Articles:
The Euro´s Feckless Rulers Back the Torroise Against the Hare

02.12.14 Publication:

Pope Francis may
think of Europe as a haggard grandmother, but this eurozone granny´s
got a gambling habit. She used to roll her dice against the bond
markets: now her target is electoral politics. It is only a matter of
time before an opposition party dedicated to dumping the euro, or to
policies anathema to the euro’s current rulers, gains power in a
eurozone country.

For Europe is in
a race, and politics is running faster than economics. The prevailing
eurozone policy of muddle-through-while-slimming down, led by Germany
and being enforced by the new European Commission, depends on the
idea that the economic tortoise will in the end outpace the political
hares.

So far, this has
proven true. Incumbents have regularly been turfed out of office in
general elections in eurozone countries, but none has yet been
replaced by the kind of anti-euro or anti-European Union parties we
all love to deride as “populist”. But for how long?

Victorious
oppositions, such as those in elections in Spain in 2011 or Greece in
2012, have come to power with a line guaranteed to be unrepeatable:
“We condemn utterly our incompetent predecessors, but now that we
are elected we are going to follow the same policies. We have no
choice.”

That is why in
Spain the opinion polls are now being led by a left-wing party that
didn’t exist 10 months ago, Podemos, and why in Greece Alexis
Tsipras’s far-left Syriza is also in prime position. Spain will
have a general election at the latest in December 2015, while Greece
may have a snap election next spring if Syriza succeeds in blocking
the choice by Parliament of a new president.

Neither Podemos
nor Syriza is explicitly anti-euro. But both stand for
interventionist, rather left-wing policies that would cause an
immediate confrontation with both Brussels and Berlin. And an even
bigger danger lies in the country sitting between the two in the
Mediterranean: Italy.

This week, the
eurozone’s third largest economy, bearing a public debt of well
over €2 trillion, found itself in a novel situation: all three of
its main opposition parties are now against the euro. The Five Star
Movement led by Beppe Grillo favours a referendum on euro membership.
The anti-immigrant Northern League favours outright withdrawal. And
the newcomer is Silvio Berlusconi’s right-wing Forza Italia party:
Mr Berlusconi has begun floating the idea of launching a parallel
currency to the euro.

That’s
all very well, you might say, but Matteo Renzi, the 39-year-old prime
minister, is Italy’s true political rebel, his centre-left
Democratic Party is leading the opinion polls, and he is staunchly
pro-euro. All true, and he is even a liberalizing reformer. The
danger, though, is that in order to force through his reforms, Mr
Renzi keeps on threatening to call a general election.

Since he came to
office in a party coup in February this year Mr Renzi has proposed a
lot of reforms, and even got some through preliminary parliamentary
votes. But he has got nothing major on to the statute books. His
opponents, even those like Mr Berlusconi who claim to favour some of
his reforms, are playing for time.

They might even
be winning. Mr Renzi’s approval ratings have just dipped below 50%
for the first time. And the Northern League, under a new leader,
Matteo Salvini, is looking resurgent at least in local elections,
which is probably why Mr Berlusconi has decided to emulate its
anti-euro stance. The next time Mr Renzi threatens to go to the
polls, the other parties might just let him.

He might win. But
the point, whether in Italy, Spain, Greece or elsewhere, is this. By
sticking to their current policy of hoping a blend of austerity and
reforms will bring recovery which brings jobs, eurozone governments
seem to think they are being prudent and patient. Actually they are
taking a huge risk.
Hares do win, sometimes.