Italy’s center-left Democratic Party, which now heads a shaky left-right coalition, bled votes to the anti-establishment 5-Star protest movement in a February election and is driven by factional squabbling. In Greece, Ireland and Spain, center-left parties are paying a high electoral price for having supported public pay and pension cuts required by international creditors. FEWER MEMBERS, LESS MONEY In Britain, the opposition Labour party is still distrusted because it presided over a deregulated financial market bonanza that ended in the crash of 2008, wrecking the reputation for economic competence once built by Tony Blair and Gordon Brown. In France, one of the few countries with an absolute center-left parliamentary majority, Socialist President Francois Hollande is deeply unpopular as his government dithers between old-style tax-and-spend policies and half-hearted welfare and labor market reforms, satisfying no one. With the membership and funding of mainstream parties dwindling in many countries, the center-left has rarely kept pace with new vectors of political action via social media and grassroots initiatives. Some of the center-left’s woes may be temporary. When voters tire of center-right governments implementing austerity policies and scandal and attrition in office take their toll, the pendulum may swing back to the mainstream opposition. But the center-left can no longer offer much prospect of a rosier future through state intervention. There are fewer fruits of economic growth to redistribute, globalization continues to exert downward pressure on wages and working conditions in developed countries, and the demographics of ageing societies with shrinking workforces make welfare benefits and pensions ever harder to sustain. Compounding the left’s problems, some conservative leaders such as Merkel and Swedish Prime Minister Fredrik Reinfeldt have successfully occupied the middle ground. “(Merkel) has taken any political polarization away by reverse-engineering the social democratic Third Way strategy,” said Henning Meyer, editor of the Social Europe Journal. “Similar to what Tony Blair and Gerhard Schroeder did in the 1990s and 2000s, she has adopted the most popular policies of her opponents – at least rhetorically.” Merkel embraced the phasing out of nuclear power, increased public spending on childcare and family benefits and offered a watered-down form of minimum wage to neutralize the center-left. A lurch to the left did not help the SPD regain much ground as core voters are still angry over painful reforms in the last decade that cut unemployment benefits and raised the retirement age, even though they are now credited with restoring German competitiveness. CREDIBLE SOCIAL JUSTICE?
Europe, China agree currency deal
debt loses some appeal in Hong Kong In June, China struck a similar agreement with the Bank of England worth up to 200 billion yuan. The deal with the ECB comes as political gridlock in the U.S. weakens the U.S. dollar against many other global currencies. A spokesperson for the ECB said the deal had been in the works for the last few months. China’s wine obsession spurs Bordeaux sales The yuan, also called the renminbi, currently trades directly with the U.S. dollar, the Australian dollar and the Japanese yen . In September, the Bank for International Settlements announced the Chinese yuan was the ninth most traded currency in the world. The yuan was involved in 2.2% of foreign exchange trading worldwide in April, the period examined by the report, more than double its share in April 2010. The dollar was involved in 87% of all trades, the euro was part of 33% of trades, and the Japanese yen was involved in 23%.
Europe’s Strategic Future: Implications of the Eurozone Crisis
The various elements of the political will supporting the European project may be reinforced down the road, but such support is just as likely to evaporate under the spotlight of social upheavals and discontent resulting from economic turmoil. The erosion of this political will would be exacerbated by the continued inability of the European Union to operate as a unified geopolitical entity. The very survival of the EU as we know it has been questioned increasingly since the eurozone crisis began. The doubts have been reinforced by the lack of viable strategy put forward for consideration, and by the plethora of nation-centric approaches put forward instead of long-term compromises. If the present is any guide, the most probable conclusion is that there is a loss of political consensus, and each new strategy comprises already undetermined and often nebulous goals. Unless there is a revamping of membership structure, rights and responsibilities within the European Union, and a clear enforcement mechanism for implementing those changes, the European Union may gradually dissipate as a geopolitical force. It is also necessary to admit that the very implementation of such drastic measures may push certain governments to the brink of leaving the European Union altogether. This less optimistic scenario is likely to go through a number of iterations, but will finally result in several tiers of integration, with a core of European countries with close bilateral ties, similar economies and matching political visions, and one or more peripheral groups of European countries tied together according to economic strength, culture, or traditional relations. There is also the option of the complete revamping of the European Union, with the terms of the Maastricht Treaty renegotiated to reflect the new terms of monetary union, probably of certain core economies, coupled with more stringent fiscal and political union, with member-states giving up sovereign powers to a new European central body. Such a scenario would create the framework of a new economic and customs union in Europe, within which the different members would pursue different lines of economic and foreign policy development. The new European Union could have a major power focus, with a number of countries grouped within the orbit of Germany, with several other groupsthe United Kingdom, Ireland, and the Netherlands on one side, the eastern European members on the other, and the southern European economies constituting a third satellite group. This scenario would ultimately open the door for a new redistribution of geopolitical power across the continent, allowing countries to seek new partnerships and new arrangements without being constrained by their membership in the new version of the European Union. All of the above scenarios and iterations do not actually represent different future paths. Rather, they are a representation of the potential ranges of the fluctuating future and capacity of Europe to contribute to and influence global geopolitical processes.