Europe In A Tail Spin – Analysis

By Rajeev Sharma

The debt-ridden European continent is in a tail spin. Winds of change are sweeping the world’s smallest but richest continent. Much of this has to do with political changes through elections where economic issues, rather than politics, terrorism, defence or foreign policy, were the main deciding factors.

As governments from Ireland to Italy fell in the recent past in a wave of anger over austerity, six European countries – France, Greece, Germany, Serbia, Italy and Armenia — held elections on May 6, 2012. The nature of elections ranged from presidential to parliamentary to state-level to merely municipal. Here is a quick look at what happened at these places.

In France, Socialist challenger Francois Hollande defeated incumbent Nicolas Sarkozy for the presidency by capitalizing on anger over austerity measures. Sarkozy is expected to transfer power to Hollande on May 14. In a nut shell, the ascendance of Hollande as the new French president implies that the Socialist-ruled France will now push for a more stimulus-minded approach to the financial crisis in France and the rest of Europe.

In Greece, the electorate punished the two main parties in parliamentary elections and Alexis Tsipras’s anti-austerity Syriza group finished a shock second place. Tsipras said the mammoth rescue plan should be renegotiated from scratch. The leader of the Left-wing coalition pledged to form a government committed to tearing up the terms of his country’s “barbaric” 130 billion euro bailout deal, as political paralysis threatened to grip the country.

In Germany, Europe’s number one economic power, the Pirate Party, which calls for copyright law to be radically reformed or abolished, won a third victory in state elections when the party took 6 seats with 8.2 per cent of the popular vote in the small Northern state of Schleswig-Holstein. The result marks the third straight election win for the Pirates, which have moved from fringe party to mainstream movement in less than a year. The Pirates won four seats in state elections in the Saarland in March and took 15 parliamentary seats in Berlin’s state elections last year. The Pirates are expected to do well in a fourth state parliament on May 13 when elections are held in Germany’s most populous state, North-Rhein Westphalia.

In Serbia, opposition Progressive Party won a narrow victory in elections as leaders battled over whether the Balkan country’s future lies with the European Union or further east. The Progressive Party of Tomislav Nikolic, who favors economic and political support from Russia, took 24 percent of the vote and the Democrats of President Boris Tadic, who won Serbia’s candidacy for European Union entry, had 22.09 percent. The decision on who will build a new Cabinet will be made once Tadic and Nikolic face off in a May 20 presidential runoff. The final poll result may affect Serbia’s relations with the European Union (EU) as well as Kosovo.

In Italy, the grassroots Five Star movement of maverick Italian comedian Beppe Grillo and Italy’s left made the biggest gains in local polls when austerity-weary voters punished conservative ex-premier Silvio Berlusconi’s party and its ally. The elections were held in 942 towns and cities and the biggest gainer was Grillo, who mocks politicians and has called for Italy to leave the euro. This was Italy’s first election since Premier Mario Monti was elected by the Italians that he would save Italy from its debt crisis.

In Armenia, a political party loyal to President Serzh Sargsyan won the most votes in a 131-seat parliamentary election, a result that tracked closely with a pattern in other post-Soviet elections: the parties in power tend to stay in power. The election was the first since rioting broke out in Armenia four years ago to protest the election of Sargsyan, Armenia’s third president since independence. The Organization for Security and Cooperation in Europe criticized that election as flawed.

Of all European states that went to polls on May 6, the French presidential election is undoubtedly the most important and needs to be discussed at length. The French have elected a Socialist for the first time in 24 years. It also means that Sarkozy enters the history books as only the second president, after Valéry Giscard d’Estaing, in 1981, to fail to win a re-election bid under the Fifth Republic.

The victory of Francois Hollande will have far-reaching and all-round implications for the world in such diverse areas as Europe’s debt crisis, the Afghanistan war, the Iran standoff and global diplomacy. Probably what sealed Hollande’s victory and defeat of the present incumbent Nicolas Sarkozy was his zany idea of levying a 75 percent income tax for the “very rich” and his pledge to hike taxes on companies that distribute profits to shareholders instead of investing in their business.

In contrast, Sarkozy had pledged to reduce France’s overall tax burden, already among the highest in the world, though he proposed higher sales tax. Hollande’s unusual proposal triggered angry remarks by netizens who said it would ensure that all the super-rich people of France shift base to the United States along with their companies, thus solving the US economic crisis in one go and pushing France deeper into the economic morass. Hollande is expected to push for a more stimulus-minded approach to the financial crisis in France and the rest of Europe and reshape the debate in the 17-nation Eurozone by resorting to more cost-cutting to bring down debts and government-sponsored stimulus to revive growth.

Sarkozy’s defeat may have both immediate and long term political implications for (i) France as it may trigger a succession battle between the socialists and the far right; and (ii) the world as he would undoubtedly be far less US-friendly than Sarkozy, the most America-friendly French leader in a half-century. Sarkozy’s stout support to Washington on Iran and Syria will be diluted by Hollande. The new President may also reverse many other foreign policy decisions taken by Sarkozy. He is likely to reduce France’s military presence in Afghanistan (which was upped by Sarkozy) and bring back French troops from Afghanistan. Hollande would also be inevitably pursuing a hands-off approach by decreasing France’s military or diplomatic muscle flexing abroad. Sarkozy routinely did this, the last example being taking up a major role in NATO’s air campaign over Libya that helped oust dictator Muammar Gaddafi.

The immediate task before Hollande would be to name a prime minister, something that he consistently refused to do all through the election campaign. He may name Jean-Marc Ayrault for the post not only because he is an important leader of the Socialist parliamentary group but also because he has good links to Germany. High on Hollande’s priority would be to work closely with German Chancellor Angela Merkel who supported his candidature.

So what do European election results denote? The results show that extremist parties on both the far-Left and the far-Right are on the rise, apparently exploiting the economic turmoil that has swept across the entire Europe. The co-opting of extreme solutions to the Muslim immigration issues also seems to be playing a part. The latest political trend in Europe seems to be the far-Left and far-Right empowerment which, as was the case in the wake of World War I, seems less about extremist parties’ identification with their goals and values and more to do with punishing mainstream candidates for perceived mistakes.

(The writer is a New Delhi-based journalist-author and strategic analyst.)