A populism spurned by the downturn’s discontents

 European populism is more like the Mad Hatter’s Tea Party than Boston’s

Political backlash usually follows economic crisis. Everyone knows how the Great Depression fuelled support for extremists on both the left and right. Less well known is the way the original Great Depression – the one that began in 1873 and involved a quarter-century of deflation – led to a wave of populism on both sides of the Atlantic. Could this history be repeating itself?

Some 1930s-style fascists are out there, notably in Greece, Hungary and further east. Yet for most Europeans and Americans, fascism is a toxic brand. Far more common are movements that echo the populism of the late-19th century.

Today’s populists are a motley crew of xenophobes, nationalists and cranks – just like their predecessors. Causes dear to 1870s populists ranged from anti-Semitism to bimetallism. Nowadays anti-immigration and euroscepticism are more likely. In America, the financial crisis begat the Tea Party. Europe’s equivalent looks like a populist wave, which many expect to break spectacularly in the upcoming EU parliamentary elections. The real story will be more surprising. Despite the severity of the shocks inflicted on European economies since 2008, most voters will back mainstream parties. Unlike in the 1930s, but as in the 1870s, the centre will hold.

You can see the populists’ media appeal. Compared with the men and women in suits of mainstream European politics, Nigel Farage – the smoking, boozing leader of the UK Independence party – is a newspaper editor’s dream. The same goes for Marine Le Pen, the blonde bombshell of France’s National Front.
As those contrasting examples suggest, there is in fact no such thing as a homogeneous populist movement. When they convene, UKip MEPs are part of the Europe of Freedom and Democracy group. Then there are the so-called Non-Inscrits – MEPs not attached to any of the recognised party groupings in the European Parliament. These include members of Austria’s Freedom party as well as the Dutch Freedom party.

So what does this motley crew have in common aside from varying degrees of hostility to immigrants? The answer is a growing revulsion against European federalism. At a time when the establishment is struggling to increase the powers of Brussels, a big win for these groups would indeed be serious.

The European Parliament long ago ceased to be a talking shop. It is now effectively Europe’s House of Representatives, sharing legislative power with the European Council. It elects the president of the commission, vets commission nominees and has the power to force their resignation. A populist parliament would sound the death knell for “ever closer union”.
Yet detailed country-by-country research by my colleague Pierpaolo Barbieri suggests that the populists will fall far short of such a victory. The elections will be a toss-up between the centre-left Progressive Alliance of Socialists and Democrats (S & D) and the centre-right European People’s party (EPP). The S & D will claim victory because the EPP will probably lose seats, as will the Alliance of Liberals and Democrats for Europe. True, Non-Inscrits will probably win about 90 seats – nearly three times the 32 seats they won in 2009 – but the EFD will remain stuck at around 30. A total share of approximately 16 per cent of the total of 751 seats hardly represents a populist landslide.

Crucially, there is very little chance that these disparate elements will be able to act in concert. The Economist recently had fun depicting Mr Farage, Ms Le Pen and the Dutch maverick Geert Wilders in a common populist teapot. In reality, Ukip loses votes when it is associated with Ms Le Pen. In organisational terms, European populism is more like the Mad Hatter’s Tea Party than the Boston tea Party.

The populists’ real breakthrough will be in France – where the Front National outperformed in recent municipal elections. Ms Le Pen has political skills far superior to her father, who had all the subtlety of Obelix. Yet this is a national phenomenon. It will matter only if it makes Ms Le Pen look like a credible candidate for France’s next presidential elections.
Moreover, it is only in France that populists have a real chance of coming first. In the UK, where Labour seems likely to win, the Tories may yet edge ahead of UKip as the British economy recovers far faster than the Keynesian Cassandras had anticipated. In Germany the eurosceptic party Alternative for Germany is growing, but it is still polling only 6.5 per cent. It will probably win about six seats, compared with 38 for the CDU/ CSU of Angela Merkel, chancellor.

And for every France there is a Spain. As Alfredo Pérez Rubalcaba, opposition leader, said in Madrid last month: “Spain will not send a single anti-European deputy to Brussels”. The same applies to Portugal which, despite the hardships of the crisis, remains staunchly pro-European. In Greece, the leadership of the leftist Syriza – which so worried the commentariat – is rapidly moving into the European mainstream. And in Italy, Matteo Renzi’s reinvigorated Democratic party will come in comfortably ahead of Beppe Grillo’s Five Star Movement.
There is also a backlash against the populist backlash: new pro-European parties are polling well in Austria (the Neos) and Greece (To Potami). These newcomers appeal to younger voters, for whom populism seems old and crass.

