From Trump to the euro crisis

Sottotitolo: 
First, Brexit, then the election of Trump tell us that the "unpredictable" can occur. It could also occur in the eurozone.

After the victory of Donald Trump, we can argue about not only the reasons for his unexpected success in America, but also about what lessons we can draw for the future of the European Union. Clearly, they are not overlapping political situations. Yet, despite all the differences, the scenarios are intriguingly similar. First, the economic crisis that has had different outcomes across the two sides of the Atlantic; then the quandary of traditional political parties.

The Great Recession has affected both the United States and Europe. With one important difference. The United States has started to grow again relatively quickly, and already in 2014, the GDP has exceeded the level before the crisis, while the unemployment decreased from 10 percent has been reduced to 4.9 percent. The opposite happened in the European Union and, in particular, in the eurozone, where the crisis

The comparison between the policies adopted to respond to the crisis shows the absurdity of the combination of austerity and structural reforms adopted in the European Union under the auspices of the European Commission with the complicity of the eurozone member States. Austerity has paralyzed the growth, led to explosive levels of unemployment and, paradoxically, increased public debt, that it was aimed at reducing. At the same time, the so-called “structural reforms” attacked - through a reactionary policy defined as "reformist", the social achievements that have characterized the European democracy of the twentieth century.

The paradox is that these policies have been supported not only by the rightwing movements, as it was predictable, but also and, sometimes, with greater emphasis, by the center- left parties. But, next year, when are scheduled parliamentary elections in three key countries such as France, Germany and (almost certainly) Italy, many unexpected things - as it was the case with Brexit and the Trump victory - could happen.

The menace of different forms of “Trumpism” does exist also in the EU countries. The center-left parties are aware and frightened by this threat and try to set up any possible, even if, fragile boundaries. The Eurozone gives us three examples that are not isolated, but certainly significant.

In Spain, the Socialist Party, after rejecting the possibility of forming a government with Podemos, has finally decided, splitting the party, to support a minority government led by the Popular Party of Mariano Rajoy, who had been at the helm of the past government, characterized by the cuts to wages and pensions, while the unemployment exceeded 20 percent of the working people.

Instead, in Italy, the scheme should be reversed. To fight the menace of the "Five stars” movement that could win the next parliamentarian elections, the Renzi’s Democratic Party will likely form a coalition government with what remains of Berlusconi's troops - in this case, a government fully endorsed by the Eurozone authorities.

Finally, in France, François Hollande will be forced by his party to give up another attempt to run again for presidency. To avoid the ascent of Marine Le Pen to the Eliseo Palace, we will quite likely see the Socialist party deciding to support the rightwing candidate, as it did in 2002 when voted Chirac to avoid he victory of Jean Marie Le Pen. Now, after the defeat of Sarkozy in the primary, it's likely that it will vote for François Fillon, the former Sarkozy's Prime minister, with an openly Thatcherite program.

Yet this alleged crisis management could be the victim of an unexpected setback, as occurred with Brexit and the victory of Trump. In France, for instance, the unexpected could occur following a possible referendum on the European policy, which could repeat the experience of 2005, when the French people rejected the European Constitution Project.

The euro’s experiment has indeed failed. In effect, the flaw was, from the outset, in the substantial transformation of the Deutschmark into a common currency. The following policy was neither right nor wrong, but fundamentally unsustainable for the majority of the Eurozone countries., given the German monetary policy, due on one hand to the horror of inflation, linked to a particular period of history and, on the other hand, to the exceptional economic structure which makes Germany the world’s fourth largest economy and the biggest exporter in the world.

To be aware of the failure of the euro is the only way to prevent a more dangerous crisis that could lead to the collapse of the entire European Union. The eurozone is not an iron cage. It is possible to It is possible to get out of it. This could be the case of the the forthcoming expiry of the Fiscal Compact . It is an international treaty, not incorporated in the European legislation and not approved by the European Parliament. Moreover, it will be submitted to the judgment of the signatory states five years after its launch, i.e. in 2019. This means that without ratification of the European Parliament and the national Parliaments of the member States ceases its validity in 2019.

It is possible that a number of governments will renounce translating the Fiscal Compact in the European legislation, having it demonstrated its inconsistency and its very nature as a means that could paralyze any possible chance to face, at a national level, the economic stagnation and impoverishment. Moreover, if the Fiscal Compact, imposed by Germany as an essential condition for the existence of the Eurozone, will be put in jeopardy, the scenario in the EU will drastically change. Finally, the European Union could be saved, allowing each member state to participate or not the eurozone.

Antonio Lettieri

President of CISS - Center for International Social Studies (Roma). He was National Secretary of CGIL; Member of ILO Governing Body, Member of the OECD's Trade Union Advisory Council and Advisor of Labor Minister for European Affairs.(a.lettieri@insightweb.it)- http://antoniolettieriinsight.blogspot.it/