The liberation of Europe

Is the euro crisis over and the EU back in the saddle in Europe?

As the April 22 French Presidential election approaches (background here), Socialist candidate Hollande has fallen to near-parity in the polls with conservative incumbent Sarkozy, mostly due to the rise of the far-leftist Mélenchon dividing the leftist vote. But France, unlike the US, holds a run-off election if no candidate wins an absolute majority -- and Hollande is projected to win that run-off by 12 points.

Hollande's victory will shatter the tight alliance of Sarkozy with German Chancellor Merkel (so close that they are often called "Merkozy"), and Merkel's open opposition to Hollande's candidacy precludes the emergence of a similar Merkel-Hollande alliance (would that be called "Merde"?). Better still, it will shatter the pro-austerity consensus, and the obsession with deficits at the expense of job creation, which are slowly destroying Europe's economies. Hollande favors large-scale economic stimulus to get the economy moving again, to be paid for by higher taxes on the wealthy and corporations -- and France, unlike Greece or Ireland or even Spain, is a big enough player to defy the EU and actually enact such policies with impunity. Pundits, financial markets, and rating agencies will burst out in the usual hysterics, but if Hollande stays the course and France shows clear signs of recovery, other countries will follow his example.

France is not the only country threatening to defy the EU. Ireland plans to hold a referendum on the "fiscal compact", the latest EU scheme to save the ever-floundering euro currency -- and while all the major parties support the compact (and the media will try to scare voters), the Irish people may well feel otherwise and will have a chance to say so. Greece's troubles, and the civil unrest provoked by the EU's prescriptions for them, are far from over. A major, if not mainstream, Dutch party has called for the Netherlands to abandon the euro. Spain has already held a huge general strike and is feeling pushed to the brink of rebellion. Support for the UKIP, a party whose goal is to take Britain out of the EU entirely, has risen as high as 11% in one poll, and the Conservative party is clueless about how to handle the challenge. A Greek exit from the euro, or even a complete break-up of the currency, are no longer seen as utterly unthinkable, but as possible outcomes to be managed, if they occur, with an eye to minimizing trauma.

The point is, there are several impending situations where a country could bolt from the EU consensus -- a Greek exit from the euro, or a French abandonment of austerity for Keynesian stimulus policy, or a Spanish revolt against conservative rule -- and in each case, it's likely that the country breaking consensus would visibly benefit from doing so. Once that happens, there are political forces in place in other countries -- Ireland, the Netherlands, Italy, Britain, perhaps even Germany itself -- ready to push for similar reforms. After the first domino falls, the EU, the modern prison-house of nations, could unravel as quickly as its Soviet predecessor did.

[For previous posts on Europe and the EU, see here.]