The Pandemic Depression
The Global Economy Will Never Be the Same
On November 17, German Chancellor Angela Merkel and U.S. President Barack Obama published an article in the German magazine WirtschaftsWoche, outlining their countries’ shared commitments to the values of individual freedom, democracy, and the rule of law; collective defense through the NATO alliance; and international cooperation on issues from refugee policy to climate change mitigation. Their essay served as a reminder of the values that have been at the heart of the transatlantic alliance of liberal democracies for decades.
In recent months, nationalists and populists have challenged those values on both sides of the Atlantic. In June, the United Kingdom's vote to leave the European Union gave populists their first major win of the year. Then, last month, the election of Donald J. Trump to the U.S. presidency placed a candidate who had demonstrated disdain for democratic values such as the freedom of the press, the independence of the judiciary, and the rule of law into the world’s most powerful office. In Europe, far-right politicians and autocrats from Budapest to Moscow cheered Trump’s victory; establishment leaders reacted with shock. Western liberal democracy, seemingly ascendant at the end of the Cold War, now seems threatened on all sides. These are particularly dark days for European democracy.
No one can no know precisely how Trump will govern or what foreign policies he will pursue. But some of the effects that his presidency will have on Europe and the transatlantic alliance are already clear. Trump’s victory will not propel far-right politicians to power, but it may bolster their confidence as they challenge establishment politicians. For those populists already in power, such as Hungarian Prime Minister Viktor Orban and Jaroslaw Kaczynski, the head of Poland's governing Law and Justice party (PiS) and the country's de facto leader, the Trump administration could be a powerful friend.
The president-elect's campaign statements suggest he will demand that European countries spend more on their own defense. That is a reasonable position, but Trump may counteract the benefits of any increase in European defense spending by undermining the credibility of the NATO alliance. As for the EU, as a supranational organization that promotes multilateral trade arrangements, free movement, environmental regulation, and international law, it embodies much of what Trump has vociferously opposed. It was no surprise, when, soon after the United Kingdom's June referendum, Trump took to Twitter to declare himself "Mr. Brexit," and has since struck up an apparent friendship with Nigel Farage, the former leader of the United Kingdom Independence Party.
THE CENTER HOLDS?
The latest tests for Europe’s political establishment came in Austria and Italy on December 4. In Austria’s presidential election, Alexander Van der Bellen, a pro-European former leader of the Greens party, defeated Norbert Hofer, the Euroskeptic candidate of the far-right, anti-immigrant Freedom Party of Austria. But the relief that Van der Bellen’s victory provoked among mainstream European leaders did not last long: later that day, Italian voters dealt a blow to their country’s establishment by rejecting a referendum on constitutional reform that the center-left prime minister Matteo Renzi had effectively made into a vote of confidence on his leadership. Renzi resigned, plunging Italy into a period of political uncertainty at a moment when it faces mounting pressures on its banking system and sovereign debt, an immigration crisis, and a surging populist group of its own, the Five Star Movement.
Next year, national elections in France, Germany, and the Netherlands will test whether moderates can hold the line against far-right forces, as they did in Austria. First, in March, Dutch voters will go to the polls for a parliamentary election. The anti-Islam firebrand Geert Wilders and his far-right Freedom Party will likely run neck-and-neck with the incumbent Prime Minister Mark Rutte and his center-right People’s Party. Then, in April and May, France will elect a new president after two rounds of voting. Marine Le Pen, the leader of the far-right National Front party, will probably emerge as one of the top two candidates in the first round, most likely setting her up against the center-right Republican Party’s Francois Fillon in the final round. Finally, in September, Germany will hold parliamentary elections. Angela Merkel is seeking a fourth term as chancellor and faces the possibility that, for the first time in the country's post-war history, a far-right party—the Alternative for Germany—will enter the federal parliament.
Trump’s victory has bolstered the hopes of populist forces in France, Germany, and the Netherlands, but in each case, the center will probably hold. In the Netherlands’ fragmented party system, it will take a coalition to govern, and since mainstream parties are likely to shun Wilders, Rutte will likely return to office as the head of a new multiparty government. In France, there is a real chance of a Le Pen victory, but it is more probable that centrists will block her by coalescing around her opponent in the second round of voting. In Germany, Merkel enjoys high levels of support. Because the migration crisis is in check for now and because she has made some concessions to critics on her right, the chancellor will probably win another term. The elections of 2017 may produce a rightward shift among some European centrists, but in the most powerful EU states, governments committed to liberal democracy seem likely to remain at the helm.
