A Year of Voting Against

Will the Eurozone survive the next 12 months? If not can the EU survive? These questions, unthinkable 12 months ago, are now asked routinely in financial markets and in every major political forum across the world. The purpose of this article is not to speculate on bailout mechanisms, or even new EU treaties, but to try and assess how the people are voting for political parties and particularly parties of the left and how these votes affect the unprecedented political crisis and the EU leaders message of no alternative to austerity.

2009 was the year bond markets began to focus on Government budget deficits across Europe, particularly Ireland and Greece. 2010 saw austerity programmes introduced across Europe, the beginnings of resistance by worker and community organisations and renewed action by the IMF and European leaders to fund banks’ toxic loans to calm markets. Unemployment continued to soar.

In 2011 the crisis related to sovereign debt levels, swollen by recession tax reductions and bank bailouts, across the 17 country Eurozone and questioned whether the Euro could survive. Bonds yields soared not just in Greece, but in Spain, France and Italy. Germany and France, the largest Eurozone countries took unilateral action. In October Merkel, Sarkozy, the ECB and IMF, frustrated by the “democratic process” took the decision to remove the Governments of Greece and Italy and replace them with financial placemen. A new EU treaty was deemed necessary in 2012 to legalise ECB lending and impose austerity and fiscal discipline on recalcitrant Eurozone members.

At the end of 2011 this strategy is not working. Greek bonds yields are at an all time high and anticipate a default of around 90 per cent of value, compared to 50 per cent being negotiated. European banks are still not lending to each other or to industry. A recession in many EU countries seems certain. Democracy Index at the end of 2011 now ranks no Eurozone countries in their top eight democracies. Finland and the Netherlands are ranked 9 and 10. The UK is 18th.

Elections 2011

Parliamentary elections were held in 10 EU countries, six in the Eurozone, representing 23 per cent of the EU population.

February Ireland (0.9 per cent EU pop). Fianna Fail was replaced by a Fine Gael-led government in coalition with the Irish Labour Party following the passing of an austerity budget under intense pressure from the ECB and IMF (see SLR 64). Both Fianna Fail and its Green partner vote collapsed as they were perceived as having disastrously handled the economy. Critics of austerity including Sinn Fein and anti-capitalist coalitions got 13 per cent, up from 8 per cent. Irish GDP shrank 1.9 per cent in 3rd quarter of 2011, unemployment remains 14.5 per cent. Despite this a new austerity budget is being introduced.

With the partial exception of Denmark and possibly Slovenia and Cyprus, all governments elected in 2011 are committed to an austerity agenda in their own country. Several though are all too aware they were only elected due to austerity imposed by their predecessors.

March Estonia (0.3 per cent). The Reform Party and its pro-business partners retained power with 49 per cent of the vote, up from 46 per cent. This was despite a 2008 austerity budget (nine per cent GDP cut in spending), leading to a GDP drop of 14 per cent and unemployment reaching 19 per cent. The message of: GDP growth of 6 per cent in 2010; slowly falling unemployment to 14 per cent (partly due to emigration); the adoption of the Euro on 1 January 2011; and that ‘the corner had turned’ sufficed to convince voters. The Social Democrats and Greens took 21 per cent up from 18 per cent. GDP in 2012 is expected around 3.5 per cent (World Bank) above the Eurozone average.

April Finland (1.1 per cent). The election was noted by the dramatic rise in the right-wing populist True Finns party (19 per cent up from 4 per cent). All other parties lost votes. The incumbent three party coalition could not form a majority and there is now a grand coalition of six parties including the left alliance, the Social Democrats and the Greens. Only the True Finns and the Centre Party who led the previous government were excluded. Finland is not in the Eurozone and unemployment is 7 per cent. The coalition’s budget is for a deficit of three per cent of GDP in 2012, slightly lower than now with a shift to environmental and health impact taxes.

May Cyprus (0.2 per cent). The election result saw only small percentage change from previous votes. However, the communist AKEL now leads a minority government. The election was affected by talks for a federation of two Cypriot states and the effect of these talks on Turkey joining the EU. Cyprus is in the Eurozone and its unemployment has risen to 8 per cent. In December under ECB pressure it announced an austerity budget for 2012. It is forced to fund its deficit from Russian loans.

June Portugal (2.1 per cent). The result was a defeat for the ruling Socialist Party which lost 8.5 per cent of its vote, down to 28 per cent, and the election of the rightist Social Democratic Party. The anti-capitalist Left Bloc also lost 4.6 per cent of its vote, down to 5.2 per cent. The election was dominated by an ECB-demanded austerity budget, which failed to pass precipitating the election. In November a further austerity budget was passed, with tacit Socialist Party support, guaranteeing a deepening 2012 recession. GDP has fallen throughout 2011 and unemployment is 12.4 per cent.

September Denmark (1.1 per cent). A Red Alliance of 4 leftist parties, narrowly beat the Blue Alliance of 5 Centre Right parties by 50.2 per cent to 49.8 per cent to form the the new Danish government. The vote was seen as a reaction to the Austerity and anti-immigration stance of the previous right-centre government. Within the Red Alliance, the anti-capitalist Red-Green Alliance improved most to 6.7 per cent from 2.2 per cent; the Radical Left (or Social Liberal) party went to 9.5 per cent from 5.1 per cent, whereas the Socialist Peoples Party went down to 8.2 per cent from 13 per cent and the Social Democrats the largest party in the coalition got 24.9 per cent down from 25.5 per cent. The Red-Green Alliance whilst supportive is not part of the Government. Budget proposals for 2012 plan steady expenditure, with greater investment in renewable energy. Danish GDP was flat over 2011 with a slight fall towards the end, unemployment is 4.2 per cent. Denmark is not in the Eurozone.

