Saturday, August 23, 2014

Barbarians at the Gate?

Europe's lumpen outsiders are becoming insiders as the Continent's political pendulum swings to the right. After the Netherlands and France, Germany may be next (German elections are due in the autumn, and the center-right candidate - Minister/President Stoiber of Bavaria - is now the favorite). Spain, Austria, Italy, Denmark, Portugal are already ruled by center-right governments. This swing does not simply mark the return of traditional conservative parties and policies - smaller governments, more attention to the interests of capital - to power. Something new is at work.

What's new is the fact that many of today's center-right governments are supported by populist or nationalist parties. In Italy, the Netherlands, Austria, and Denmark, the government is either a coalition or a minority government propped up by the pivotal support of populist right-wing parties. In France the government is composed of mainstream center-right politicians. Yet, President Chirac owes his victory to the success of the far right National Front.

This is a decisive novelty. In the past, Europe's political contests were waged between left wing parties representing the interests of labor, and right wing parties representing the interests of capital. Centrist parties that represented the middle classes and moderated the ideological extremes of left and right were pivotal. Nowadays, ideological differences between left and right are blurred. So a new breed of politicians and a new constituency of voters hold the balance of power.

The successes of populist/right wing parties can largely be attributed to the failures of left-leaning governments. Europe's disappointing economic performance lies at the root of this. European unemployment remains high, and productivity growth (and hence living standards) has slowed since the mid-1990s. Even non-economically-minded voters perceive the striking difference with the US, where productivity growth has skyrocketed since the mid-1990s and unemployment is far lower. Some voters are beginning to think that their cherished European welfare state may be to blame.

Many European voters also feel threatened and unprotected. A common slogan is that Europe's social model trades less economic growth for more social protection and less risk. But this idea does not convince everyone. Large groups of "outsiders" (young unemployed and first time job seekers, temporary workers, shopkeepers and other self-employed) do not see these supposed benefits because they lack a stable and protected job, or do not qualify for unemployment insurance, or are too young to benefit from public pension systems. These voters also complain about crime, and of the deteriorating quality of life in their cities.

Many "outsiders" supported right-wing populist parties in the latest elections; their votes are critical for the survival of the new center-right governments in many European countries. These "outsiders" were often neglected in Europe's traditional political competition, and their demands received little or no attention. Across Europe, they have suddenly become political arbiters.

What these newly influential voters want is clear: less immigration, crackdowns on crime, more economic opportunities, but also more protection against economic risk and international competition. Politicians representing these voters lack experience in government, sometimes are technically unprepared for governance, and are suspicious of technocrats and bureaucrats, particularly those in Brussels. On many issues, the positions of populist parties conflict with the traditional pro-capital and pro-market platforms of established center-right parties.

Not all of this is black. Some of the demands of these voters are sensible and will improve policymaking. Most of Europe, for example, needs better crime prevention and a serious effort at cracking down on illegal immigration. But in other important policy choices, populist parties could lead Europe astray.

Of course, most European countries need to rethink the foundations of their welfare state. Working life needs to be lengthened, public pensions are often too generous, labor markets too rigid. Traditional pro-capitalist right-wing parties would welcome such reforms. Yet, welfare state reform is not a priority of right-wing populists.

But the biggest risks are to European integration. The new populist and nationalist parties are suspicious of Europe in general, and of EU enlargement in particular. This hostility comes at the wrong moment in time, with Europe engaged in ambitious and difficult constitutional reforms. European enlargement, moreover, although imminent, is not a done deal. Negotiations for enlargement are still under way.

The Convention on the Future of Europe is discussing ways to integrate new policy areas, such as internal security, immigration, elements of a common foreign policy and of external security. But the Convention's outcome is unpredictable. The opposition posed by this newly empowered political constituency could be decisive.

Traditional center-right parties have been pro-Europe. European integration has rarely been affected by the left/right divide. That holiday from serious politics may be over for good.

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