Brexit to the west. Italian populism, fiscal mayhem and euroscepticism to the south. Right-wing populism to the east and north. A pro-Russia agenda to the south and east. An immigration debacle throughout. And minority parties left, right and centre.
It’s the EU’s ultimate nightmare scenario. They’re surrounded and infiltrated. Today we summarise what’s going on in the EU, what’ll happen, and what it means for Britain.
The new Italian government is the main threat. Both financially and geopolitically. Yesterday we covered the financial side. But what about the new government’s stance on the EU and its policies?
The ruling parties came from very eurosceptic backgrounds. They then moderated their official positions to become more appealing to the centre.
But the threat is still there. The Italians want the EU to allow the government to breach EU fiscal rules. And perhaps put up with the alternative currency known as the mini-BOT. If they don’t get their way, the euroscepticism will ramp up fast.
The Express has been keeping a tab on the resulting rhetoric that’s too embarrassing for other papers to publish:
The leader of Italy’s far-right Lega party told Paris to stop “poking its nose” into Rome’s internal affairs after French economy minister Bruno Le Maire called on the country’s new eurosceptic government to maintain its efforts to reduce its giant public debt in line with European Union fiscal rules.
And:
Lega leader Matteo Salvini has told Manfred Weber to “focus on Germany” after the MEP warned Italy’s “debts are too high” and said the country’s future leaders are “playing with fire” with threats to leave the euro zone.
It’s like the good old days of European politics, isn’t it? Remember, the EU is causing this mess and build-up of pressure, not preventing it. Like cats in a bag, these countries are stuck with each other at an unhealthy distance.
The EU’s other major fear about the new Italian government is on EU foreign policy. Apparently having a unified foreign policy for 28 nations is troublesome. Who would’ve thought?
The key issue is Russia. The Italian government’s manifesto wants the country to reach out to Russia economically and commercially. Sanctions on the evil empire should end immediately and NATO should turn to policing the EU’s southern borders for African immigrants.
The only problem is, Italy can’t make any of those policies. They’re predominantly in the EU jurisdiction. Uh oh.
EU encourages the right
Bloomberg summarised the shift to the political right in Europe:
If 2017 looked like the year when moderate politicians took back Europe, look again. The election of centrist French President Emmanuel Macron and the re-election of German Chancellor Angela Merkel mask a rising tide of anti-immigrant and populist sentiment that is sweeping aside or weakening mainstream party politics across the continent.
A Bloomberg analysis of decades of election results across 22 European countries reveals that support for populist radical-right parties is higher than it’s been at any time over the past 30 years. These parties won 16 percent of the overall vote on average in the most recent parliamentary election in each country, up from 11 percent a decade earlier and 5 percent in 1997.
In many countries, the right wing is in control. Such as Hungary and Poland. In other places, they are a minority partner in government. In Germany, the Alternative for Germany (AfD) party is in opposition, although it’s not particularly right wing.
It’s fascinating to see what’s happened to UKIP in the UK by comparison. The party lost its hold in the UK after the Brexit referendum. That defies conventional wisdom. The country so eurosceptic it voted to leave the EU is the one country not falling prey to populist right-wing political parties…
This illustrates nicely that it’s the EU which is causing the shift right in Europe – it’s a reaction to the EU policies.
But in the rest of Europe, the same movement will have a much more difficult time getting its way, and therefore is less likely to disappear.
Fighting over funds
The issue of the EU’s budget isn’t in the news any more. But the planned shift in funding from the east to the south had caused an uproar.
Instead of helping eastern European nations to adopt EU values by providing funding, the new EU plan was to starve those nations of funding based on their inability to comply with EU values.
Funny how the worm turns.
Instead, southern Europe would get the money to help its economies. They had been horrified when they realised the departure of Britain meant they’d lose billions in aid.
Fighting over money. Who would’ve thought?
A test in 2019
The next EU elections are in 2019. If the EU continues to get negative publicity, where will that leave the makeup of the EU parliament?
Remember, voters can safely elect wacky eurosceptics to the EU parliament without trashing their own country. If they’re willing to vote for the parties ruling Italy, imagine who they’ll vote for to hamstring the EU. How many UKIP type voters of the sort who back a different party in national elections are there in the rest of Europe?
Bloomberg provides us with the past data on the right-wing and eurosceptic share of the vote in EU parliament. See if you can spot the trend…
Source: Bloomberg
What would a heavily eurosceptic EU parliament bring?
It’s not like the EU will disband itself. Instead, it’ll be stuck with politicians that have wildly differing views of the EU’s goals and purpose.
Where will this leave Brexit negotiations?
A better Brexit
First of all, the change in Europe illustrates the point I’ve been making continuously. Dragging out the Brexit process for as long as possible benefits Britain. It encourages a better deal because the EU is weakening and the UK is strengthening. At least in relative terms…
2019 could be the most important year for Brexit. Our negotiating partner could be an entirely different group.
But it’s trade that’s the key issue on Brexit. And the answer there depends on how you perceive the issue to begin with.
If, for example, you believe that trade is only a good thing inside the EU, and that the EU shouldn’t trade with Brexit Britain, then the stance shouldn’t change much as the EU goes populist and eurosceptic.
If you believe the EU is merely making life difficult for Britain to discourage other nations from leaving, then things change.
This suggests that free trade does not suddenly stop being good just because you’re outside the EU. Punishing Britain is an act of mutual harm. It makes no sense. And will only worsen the EU’s stance by exposing it as an anti-trade bloc.
In this case, a weaker EU will drive a more mutually beneficial bargain. A better Brexit.
This year, the EU is surrounded. Next year, it’ll be infiltrated. And after that, it’ll be neurotic.
Until next time,
Nick Hubble
Capital & Conflict
PS If you missed yesterday’s issue – which prompted a wide response from readers – you can read it here.
Basically, the coalition set to govern Italy has released its manifesto, the aim of which is to blackmail the EU into waiving the fiscal rules as a concession to keep Italy in the euro.
Whatever happens, the EU is trapped… which is good news for Britain, right?
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- Is Italy the weakest point?
- Why the European sovereign debt crisis is back
Category: The End of Europe