• Like Charles de Gaulle, Le Pen seeks independence toward US (Photo: Blandine Le Cain)

Opinion

European tremors have only begun

05.06.14 @ 09:27

  1. By Dan Steinbock

BRUSSELS - When President Obama arrived in Poland earlier this week, it was as two decades of uncritical integration exuberance had faded in Europe.

Instead of Brussels, the old continent is again led by a handful of core economies – Germany, France, UK, Italy and Spain – that collectively account for more than 70 percent of the European economy.

And several member states have been shaken by the recent EU elections, particularly in France where Marine Le Pen’s National Front came out top with 25 percent of the vote, and in Britain where the UK Independence Party triumphed with 28 percent of the vote.

But what do Europe’s new leaders want?

Away from US laissez-faire

While French and German socialists understand the need for structural reforms, they support only reluctantly the austerity obsession, which has caused mass unemployment, new debt and lingering growth in Europe.

Such measures were first tested in the early 1930s in the US where they contributed to the Great Depression. In the early 2010s, the results have been similar, as evidenced by the new World Social Protection report by the International Labour Organisation (ILO).

In the postwar era, the “Three Glorious Decades” of growth made possible the European social model. In barely three years, it has been shaken to the core by single-minded austerity policies, at the expense of inclusive, pro-growth policies.

On Monday (2 June), when the European Commission demanded Paris to take further action to cut its budget deficit to the EU’s 3 percent limit, Brussels virtually ensured its own isolation in the future and the further expansion of Marine Le Pen’s National Front.

Unsurprisingly, a policy response is in progress.

In July, Italy will take over the EU’s six-month rotating presidency. PM Matteo Renzi will still be riding the sweeping victory of the EU vote, which saw his PD party win a massive 41 percent.

He will try and force economic and institutional reforms domestically and could initiate a historic compromise in Brussels.

Instead of exclusive focus on austerity, Renzi hopes to focus on a lower deficit, but slow the timetable for debt-reduction.

In France, Marine Le Pen denounces the “Europe of Brussels”, supports protectionist measures, and opposes unbridled free trade, supranationalism, the euro and the Eurozone.

Multipolar eurosceptic Union?

As President Obama unveiled his $1 billion “European Reassurance Initiative”, optimists saw Washington’s return to Europe, while pessimists argued it was too little too late.

In 2013, US military spending amounted to $640 billion. The European initiative represents 0.15 percent of the total.

In the West, protest Europe’s fascination with Russian President Putin is usually explained by autocratic inclinations. But the realities are more complex.

Marine Le Pen advocates a privileged partnership with Russia, which is necessitated by “obvious civilisation and geostrategic factors” as well as “energy security interests”.

She believes the ongoing process of demonisation of Russia and Putin at Brussels and Washington is a pretext for the creation of a “unipolar world”.

Like UKip’s Lafarge, Le Pen often demanded Paris to withdraw its troops from Afghanistan. She rejected efforts to involve France in the Libyan conflict and has denounced Atlanticist interventions. Like Charles de Gaulle, she seeks independence toward US.

These ideas have unleashed much concern in Washington, which had hoped to complete the EU-US free trade agreement.

From China’s standpoint, the new approach toward multipolarity is reminiscent of Chirac’s ideas over a decade ago.

The eurosceptic tremors have only begun

In Brussels, the political middle remains in majority.

The centre-right European People’s Party (EPP) and social democrats (S&D) still dominate with 54 percent of the seats, while the liberal-centrists (ALDE) and the greens have around 16 percent.

European integration did not die, but took a heavy hit.

In the process, the share of (largely eurosceptic) independents soared to almost 14 percent. Meanwhile, the left-green socialists, anti-federalist (ECR) and eurosceptic, rightist (EFD) beat the moderate fringe groups accounting for 17 percent of the vote.

In the coming months, the moderate middle hopes to coopt the protest parties, while the latter hope to tax the incumbents’ support. Instead of “more Europe”, the winning protest parties want to foster sovereign states and a looser federation.

With lingering recovery, European decision-making should now be decisive, fast and consolidated. But that’s precisely what’s not going to happen. Instead, strong consensus may be replaced by fragmented sectarian struggles.

Meanwhile, both Washington and Beijing wonder how far Europe’s protest will go.

The writer is research director of international business at the India China and America Institute in the US and a visiting fellow at Shanghai Institutes for International Studies in China and the EU Centre in Singapore.

The commentary is an updated version of the original released by China-US Focus on 3 June, 2014.