The European conservatives are organising while the progressives fight among themselves

I read an article in the Frankfurter Allgemeine Zeitung (FAZ) yesterday (January 16, 2022) – Ich hoffe auf Deutschland – which made me laugh really. Comedy in absurdity. It also told me that the forces in Europe are firmly against any major progressive change. I considered this issue last week in this blog post – German threats of exit rely on the ignorance of others reinforced by Europhile progressives (January 11, 2022). I know progressives thought that the invocation of the Stability and Growth Pact escape clause in 2020 as the pandemic took hold might have been a sign that things were changing in Europe after years of austerity bias. But as the days pass, more evidence mounts that there is a status quo that is being managed and it won’t be long before we see the familiar claims about excessive deficits and debt. The latest input comes from Austria’s new Finance Minister, Magnus Brunner who was reported in the FAZ article as saying that he rejects a debt union outright and hopes to win over the new German government to ensure they hold the fort. With the new German finance minister also of a similar if not more extreme persuasion about sound finance, I do not think he will have much trouble convincing the German. He also signalled that he wants to use a coalition – the “Staaten der Verantwortung“ (States of Responsibility) to maintain discipline in the Eurozone. The short period of fiscal flexibility is coming to an end. Meanwhile, with the French Presidential election approaching, the Left is fighting among itself for peanuts. The old guard is not about to fall yet.

The conservative austerians are organising

The new Austrian Finance minister said that as opposed to the previous statements by Chancellor Sebastian Kurz to have an open cheque to deal with the pandemic, the new government will be more frugal in its fiscal approach.

It plans to withdraw aid in March 2022 as it expects the crisis to be abating by then.

He indicated that while several critics of the previous government pointed to wasteful spending, there was an understanding that the government aid had to be quickly dispensed and so some waste was to be expected.

He said in response to hardline anti-government moralists that:

Aber wir sollten die Kirche im Dorf lassen

(We should leave the church in the village!)

This reflected his preference for providing corporate support to save companies from insolvencies.

But now was the time to pay for the support.

He noted that the OECD in its latest Economic Outlook was starting to bear down on public debt levels – so nothing much has changed from organisation.

Austria debt is around 82 per cent of GDP, which is above the SGP threshold level of 60 per cent.

The new government (ÖVP – Austrian People’s Party) reflects a conservative liberal-leanding Christian (Roman Catholic) ideology and has been in power for years in one coalition or another. Since 1945 it was been in opposition from 1970 to 1986 but in government otherwise.

It reflects the hard-right anti immigration and Islam thinking that many of these conservative parties in Europe propagate.

Its economic mantra is ‘balanced budgets’ and Brunner indicated the government was committed to restoring that state in the medium-term, once the pandemic eases.

He reaffirmed Austria’s commitment to the SGP and was critical of discussions at present at the European level which were focusing on relaxing fiscal rules, were “Manche Diskussion auf europäischer Ebene geht für mich in eine vollkommen falsche Richtung” (going in the wrong direction).

This was a direct shot at the so-called Paris-Rome connection.

Rather than relax the rules, Brunner claimed that:

Wir müssen zurückkehren, zu den strengen Regeln einer nachhaltigen Budgetpolitik.

(We must return to the strict fiscal rules of sustainable budgets).

There was no mention of reducing unemployment. His focus is on fiscal numbers.

He claimed that the nations that have dealt with the crisis the best (Germany and Austria) are those which enforce these strict rules.

He clearly senses that the Paris-Rome nexus is becoming influential and so the frugal nations have to lobby together.

That is why he “hopes that Germany” will demonstrate fiscal leadership – along the lines of the CSU/CDU government under Angela Merkel and join with Austria in opposing any relaxation of the fiscal rules.

He considered the new Germany government will not support a debt union – where European debt is issued and permanent transfers are made to struggling states.

He interestingly tied that into climate policy and eschewed any notion that European debt, issued under mutual responsibility, should be used to develop carbon cutting energy investments in Europe.

He said that:

Deshalb lehnen wir ja auch den aktuellen Taxonomie-Plan zur Finanzierung der Energiepolitik ab. Es kann nicht sein, dass wir mehr Schulden machen, um die Atomkraft zu unterstützen.

(We reject the current plan for financing energy policy. We cannot take on more debt to support nuclear power).

To counter the Paris-Rome nexus, he claimed he was seeking to put the ‘frugal four’ (Netherlands, Denmark, Sweden and Austria) back on the road even though electoral shifts have occurred in those nations since they last put out a statement early in the pandemic.

