Rising Stars of Europe

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Rising Stars of Europe

Panic

Panic had gripped European centrists at the beginning of 2017. Donald Trump was being sworn in as President of the United States on a xenophobic platform. Britain had voted to leave the EU, imperiling the European project. Right-wing populists such as Marine Le Pen and Geert Wilders were leading the polls in the core European bellwether countries scheduled to vote next. The populist tide seemed unstoppable, flooding Western democracies with autocratic nationalism that already held sway in Russia, Turkey, Poland and Hungary.

Comeback kids

Well, what a difference a year makes! 2017 bows out with a strengthened political centre. Young political stars have risen across Europe, turning back the tide of radicalism. Liberals have triumphed in elections across the continent and beyond. In the meantime, disgruntled Anglo-Saxon voters are having second thoughts about the wisdom of Brexit as well as the Trump agenda.

In 2017, the Eurozone eclipsed both the US and the UK in terms of economic growth (+2.6%). After a decade of pain, unemployment finally fell to pre-crisis levels (8.8%). Integration marched ahead with 25 EU countries pooling their armed forces under the PESCO framework. The EU also closed free trade deals with Canada and Japan while preparing to do the same with the leading economies of Latin America.

As the battle between the ‘open’ model advocated by the political centre and the ‘closed’ worldview of right-wing nationalists as well as left-wing populists rages on, we will analyse the driving forces behind the 2017 centrist resurgence and its chances to prevail in 2018.

A new dawn

Europe’s most dramatic political upset was achieved by a 39-year-old former investment banker, who had shaped economic policy for a failed government. Emmanuel Macron’s background seemed a perfect foil for an anti-elitist Front National. His manifesto was, in his own words, “neither left nor right” and “unashamedly pro-European”. He openly advocated slaughtering sacred cows such as inflexible labour laws.

It was the opposite of the economic nationalism championed by Marine Le Pen, who promised workers at a troubled tire factory that she could ‘save’ their jobs if elected. Macron, by contrast, exposed the unpleasant truth: traditional mass manufacturing was in terminal decline. Raising trade barriers against Chinese imports would only raise prices and deprive consumers of choice. During the candidates’ televised debates, Marine Le Pen revealed an alarming ignorance about global supply chain integration when she pretended that France ‘did not need’ to import medicine from abroad.

Since Macron recognised that technology and entrepreneurship were the only ways to boost French growth, he even called for France itself to become “more like a start-up”. Coding centres like École 42 illustrated the way forward, providing opportunity for young talent with a highly selective zero-fee model that relies more on students teeaching each other than on salaried staff. With easy access to the vast EU market being a vital consideration even for start-ups, Paris gained at the expense of London in terms of venture capital funding.

When evidence piled up that the ‘En Marche’ programme could actually boost the economy despite the bitter medicine it contained for labour unions, Macron trounced Le Pen 2-1 in the run-off. He had already seen off the traditionally dominant conservatives and socialists in the first round. Europhiles rejoiced when the newly elected president strode into the Elysée Palace to Beethoven’s ‘Ode to Joy’.

And yet, the victor faced doubts about his self-styled ‘En Marche’ movement. Were they capable of implementing his policies in parliament and government? Again, Macron proved the naysayers wrong: ‘En Marche’ won an absolute majority. Within months, much of the movement’s agenda was written into law. A ‘third avenue’ of labour regulation, for example, helps freelancers in the ‘gig economy’ by making social benefits portable.

While Macron’s proposals on reforming the Eurozone still hinge on broader international debate, at least they encompass an ambitious vision that puts France back into the driver’s seat of Europe. As a result, Macron moved the political centre of gravity so strongly towards an open, integrative model that even for someone like Marine Le Pen exiting the Euro currency is “no longer a priority.”

 

Breaking the spell

While Emmanuel Macron achieved one of the great political upsets of the century, the seemingly unstoppable populist tide had already been halted a few weeks before his first-round victory. It was Mark Rutte and his Dutch Liberal Party ‘VVD’ that broke the spell of the right-wing pied pipers in the first quarter of 2017.
A highly publicised war of words between Rutte and Prime Minister Erdogan of Turkey sharpened the Dutchman’s profile as a standard bearer of liberal values. It allowed Rutte taking a stand against all nationalist autocrats, painting them as abusive strongmen who can’t be trusted by Western European voters. With a campaign focused on the VVD’s economic achievements (Dutch GDP per capita even eclipsed their German neighbours), the incumbent appealed to a self-proclaimed ‘nation of traders’.
At the end of the day, voters understood that the engine of Dutch prosperity was at risk from Geert Wilders’s proposal of closed borders. Relegated to second place with 13.1% far behind Rutte’s VVD at 21.3%, the populist underperformed even pessimistic opinion polls. However, due to the fragmented nature of Dutch politics, Rutte was forced to build a complex four-party coalition including social conservatives. Still, his victory proved that the centre could hold against populist demagogues from the left as well as the right.

