Friday 1st June, 2018

These days it is by and large foolish to try a predict with accuracy the course of events in European politics, with things taking place completely without warning, and others which appear to have already happened, suddenly resurfacing to happen again in a way very different from what we assumed had happened the first time. Some events on the other hand are repetitions, more farcical versions of the first-time round.

With the increased tempo of politics in this era, I thought I’d start writing an end-of-week summary of my thoughts on some of the more significant developments which have taken place today or over the course of the past week; reflection on the state of affairs, I intend somewhat shorter than some of the longer stuff I’ve written. Hopefully they’ll provide some food for thought.

This Friday (1^st June), there are two main events emanating from the South that of course demand attention: the moción de censura which passed successfully in the Spanish Congreso in Madrid, and the confirmation in Rome of Italian Prime Minister-Designate, Giuseppe Conte, and the rag-tag band of populists from the Lega (formerly Nord) of Matteo Salvini and Movimento 5 Stella of Luigi Di Maio, who hope they can run a government together. And not just any government, but the government of the third-largest state in the eurozone. Also on the agenda is the growing split in trans-Atlantic relations.

 

Regime Change in Madrid

In Madrid on Friday 1^st June, the moción de censura (vote of no confidence) was passed by the Congreso 180 votes to 169 with 1 abstention. Pedro Sánchez, Secretary-General of the Spanish socialist party, was therewith elected Prime Minister by the chamber. El País reported this evening that the socialist leader will be appointed Prime Minister officially by King Felipe tomorrow morning (Saturday 2^nd June) at 11 o’clock.

It is these days common currency to talk of corruption when discussing governments in the south of Europe – Italy, Spain and Greece all carry this connotation with them when mentioned in places like Berlin or London. So, it doesn’t surprise me that this is how Rajoy would meet his political end. The ‘Gürtel’ affair involved a fairly straightforward case of Rajoy’s party being bribed in return for public contracts. The court ruling made specific mention to Rajoy, vice-secretary of the party between 1990-2003, doubting the credibility of his testimony given in July 2017.

All damning stuff indeed, but whilst this is blatant evidence of corruption in the Spanish elite, I’m left wondering why northern states aren’t so tarred with this brush in Europe’s general psyche. For example, news emerged yesterday that the London Evening Standard – edited by former British Conservative Chancellor George Osborne – has made a deal with several companies including Uber and Google, whereby they will provide positive coverage in the paper at the small price of £500,000 a go. It seems the Standard approached firms with this favourable deal. Meanwhile Boris Johnson, the British Foreign Secretary, is still currently on the payroll of The Telegraph, and last year the DUP – a tiny 10-seat party – were promised £1bn by Theresa May after the general election left her party without a majority and she needed the votes to secure her government. No overt law-breaking here but clearly some questionable incentives and motivations that aren’t necessarily aligned with the average man or woman. Or instead let’s take Germany: the VW emissions scandal. Has been going on for several years now – since 2015. The US has charged ahead with its investigation, levying fines and even arresting VW executive Oliver Schmidt. But what has Berlin done? Merkel declared last month in the Bundestag “It cannot be in our interests to weaken the car industry by political means”. In other words, ‘let’s hope this all blows over because to take action and hold people to account would harm the industry – and all of us at the top’. No fines, no real change in the laws and certainly no arrests. The heute-show put it: “Germany is one giant industry-protection zone”. And I ask you, is this not corruption? Politicians working for private interests, among which no doubt their own? I think so. And yet the north, particularly people in Berlin and Brussels, continue to volley accusations of corruption at the South as if they are completely free of this issue – when in truth, they have simply found more sophisticated ways of enabling it.