Now he is claiming that he wanted to form a group within Ecofin (the notorious finance ministers committee) which he referred to as the “states of responsibility” whose will lobby to restore the fiscal rules in their entirety.

Who are these states?

Well he wants the Frugal Four to expand to add Finland, then Germany, the Czech Republic, Slovakia, the Baltic countries, and indeed, any nation that is committed to the fiscal rules.

He was asked about the implications for the ECB in increasing interest rates and ending its bond-buying programs which have suppressed yields on EMU Member State’s debt.

He was fairly non committal.

His main policy focus was on lowering corporate taxes and implicitly attracting companies to move across the border from Germany, where tax rates were higher.

While the Left fights among itself

Meanwhile, the French Presidential election is to be held on April 10, 2022.

The – Opinion polling for the 2022 French presidential election – is interesting and depressing.

The progressive interests have a stack of candidates fighting among themselves over a handful of percentage points.

As each week passes, it seems a new candidate on the Left joins the fray, the latest being the former Socialist justice minister Christiane Taubira.

We now have:

1. Christiane Taubira (Radical Party of the Left) – former Justice Minister.

2. Jean-Luc Mélenchon (La France Insoumise) – hard left.

3. Anne Hidalgo (Socialist Party) – Mayor of Paris.

4. Yannick Jadot (Europe Écologie) – Green.

5. Fabien Roussel (French Communist Party).

6. Arnaud Montebourg (L’Engagement) – so-called Miscellaneous Left.

7. Philippe Poutou (New Anticapitalist Party) – Far Left, Union connected

8. Nathalie Arthaud – Lutte Ouvrière – Left, Union

They are fighting among each other for votes from progressive voters while the right and right-centre candidates stand alone.

In the – Poll of Polls – which brings together polling data from all sources, polls published on January 17, 2022, we learn that:

Candidate Party January 20, 2021 January 17, 2022 Emmanuel Macron La République en Marche! 24% 26% Marine Le Pen National Rally (Hard right) 26% 17% Valérie Pécresse Les Républicains (Centre-Right, Liberal) n.a 17% Éric Zemmour Reconquête (Right-wing) n.a 12% Jean-Luc Mélenchon La France Insoumise 11% 10% Yannick Jadot Europe Écologie 7% 6% Christiane Taubira Radical Party of the Left n/a 4% Anne Hidalgo Parti Socialiste 7% 3% Fabien Roussel French Communist Party n/a 2% Nicolas Dupont-Aignan Debout la France (Right-Gaullist) 7% 2% Jean Lassalle Résistons! (Centre-right) 1% 1% Philippe Poutou New Anticapitalist Party (Far Left) 1% 1% Florian Philippot Les Patriotes (Right-wing, Nationalist) n/a% 1% Arnaud Montebourg L’Engagement (Left) n/a 1% François Asselineau Popular Republican Union (Hard Eurosceptic n/a 1%

Note: a few other candidates have less than 1% standing – Nathalie Arthaud – Lutte Ouvrière (Left); Hélène Thouy – Parti animaliste (Animal Rights).

So do the sums.

The Left or Left-leaning candidates – of which there are 7 – command no more than 25 per cent of the intended vote and none will get to the second round.

If they all rallied behind one (say Jean-Luc Mélenchon, who is the most popular), then they would be ahead of the right-wing candidates – Marine Le Pen, Valérie Pécresse and Éric Zemmour.

The traditional Socialist Party has all but disappeared.

So 25 per cent of the voters will cast their votes in vein for this rag-bag of Leftist candidates.

It is a long way back to the days when François Hollande who was leader of the Parti Socialist, the traditional progressive party in France that had a serious chance of winning government at each election, won the 2012 election commanding all arms of government.

Why did his party go backwards so quickly?

The same reason that the Mitterand government in the 1980s fell into disfavour.

They played the neoliberal austerity game that damaged the well-being of the workers who had elected them.

So while the right wing politicial forces in Austria are plotting to strengthen and broaden the austerity alliance in Europe, the progressive interests in France are failing.

That juxtaposition is happening all over the world.

For example, see the decline of popularity for the Biden administration and the rumblings from a resurgent Trump.

Lack of action to protect workers will kill parties that claim to represent them.

Conclusion

This is a sorry state of affairs.

That is enough for today!

(c) Copyright 2022 William Mitchell. All Rights Reserved.