the dearth of imaginative responses from the older leadership generation.

In the past two years, confidence in the existing leadership collapsed not only in Germany but also in France and Italy. Voters not only turned against familiar leaders but also rejected the party systems that had produced and sustained those leaders and defined the parameters of their competition throughout the postwar era.

No matter who wins the CDU leadership contest, however, it is clear that the post-Merkel era will no longer be dominated by just two parties, the Christian Democrats on the right and the Social Democrats (SPD) on the left. Disappointed by the mainstream parties but unwilling to vote for the xenophobic far right, many voters in Bavaria and Hesse opted for the resurgent Greens, who offer a younger, more dynamic leadership team (Annalena Baerbock and Robert Habeck). In recent years, the Greens have become less radical and anti-capitalist than in the past, making the party more attractive to protest voters fleeing both the mainstream parties and the extremes.

Still, the recent regional elections may give a misleading picture of the party realignment currently under way in Germany. The stronghold of the AfD is in the economically struggling districts of the east, far from the more prosperous states that voted most recently. The three-way competition among the CDU, SPD, and Greens for the diminishing centrist vote, combined with the growing reluctance of center-right and center-left to continue with the “grand coalitions” that have kept the extremes at bay for decades, will almost certainly make for greater instability going forward. And instability in Germany translates into immense uncertainty for the rest of Europe, which strains uncomfortably at its German anchor yet depends on that fixed mooring to define its place in a world buffeted by increasingly violent and variable currents.

 

IF GERMANY’S PARTY system is thus in flux, the French party system was utterly destroyed by the tumultuous presidential election of 2017. Macron’s En Marche! movement pulverized both the Socialist and Republican parties and left standing essentially a one-party state facing a scattered, disorganized, and disparate opposition, ranging from Jean-Luc Mélenchon’s France Insoumise on the far left to Marine Le Pen’s Rassemblement National on the far right. The once-dominant center-right Republicans split in two, with half throwing in their lot with Macron, leaving the other half, led by Laurent Wauquiez, to hunt for support from the far right.

Yet despite the magnitude of Macron’s victory (he won 66 percent of the vote in the second round against Marine Le Pen, while his République en Marche party won 53 percent of the seats in the subsequent legislative elections), his grip on power is less secure than it initially appeared. Although his labor market reforms aroused less union opposition than expected, his tax reforms, particularly the abolition of the wealth tax, quickly earned him the label “president of the rich.” This has proved to have more staying power than “Jupiter,” the epithet the media chose for him in happier days, when he did indeed seem all-powerful. But Macron has since suffered grievously from a series of self-inflicted wounds, ranging from seemingly callous comments about unemployment to maladroit handling of an incident in which one of his close aides was videoed manhandling a demonstrator.

Then, in mid-November, an anti-Macron movement sprang up in response to a hike in the tax on gasoline and diesel fuel—a measure touted by the government as a step toward realizing France’s ambitious goals for greenhouse gas reductions. The movement took its name, Gilets Jaunes, from the yellow safety vests that all French drivers are required to carry in their cars, which provided the protesters with a handy uniform and unmistakable visibility. Called to arms via social media, the Gilets Jaunes had no obvious leaders and no affiliation with any political party, labor union, or other organized groups. Some blocked traffic in small towns and cities across France, while others clashed with police on the Champs-Élysées. The movement appeared to be predominantly rural and exurban, drawing on workers, retirees, and the less-educated, thus highlighting the contrast with Macron’s world of managers and technocrats. Demonstrators repeatedly complained that the president was “distant,” “out of touch,” and “contemptuous” of people like them. And polls suggested strong support from as much as 80 percent of the population.

Macron claimed to have understood the “suffering” of the protesters, but they were not mollified. The government quickly abandoned any pretense of standing firm and announced a six-month “suspension” of the fuel tax increase. Then Macron, who only days earlier had announced that he would never retreat from sound reforms, announced that the tax would be scrapped altogether but also insisted that there would be no reinstatement of the wealth tax, whose abolition has been called “the original sin” of Macronism. On the Monday following the fourth weekend of protest, December 10, President Macron spoke to the nation in somber tones, apologizing for his insensitive language and announcing a series of measures, including an 8 percent hike in the minimum wage and a tax break for retirees, which he hoped would calm the anger. Some protesters thought it was too little, too late, but others seemed mollified and said they would not march again in Paris, for now—but it remains unclear whether these concessions will end the crisis.

The president is trying to appease a group whose motivations transcend any specific demands and go rather to the heart of his whole approach to reform: top-down, technocratic, and focused on long-term results rather than alleviation of immediate grievances. His approval rating has plummeted even more rapidly than that of François Hollande, his unfortunate predecessor, and now stands at 25 percent. Recovery from this rapid decline seems difficult if not impossible. The government’s retreat in the face of violent protest has only encouraged the demonstrators. As this article goes to press, authorities in Paris are bracing for renewed violence. The fate of Macron’s presidency hangs in the balance. 