 

I saw a tweet by a Podemos supporter noting rather wryly that the coalition of votes which brought Mr Rajoy’s end was in fact the one which Podemos suggested to Mr Sánchez in 2016 as an alternative to yet another Rajoy-led centre-right PP (People’s Party) government. Whether Mr Sánchez would in fact have received the support of Basque and Catalan nationalists two years ago as he did today is questionable, but it nicely brings up the question of what will the socialists do, now their man leads the government. Sánchez appears to be on the left-wing of the party, and reminds me in some respects of Corbyn. He has been elected twice now by his party’s membership to the post of Secretary-General having been challenged by his more centrist ‘colleagues’ after the poor showing in the 2015 and 16 elections. He seems to have resisted open overtures to the left because of the centrist wing in the party; nonetheless, in the long run the PSOE will have to shift leftwards if it is to make a more significant showing than the paltry 84 deputies it won last time. The question remains as to whether he feels confident enough to strike out leftwards, or will he succumb to the same old crushing paralysis and tired rhetoric which has sent several other European socialist parties to their graves – in Greece, in France and now it seems in Germany and Italy. Perhaps an election on an anti-neoliberal platform is what he will use, but as far as I’m concerned, he needs to start the change of pace now. There are two clear examples which show him what to do and what not to do. On the one hand, Jeremy Corbyn, or perhaps even closer to home, António Costa’s broad-left government in Portugal; clear, defiant challenges against the neoliberal and austerian orthodoxy of the past few decades. On the other, the utter tragedy that is the SPD; Martin Schulz succumbing to yet another Grand Coalition, and now Olaf Scholz, a hollow, painfully unimaginative attempt to out-austerity Schäuble. The SPD hasn’t been thanked for this rigid adherence to teutonic rigour, so the signposts should be clear for Mr Sánchez. Hopefully rebellious parliamentarians will not give him the same headache that Corbyn has been receiving out of government, but that may be a fool’s hope.

 

A final note is on Rajoy. The commentariat was alive on Thursday as it slowly dawned on everyone that the Spanish Prime Minister had left the chamber and had decided to go for a long meal, and let the no-confidence proceedings continue without him. And at this point I’m interested to ask what would you do? Not a bad choice as far as I’m concerned. He’d lost and this had become clear. Hearing the arguments for hours on end on why I’m no longer fit for the office would drive me to insanity or perhaps just boredom were I in his position, and frankly I’d come to the conclusion that this was a waste of my time. Yes, it suggests a lack of respect for the office perhaps but the court’s verdict had already shown that clear as day, so what else was there to lose? Perhaps in Westminster there would be some archaic respect for the procedures of parliament and its traditions, but in my mind going to eat some good food when all else seems thoroughly pointless is one of the oldest and most venerable traditions one can follow, and Rajoy did just that. Adiós Señor Rajoy. Cuidar de sí mismo.

 

Barbarians with the keys to the city

In Rome the same day Italy finally found itself holding its breath and jumping in headfirst as President Mattarella confirmed the designate of the 5 Star-Lega coalition, Giuseppe Conte, as Prime Minister of Italy, thus handing this unholy alliance of barbarians, racists and outcasts the keys to the Eternal City and putting them in control of the third-largest state in the eurozone.

This drama has unfolded over the last few weeks, with talk of technocratic governments, mass deportations, euro-exits and dodgy CVs all around. It’s always a wonder where Italy digs up its designates for Prime Minister, isn’t it? These days it’s either an unknown (I’m pretty sure Conte made a Twitter account last week after he was spontaneously asked to be the Lega-5 Star designate), or a Berlusconi. One could say Renzi was neither but he also possessed neither of the two categories’ qualities and few of his own to compensate.