Although Trump will not be able to propel populist politicians into office, he can support those already in power. Trump has already invited the autocratic Orban—whom the administration of U.S. President Barack Obama has largely shunned over the past five years—to visit him in Washington. In a December 1 interview with Hungarian media, Jeffrey D. Gordon, a Trump campaign adviser, claimed that his camp viewed Orban as “a great leader, one of the best in the world.” The leaders of Poland’s PiS government, which is undertaking an unconstitutional takeover of the country’s Constitutional Tribunal and faces the threat of EU sanctions, can expect a similar embrace. During the campaign, Trump repeatedly praised autocratic leaders and made it clear that he does not see it as the United States' role to promote democracy and human rights abroad. Trump’s overture to Orban suggests that he will embrace European leaders with autocratic tendencies instead of pressuring them to respect democratic norms, as the Obama administration did.
As for NATO, in a November 29 phone call with British Prime Minister Theresa May, Trump underlined its importance for both the United Kingdom and the United States. Although Trump is unlikely to dismantle the alliance, he has already done lasting damage to it. NATO’s Article 5 mutual defense guarantee is meant to act as a deterrent, assuring potential foes that an attack against one NATO member will prompt a reaction by all. But Trump has seriously undermined that guarantee by suggesting that the United States will only defend NATO countries that have met pledges to spend at least two percent of gross domestic product on defense. And by signaling that he seeks warmer relations with Russian President Vladimir Putin, he has further undermined NATO allies' faith that the United States would come to their aid in the event of a Russian incursion.
A TEST OF UNITY
In March, the European Union will celebrate the 60th anniversary of the Treaty of Rome, which established the European Economic Community, the EU's predecessor. Since the EU’s inception, U.S. presidents from both parties have advocated for European integration. Obama has repeatedly emphasized that European unity is a strategic interest for the United States and, as he put it during his November visit to Greece, that European integration is "one of the great political and economic achievements of human history.” EU leaders should expect no such encouragement from Trump.
To the contrary, European leaders should be prepared to see Trump try to divide their union and play them off one another. The EU often champions liberal values and policies—such as multilateral environmental, human rights, and trade treaties—that Trump opposes. A strong, united Europe working to promote such liberal values globally would conflict with Trump’s policy agenda. More generally, European integration embodies the kind of “globalism” that Trump and other populists rail against. Thus it is no surprise that Trump has championed Brexit, has reached out to Orban and other Euroskeptic politicians, and has called for warmer relations with Russia even as Putin threatens European security and seeks to divide the EU. Europe’s leaders should expect more of the same from the incoming administration.
The Trump era will present a profound test of unity for Europe’s bedraggled union. As Europe confronts the negotiations over Brexit, the potential revival of the Eurozone crisis in Italy, the lingering refugee crisis, Russian aggression on its eastern flank, and the the rise of autocracy in some EU member states, it will also have to deal with a U.S. president who may do more to stymie European cooperation than to encourage it. Merkel can undoubtedly play an important leadership role in this new context. But she was right to emphasize recently that “no single person, even with the most experience, can fix things around the world.”
Van der Bellen’s victory in Austria and increases in public support for the EU since the Brexit vote have offered some hope that Europe’s liberal democratic order can survive the crises it now faces. But if Europe’s leaders want their union to survive this dark age for democracy, they must offer citizens a positive vision for the future of their collective project and redouble their commitment to it. Above all, they should work to revive Europe’s flagging economy, shifting away from their obsession with austerity to a focus on reviving growth. They should come to grips more effectively with the migration crisis, expanding on recent initiatives to secure Europe’s external borders while providing more support to those states that bear the greatest refugee burden. They should intensify defense cooperation to show citizens how European institutions can help protect them against common threats. And EU leaders must stand up to the Euroskeptic populists in their midst, defending the democratic values on which the union was built.