Sarah Wagenknecht, one of the most prominent representatives of Germany’s radical left, just called for abandoning the Euro as the best way to end the eurozone’s economic and social misery. Germany took notice, not least because with her good looks and sharp brain, she is a permanent presence of the political talk show circuit on German TV. Mrs. Wagenknecht also broke new ground politically. Up to now, that view was only held by the right-wing Alternative für Deutschland, AfD.
What her announcement signals is an important shift in the eurozone’s political balance. The German hard left is by no means alone in changing its stance toward the Euro. Left-wing parties all over Europe, notably in Spain, France and Italy, are fully engaged in advocating an end to what they consider the failed euro project.
Their political reasoning is straightforward. What had attracted them to the project in the first place was the prospect of advancing to a big socialistic welfare state and redistribution mechanism on a pan-European scale – the original goal of Europe’s true leftists.
Alas, the prospects of getting to that promised land are getting dimmer from day to day.
It is fairly certain that the governments of most countries in northern Europe, sobered by the Greek experience, will resist any transfer mechanisms on the European level that are too large and too loose. Moreover, these mechanisms – if and when implemented – will definitely come with strings attached.
Unlike what people like Mrs. Wagenknecht and her colleagues in other European countries had hoped for, they won’t be free to spend happily – by incurring debt that is provided to them by other countries. In France, the radical left politician Jean-Luc Mélenchon, fourth in the 2012 French presidential elections, receiving 11% of the votes is a major critique of the German approach to the crisis.
After Tspiras’ turnaround, Mélenchon is utterly disillusioned. The French left had put great hopes in the revolutionary mindset of Greece’s prime minister. It was almost as if they were envisioning the coming of another Che Guevara, this time in Europe.
No wonder then that the former French presidential candidate now advocates for France to leave the eurozone “dominated by Germany.” In doing so, he joins Marie Le Pen from the right-wing Front National who argues in the same way.
Left and Right to unite?
What makes this development in France doubly ironic is the fact that, from the vantage point of the French government at the time under President Mitterrand, the euro project was introduced exactly for the opposite purpose – to keep Germany under firm economic and political control.
But the trend stretches beyond France. We are about to see a new constellation in Europe. The radical left and right united in a fight against the euro.
That, too, is ironic. After all, the euro was advertised to the public at large as a European project for peace and common welfare. Instead, it now feels like a prison that no one is able to escape.
In Italy, the majority of the opposition is in favor of an “Ixit.” The political debate in the country is even further advanced.
Stefano Fassina, a former Deputy Finance Minister and a member of the ruling Democratic Party, argues for an organized dissolution of the euro.
He even envisions an alliance of “national liberation fronts” of left parties and those on the “democratic right.” Indeed, a “liberation front” of right and left united against the euro may well emerge.
This is a development that must be hard to swallow for the “fathers” – yes, it was exclusively fathers — of the euro project.
The negative impact
Instead of validating their core belief, which was that the euro would unify Europe, the common currency, certainly in a prolonged period of a stagnating, if not declining economy, actually leads to more conflicts and dissent between countries. Worse, instead of supporting democracy, the euro has become the most powerful tool in the arsenal of those who want to end democracy (or use it only for their own, rather cynical purposes).
The problem is that the establishment in most countries is really without much of a defense. After all, the project was pushed through against the loud and well-founded warnings of economists from all over the world.
Now that the currency union is clearly not functioning — and instead of the promised increase in general welfare, is bringing stagnation and unemployment to Europe, the establishment parties cannot admit to have committed the biggest economic mistake since the Second World War.
It was perhaps an honorable mistake, but one that has huge political consequences. Because politicians in Brussels, Berlin and Paris and the other member states of the euro cannot admit to such a huge miscalculation in the not so recent past, they get more and more detached from reality. As a consequence, they work hectically from crisis to crisis, without ever getting around to fixing the root causes of the problem. All that is really left for them is to hope for a miracle to occur.
No long term solution
But it won’t. The ECB might have a few more tricks up its sleeve, but – for all its technical finesse and determination, its luck will run out. A central bank is in no position to resolve the issues of too much debt (=fiscal policy) and diverging competitiveness (=economic policy). Under those circumstances, the established parties effectively do their hardest political opposition’s own bidding. They give their radical opponents the very ammunition they need to attack the established parties, while generating a lot of resonance for themselves in the public at large.
Even more troublingly, this is no abstract matter. Citizens all over Europe experience the negative consequences of the euro in their daily life.
It doesn’t really help the establishment in that regard to argue that too many ills are put on the back of the common currency. After all, who is to be held responsible for bad developments – if not the government in charge?
In analyzing this situation and assessing the implications, it provides no solace at all that it is not even necessary for the left and the right to win national elections.
Denial and further experimentation
It will suffice if a sizeable enough part of the population supports them in upcoming elections to provoke a shift of the overall politics of a country.
In all likelihood, the story that will likely repeat itself politically is the one about immigration.
What is now, with the benefit of hindsight, perceived as allowing for “too much” immigration before, caused quite a few establishment parties, including in Europe’s presumably “enlightened” north to change its policy stance.
The same goes for the euro. Considered a good idea at the time, the most effective way for establishment parties to forego real political problems for themselves, so they believe, will be to act in an ever more restrictive fashion toward continuing to pursue the euro experiment.