September Latvia (0.5 per cent). Relations with Russia were prominent during the elections and post-election discussions. The pro-Russian Harmony Centre party took most votes with 28.3 per cent, the newly formed Zatlers Reform Party was second with 20.8 per cent and 22 seats, though six MPs have since left. Eventually a right-nationalist coalition government led by Zatlers but excluding Harmony Centre was agreed, followed by massive protest demonstrations. The budget for 2012 envisages further IMF/EU-induced austerity, to finish cutting its deficit from 10 per cent GDP in 2008 to 2.5 per cent in 2012. Between 2008 and the start of 2011 GDP fell 22.5 per cent, unemployment has fallen slightly but is still 16.2 per cent. Latvia is not in the Eurozone.

October Poland (7.7 per cent). The outcome of the election was for the first time in post Soviet times, a new Government with the same composition of the last, a christian-democratic coalition between the Civic Platform and the Polish Peoples Party who between them took 48 per cent of the vote, down from 50.4 per cent. Palikot’s Platform, a split from the Peoples Party standing on an anti-clerical pro-abortion and gay rights basis took 10 per cent. A third christian-democratic party Law and Justice was second with 29.9 per cent and the social-democratic Democratic Left Alliance fell to 8.2 per cent from 13.2 per cent. Poland has not fallen into recession since 1991. It is planning to cut its budget deficit in 2012 to under three per cent by relying on projected GDP growth of four per cent, similar to 2011. Its unemployment rate has remained around 12 per cent for two years. Poland is not in the Eurozone.

November Spain (9 per cent). The overwhelming winner was the christian-democratic Peoples Party which took 44.6 per cent of votes and a majority of seats. The loser was the outgoing social-democratic PSOE, down to 28.7 per cent from 43.9 per cent, which was widely blamed for the economic and budget crisis and unemployment at 21.5 per cent, the highest in the EU. Other parties gained from the PSOE decline. The anti-capitalist United Left attracted votes from many protesters getting 6.9 per cent up from 3.8 per cent. The newly legalised left nationalist Basque party Amaiur got the largest vote in the Basque region. Both these parties had campaigned against the austerity budgets. The Peoples Party having been critical of the PSOE budget constraints, has announced on 3 January 2012 that the deficit is worse than anticipated at eight per cent and is planning significant spending cuts and tax increases. GDP which fell five per cent in 2008-10 had grown one per cent since then. A Spanish recession and further unemployment rises look certain.

December Slovenia (0.4 per cent). The election was called after the previous government lost a confidence vote largely over budget issues. The largest party was the newly formed centre-left List of Zoran Jankovic with 28.5 per cent with most of its votes switching from the Social Democrats, down to 10.5 per cent from 30.5 per cent. A government has not yet been formed but it is likely to be a leftish coalition. Slovenia is not in the Eurozone. GDP slumped 10 per cent in 2009 recovering two per cent till a recent dip. Its budget deficit grew to 10.3 per cent GDP mid 2011, from 8.8 per cent in 2009 and it faces EU demands for budget cuts. Unemployment has grown to 11.5 per cent from 10.5 per cent a year ago.

What do the elections tell us about public opinion?

Firstly each country’s election was specific to that country’s economics and politics – there was no overwhelming EU-wide issue. However, given two ‘electable’ parties, and economic difficulties, voters consistently voted out the sitting government which had ‘caused’ the problem. This was seen in Ireland, Portugal, Denmark, Spain and arguably Slovenia. By and large voters readily swap between social-democratic neo-liberals and christian-democratic neo-liberals. See also UK elections.

Secondly the economy seems less central for voting intentions for countries not in the Eurozone, although IMF and ECB threats about budget ‘discipline’ abound. That said unemployment is an issue affecting voting in all countries. Where the economy was deemed ‘on course’, as in Estonia, Finland and Poland, either government’s were kept or some other issue dominated, such as immigration in Finland.

The left nationalist and anti-capitalist or at least non social-democratic left, picked up or retained votes in several counties such as Ireland, Denmark, Poland, Spain and probably Slovenia. The exception was Portugal. A clear vote against austerity is still very much a minority vote. Other elections in Scotland and in German and Italian states bear out these conclusions.

Decisions on new treaties and financial policy within the Eurozone are made at Council of Minister meetings. The exception being when Merkel and Sarkozy deem otherwise. The Council of Ministers is representative of European Governments, not public opinion directly. With the partial exception of Denmark and possibly Slovenia and Cyprus, all governments elected in 2011 are committed to an austerity agenda in their own country. Several though are all too aware they were only elected due to austerity imposed by their predecessors.

Elections will be held in 2012 in Italy, France and Greece and in 2013 in Germany. Given the experience of this year, most incumbent parties will lose. Only in Greece however, are things so bad that withdrawing from the Euro will be a significant issue. Even Merkel and Sarkozy must modify their stance on fiscal discipline to hold on to office. Continued rising unemployment and recession are not vote winners.

So having said I wouldn’t speculate, I now will. The Euro will survive, probably without Greece and possibly some other countries. There will be a new treaty setting out revised fiscal rules and creating a true Central Bank; however, these rules will differ from those discussed in December 2011.

What the fiscal rules and penalties should be both for the Eurozone and the wider EU and how we create a redistributive EU, mitigating uneven development between rich and poor countries, is a task for the European left as a whole. The richest Eurozone country is eight times richer than the poorest eurozone country. So to paraphrase; how do we end poverty in the EU?

Finally, the proposed new treaty as outlined by Merkel would remove yet more autonomy from elected governments, who would be forced to have their budgets ‘approved’ by a small group of financiers. Since many countries would reject such a constitution in a referendum which European leaders will therefore seek to avoid, democracy could become a uniting issue for the left across Europe.

Photograph

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