Category Archives: Europe

Blame France’s incompetent and corrupt elite for the rise of Marine Le Pen

“Apres moi, le deluge.” (After me comes the flood)

–Louis XV

Say what you will, Francois Fillon, the disgraced former frontrunner in the upcoming French presidential elections, is no Professor Moriarty. As the investigative journal Canard Enchaine reports, Fillon paid his wife Penelope over 800,000 euros for work as a political assistant it is unclear whether she preformed. Far from being a master criminal, it seems he gave two of his children legal jobs despite the highly relevant fact that they were not yet lawyers. France is ripe for another revolution to rectify such excesses.

This is the problem with the rise of populism in Europe. The demagogues—horribly wrong as they are in policy terms over peddling impossible dreams as solutions–have all the best lines. And they are entirely correct in that Europe’s lazily corrupt, highly incompetent elite have driven the people they represent into a ditch.

There is no doubting that Marine Le Pen, the charismatic, firebrand leader of the xenophobic Front National (FN) has a great story to tell about both French elite corruption and incompetence.

The corruption portion of the populist narrative is beyond dispute. Beyond Fillon, former President Jacques Chirac and former Prime Minister Alain Juppe were given suspended sentences for corruption. Former Finance Minister and current IMF chief Christine Lagarde was found guilty of negligence for approving a massive payout of taxpayer money to a controversial French businessman. Former President Nicolas Sarkozy is presently under investigation for alleged illegal campaign funding. In reading this doleful list, sometimes I truly wonder if there is anyone left in power in France who has behaved honourably.

The other side of the coin, incompetence, is epitomised by hapless outgoing current President Francois Hollande, a leader so gormless that in November 2016 he had a personal approval rating of just 4%, a subterranean low unequalled in the history of the Fifth Republic. Bowing to electoral reality, in December 2016 Hollande surrendered, not even bothering to try to run for a re-election he stood absolutely no chance of winning.

The main reason for this was his pathetic failure to even begin to substantially reform the sclerotic French economy. During his tenure, France has lost a further 600,000 jobs. In 2016, France grew at an anaemic 1.1% of GDP, in line with its lacklustre 1.2% in 2015. Stunningly, as of January 2017, more than one in four workers under 25 is jobless. The world is simply passing the French economy by.

As a result of this dual headed monster of corruption and incompetence, Fillon has fallen in the polls, making maverick centrist Emmanuel Macron the new frontrunner to be President of France. The latest early February 2017 polls have Le Pen at 25%, Macron at 22%, and Fillon at 19% in the first round of voting. In a second round, Macron would win decisively over Le Pen with a 66-34% advantage. But while the competent Macron is now likely to win, such a victory should not be seen as a repudiation of Le Pen. Rather it is part of her long-term game plan.

For Macron is France’s last, best chance to save itself in its present form. However, if he cannot reform the heretofore unreformable French economy, France as we know it is on its last legs. Le Pen is set to take one third of the vote in the second round of this year’s presidential elections on May 7th, almost double her father’s total of 18% as the FN candidate in the second presidential round of voting in 2002. So the flood waters for the French elite are definitely rising.

All Le Pen needs are five more years of economic failure, and then she has all the chance in the world to win the presidency next time, especially as her narrative of elite incompetence and corruption hardens into certainty for the French electorate. Le Pen is merely betting on is things staying as they are, with the talented, youthful Macron (he is only 39) unable to drag his country into the twenty-first century. Given France’s recent past history, that is more than a reasonable bet to make.

And yet in Macron there is hope. A former Rothschild banker, he comes from the real world pro-business wing of the Socialist Party, serving as a marginally successful economy minister under Hollande, after the French president made his belated policy pivot back to economic reality. If anyone can reform France, Macron is the man.

However, Le Pen’s long-term bet on French elite incompetence and corruption has so far been borne out by the historical facts. It will take real French reform to stave off the terribly destructive prospect of French populism. For the main problem in French politics at present is that only Le Pen seems to have a real long-term political game plan.