 

IN ITALY, TOO, THE OLD party system collapsed—as abruptly and dramatically as the Morandi Bridge in Genoa. Parliamentary elections last March obliterated the once robust competition between Berlusconi’s Forza Italia and Matteo Renzi’s Partito Democratico and replaced it with an improbable coalition of northern and southern populists. In many respects, Matteo Salvini’s League (formerly Northern League) and Luigi Di Maio’s Five Star Movement cordially detest one another, but they suspended their mutual animosity for the sake of power.

The two parties took a while to agree on the contours of a new government, in part because of European Commission objections to their budget plans and choice of finance minister. Once the new government was in place, however, it wasted no time in highlighting its differences with the authorities in Brussels on two key issues: immigration and the budget.

For Salvini, immigration was paramount. He came to power by blaming Italy’s problems on immigrants, and blamed Italy’s immigrants on the Dublin Treaty, under which so-called front-line states—the countries in which immigrants first set foot on European soil—are required to assume responsibility for housing, feeding, and classifying them and ultimately deciding their fate. With other member-states refusing to accept their fair share, Italy, Salvini argued, bore a disproportionate burden. Voters agreed, and Salvini, though nominally vice-premier, emerged as the government’s real strong man.

Di Maio, meanwhile, insisted on making good on a campaign promise to provide a means-tested basic income to Italy’s poor and unemployed, many of whom resided in the southern half of the peninsula where the Five Star vote was concentrated. The measure meant reneging on the previous government’s pledge to Brussels to reduce Italy’s budget deficit to just 0.8 percent of GDP.

The new government sent the European Commission a revised budget with a projected deficit of 2.4 percent, which was promptly rejected despite being within the Maastricht Treaty limit of 3 percent and actually less than the projected French deficit of 2.8 percent. The reasons for this seemingly unequal treatment are technical, having to do, as EU Economic Affairs Commissioner Pierre Moscovici explained, with Italy’s high debt load and the path of its structural deficit, but such technicalities are hardly convincing to the man in the street, and the commission’s insistence that the new government honor the commitment of the previous government, which voters had just resoundingly sent packing, was taken, as in the 2015 clash between the commission and Greece, as an affront to democracy.

Alain Pitton/NurPhoto/Sipa via AP Images

The Gilets Jaunes (yellow vests) protests are a violent reaction to French President Emmanuel Macron’s top- down, technocratic style of governing. 

 

 

Italy now faces sanctions from the European Union, which can only complicate its already difficult economic situation. But so far the bond market, though jittery, has refused to panic, leading some observers to conclude that the confrontation is being dramatized by leaders on both sides eager to demonstrate their rhetorical commitment to principle without actually bringing the clash to a head. Neither side wants the kind of open breach precipitated by Britain’s 2016 referendum to exit the EU.

 

WHICH BRINGS US to Brexit, the fourth of the European Union’s current woes. After protracted and arduous negotiations, the EU and the United Kingdom have finally agreed on a plan that pleases virtually no one and may bring down Prime Minister Theresa May’s government, from which several ministers, including Brexit Secretary Dominic Raab, resigned in protest. If approved, it would leave Britain with most of the burdens of EU membership but with no say in European councils. The trade snafus of a hard Brexit would be avoided, yet many member-state perks will have been sacrificed. Polls suggest (not altogether convincingly, given the large percentage of undecideds) that public sentiment in the U.K. has turned against Brexit now that the terms of the deal are clear, but no major political leader has yet been willing to speak up in favor of a new referendum.

The generational changes that have upended party systems in Italy, France, and Germany have yet to destabilize the British system. British youth voted to remain in the European Union, but they were outvoted by their elders. Labour leader Jeremy Corbyn—hardly a youthful face—has called for new elections if May’s government falls but has so far refrained from calling for a new referendum. At this writing, the situation therefore remains quite murky.

 

WITH A WEAK coalition government in Germany and a beleaguered Macron in France, the prospects for institutional reform of the European Union seem dim at best. Buoyed by his triumphant campaign, Macron proposed in 2017 that the way forward for the EU was to strengthen the central authority. But even before the fraying of her power became evident, Merkel dragged her feet on this proposal, which now seems dead in the water. Meanwhile, the two-pronged Italian challenge to the authority of the European Commission signifies that the momentum has now turned the other way: toward a greater devolution of authority to the member-states to counter the widespread popular perception that too much sovereignty has been ceded to the bureaucrats in Brussels.

It has often been remarked that the EU evolves in spurts. The spurt of the postwar generation, the Maastricht generation, the generation that brought the Single Market and the free movement of capital, goods, and people, is now exhausted. The younger generation that will replace it has not yet figured out where it wants to go. Until it does, Europe will remain at a standstill, poised uneasily between increasingly formulaic celebrations of the peace that the European Union takes itself to have achieved and the conflicts that its internal contradictions are inciting today. 

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