By Marcus Walker
The European Union's challenges are multiplying, possibly posing the stiffest test yet of the regional bloc's ability to muddle through crises.
Nationalist, antiestablishment politics and other internal strains are on the rise in the EU just as its geopolitical surroundings have become more uncertain than at any time since the end of the Cold War. Political risks to the European order are mounting before the wounds of the long economic crisis have fully healed.
Is the EU itself in danger of unraveling, as its common currency was in the recent past and could be again? And if the EU survives--a more likely prospect than not--can it win back the confidence of ordinary Europeans who no longer associate it with progress toward prosperity?Elections this year in some of the EU's founding nations will gauge the strength of the centrifugal forces. The single greatest challenge to the bloc's survival in its current form, many observers agree, would be the election of National Front leader Marine Le Pen as president of France. Ms. Le Pen wants to return powers to national capitals from Brussels and reintroduce national currencies alongside the euro.
Her political ascent is as uncertain as the support of French voters for such measures in any referendum. But the lesson of 2016's votes in the U.S. and the U.K. is that festering discontent in swaths of Western societies can deliver electoral shocks to the establishment.
Opinion polls suggest Ms. Le Pen is more of a long shot for the Élysée Palace than Donald Trump was for the White House--or than Brexit was in the U.K.'s referendum on EU membership.
But "with an electorate clearly seeking a major change, anything can happen," said François Heisbourg, special adviser at the Foundation for Strategic Research, a Paris think tank. "If she does win, then it's the end of the EU."
Others believe the EU could survive even a Le Pen presidency, since her party would also need to win June parliamentary elections to form a government and French voters would have to back "Frexit" in a referendum.
Unless there is a Le Pen victory, the EU is unlikely to lose more members, said Charles Grant, director of the Centre for European Reform, a London think tank. But Mr. Grant said doubts about the euro could revive if Italy holds elections as some expect and voters back the antiestablishment 5 Star Movement, which wants a referendum on the common currency. Impediments to the 5 Star Movement's ability to win on a national level include its refusal to form coalitions with more-established parties. "The chances that the euro will face an existential crisis about Italy aresmall but not zero," Mr. Grant said.
Opinion polls show limited support in eurozone nations for scrapping the euro and reverting to national currencies. The EU's latest Eurobarometer survey, published in December, suggest around 70% support, on average across the bloc, for keeping the common currency.
Longer-term doubts about the euro's viability are unlikely to disappear unless a stronger economic recovery takes hold in struggling countries such as Greece, Portugal and especially Italy. Optimists believe Italy's steps toward cleaning up its ailing banking system could unlock better growth, just as Spain's steady recovery followed the recapitalization of its banks.
Europe's monetary union is still "incomplete and fragile," said Nicolas Veron, a visiting fellow at the Peterson Institute for International Economics in Washington. "There will come a day when the eurozone faces a crisis to which the only answer is fiscal union."The sources of Europe's populist backlash go beyond economics, extending to countries whose economies are humming along with low unemployment. The anti-immigration Alternative for Germany, or AfD, could emerge from elections this fall as the biggest opposition party in Germany's parliament. The biggest surprise of all, however, would be the failure of Chancellor Angela Merkel--Europe's dominant political figure for the past decade--to win re-election.
The ability of mainstream EU politicians to contain nationalist challengers depends partly on finding a common strategy on migration, Mr. Grant said. Efforts to beef up external borders, join with other regions to stop or return migrants, and improve cross-border police cooperation against terrorism go in the right direction, he said.
"Populism isn't going away anytime soon," said Mr. Heisbourg of France's Foundation for Strategic Research. "The real surprise is that much of the uncertainty comes from outside the EU," he said, citing Russian assertiveness, doubts about Mr. Trump's commitment to traditional U.S. security guarantees in Europe and the terrorist threat from followers of the militant group Islamic State.
Write to Marcus Walker at email@example.com
(END) Dow Jones Newswires
January 16, 2017 05:14 ET (10:14 GMT)
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