The Eurozone's multifaced crisis

For the first time in the second post-war history of Germany, the new government doesn’t consist of two parties, as has been the case over the past seventy years, starting with Chancellor Adenauer, but of three parties. It is an important novelty but it is far from upsetting traditional German politics. Social Democrats, Greens and Liberals are used to managing public affairs with the aim of keeping out the far- right Alternative for Germany (AfD) and the Left Party, originally  born from the split of the SPD. 

According to the statements of Olaf Scholz, the Social Democrat leader at the head of the new government, Germany will modify what is necessary to meet the requests of the two allied parties, but the fundamental axis will remain that of Angela Merkel, who was at the head of government for the past 16 years - the longest chancellorship together with that of Helmut Kohl. A long period during which Germany consolidated its position as the fourth economic power globally after the United States, China and Japan.

1. Unlike Germany, political instability has been the common feature of the major eurozone countries. A brief review may be helpful. In France, during the long German chancellorship of Angela Merkel, four presidents of the Republic succeeded one another at Elysée Palace, along with a greater number of governments.

During the same period the political scenario changed radically with the substantial liquidation of the Socialist party reduced to 6 percent of the vote in the elections that followed Hollande's end of presidency  lasted from 2012 to 2017 - a miserable end for a party whose roots dated back to the second half of the nineteenth century.

The outcome of the elections in France next spring is uncertain. The leftwing has not any effective common candidate. It is still possible  that in the second turnround Marine Le Pen, head of the Ressemblement National, will return to defy Macron, who - if prevailing as candidate  in the center-right party “Le Republicain” - could again gain the presidency. In this case the alliance between Germany and France will remain at the center of the eurozone.

What about the future of the eurozone where a number of member state live in diverse ways a critic condition?

2.    Among the three major countries of the European Union, after the exit of Great Britain, Italy lives particular conditions. The parties were not able, after the crisis of the government lead by Giuseppe Conte, to agree on a new alliance. So, to avoid the recourse to early elections, the President of the Republic, Sergio Mattarella, has called Mario Draghi, former president of the ECB, not affiliated to any party, to form a government with a number of technicians as ministers in some key places.

The crisis of a democratic system  could not be more evident. The national newspaper “Repubblica” has written a comment that reflects the opinion of the ruling classes: “In Italy – it writes - with the birth of Draghi’s government, as wanted by Sergio Mattarella , the parties were by de facto marginalized. They paid the price for their failure… two governments from opposite sides fell badly; they broke all the possible political formulas ”(2 December 2021). A harsh judgment for a founding country of the European community.

Draghi could remain at the helm of the government until the new elections in the spring of 2023. But he could also be elected to the presidency of the Republic after the end of the mandate of Mattarella next February. In this case , it is not clear who his successor at the head of the government might be. In any case, the dominant factor in one of the three main founders of the European Community and of Eurozone is the incertitude of its political future.

Spain with 47 million people is the fourth most populous member State of the European Union. The recent elections of May 2021 in autonomous Department of Madrid, one of the three most populous in Spain, has been significative of the current climate. The PSOE, the socialist party which leads the government, has suffered the worst defeat of his history in Madrid, the capital and most populous city of Spain. At the same time  Más Madrid, the party born from the scission of the PSOE, has become the second party at regional  level bypassing the Socialist party.

The heavy defeat of the Socialist  Party coincided with the extraordinary success of the right-wing People's Party, led by Isabel Díaz Ayuso, which nearly doubled the election result of 2019 by winning 44 percent of the votes. After these results Pablo Iglesias, the historic leader of Podemos and vice President of the government, announced his departure from politics. The national government, which has not a parliamentary majority depends on the abstention of Esquerra Republicana (Erc) of Cataluña and Euskal Herria Bildu of the País Vasco, which are supporters of the independence of their  two regions. in short, in the fourth most important country in the Eurozone, the center-left has an uncertain future, ruling without a majority of its own, and struck by the heavy defeat in the Madrid region.

3.      Without going into a detailed analysis of each of the 19 countries that make up the euro area, we can usefully consider the main nine that comprise about 315/320 million inhabitants , the large majority out of the less than 340 million people that make up the euro area. For the purposes of this article we will giving them a summary look.

-  In the Netherlands , the major among them, with about 17 million inhabitants, Mark Rutte, for many years at the head of the government with his center-right party, was reelected in March 2021, but wasn’t able to form a governing coalition until half of December. Finally, the new coalition, will include along with his center-right VVD , led by Rutte , the center-left D66, along with two minor center-right parties. – the same which were at origin of the previous crisis, caused for a scandal in the attribution of some welfare benefits.

Meanwhile, in the midst of the long political crisis in a country without a government majority, important events took place, such as the transfer from Amsterdam to London of the headquarters of Shell, the Anglo-Dutch company, among the four most important oil companies in the world, formerly known as Royal Dutch Shell.

