The Corner

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The End of Austerity?


Ekathimerini reports:

European Commission President Jose Manuel Barroso has raised doubts about persisting with austerity policies in the EU, while calling for a move towards federalism. “While I think this policy is fundamentally right, I think it has reached its limits,” Barroso said in a speech in Brussels on Monday, according to the Wall Street Journal. “A policy to be successful not only has to be properly designed, it has to have the minimum of political and social support.”

Indeed. But in Germany, the country that is actually paying to keep the euro alive, austerity (elsewhere) is pretty  popular.

Barroso ploughs on:

“We have to have tailor-made solutions for each country, we cannot apply a one size fits all program to the European countries,” he said.

Got it at last, but there’s a catch:

Barroso suggested that greater integration within the EU was the answer to the 27-nation bloc’s problems.

“A half-hearted attitude towards the project of European integration only serves to strengthen its opponents; to concede the political momentum to those on the side of nationalism and populism.”

Ignore the routine brandishing of those reliable bogeymen “nationalism and populism” (I’m surprised he left out “war”) and concentrate on the essence of what Barroso is saying. He’s right to argue that there are limits to austerity. There clearly are. And as things are being run now, much of that austerity is, in any event, self-defeating. And he’s also broadly correct to suggest that a lurch deeper into federalism (some sort of fiscal union) would be a remedy of sorts to the euro zone’s woes, albeit one that would come at enormous expense to taxpayers in Germany, Finland and elsewhere in the currency union’s north while crippling the growth prospects of its south for who knows how long. But let’s be clear that this is a federalism that would be rejected by a majority of voters in quite a few countries, voters that Barroso is clearly prepared to ignore.

There are limits to austerity, it seems, but to Barroso—as it happens a former Maoist agitator—there are limits to democracy too.

Some Germans, however, may be paying attention.

Business Insider notes:

Germany’s new, anti-euro political party – Alternative für Deutschland (AfD) – would get the 5% minimum share of the national vote required to enter the German Bundestag if September’s federal elections were held today, according to a new INSA Institute poll conducted for Bild, Germany’s most widely circulated daily newspaper. This is a big milestone for the party, which was only officially founded on Sunday, April 14, and hasn’t even fully registered for the September elections yet. The poll shows how much appeal the anti-euro stance has in Germany right now.

(Last Monday’s INSA Institute poll only gave AfD 3% of the total vote.)

In a report on the rise of AfD published Friday, Deutsche Bank’s Co-Chief European Economist Gilles Moec discussed the remarkable success the nascent political party has found so far.

Moec provides figures from a few other polls that show the extent to which AfD is able to tap into the anti-euro sentiment that exists in Germany (emphasis added): According to a recent poll by Infratest Dimap (mandated by German weekly Welt am Sonntag) dated April 7, 24% of the respondents indicated that they could imagine voting for the AfD in the federal elections. 7% of respondents answered “Yes, for sure”. 17% of respondents answered “Yes, perhaps”. (CDU/CSU voters: 19%; SPD: 21%; Greens: 14%; Left Party: 29%; FDP: n/a; undecided/non-voters: 31%).

It’s a start.