The financial crisis was bound to have political consequences. Yet the striking thing about Europe’s populists is not how well they are doing, but how badly. A hundred years ago the ultimate beneficiaries of a deflationary downturn were Social Democrats, not populists. The same looks to be likely today.

Ukraine’s Bumpy Road to Europe


Nestled amid the green Crimean hills, lapped by the Black Sea’s languid waves, Yalta’s battle-scarred appearance in February 1945 prompted Winston Churchill to call it “the Riviera of Hades.” It still has the faint aura of a seaside resort for secret policemen.

Today, of course, the Soviet system is a (slowly) fading memory, and the organizers of this year’s Yalta European Strategy conference could even make fun of Stalin in a specially commissioned cartoon. Yet Stalin’s ghost is not so easily exorcised. Although nearly 70 years have passed since President Franklin D. Roosevelt and a reluctant Churchill handed Eastern Europe over to the Soviet dictator, the old ogre still seems to haunt the Livadia Palace.

After President Barack Obama’s fumbling over Syria, Russia is once again flexing its muscles — not just in the Middle East, where President Vladimir Putin is bidding for the role of power broker, but also in his own backyard. At Yalta in 1945 it was above all the fate of Poland that was at stake; this year it was the turn of Ukraine itself.

The choice was made crystal clear in the course of the conference last month: on one side, the European Union; on the other, Russia.

“The most beautiful flowers often grow on the edge of the precipice,” said the Polish foreign minister, Radek Sikorski, during a debate about Ukraine’s European dilemma. Ever since the Ukrainian “Orange Revolution” in 2004, Kiev has been edging toward closer integration with Europe. This was the case under the now-jailed Yulia V. Tymoshenko, the former prime minister, but also under her jailer, President Viktor Yanukovich. In large part thanks to Poland’s initiative, the European Union’s Eastern Partnership has become an antechamber for potential new members, covering not only Ukraine but a number of other “frontier” markets in the neighborhood, including Moldova, Armenia and Azerbaijan.

Ukraine is the first of the Eastern Partnership countries to take the next step: an Association Agreement with the European Union. This is scheduled to be signed at the Eastern Partnership Summit in Vilnius, Lithuania, on Nov. 28. An Association Agreement matters because it implies a free trade agreement and also paves the way to a formal application for E.U. membership.

In Sikorski’s words: “We’ve done it, so can you.”

The stark alternative is Russia’s proposal for a Eurasian Customs Union proposal. Speaking at the Valdai Discussion Club last month, Putin firmly denied that Russia was bullying Ukraine, Moldova and other nations to join his Eurasian union. But he noted that Russia was the main market for Moldovan wine and Ukrainian products. It was only honest, he said, to point out what they might lose by turning westward to the European Union.

Putin’s chief economic adviser, Sergei Y. Glazyev, was at the Yalta conference and made the same kind of argument. Recent Russian trade restrictions on Ukrainian products — notably the ban on Roshen confectionary — were a warning against the “suicidal” step of signing the E.U. Association Agreement. In the course of an astonishingly undiplomatic debate between Glazyev and Petro Poroshenko, a Ukrainian member of Parliament and businessman, a member of the audience asked Glazyev: “We have chosen Russia in the past over Europe, and where did it take us?”

One stumbling block to a deal at Vilnius remains Tymoshenko’s continued imprisonment. Yanukovich is under intense E.U. pressure to release Tymoshenko, who has been in jail since 2011 on corruption charges relating to a deal reached with Gazprom when she was prime minister (she was also briefly charged with murder earlier this year). According to both the Court of Human Rights and Council of Europe, her rights have been violated.

But the real obstacle to Ukraine’s European future may yet prove to be the country’s chronic economic weakness. In this respect, Ukraine is indeed Hades to Yalta’s Riviera. The country’s foreign reserves are running out. Russia accounts for a quarter of Ukraine’s exports and the trade restrictions imposed this summer could cost up to $2.5 billion in the second half of the year. Cheap foreign finance has disappeared. Since May, Ukrainian bonds have plummeted.

At the Yalta conference, the Russian taunt to the European Union was simple: “Are you ready to bail out Ukraine, too?” The answer to that question might in fact be yes, if in return Ukraine is willing to commit to meaningful reforms, both economic and political.