It is not the first case of loss of a worldwide company for Netherland. Unilever, the old Anglo-Dutch company with more than 90 years of existence and an annual turnover of over fifty billion euros, moved its headquarters from Amsterdam to London at the end of 2020. It is interesting to remember that Great Britain was considered a country destined for a deep crisis after the 'exit from the EU due to the abandonment of large European companies, while the exact opposite has happened with the transfer of global level companies from The Hague to London.

-  Belgium, where the main European institutions are located, is basically divided between Walloons and Flemings who speak two radically different languages ​​and are linked to a different historical past. Brussels, the country's capital, is a separate place where the two languages ​​are spoken, with a prevalence of French within the European institutions located in Brussels. Thus the capital is unified by supranational institutions, while the country is divided by different history and languages.

However, the multi-colored unity of Brussels as the de facto capital of the European Union has no parallel in the country. Belgium remains a country deeply divided not only by ethnicity but also by political characteristics. The formation of the national government is very difficult.

For 18 months, from March 2019, after the national elections, to October 2020, Belgium lived with a provisional government without a majority. The finally formed government, headed by the Conservative, Flemish Prime Minister Alexander de Crook, includes an equal number of ministers of Wallonia and Flanders.

It is a kind of double government that sees itself as representative of different national entities, while Brussels, the capital of the European Union, remains an ethnically divided city, with  Walloons and Flemings living in fundamentally separate constituencies - the only common feature being the presence of representatives of the 27 countries of the European Union that can be found in the most elegant and expensive hotels and restaurants in Brussels.

In many respects, a plastic representation of unity and, at the same time, of the division that characterizes the European Union which has its reference in Belgium, and in Brussels its de facto capital.

-   In Portugal, the government of socialist Antonio Costa was forced to resign in November after losing the support of the two left-wing parties -the Portuguese Communist Party and the Popular Party, which supported the government by renouncing to participate in it. Their request was in opposition to the budget presented by the prime minister, Antonio Costa, a careful executor of the stringent policies dictated by the European Commission. The outcome has been the crisis of the government . The President of the Republic, Marcelo de Sousa of right-wing affiliation has called early elections for the end of January. According the forecasts, the Social-democratic party, a center-right party, could win the elections and lead the new government in alliance with Chela (Basta!), a growing far-right party.

-    Greece represents an exception among the European countries we are looking at, in the sense that a right-wing party, led by Kyrios Mitsotakis, is at the head of the government since 2019. The country totally depends on the financial help of the  ECB. Its history is hard evidence of the European Union’s policy in regard to the member states. Its growth has stopped in the past decade. It has become one of the poorest countries in the Eurozone. The current unemployment is around 13 percent after having touched 27 per cent during the crisis during the last decade. The public debt amounting to around 100 0f the GDP at the end of last century, before the entry of Greece in the European Union, has surpassed two hundred percent of the GDP, one of the highest at worldwide level. Its entry in the ECB in 2001 has gave place to an economic and social debacle. It remains that the current rightwing government has to conform its policy to the dictate of the European commission to avoid a dramatic increase of the interest rate on its elephantiac pubic debt.

Finally, Austria is the minor country with less than 9 million inhabitants among those  we are observing . It is a country strongly close to the Eu leadership in Brussels. The former leader Sebastian Kurtz has always had strong links with the European Commission since he was elected to the premiership, He was also popular in the country  obtaining around 35 percent of electoral vote in 2019. But, In the autumn of 2021, the tribunal after a long and thorough investigation, sentenced  Kurtz for corruption having, during his first mandate,  manipulated data on electoral preferences and made false statements to a parliamentary commission. The consequence was unavoidable. In the past October he had to leave the government retiring from the political life. It was overwhelmed by the crisis, although it was firmly supported by the European Commission. after a short interval during which the country was led by a provisional government, on 8 December, a new head of the conservative government has been nominated.

The last examples show that the governments of the eurozone from the leftwing, as well as the rightwing allocation, keep to live in a permanent precarious condition.  The common feature is the attempt of all the different governments indifferently of center-left or center-right dominance to be faithful executors of the rules imposed by the European Commission..

Summing up, with a remarkable difference in relation of German and France, the economic and political instability has increased in the main Eurozone’s countries the past twenty years dominated by the passage to the euro.

In any case, the eurozone remains the repository of expectations, which the policy has demonstrated unfounded. This does not mean that it on the verge of dissolution. The economic élite in each of the eurozone’s countries defends the common currency that is the protection of their economic well-being and their social status. It is a subtill class but in different ways it has been always linked to the current  governments. So eurozone has given an image of stability, even though no government has been effectively stable under the euro banner, with the relevant exception of Germany and partially of France. It is not the case to preconize the future. For its own nature, it remains uncertain. But the judgment on the past and its failures can hardly be  controverse. And this should be taken into account when discussing the uncertain future of the European Union.