I’m not sure it’s that surprising that the 5-Stars have gone with the Lega as their first coalition-partners in government, given their antics in the past, seizing on more radical left discontent and particularly the anti-corruption warpath whilst declaring themselves beyond left and right and allying with Nigel Farage in Strasbourg, later botching an attempt to transfer to the liberal group under Guy Verhofstadt, the staunch European federalist. What’s more tactically questionable is 1, leaping at their first opportunity to form a government, and 2, not recognising that this particular class of bedfellow will be especially treacherous in the months to come. Of course, this government cannot go on without quickly running into resistance, especially with Salvini at the Interior (and his looming promise to deport 500,000 migrants from Italy) and Di Maio having claimed Finance (his first pick going to European Affairs). The combination of flat-tax and universal basic income – among other spending promises – will send the deficit soaring and bring Rome into direct confrontation with Brussels and Frankfurt, like SYRIZA’s Tsipras in Athens 3 years ago. Unlike in Greece (though she ultimately capitulated under Tsipras), Conte’s government has no strategy for bringing about a wider transformation of the Union required to end the fragmentary centrifugal forces which are causing misery for Europe’s peoples, particularly in the South, and have undermined the entire European Project, and will continue to do so. In fact, in complete contrast to Varoufakis, it seems the 5 Star-Lega government do in fact want to leave the eurozone, if they saw an opportunity.

The fact is, if the coalition does not push matters to the brink and simply go for a typical EU-style fudge, then they lose all their credibility as the real answers to Italy’s problems. And Di Maio is no doubt aware of this, that he cannot afford to surrender. On the other hand, Tsipras must’ve been just as aware and he bent the knee after just 7 months. However, this is where point 2 comes in, for Salvini will not stick around to take responsibility for the mess that will result from a clash between Rome and Europe. Europe neither has the mechanisms nor I suspect the willpower to prevent him from beginning his fascist round-up of supposed threats to the Italian nation, so he will be able to carry on unimpeded, and certainly any plans he makes for this will not cause real problems for Italians in general, unlike the 5-Stars in Finance and Europe. So, when the time comes, perhaps Salvini will withdraw his support for the government; perhaps he no longer believes the 5-Stars are willing to do what it takes to save the country. Perhaps all he wants to do is create the chaos necessary for he and his allies to appear as the only real solution. And Di Maio will be left with a great big pile of god-knows what to clean up whilst his self-professed allies now turn on him. Of course, the irony in such a fate is delicious, a populist becoming the victim of populism, but it must be recognised that this will only do Italians and Europeans more harm, as general faith and trust in democratic government buckles under increased pressure, and with it the European Project.

 

So of course, the worse thing the EU could do is amplify the problem presented by this government by trotting out several senior figures and having them repeat the same kind of lines they did in 2010 with Greece, in 2011 with Ireland and Spain, and later Italy and Greece again, in 2013 with Cyprus, and finally in 2015 with Greece once more. What did the (German) Commissioner of the Budget Günther Oettinger say? ‘The markets will teach them how to vote’. What did Manfred Weber, leader of the EPP group in parliament say? ‘Eurozone reform is dead’ (when we all know very well that Merkel, Scholz and the CDU all in fact killed reform with the repeated ignoring of President Macron’s proposals). What did Guy Verhofstadt, leader of the liberal group say? ‘Reforms, reforms, reforms, and Italy will be saved’ (like those which saved Greece, you mean?) Et tu, Mr. Juncker? Oh yes, he couldn’t resist to bring out the tired old trope that Italians simply are too corrupt and not hard-working enough. One would be forgiven for thinking the EU was trying to bring about its own disintegration.

 

A frenemy across the pond?

This last piece comes from a note I saw on the public edition of Eurobriefing on Friday discussing the impact of the import tariffs which Trump’s administration had decided to levy on allied country’s companies in Canada, Mexico and indeed the EU. The wise men and women at Eurobriefing fear the lasting impact may be to drive a deeper wedge between France and Germany given that, France is a deficit country and does not have a surplus with the US, whereas Germany does. Hence, the French have far less to lose from Trump’s continued attempts to assert himself than the Germans, who will do everything to defend the German car industry which is at risk of being drawn into this looming trade war. Meanwhile, Macron has tried to position himself to be the US administration’s first port of call in Europe, before Britain or Germany, and will not necessarily want to support Germany all the way in retaliating against the yanks. Merkel has instead made the most strident remarks about Europe having to potentially forge its own path in the face of this increasingly disengaging and volatile America; and yet as usual with Merkel this has amounted to little concrete so far. It has been noted that this is the flipside of the current account surplus that Germany has built its success on – powerlessness in situations where the guarantor of the international system all of a sudden decides she wants to undermine it. We saw this with the exposure of German firms in Iran, and now we’re seeing it on trade. Germany relies on a friendly international environment and this is being sorely tested, as is the provincial German political class, who have found themselves clueless as to who to look to next.