Limbo land

After the victories of Rutte and Macron, political observers turned to Germany and its September elections. Angela Merkel was eyeing a fourth term, and the liberal FDP party resurged under Christian Lindner, a charismatic young leader modelled on Macron’s centrism, optimism and drive.

However, it was the populist AfD that dominated headlines after the refugee crisis of 2015 and a concomitant spike in crime statistics. Originally founded as an anti-Euro party, the AfD deemphasised its opposition to the single currency in favour of its new focus on immigration as well as its effects on crime and terrorism. The AfD’s claim of ‘Germany, dare!’ proved a perfect antidote to Merkel’s cautious and lacklustre campaign with its clumsly slogan (“for a Germany in which we live well and enjoy living”) and laughable hashtag, #fedidwgugl.

Vowing to ‘hunt Angela Merkel’, AfD needed just 12.6% of votes to win third place in a crowded parliament, preventing a revival of the 2009 ‘black-yellow’ coalition of Merkel’s bloc with 32.9% and the FDP with 10.7%. Talks to form a government including the Green Party collapsed, exposing the vulnerability of the centre. Further populist inroads were expected in case of another ‘grand coalition’ of Merkel’s union and Social Democrats. Despite a vibrant economy, the AfD secured a backwards kind of victory by scaring the parties of the centre into projecting an image of inflexible dogma.

At the time of writing, a fourth Merkel government has yet to be formed, leaving Europe’s largest economy in limbo land. Her humiliating non-victory proves that even in a positive economic climate, only a vigorous centrist campaign and a broad coalition can overcome the simplistic slogans of the populists.

 

Beyond the core

Apart from the electoral contests in “core Europe”, peripheral ballots delivered highly interesting insights:

 

  • Austria: To the detriment of centrists, the Austrian NEOS movement was flattened by the two-wheeled steamroller of Sebastian Kurz’s conservatives (ÖVP) at 31.5% and the right-wing “freedom” party (FPÖ) at 26.9%. Once in government, however, FPÖ instantly abandoned its anti-European agenda in favour of a strong push on immigration reform. Such were the bitter lessons of Le Pen and Brexit that Jörg Haider’s heirs abolished their signature pledge of a referendum on the Euro. Now Europe is waiting for how its youngest chancellor, Sebastian Kurz (31), will ride the continent’s wave of youth from a conservative angle.

 

  • Catalunya: Ines Arrimadas’s centrist Ciudadanos (‘C’s’) party won a surprising victory by leading the tally in votes (25.3%) and seats (37). However, ‘C’s’ are unable to form a government since parliamentary seats are weighted towards rural areas where separatist parties held sway. Nevertheless, C’s achieved a historic breakthrough: never before had a non-Catalan party surged to the top of the region’s polls. Nationwide, C’s chairman Albert Rivera remains the most popular politician of Spain. Rivera stands a chance to gain 20%+ of seats were new elections to be called–not an unlikely scenario considering the fragility of Mariano Rajoy’s minority government.

 

  • Czechia: Billionaire businessman Andrej Babis was described as the “Czech Donald Trump” when he won almost 30% of votes at the head of ANO2011. The movement has confounded political analysts, having been described both as ‘centrist’ and as ‘populist.’ Having featured anti-European messages during the campaign, the victorious ANO2011 group joined Guy Verhofstadt’s pro-European ALDE alliance in the European Parliament. Once sworn in as Prime Minister, Babis even spoke of joining the Euro once Czechia balances its budget. His U-turn earned him the moniker of “Euro-opportunism” by Czech publication Echo24. Whether he follows Polish-Hungarian nationalism or a more centrist blueprint remains to be seen.

 

Anglo-Saxon blues

Outside of Europe, nationalists and populists ran into trouble as well. Donald Trump’s approval ratings languish in the mid thirties, which is a shockingly low level of for a first-year president. Trump’s anti-elitist policies have been shelved in favour of a traditional Republican agenda of lower taxes for the rich and higher defence spending. One may credit the administration with the avoidance of nuclear war despite the commander-in-chief’s late-night Twitter threats against North Korea.