Published in City AM London, February 13, 2017.

Germany is not the answer to any serious strategic question

Given the nervous breakdown of America, epitomised by the election of know-nothing Donald Trump as President, it is altogether understandable and human that elites are desperately casting about for a new champion of western stability. There are precious few other candidates for the job, so largely by the process of elimination analysts (particularly on the left) have hit upon Chancellor Angela Merkel’s Germany as the last, best hope for the western order.

This would be a laughable thesis if people were not taking it seriously. For in truth, Germany cannot save either the wider world or Europe. In fact, it is an open question as to whether Germany can even save itself.

In her endless intellectual confusion over the basic fact that caution is not the same thing as wisdom, it is all too easy to point the finger of blame at Merkel for this. Yet Germany’s problems, and the weaknesses that spring from them, are far more systemic and deep-rooted. A simple look at the unholy trinity of crises facing Berlin—the endless euro crisis, the war in Ukraine, and the refugee crisis—makes it clear that Germany is more supplicant than driving force on the world stage.

More than the others, it is euro crisis that provides the analytical key to understanding overall German weakness. The basic problem is psychological and moral. In Europe, what is truly going on is the end of economic life as it has been known. Europeans simply can no longer afford the serene, cosseted, not overly strenuous and very attractive way of life they have grown used to; government in European countries has simply grown unaffordable.

Having bought into the cult of endless leisure time as an inalienable right, it is devilishly hard to row back from this primary sign of decadence. But almost no-one wants to hear this, much less do anything about it. To do so would require a very painful, immediate retrenchment for millions. That is human and understandable, but it is also fatal. For it means that at present democratic politics in Europe is being conducted based on lies.

And lying—beyond the immorality of it–is a very poor basis for making sustainable policy, at least in any open society. With its wilfully ignorant populace, Germany is the primary example of how stubborn self-delusion fuels member states’ approach to Europe.

In essence, to survive, the euro-zone will either move towards a true federation, becoming a debt union complete with fiscal transfers (all done on largely German terms) or the euro will cease to exist. As such, Berlin will be the primary paymaster for such a new political constellation. As none of this appeals to much of anyone in Germany, best not to talk about it. And so Chancellor Merkel does not.

It is at this point that even the sleepiest German citizen will wake up, howling. It is also here that not levelling with one’s own people becomes as poor a strategy as it is immoral. By not making clear what is really going on, Merkel has been able for quite a long while to put off an awful lot of unpleasantness. But to imagine for a moment that the German people won’t feel fundamentally lied to once the check for this Kafkaesque party comes due, is not to be Machiavellian. Rather, it is to be hopelessly naïve.

Whatever Germany ultimately decides to do, there will have to be sacrifices. And any policy requiring those sacrifices that is not buttressed by public support stands no chance of success. Lying as a way to avoid the democratic deficit over the European crisis is not clever.

Meanwhile, Germany, like doomed passengers on the Titanic, has spotted the economic iceberg dead ahead, but made precious little effort to right the ship of state’s course. The demographic problem is especially stark. The old age dependency ratio—which evaluates the number of pensioners in a society versus the working age population—simply cannot be wished away. The German ratio was 34% in 2013, rising to an economically crippling 52% by 2030. Over this period of time, the number of pensioners in Germany will skyrocket by 5 million, even as the number of workers declines by 6 million. Who is going to pay for those endless vacations and for the overly generous social safety net?

The inconvenient truth about Germany is that it is strategically pacifist (with laughable defence capabilities for a serious power), politically ostrich-like in its stubborn refusal to even attempt to master Europe’s many policy crises, and—worst of all—economically very much living on borrowed time.

For all these reasons, Germany is simply not the answer to any serious strategic question there is.

Published in City AM London, January 16, 2017

The year of the vampire: 2017 is when political risk bites back

“I have never met a vampire personally, but I don’t know what might happen tomorrow.”