The fact is, Europe cannot rely on itself to be united in how it will respond to Trump’s America. Fittingly, even Germany itself, at Europe’s centre, finds itself divided on the issue. The age old go-to for those questioning the wisdom in blind support for the US was to form more cordial relations with Russia. For Germany this presents a problem as Russia undermined the peaceful, friendly nature of the international system before the US did, and they don’t seem to be backing away from that. On the other hand, Germany has an economic interest in friendlier relations with Russia due to the Nord Stream pipeline, and the presence of Russian gas across the eastern European economy, deeply integrated with Germany’s. There is a significant wing of the ruling SPD who believe more cordial relationship with Russia is key to prosperity in Europe, and former social democratic Chancellor Gerhard Schröder was last year appointed to the board of Russian oil giant Rosneft, already having been appointed manager of the Nord Stream II project in 2016. The governing CDU’s Bavarian sister party (CSU) also believes in cordial relations with Russia. Viktor Orbán, who has formed a close relationship with senior CSU figure, former Bavarian Premier and current German Interior Minister Horst Seehofer, also sees a benefit from closer relations with Moscow. His own economy, as well as that of Czechia and Slovakia rely heavily on Russian gas imports. Further afield, the new Italian government has placed reconciliation with Russia and a shift away from the US among its foreign policy priorities. This theoretically bodes well for Germany as it gears up for full-scale trade war, and suggests the recent EU declaration to hold to the Iran Agreement should remain strong. And yet, this hasn’t translated to Germany making open overtures to Russia as a consequence, for such a permanent break with the US is not in any German politician’s playbook currently.

The other side of the equation is firstly, witnessing over the past year French President Macron’s attempts to impress and win over Trump and become his first European port of call, as well as act alongside him in asserting a traditionally Western approach to the Middle East. Poland also has made clear it has no interest in undermining relations with the US or weakening NATO, and you can see why. Who is going to replace the overwhelming military presence of the US in Europe should they decide to pull back on some of their commitments? Europe has become perilously reliant on America and like with Germany’s trade surplus, we now have no leg to stand on when trying to negotiate. Warsaw only this past week invited the US to establish a new permanent military in Poland and even offered to pay $2bn to make it happen, so even with the yanks as ambivalent as they’ve ever been towards the fate of this continent, Poland would rather bet its chips on Washington than London, Berlin or Paris. Poland also offered the previous week to act as the mediator between America and the rest of Europe on the Iran matter, suggesting our attempt at a united front is already faltering. The Baltic states, whilst not quite so friendly with Trump’s particular politics, are in a similar bind when it comes to Russia.

And then there’s Britain. There’s been nothing particularly ground-breaking from my island homeland as talk of trade wars and indeed actual war has heated up over the past month. As unsuccessful as Macron’s attempts to come off as an equal of Trump’s have been, Britain under May has looked like little more than a follower, and one completely devoid of imagination or their own will at that. Thankfully, on both Iran and trade Britain’s following has kept it in line with the rest of the EU, but will this hold? The whole point of Brexit is to go separate ways from Brussels and Brexiteers are becoming ever more restless for a clear sign of this from Westminster. And yet any sane person can tell Trump’s America is not a horse to bet on. For now it seems Britain will remain in its deepest pit of irrelevance since 1066. But I suspect British governments in the years to come will lean towards America – in a reflexive manner – especially given Brexit and if the EU decides to reconcile with Russia in the wake of Trump – itself not the brightest move. If this is Europe’s time to prove itself in the art of foreign diplomacy, there are few worse moments it could come. Shame no one in Brussels or Berlin seems equipped to actually articulate a foreign policy independent of both the US and Russia given we now have an excellent set of circumstances in which to do so. We are not in the era of Atlanticism or Ostpolitik anymore.