For the European Union, this is another opportunity to do what it is best at: expanding. Those who have heaped scorn on European policy makers of the past three years tend to forget that, despite their strictures, the process of expansion has continued. Two new countries have joined the monetary union since the financial crisis began; a third will join in January.

As for Kiev, if the choice is between following Poland’s lead or reverting to dependency on Moscow, like Belarus, surely the Ukrainians will choose the former. Not only do they have Poland’s example before them. There are the reassuring cases of Bulgaria and Romania, which are not a thousand miles behind Ukraine in terms of institutional development but which have been E.U. members since 2007. Croatia joined this year.

Recall, too, that — as the Hungarian example underscores — the European Union is far better at pushing change in nonmembers (during the accession process) than after membership is achieved. It will take time for Ukraine to raise its standards to the level required of E.U. members. It will not be easy. But if the alternative is to be drawn back into the historic death embrace of a reborn Russian empire, Europe suddenly looks worth these sacrifices.

We look forward eagerly to Ukraine’s first step toward E.U. membership. We also look forward to Yalta’s imminent rebranding as the Riviera of Purgatory.

The Left’s Irrational Fear of American Intervention


Not for the first time, human rights violations by a Middle Eastern tyrant pose a dilemma for leftists on both sides of the Atlantic. On the one hand, they don't like reading about people being gassed. On the other, they are deeply reluctant to will the means to end the killing, for fear of acknowledging that western – meaning, in practice, American – military power can be a force for good.

Ever since the 1990s, when the United States finally bestirred itself to end the post-Yugoslav violence in the Balkans, I have made three arguments that the left cannot abide. The first is that American military power is the best available means of preventing crimes against humanity. The second is that, unfortunately, the US is a reluctant "liberal empire" because of three deficits: of manpower, money and attention. And the third is that, when it retreats from global hegemony, we shall see more not less violence.

More recently, almost exactly year ago, I was lambasted for arguing that Barack Obama's principal weaknesses were a tendency to defer difficult decisions to Congress and a lack of coherent strategy in the Middle East. Events have confirmed the predictive power of all this analysis.

To the isolationists on both left and right, Obama's addiction to half- and quarter-measures is just fine – anything rather than risk "another Iraq". But such complacency (not to say callousness) understates the danger of the dynamics at work in the Middle East today. Just because the US is being led by the geopolitical equivalent of Hamlet doesn't mean stasis on the global stage. On the contrary, the less the US does, the more rapidly the region changes, as the various actors jostle for position in a post-American Middle East.

Syria today is in the process of being partitioned. Note that something similar has already happened in Iraq. What we are witnessing is not just the end of the Middle East of the 1970s. This could be the end of the Middle East of the 1920s. The borders of today, as is well known, can be traced back to the work of British and French diplomats during the first world war. The infamous Sykes-Picot agreement of 1916 was the first of a series of steps that led to the breakup of the Ottoman empire and the creation of the states we know today as Syria and Iraq, as well as Jordan, Lebanon and Israel.

As we approach the centenary of the outbreak of the first world war, there is no obvious reason why these states should all survive in their present form.

It is tempting to think of this as a re-Ottomanisation process, as the region reverts to its pre-1914 borders. But it may be more accurate to see this as a second Yugoslavia, with sectarian conflict leading to "ethnic cleansing" and a permanent redrawing of the maps. In the case of Bosnia and Kosovo, it took another Democrat US president an agonisingly long time to face up to the need for intervention. But he eventually did. I would not be surprised to see a repeat performance if that president's wife should end up succeeding Obama in the White House. After all, there is strong evidence to suggest Obama agreed to the original chemical weapons "red line" only under pressure from Hillary Clinton's state department.

Yet the president may not be able to sustain his brand of minimalist interventionism until 2016. While all eyes are focused on chemical weapons in Syria, the mullahs in Iran continue with their efforts to acquire nuclear weapons. The latest IAEA report on this subject makes for disturbing reading. I find it hard to believe that even the pusillanimous Obama would be able to ignore evidence that Tehran had crossed that red line, even if it was drawn by the Israeli prime minister rather than by him.

The Iranian factor is one of a number of key differences between the break up of Yugoslavia and the breakup of countries like Syria and Iraq.

