A week of turmoil for Europe

Yesterday was a big news day for EU politics, with a series of high-profile speeches in reaction to the disastrous election result in Italy on Monday. But despite the many speeches, the message has been singular: there is “no alternative” to austerity, and hostility toward the EU in domestic politics is exascerbating the euro crisis.

The day started with a speech by humiliated ‘technocrat’ prime minister Mario Monti at the European Commission. Having been rejected by his home country, it is perhaps unsurprising that the former European Commissioner wanted to come to Brussels, where people understand him. It was Brussels after all, at the behest of Berlin, who installed Monti on the Italian throne after forcing out Silvio Berlusconi at the height of the Italian crisis in 2011.

And it is no coincidence that it was the ‘Italians abroad inEurope’ voting region in which Monti received his highest share of the vote – 30%. This compares to the 9% of the vote he received at home – less than half the vote chare received by anti-establishment comedian Beppe Grillo.

Send in the clowns

There are plenty of people in Europe who hold stereotype-based views about Italy - that it is and has always been an ‘unserious’ country. Italian voters won’t have helped that perception over the weekend, when half of them voted for either a comedian or a clown to lead their country. “Do they think this is a joke?” one exasperated German asked me this morning.

Elections have consequences, and people get the leaders they deserve. Those Italians who insist on re-electing the clownish SilvioBerlusconi despite the ruin and shame he’s brought to Italy - and those Italians who decided they would rather see political anarchy by voting for a comedian who will not even sit in the parliament – will get the future they deserve. The problem is that because of the Eurozone debt crisis, we are all going to get the future they deserve.

Those outside Italy have long been baffled at how such a sizable portion of the Italian population could still support Berlusconi after the corruption allegations, Bunga Bunga parties, dalliances with underage Moroccan prostitutes and – most consequentially – the disastrous handling of the Italian economy. But what is newly shocking is the other surprise winner of this election – an anti-establishment comedian. The fact that so many Italians would vote for what is essentially an anarchist party, led by a comedian who does not even intend to take a seat in the Italian parliament, has rattled the world today.

The Italian election that could sink Europe

Italy’s constant lurching between left and right since WWII had, in the past, become so frequent that few people bothered to pay too much attention to the vagaries of Italian politics. But all that has changed since the advent of the eurozone crisis. All eyes are on the Eurozone's third largest economy this weekend as Italians go to the polls in what could be the most consequential Italian election of the modern republic.

Much of the international media attention has focused on the possibility of a return to power for the country’s notorious former leader Silvio Berlusconi, who was ousted in 2011 by what essentially amounted to an EU putsch. The prospect of a return to power for the now clearly mentally unstable Berlusconi is terrifying to the rest of Europe and would likely result in absolute panic in the Eurozone. But such a scenario is unlikely, even with Berlusconi’s last-minute efforts to try to buy votes by promising tax rebates.

Brexit begins

By all accounts, the speech delivered by UK Prime Minister David Cameron this morning outlining his vision for a British disengagement with the EU was short on substance, contradictory and hackneyed. He mixed metaphors, made embarrassing errors reflecting a lack of EU knowledge and managed to enrage his EU partners even without having made specific demands.

But despite its rhetorical flaws, Cameron’s speech will be one for the history books. With three words - "in/out referendum" – Cameron has plunged the UK into four years of economic uncertainty. The prime minister will have the dreaded ‘Brexit vote’, but only in 2017, after the next election. With this he hopes to placate the fiercely eurosceptic wing of his party while at the same time kicking the can down the road. But the long time frame, business leaders and non-EU governments have warned, could be hugely damaging to the British economy. Investors will likely be hesitant to invest in the UK when their future in the European market is uncertain.

The showdown: Germany v. Italy

The centre of political gravity may be in Brussels today as EU leaders meet for yet another “make-or-break” summit, but all eyes in Europe will tonight be on Warsaw. The German and Italian football teams will be battling it out to see who will go on to the European Championship final on Sunday.

Like the Germany-Greece game last week, tonight’s game will be fraught with political tension. Thankfully, German Chancellor Angela Merkel will not be at the match tonight to humiliate her Southern neighbours, as she did at the match with Greece. Instead she will be here in Brussels, perhaps watching the match with Italian prime minister Mario Monti. And as the Germans and Italians battle it out on the field in Poland, their leaders will be battling it out here in Brussels.

Monti, the ‘technocrat’ prime minister put into place by EU leaders after they forced disgraced former prime minister Silvio Berlusconi to resign, is coming to Brussels today with a list of demands. He wants the EU to take immediate measures to save the Italian and Spanish economies, which are teetering on the brink of collapse. Specifically, he wants the EU to collectivise debt by issuing ‘eurobonds’ – a joint bond guaranteed by all countries using the euro.

Angela vs. the growth

As predicted, Socialist Francois Hollande ousted the centre-right Nicolas Sarkozy in French elections on Sunday after a campaign in which he railed against the German-led austerity drive in Europe. He has insisted that Europe needs to end its obsession with austerity to dig its way out of the debt crisis, and instead focus on growth.

Coming as it did on the same day that anti-austerity parties in Greece took a majority of the vote, Sunday has been interpreted as a Europe-wide rejection of German Chancellor Angela Merkel and her insistence on austerity and budget cuts. The markets have certainly interpreted it as such. Stock exchanges across the world have taken a dive the last three days, particularly in Europe, over fears that the delicately crafted ‘fiscal union pact’ worked out over the past several months is now about to fall apart.

Whether that actually comes to pass may depend less on Hollande than on how his victory is interpreted in other European capitals. All eyes will be on the new French president’s first meeting with Merkel next week, a day after he is sworn in on 15 May. It is in both of their interests that the meeting goes well. Hollande needs to walk away with something to say that he “renegotiated” the fiscal compact, while Angela needs to reassure the German people that Eurozone countries will still have to adhere to strict budgetary rule while at the same time reassuring the markets that there will be no Franco-German rift.

What will likely be worked out is the addition of a paragraph about stimulating the economy into the compact – something that wouldn’t require new ratifications by national parliaments.

The new Italy: this is what technocracy looks like

Former EU commissioner Mario Monti, appointed as Italian prime minister on Sunday after Silvio Berlusconi was forced by the markets and EU leaders to resign, had his ‘technocrat government’ approved by the Italian parliament today.

Neither Monti nor the members of his cabinet have been elected by the Italian people. They are not politicians but instead experts in their respective fields. The 'government of experts' has been brought in because, it was thought, both within and outside Italy, the Italian political system is so broken that only unelected non-politicians could be trusted to implement the reforms EU leaders say are necessary to prevent the country’s economic collapse.

American readers may be wondering how on earth a national leader in a democracy could come into power without having been elected. It has to do with a quirk in parliamentary democracy. Members of the upper houses of many of Europe’s parliaments (their equivalents of the US Senate) are appointed rather than elected. A prime minister can come from either house, so if the parliament wishes to appoint a leader who has not been elected they simply have the president appoint that person to the senate.