Three elections — and three defeats — for EU-wide austerity

The concept of a ‘democratic deficit’ has long plagued the European Union — the EU’s history is littered with grand, transformative schemes planned by EU leaders that voters have ultimately rejected as too sweeping.  As recently as 2005, French and Dutch voters rejected the proposed EU constitution, smacking the EU elite for getting out too far in front of an electorate that clearly did not approve.

Sure enough, the story of the last three days — in the UK, in France and in Greece — will go down in EU history as a similar pivot point against German chancellor Angela Merkel’s attempt to impose strict fiscal discipline across the continent, even as additional electoral hiccups await in the North-Rhine Westphalia state elections later this week, the Irish referendum on the fiscal compact later this month and French and Dutch parliamentary elections due later this summer.

French president-elect François Hollande will now immediately become the face of the EU-wide opposition to austerity and is expected to challenge Merkel with a view that advocates more aggressive spending in a bid to balance fiscal responsibility with the promotion of economic growth — a distinct change in Franco-German relations after the ‘Merkozy’ years.  In his victory speech, Hollande called for a ‘fresh start for Europe’ and laid down his gauntlet: ‘austerity need not be Europe’s fate.’

It is an incredible turnaround from December, when Merkel and deposed French president Nicolas Sarkozy single-handedly pushed through the fiscal compact adopted by each of the EU member states (minus the UK and the Czech Republic), which would bind each member state to a budget deficit of no more than just 0.5% of GDP.  The treaty followed in the wake of the latest eurozone financial crisis last November, during which both the governments of Silvio Berlusconi in Italy and Georgios Papandreou in Greece fell, to be replaced by Berlin-approved technocratic governments, each tasked with the express purpose of making reforms to cut their governments’ respective budgets.

  • UK local elections: Voters across the United Kingdom handed a massive local election victory to the Labour Party Thursday at the expense of both of the Conservatives and the LIberal Democrats, the parties that comprise the UK’s governing coalition, which is pushing ahead with budget cuts, even as the latest figures show that the UK is slipping into a double-dip recession.  Despite a high-profile win by the Tories in London, where Boris Johnson was reelected as mayor, Labour won over 800 council seats, which will further embolden Labour leader Ed Miliband as he continues to pummel David Cameron’s government on austerity.
  • French presidential electionSarkozy has now fallen to an opponent in Hollande who has attacked Merkel’s austerity model and has called for a re-evaluation and renegotiation of the ‘Merkozy’-led fiscal compact.  Indeed, the vigor with which Merkel and other EU leaders, including Cameron and Spanish prime minister Mariano Rajoy, inserted themselves in the French election with vocal support for Sarkozy and opposition to Hollande was unprecedented in European politics.  Throughout the campaign, both Sarkozy and Hollande promised to balance France’s budget during the next presidential term, in a nod to the reality that France cannot continue to borrow indefinitely, in an era where credit agencies have already begun to challenge France’s ‘AAA’ credit rating.  Sarkozy had already raised France’s retirement age from 60 to 62 and was pressing for further budget cuts; Hollande campaigned on fewer budget cuts and higher taxes for France’s wealthiest citizens.  But Hollande’s policy promises seemed fairly mainstream compared to some of the first-round presidential candidates — the 18% of voter support for far-right Front national candidate Marine Le Pen and the 11% support for far-left Front de gauche candidate Jean-Luc Mélenchon in the first round of the election on April 22 can both be explained, in part, as expressions of disapproval with both the EU and with further austerity.
  • Greek legislative elections: In the country that has suffered most from Europe’s sovereign debt crisis, two-thirds of the Greek electorate have voted against the center-right New Democracy and the center-left PASOK, the two longtime major parties in Greece’s postwar political life.  Both parties supported the bailout essentially forced on Greece by the ‘troika’ of the European Central Bank, the European Commission and the International Monetary Fund, and both have received fewer votes than in any time since 1974, when Greece returned to democracy after a brief military dictatorship.  Although PASOK and ND may well form a new government coalition, the election resulted in the radical leftist SYRIZA party emerge as the 2nd place winner (over PASOK), the neo-nazi fascist ‘Golden Dawn’ party winning almost 7% of the vote, and robust representation in the next Hellenic Parliament by each of KKE (Greece’s communist party), Democratic Left (a third radical leftist party) and the Independent Greeks (an anti-bailout center-right party).  If no coalition can be formed, however, a second set of elections will be held in June, in which anti-bailout parties could do even better.
That’s not all, though — it’s by no means clear that the electoral deluge has ended for the pro-austerity forces across Europe where, unlike in the United States where a fragile economic recovery appears to be taking hold, unemployment is creeping to the highest levels yet and GDP growth is slowing to the point of recession across the eurozone.
  • NRW state election.  Next week, Merkel’s own party, the Christian Democratic Union, is expected to lose a state election in Germany’s largest state, North Rhine-Westphalia.  Although the election is not being viewed as a referendum on Merkel or the CDU’s performance in government or as a referendum on Europe, Merkel’s coalition partner, the Free Democratic Party, is expected to be wiped out, while the two parties that form the current NRW government — the Social Democratic Party and the Green Party, both of which are pro-Europe and less pro-austerity than the CDU — are both expected to make gains.  Also expected to make gains are the anti-establishmentarian Pirate Party, which has only recently emerged as a political force in Germany.
  • Dutch legislative election.  Dutch elections are scheduled for September 12 after Prime Minister Mark Rutte failed to achieve support from his own coalition for austerity measures in the Netherlands.
  • Irish referendum.  Irish voters, who have so far approved the massive austerity measures that have resulted from the nationalization of Irish banks in the wake of the 2008 financial crisis, may be emboldened by today’s French and Greek elections to reject the fiscal compact on May 31 in a referendum required by Ireland’s constitution.  Although polls currently show the ‘yes’ campaign leading the ‘no’ campaign, and notwithstanding the threat that Ireland’s own fiscal bailout could be endangered by a ‘no’ vote, Sinn Fein and other leftist groups in Ireland have attacked the fiscal compact as a straitjacket on Ireland’s sovereignty.
  • French parliamentary election.  France will hold parliamentary elections in June, which always succeed the April/May presidential election.  While it is typical for parliamentary elections to follow the result of the presidential election, and the Parti socialiste will almost certainly emerge with a majority in the Assemblée nationale, Sarkozy’s defeat will leave the French center-right without an effective leader going into the parliamentary election and Le Pen, encouraged by her first-round presidential election success, will use that opportunity to try to win as many seats as possible for the Front national.

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