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Abu Dhabi, UAEMonday 18 June 2018

As Europe drifts away from its roots, Macron fizzes with ideas

A series of inconclusive elections have brought the grand plans of renewed European integration to a stand still, writes Alan Philps

Emmanuel Macron gives a speech in Paris earlier this week.
Emmanuel Macron gives a speech in Paris earlier this week.

When Emmanuel Macron was elected president of France in May last year, pundits declared that the tide of political protest in Europe had retreated and the European Union could at last move its stalled integration project to the next stage. Mr Macron is full of energy and optimism on how to do this, but he has had to wait 10 months while the Germans held an indecisive election which allowed Chancellor Angela Merkel to squeak back into power after long coalition negotiations.

That bright dawn in France is now clouded by the result of another election, this time in Italy, which is also described as indecisive in that no clear majority emerged. In fact the message sent to the political class of Europe and the whole of the EU was resoundingly clear: a full 55 per cent of Italian voters opted for Eurosceptic or anti-establishment parties.

The Five Star Movement founded by the comedian Beppe Grillo as a vehicle for protest against all politicians led the poll, with 32 per cent of the vote, followed by the far-right anti-immigrant and anti-Brussels party, the League.

It was a clear break with the past. Even the populist Silvio Berlusconi, previously a magnet for the disaffected, was unforgiven when he tried to make a comeback. His party scored a disappointing 14 per cent. Italian voters had had enough of their politicians whom they saw as weak, corrupt and in thrall to the power-brokers in Brussels. So why not vote for a party founded by a clown?

It is theoretical possibility that these two outsider parties may form a coalition together, which would be the stuff of nightmares for Italy’s fellow members of the EU. But the nightmare seems unlikely to happen any time soon.

The leading candidate for prime minister would be the Five Star leader, Luigi Di Maio, who until five years ago had no political experience and was living with his mother. Mr Di Maio was chosen as leader by an internet poll of Five Star members, a technique which meets the movement’s democratic ideals but which is unlikely to choose politicians with experience.

But this outcome is unlikely. The two protest parties have diverging views on the economy. Five Star, which largely represents the poor south of Italy, promised a guaranteed basic income, which would be paid for by the more productive north. But the north is the heartland of the League, and the small businesses who make up its core will not relish funnelling cash to the south. Rather, the party has promised to introduce a flat tax, which favours the wealthy.

It is now understood that the President of Italy, Sergio Mattarella, who takes charge of the coalition-building, does not see any chance of a government before July, and early elections in the autumn are not ruled out. The logic of early elections is that both Five Star and the League will use the summer to strengthen their popularity in preparation for the next round. That looks like a more promising tactic than joining a weak coalition that would only taint their outsider reputations.

It might be expected that financial markets would now be in turmoil. But there is no sign of that. Italy is used to unstable governments, and traditionally installs talented individuals as president of the republic, who steadies the ship in times of trouble, and in the treasury, which manages the risks of the country’s huge borrowing and debt-ridden banks. These are now the biggest threat to the health of the eurozone, the 19 members of the inner core which use the common currency, the euro.

That view, of discreet competence behind the political carnival, is the one that Italians like to promote. The opposite view, which has made Italy one of the most Eurosceptic countries in the bloc, is that the rest of Europe has simply given up on Italy.

Though a founder member of the bloc, it has failed to adapt to the Germanic fiscal discipline imposed by the euro, and only rarely does it have the type of government that Brussels can do business with. So Italy is left to its own devices, and to cope with the influx of migrants across the Mediterranean, with scant solidarity shown by the rest of the bloc. The idea of Italy no longer being at the top table of European decision-making is one that causes anguish among the political class, and the voters conspire to make it happen.

Where does this leave Mr Macron and his plans to create a eurozone banking union with its own finance minister? Despite long delays, Mr Macron is still fizzing with ideas. The new German government will no doubt want to show willing to some extent, despite deeply held reluctance in Berlin to be on the hook for handouts when crisis strikes in Italy or other countries.

The fiscally incontinent promises of the leading parties in Italy are unlikely to inspire a generous frame of mind in Germany, even if Italy remains in the hands for a caretaker government for months to come.

The second issue is the European Parliament elections, which are to be held in May next year. Proposals by France and Germany that may be seen as another Brussels “power grab” will be political risky in the run-up to the elections, for fear of whipping up Eurosceptic feeling.

The big unknown is how deep the anti-EU feelings run among the voters of the 27 countries who will vote next year, after Britain has left the bloc.

The prospect of any other country following Britain’s lead is slim, as all can see that Britain is going economically and diplomatically weaker for years to come. Even the Poles, who are in open conflict with the European Commission, are not planning to give up the subsidies they get from Brussels. But that does not lessen the truth that Mr Macron’s plans for a renaissance of Europe will be subject to repeated delays.