–Bela Lugosi

Perhaps the greatest single indicator that the West no longer rules the world is its constituent nations’ signal inability to solve any of their many festering crises. Gormless, wildly overrated Chancellor Angela Merkel epitomises this trend more than anyone else. She has made ineffectual policy failure into a sort of performance art, astoundingly convincing many that ‘managing crises’ is an acceptable substitute for solving them.

But of course it is not; it is merely a novel marketing tool for putting off the inconvenient truth that the West’s crises are structural, endemic, and are in the process of going septic. For the hard rule of history is that either you master crises, or they master you. 2017 will be the year of the vampire, when the myriad unsolved policy challenges confronting the West bite back, in their undead fashion.

The refugee crisis will rise to threaten Europe’s political order. While the hell of Aleppo is ending, the refugee crisis caused by the Syrian civil war is not. The EU’s patchwork immigration deal with Erdogan’s Turkey is coming apart at the seams.

The erratic Turkish President is furious the EU has failed to honour its promise of visas for Turkish citizens to travel in Europe in exchange for Turkey serving as the continent’s night watchmen, keeping the refugees from its shores. Erdogan’s post-failed coup crackdown has made honouring this pledge practically impossible. By the spring, if Erdogan fails to receive German satisfaction over the deal, look for him to open the gates, and the refugee crisis to reappear, seemingly from nowhere. The fundamental east-west divisions within the EU over this issue will bring it to the brink of collapse.

Europe itself is living on borrowed time. While the establishment will (just) survive elections in France, Italy, and Germany this coming year, this amounts to the last roll of the dice for the continent’s elite to find a source of significant growth to save themselves.

Centre-right candidate Francois Fillon will win the French presidency over the populist rightist Marine Le Pen and her Front National (FN) Party. But vampire-like—lurking just beneath the surface—the 2017 presidential election amounts to a triumph for her. Le Pen will roughly double the vote her father received in the second round of the 2002 presidential election, with the FN candidate receiving upwards of an alarming 30% of the total. If Fillon fails to fundamentally reform reactionary France, it is entirely likely that Le Pen wins the presidency the next time around.

Likewise, Chancellor Merkel will win the joyless autumn German parliamentary elections, proving once again that the tallest pygmy in the village is still considered a giant.

But the chickens are coming home to roost even here, in the form of further terror attacks that will be laid at the door of Merkel’s open immigration policy, sluggish domestic growth of under two percent (probably about the baseline target needed to be reached to hold European populism politically at bay), and the fact that the crises all around it will call for decisive German action which Merkel seems constitutionally incapable of providing. A few more years of this drifting and it will be risk on in Germany as well.

In Italy it is probable that Beppe Grillo’s insurgent populist Five Star Movement will actually win the most seats in Italy’s upcoming parliamentary elections, though it could well fall short of an overall majority. New voting rules will likely weaken the power of any sitting administration, meaning Five Star will either govern in a chaotic, weak manner, or be excluded by the other parties from forming a government in the first place. If it is the former look for its challenge to the European order to fade. However, if it is the latter, Five Star is just one ineffective Italian government away from a referendum on the euro.

The Iran nuclear crisis will rear its ugly head as well. In a very changed Washington, the strong anti-Iranian orientation of the new Trump administration—the President himself, National Security Adviser Michael Flynn and even stable Secretary of Defence James Mattis—will cause the seemingly settled Iran nuclear crisis to come back from the dead. Either the deal will be unilaterally abrogated outright, or the administration will harry Iran over every point of its implementation, hoping Tehran walks away in a fury. In either case, the flare-up will precipitate a transatlantic crisis as a hard-pressed Europe will see no reason to follow the despised Trump over the abyss.

Finally, the gormless Trump administration will unwittingly trigger a trade war with China, which could well precipitate the world’s next economic crisis. The year of the vampire is here with a vengeance.

Published in City AM London, Janaury 3, 2017.