April 29, 2012

Carnage as Europeans refuse to take their medicine


Ian Traynor, Ambrose Evans-Pritchard  April 28, 2012


Protestors clash with riot police during a large anti-austerity demonstration in Athens last year.


Protestors clash with riot police during a large anti-austerity demonstration in Athens last year. Photo: AFP


LONDON: Europe's political centre is starting to crumble. Elected governments have already been swept away - or replaced by EU technocrats without a vote, indeed to prevent a vote - in every eurozone state where unemployment has reached double-digits: Spain (23.6 per cent), Greece (21 per cent), Portugal (15 per cent), Ireland (14.7 per cent), and Slovakia (14 per cent).


The political carnage has been striking. Ireland's Fianna Fail, creator of the Irish free state, has lost every seat in Dublin. Greece's Panhellenic Socialist Movement (PASOK) - torch-bearers of Greek democracy since the colonels - has fallen to 14 per cent in the polls and faces ruin next month.



For more than two years, Europe's mainstream political elites have been battling to save the single currency, seeking its salvation in a German-scripted program of austerity and legally enshrined fiscal rigour that curbs the budgetary sovereignty of elected governments.

This week the tornado smashed into the core, bringing down the Dutch government and threatening the French President Nicolas Sarkozy.


In elections in France last weekend, in the Royal Palace in The Hague on Monday, and Wenceslas Square in Prague on Saturday, a democratic backlash appeared to be gathering critical mass as the economic prescriptions of the governing class collided with the street and ballot box. The collision is likely to bring down three European governments.


The centre-right Dutch prime minister, Mark Rutte, threw in the towel on Monday, submitting his resignation to Queen Beatrix after seven weeks of fruitless haggling over colossal spending cuts, which are required to comply with new European rules he has done much to design. There will now be early elections later this year, which may turn on this one single issue. ''Europe will be the main political divide in Holland,'' Paul Nieuwenburg, a political scientist at Leiden University said.


After the biggest popular protests in Prague since the velvet revolution brought down communism, the right-wing government of Petr Necas teetered on the brink, because of unpopular spending cuts as well as sleaze.


 Most crucially of all, the Sarkozy era in France looked to be over, having dazzled briefly and faded fast.


''There's a new uncertainty,'' a leading Belgian economist, Paul De Grauwe, said. ''Now we will have to see what will happen with the fiscal pact, and how the markets react.''


The French delivered a loud ''non'' to Berlin's euro policies, handing a first-round victory to the socialist Francois Hollande, whose central campaign pledge was to reopen Chancellor Angela Merkel's eurozone fiscal pact, an international treaty signed by 25 EU leaders. Almost one-in-five French also voted for the europhobic National Front of Marine Le Pen,who wants the single currency scrapped and the French franc restored.


The fall of Sarkozy, if confirmed, and the demise of the Rutte government after only 18 months in office add to the political wreckage littering the chancelleries of Europe.


As the euro crisis drags on, things will get worse for ordinary folk, impacting on the real lives and economies of Europe in the form of unemployment, slashed benefits, credit crunches, banking crises, and company closures. The populists are well placed to benefit from the perceived failures of the mainstream parties and the EU governing elite.


They may also gain from the mismatch between what people are voting for - a tempering of austerity - and what they are getting: a new European regime dictating and policing the taxation and spending policies of national governments. In the gap between mandate and delivery, between politics and economics, lie the seeds of a new crisis of democratic legitimacy.


''There's an urgent need to adapt eurozone budgetary planning to shifting realities,'' Thomas Klau of the European Council on Foreign Relations, in Paris, said. ''Hollande means it when he calls for a refocusing of the crisis-fighting strategy away from austerity alone to include measures to boost growth. And he will get support from other European capitals if he plays his cards right.''


The same day that France decides between Hollande and Sarkozy, the Greeks will also elect a new government. They are almost certain to opt for politicians promising to row back on the radicalism of the social revolution being imposed there by the eurozone as the price of hundreds of billions in bailout funds.


And the relatively young governments in Rome and Madrid, committed to root-and-branch reform of sickly economies but bridling at the depth and the speed of the changes demanded by Berlin and Brussels, will be grateful if a president Hollande represents a catalyst and succeeds in negotiating a relaxation of austerity with Merkel.


''All this could push Germany into accepting less tight conditions for the rest of the euro zone,'' De Grauwe said. ''The wariness about Europe is intensifying everywhere. The eurozone is very fragile. You can only maintain it with greater solidarity.''


Guardian News & Media; Telegraph, London

http://www.smh.com.au/world/carnage-as-europeans-refuse-to-take-their-medicine-20120427-1xqbd.html

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