Friday, 1 March 2013

A week of turmoil for Europe

Yesterday was a big news day for EU politics, with a series of high-profile speeches in reaction to the disastrous election result in Italy on Monday. But despite the many speeches, the message has been singular: there is “no alternative” to austerity, and hostility toward the EU in domestic politics is exascerbating the euro crisis.

The day started with a speech by humiliated ‘technocrat’ prime minister Mario Monti at the European Commission. Having been rejected by his home country, it is perhaps unsurprising that the former European Commissioner wanted to come to Brussels, where people understand him. It was Brussels after all, at the behest of Berlin, who installed Monti on the Italian throne after forcing out Silvio Berlusconi at the height of the Italian crisis in 2011.

And it is no coincidence that it was the ‘Italians abroad inEurope’ voting region in which Monti received his highest share of the vote – 30%. This compares to the 9% of the vote he received at home – less than half the vote chare received by anti-establishment comedian Beppe Grillo.

If he came to Brussels for appreciation, he got it. The crowd gave him a standing ovation after a speech in which he explained that the brutal austerity reforms he had imposed on the country over the past year would eventually pay off, but it was tough for an angry Italian electorate to understand that now. Austerity was the right response to the crisis, he said. It is right and it will continue to be right.

After the speech Monti met with Commission President José Manuel Barroso and Council President Herman Van Rompuy to discuss the Italian situation. The EU leaders made clear that they expect any new administration to continue the Monti austerity reforms.

But Italians are in no mood to follow dictates from Brussels and Berlin. Italian President Giorgio Napolitano was in Germany yesterday to reassure the markets and political leaders that Italy “is not falling apart”. But he demonstrated a feisty reaction to German characterisations of the election, cancelling a meeting with the Social Democrat opposition leader Peer Steinbruck because he told a rally on Tuesday, “I am appalled that two clowns have won.”

“We demand respect for our country,” Napolitano told members of the Italian community in Munich, in what was described as an “emotional” speech. Reuters reports that the president “stifled a sob” as he said, “"Our country has serious problems in its structure and daily life ... It has darkness but many lights, and you can be proud.”

But if Italians were demanding respect, they weren’t getting it yesterday from German leaders. “The politically responsible people in Rome recognise that Italy needs a continuation of a policy of reform, of consolidation, one which is able to secure the confidence of the citizens and the markets,” said Guido Westerwelle, Germany’s foreign minister. German economy minister Philipp Rösler said there is “no alternative to the previously adopted path of structural reforms.”

Indeed the reaction generally from Northern Europe was unsympathetic. In a speech yesterday in London’s financial center, Olli Rehn, the Finnish European Commissioner for Economic Affairs, insisted that the EU is not only pursuing austerity but also growth. But at the same time he made bizarre overture to Southern Europe which sounded more like a veiled insult. “We need to build bridges between the stability culture of the north and the solidarity culture of the south.” I’m not quite sure what a “solidarity culture” is, but it sounds awfully similar to the “makers versus takers” argument we hear so often in Europe these days (Flanders versus Wallonia anyone?)

But there were others in Germany and Northern Europe who had a mote inward-looking reaction to the Italian result. Klaus Barthel, and German Social Democrat who is quite far to the left, told the newspaper Handelsblatt that it was this kind of divisive rhetoric that had contributed to the huge anti-German feeling in Italy, which is being blamed for Monti’s humiliating defeat.

“Mrs Merkel delivered enough substance to Berlusconi’s nationalist slogans,” he said. “Her advances to the Teutons [aka glorifying Northern European work ethic] bring perhaps one or two votes [in Germany] but come back negatively a million times over from our neighbours.” 

Chastising Cameron

Italy wasn’t the only EU country coming in for criticism from EU leaders yesterday. While in London yesterday Olli Rehn took the opportunity to explain Europe’s sheer confusion over David Cameron’s quest to “repatriate”powers back to the UK.

"I believe it is firmly in Britain's interest to use its energy for reforming Europe rather than seeking to undo our Community, which would leave us all weaker,” he told the assembled bankers and British politicians. “In a nutshell, why not focus on reform rather than repatriation?"

"It is in everyone's interests for Britain to be an active player here,” he continued. “This is a game in which, if I were a British citizen, I would want my country to be playing as a midfield playmaker rather than watching from the sidelines. No-one ever scored goals sitting on the bench."

His speech was followed by an even more combative one from Council President Herman Van Rompuy, who blasted Cameron’s quest to redefine Britain’s role within the EU as both counter-productive and impossible.

"It is not just a matter between ‘London’ and ‘Brussels’" but "would impact the relationship between your country and 26, soon 27 others,” he told the London audience.

London’s hostile stance toward the rest of Europe is already having an impact on its relationships within the EU, he said. “How do you convince a room full of people, when you keep your hand on the door handle?” he asked. “How to encourage a friend to change, if your eyes are searching for your coat?"

"Leaving the club altogether is legally possible" but it would be "a most complicated and unpractical affair,” he said. “Just think of a divorce after forty years of marriage.”

The EU may have had a brief period of calm over the past several months, but it is clear that this rest period is now over. The double-whammy of Cameron’s Brexit speech and Italy’s disastrous election have plunged Europe into new uncertainty. The next few months are going to be a delicate period.

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