The Middle East is not the Balkans. The population is larger, younger, poorer and less educated. The forces of radical Islam are far more powerful. It is impossible to identify a single "bad guy" in the way that Slobodan Milosevic became the west's bete noire. And there are multiple regional players – Iran, Turkey, the Saudis, as well as the Russians – with deep pockets and serious military capabilities. All in all, the end of pan-Arabism is a much scarier process than the end of pan-Slavism. And the longer the US dithers, the bigger the sectarian conflicts in the region are likely to become.

The proponents of non-intervention – or, indeed, of ineffectual intervention – need to face a simple reality. Inaction is a policy that also has consequences measurable in terms of human life. The assumption that there is nothing worse in the world than American empire is an article of leftwing faith. It is not supported by the historical record.

The Losing Habit

 How long will the GOP stay in denial?

Defeat can be habit-forming. Ask any Democrat. They lost three presidential elections in a row in the 1920s and 1980s, four in a row between 1896 and 1908, and a record six in a row between 1860 and 1880. Only in one period in modern American history have Republicans suffered such a string of defeats: between 1932 and 1948, when Franklin Roosevelt won four and Harry Truman made it five.

I know what it feels like. The British Tories were out of power for 13 years between 1997 and 2010. Last night was my second defeat since I moved to the United States in 2002 and became a Republican supporter. (Actually, it was my third, since I endorsed John Kerry in 2004 in a fit of frustration about the Bush administration’s mishandling of Iraq and the Republican Party’s fiscal irresponsibility.)

To break the losing habit, Republicans must resist the temptation to make excuses. We should dismiss the following thoughts from our minds: it was Hurricane Sandy’s fault; it was Chris Christie’s fault; the mainstream media gave Obama a pass on Benghazi; a Mormon can never be president; a private-equity guy can never be president; the Tea Party went too far; the Dems’ ground game was better in Ohio.

Forget all that. These are just ways of denying the deeper causes of Mitt Romney’s defeat. Until we face up to these, we will keep on losing. Indeed, I predict now that we will lose in 2016, even when faced with a less ruthlessly effective campaigner than President Obama.

First, the Democrats understand the new world of Internet-savvy, data-driven marketing better than the Republicans do. My own experience of being piranha-attacked by liberal bloggers taught me that. And this was just a minuscule bit of vilification compared with the character-assassination campaign against Romney during the summer.

Second, demographic trends doom any Republican campaign that appeals more to white males than to any other voter group. According to exit polls, Romney won 60 percent of the white vote, compared with Obama’s 38 percent. But Hispanics voted Democratic in even larger numbers than four years ago. The Hispanic share of the population is set to rise from 16 percent in 2010 to nearly 30 percent by 2050. Non-Hispanic whites, meanwhile—who made up two thirds of the population the last time Republicans won a presidential ­election—will be down below half by midcentury.

Third, running on the economy doesn’t work if people remember your own party’s role in screwing it up and think improvement is in sight. According to the latest IMF projections, U.S. growth will be higher over the next four years than that of any of the other major developed economies. Unemployment will come down faster. Driving recovery will be the bonanza of cheap energy represented by shale gas.

Finally, and most important, the Democrats have figured out what European Social Democrats long ago understood: the more entitlements you create, the more voters you can depend on. Let me put it very simply: given the choice between higher taxes on the 1 percent and cuts in entitlement for the 47 percent, voters went for the former. Surprise!

True, we now are in for an unpleasant bout of brinksmanship as the reelected president takes the still-Republican House to the edge of the fiscal cliff. But the Grover Norquist argument that the debt can be brought under control without any new taxes is no longer credible, if it ever was. Even staunch supporters of Paul Ryan like Devin Nunes acknowledge this.

Again, the historical trend is not the Republican Party’s friend: since 1960, welfare spending (mainly Social Security, Medicare, and Medicaid) has risen inexorably from 2 percent of GDP to above 10 percent; the Congressional Budget Office sees it nearing 20 percent by 2059. With every passing year, the share of the population receiving some form of government transfer rises.

Of course, the rising cost of “benefits for the boys (and girls)” cannot be met solely by taxing the rich and cutting defense. At some point, the Democrats will be forced to admit that. And at some point, too, the geopolitical consequences of allowing the United States to proceed down this European road will become clear. Middle-class taxes will go up. And Iran will go nuclear. At which point, we Republicans will cry: “We told you so!”

But will that be an election-winning slogan? I doubt it.

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