Why the Far Right Is No Longer an Existential Threat to Europe
The far right’s acceptance of the euro means that possible Victory in France’s election is unlikely to lead to financial crisis.
Veterans of European crises got a sickening sense of deja-vu this past week.
Since a debt crisis beginning in Greece in 2009 almost destroyed the euro, investors have been alert to anything that threatens the survival of the European Union or the common currency shared by 20 of its 27 members.
As Europe’s far-right parties have crept closer to power, their stated goals have shifted from leaving the EU to reforming it from within.
The underappreciated story of Europe’s election season isn’t the fragility of the EU and euro, but their resilience.
The debt crisis that began in Greece in 2009 exposed the common currency’s underlying contradictions.
By allowing countries with higher inflation such as Greece and Spain to borrow at the same low interest rates as Germany, it fueled the growth of unsustainable debts.
Yet the euro survived because its political popularity trumped its economic flaws
In previous campaigns, RN backed a referendum to make French law superior to EU law, in violation of the bloc’s rules, but hasn’t highlighted the pledge in the current campaign.
After becoming prime minister of Italy, Giorgia Meloni did a U-turn from vocal EU critic to team player
The key flashpoint, though, is France’s shaky finances.
On Wednesday the European Commission, the bloc’s executive arm, notified Paris it was in breach of the bloc’s 3% deficit limit, which is supposed to lead to negotiations on a remedy.
Brussels has long given France a long leash on deficits because it is politically and financially too important to fail. A showdown with an RN government could fray the bloc’s credibility and cohesiveness.
French bond yields have risen because, unlike the U.S. and Britain, who have larger deficits as a share of GDP, France doesn’t control the currency in which it borrows and is thus at greater risk of default.
The far right might want a different path from the rest of Europe, but its freedom is limited if it wants to keep the euro. And voters clearly do.
Greg Ip Wall Street Journal 20 June 2024
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