Europe Readies for Nationalist Tide
January 16 2017 - 5:29AM
Dow Jones News
By Marcus Walker
The European Union's challenges are multiplying, possibly posing
the stiffest test yet of the regional bloc's ability to muddle
through crises.
Nationalist, antiestablishment politics and other internal
strains are on the rise in the EU just as its geopolitical
surroundings have become more uncertain than at any time since the
end of the Cold War. Political risks to the European order are
mounting before the wounds of the long economic crisis have fully
healed.
Is the EU itself in danger of unraveling, as its common currency
was in the recent past and could be again? And if the EU
survives--a more likely prospect than not--can it win back the
confidence of ordinary Europeans who no longer associate it with
progress toward prosperity?
Elections this year in some of the EU's founding nations will
gauge the strength of the centrifugal forces. The single greatest
challenge to the bloc's survival in its current form, many
observers agree, would be the election of National Front leader
Marine Le Pen as president of France. Ms. Le Pen wants to return
powers to national capitals from Brussels and reintroduce national
currencies alongside the euro.
Her political ascent is as uncertain as the support of French
voters for such measures in any referendum. But the lesson of
2016's votes in the U.S. and the U.K. is that festering discontent
in swaths of Western societies can deliver electoral shocks to the
establishment.
Opinion polls suggest Ms. Le Pen is more of a long shot for the
Élysée Palace than Donald Trump was for the White House--or than
Brexit was in the U.K.'s referendum on EU membership.
But "with an electorate clearly seeking a major change, anything
can happen," said François Heisbourg, special adviser at the
Foundation for Strategic Research, a Paris think tank. "If she does
win, then it's the end of the EU."
Others believe the EU could survive even a Le Pen presidency,
since her party would also need to win June parliamentary elections
to form a government and French voters would have to back "Frexit"
in a referendum.
Unless there is a Le Pen victory, the EU is unlikely to lose
more members, said Charles Grant, director of the Centre for
European Reform, a London think tank. But Mr. Grant said doubts
about the euro could revive if Italy holds elections as some expect
and voters back the antiestablishment 5 Star Movement, which wants
a referendum on the common currency. Impediments to the 5 Star
Movement's ability to win on a national level include its refusal
to form coalitions with more-established parties. "The chances that
the euro will face an existential crisis about Italy are small but
not zero," Mr. Grant said.
Opinion polls show limited support in eurozone nations for
scrapping the euro and reverting to national currencies. The EU's
latest Eurobarometer survey, published in December, suggest around
70% support, on average across the bloc, for keeping the common
currency.
Longer-term doubts about the euro's viability are unlikely to
disappear unless a stronger economic recovery takes hold in
struggling countries such as Greece, Portugal and especially Italy.
Optimists believe Italy's steps toward cleaning up its ailing
banking system could unlock better growth, just as Spain's steady
recovery followed the recapitalization of its banks.
Europe's monetary union is still "incomplete and fragile," said
Nicolas Veron, a visiting fellow at the Peterson Institute for
International Economics in Washington. "There will come a day when
the eurozone faces a crisis to which the only answer is fiscal
union."
The sources of Europe's populist backlash go beyond economics,
extending to countries whose economies are humming along with low
unemployment. The anti-immigration Alternative for Germany, or AfD,
could emerge from elections this fall as the biggest opposition
party in Germany's parliament. The biggest surprise of all,
however, would be the failure of Chancellor Angela Merkel--Europe's
dominant political figure for the past decade--to win
re-election.
The ability of mainstream EU politicians to contain nationalist
challengers depends partly on finding a common strategy on
migration, Mr. Grant said. Efforts to beef up external borders,
join with other regions to stop or return migrants, and improve
cross-border police cooperation against terrorism go in the right
direction, he said.
"Populism isn't going away anytime soon," said Mr. Heisbourg of
France's Foundation for Strategic Research. "The real surprise is
that much of the uncertainty comes from outside the EU," he said,
citing Russian assertiveness, doubts about Mr. Trump's commitment
to traditional U.S. security guarantees in Europe and the terrorist
threat from followers of the militant group Islamic State.
Write to Marcus Walker at marcus.walker@wsj.com
(END) Dow Jones Newswires
January 16, 2017 05:14 ET (10:14 GMT)
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