Over the past few days, we’ve witnessed the economic crisis in Europe become a political crisis, and what is emerging from the mess are two new governments of “national unity,” in the two most beleaguered countries – Italy and Greece. In Rome, scandal-ridden Prime Minister Silvio Berlusconi kept his promise to step aside and resigned, making way for a new administration likely to be formed by former European Union Commissioner Mario Monti. In Greece, Lucas Papademos, a former European Central Bank vice-president, replaced George Papandreou as head of a new coalition government. My guess is that markets will cheer the changes, especially in Italy. My other guess is that the good cheer won’t last very long.
That’s because the cast may have changed, but the depressing play we’re watching hasn’t. Monti and Papademos face the same daunting, if not impossible, tasks as Berlusconi and Papandreou: To implement painful reforms and fix broken national finances in the face of mounting public opposition. Will they prove any more adept than their predecessors?
On the surface, we could say they will be. Both Monti and Papademos come from technocratic, policy-making backgrounds, so they should be well versed in the economic problems their nations face, and the possible solutions. As outsiders, neither is beholden to political parties or factions to the same degree as Berlusconi or Papandreou, which in theory should give them a freer hand to push through reforms. And both will enjoy at least a short honeymoon period during which the public might be willing to accept their tough decisions.
But we shouldn’t get our hopes up too high. Being non-political outsiders also has its downside – do they possess the connections, relationships and leverage in political circles to actually get things done? Berlusconi and Papandreou struggled to win support for reform measures and austerity packages. Can Monti and Papademos do a better job of convincing their countries’ politicians to accept the same reform measures and austerity packages, or perhaps even tougher ones? With an election looming in February in Greece, Papademos could prove little more than a caretaker until the public has their say. Then there is the question of how the voting public will respond. Athens has witnessed protests and strikes against austerity measures with predictable regularity. Will they now stop that Papademos is the prime minister? Will the people of Rome stay off the streets if Monti rips into social services and raises taxes? Of course not.
I think we also have to ask how much legitimacy these governments will really have. As my colleague Stephan Faris pointed out over the weekend, these new administrations were ushered into office by nervous financial markets, not the voting public. Even beyond that, you could say that both are an outgrowth of euro zone politics, especially the manipulations of German Chancellor Angela Merkel and French President Nicolas Sarkozy. The euro zone’s power couple had put tremendous pressure on Berlusconi and Papandreou to force reforms down the throats of an unwilling, domestic political system. Their impact on Greece was even more significant. When Papandreou raised the idea of letting the Greek public decide if Greece should accept the latest euro zone bailout, Merkel and Sarkozy freaked out and demanded Athens prove its commitment to the monetary union. What if – perish the thought! – the Greeks voted against the euro!?!? The opposition in Berlin and Paris precipitated Papandreou’s departure. Something feels very wrong about how that played out. In a democratic society, it is only proper that the people of a nation get to choose their own fate, rather than having it dictated to them by foreign powers, whatever economic situation they may face.
So what we’re seeing as the process of economic reform unfolds is that the euro zone is becoming an increasingly undemocratic place. Governments are forming that aren’t elected by the people to force through reforms demanded by the euro zone. European leaders are wielding influence over the lives and politics of member countries in ways that are proving out of the control of local voters. None of that political reality will make it any easier for Monti or Papademos to do their jobs.
Even more, these questionable political shenanigans are being done in the name of the euro, for the lofty cause of European integration. That is ironic. The euro was to be a tool for preserving democracy. Now it has become a cause in itself. Of course, it is understandable that Europe’s politicians have come to fear the ballot box. Those politicians who have faced it since the euro crisis began have lost (Portugal, Ireland) or look set to lose (Spain, Slovakia, Greece). Perhaps the need to press ahead with austerity measures would have doomed these politicians, even if they still used their own currencies. But nevertheless, the leaders of Europe are confronting a dire reality – saving their jobs, or saving the euro.
In the end, no matter who might be running the governments in Rome, Athens or Berlin, European leaders will have to answer for their choice of the government of the euro over the government of the people. They might come to regret it.