The White House benefits from a surging world economy, for which Trump personally takes full credit. However, the days of U.S. global leadership appear numbered. An increasingly confident China consolidated power with ambitious trade deals, a billion-dollar infrastructure programme (‘one belt, one road’) as well as aggressive naval expansion in the South China Sea (‘the clue’s in the name’, according to a former British Chancellor). Few were surprised when Chairman Xi Jinping took the stage at his party conference, openly declaring his intention for China ’to be a world leader and therefore, leading the world.’

What about the country where populism scored its first major victory–Brexit Britain? At the time of writing, Brexit is opposed by 51% of Britons (against 41% who still support it). And yet, the country’s leading politicians seem determined to go through it. When Theresa May was riding high in the polls, she called a snap election to secure a personal mandate for a ‘hard Brexit’–leaving not just the EU but also the single market.

The result was May’s disgraceful humiliation at the ballot box. Her gamble squandered a narrow Conservative majority with Labour closing in at 40%, the party’s best result since Tony Blair. Only the fear of a hard-left Jeremy Corbyn government held the enfeebled Tory minority together. None of the Johnsons, Goves, Redwoods and Rees-Moggs rebelled against an EU exit bill in excess of £40 billion. May even pledged continued compliance with EU regulations in order to avoid a ‘hard border’ in Northern Ireland. Eighteen months after the referendum, the Brexiters’ bluff has been called, but vast segments of the population have yet to notice.

In spite of Brexit woes, Britain offers a cautionary tale to Europhile centrists: the Liberal Democratic party achieved an abysmal result with 7.4% of the vote and 12 paltry seats. The LibDems’ proposal of a second EU referendum angered Remainers and Leavers alike. Party leader Tim Farron avoided taking a clear stand and resigned shortly after the election.

 

Bottom line

At the end of 2017 centrist parties are in a strong position across Europe. Across a dozen continental countries with more than ten million inhabitants, they have achieved 18% of unweighted votes since 2013. The ballots of 2017 have been even more advantageous, with centrists coming out on top in France, the Netherlands, Catalunya and Czechia.

Due to the impact of Germany as well as previous elections, the traditional left/right axis still stands with conservatives at 25% and social democrats at 19% of votes. The political spectrum is complemented by ultra-left and ultra-right wing forces at 15% each, still an alarmingly high percentage. Green/ecological parties are running at 7% on average, althought they are sometimes aggregated into left-wing alliances (such as in Greece)

As the example of France has shown, support for traditional parties may crumble quickly. French conservatives and socialists failed to qualify for the second presidential ballot as the debate moved from ‘left vs right’ to ‘open vs closed’. As soon as the tipping point is reached, a centrist force like En Marche can vacuum up disappointed voters by making a strong and credible case for the ‘open’ model.

Looking across all of the contests, we look at how the centre can win not just occasionally but consistently. Its advocates will have to prove that 2017 wasn’t an aberration in the face of ever more aggressive attempts to seize power from populists, who seem to become ever more economical about hard facts.

 

A winning formula?

It is evident that the centre tends to prevail when a few key ingredients are in place. The successes of Macron, Rutte, Lindner and others can be boiled down into a seven-step winning formula for centrists:

  1. a young, energetic and charismatic leader, unencumbered by scandal
  2. a clean break with traditional left/right thinking by exposing the fallacies of the right (eg ‘we can rescue old industries by restricting  trade’) and the left (eg ‘we can regulate and tax our way to prosperity’)
  3. A clear manifesto that spells out economic truths such as the imperatives of technological innovation,  empowering of start-ups as well as free trade across borders
  4. A positive message that shows how people can prosper in an open economy, emphasising opportunity (such as free education) and individual responsibility (such as limited social welfare benefits)
  5. An open minded approach that allows for a big tent of voters, overcoming divisions of class, race, gender, nationality and religion while rejecting ‘closed’ thinking against any of those groups
  6. A pathway towards integration into society for migrants that highlights their individual responsibility (eg adherence to constitution, learning new skills, limited social welfare)
  7. A new model of delegation of responsibility (downwards to local and regional levels where possible, upward to continental and global level to capture economies of scale)

If communicated vigorously during campaigning and implemented relentlessly in government, these cornerstones may turn out to be a winning formula for centrists in many years to come.

2018 will put the strength of centrism to the test, with looming votes in Italy and the prospect of Greece returning to the financial markets. Contests in Mexico and Brasil will test the appetite of the LATAM region for free trade as well as its grapples with violence and corruption. In November 2018, Trump might have his wings clipped with U.S. Democrats bound to retake the House of Representatives while making inroads in the Senate.

As for Europe, Macron, Rutte, Lindner and others have shown that there is no reason to despair in the face of populism. The future is wide open, and the young stars of the centre have their chance to rise and shine.

 

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