EsadeEcPol | Policy insight
Authors: Antonio Barroso Villaescusa (Deputy Director of Research, Teneo) & Luis Cornago Bonal (Associate, Teneo)
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The economic and social consequences of the health crisis caused by the coronavirus are becoming more evident by the day. Given the size of the shock caused by Covid-19, the pandemic might also trigger what political scientists call a "critical juncture," that is, a relatively short space of time during which major political changes are more likely to occur (Capoccia, 2016).
It is too early to know what the scope of possible changes will be, especially considering the radical uncertainty that still surrounds the virus. At the same time, it might be worthwhile reviewing the current state of politics in Europe and beyond in order to explore those areas where the pandemic could have the greatest impact.
To understand the political consequences of the pandemic, it is necessary to identify the trends that precede it
This article reviews the trends that were taking place when the pandemic started and asks questions about the potential impact of Covid-19 on European (geo)politics. The following sections analyse recent developments in European politics from the perspective of national political systems (first), European integration (second), and geopolitics (third).
1. National politics
Covid-19 has hit European countries when they were still immersed in a period of profound political realignment. Over the last decade, political fragmentation has increased in almost all of Europe. Mainstream parties have seen their presence significantly reduced in nearly every parliament.
As shown in Figure 1, both the centre-right and centre-left have been systematically penalised by voters between 2007 and 2019 in Germany, Spain, France, and Italy.
Figure 1. Changes in European party systems (2007-present)
The eurozone crisis caused the breakdown of party systems in the main southern European countries. In Spain and Italy, the radical right emerged strongly just a few years after anti-establishment left-wing parties.
In northwest Europe, the crisis accelerated the political changes that had been taking place for decades with the growth of parties on the radical right and alternative left and green parties. This has also occurred in recent years in countries such as Denmark, Finland, and the Netherlands, where both the Greens and the radical right have become established electorally (and even grown in some cases). An exception is the Danish extreme right, which last year obtained one of its worst-ever electoral results.
In Germany and Sweden, the radical right, which had been marginal, emerged with relative strength after the crisis – these parties further benefited from the politicisation of the refugee crisis in 2015. The Greens in Germany are now stronger than ever according to polls, and, in Sweden, the Greens govern with the Social Democrats, although they only have two MPs and barely won 5% of the vote in the last elections.
The new landscape has led to novel political experiments
This new landscape has led to novel political experiments. In 2015, the radical left came to power in Greece supported by the ANEL nationalist right party. In 2018, the first ever populist coalition was formed in Italy by the anti-establishment Five Star Movement and the far-right Northern League.
Another example can be found in Spain, where the current government (the first coalition cabinet since transition to democracy) includes a party to the left of social democracy, which is rare in Europe. Meanwhile, the radical right has become the main force on the right of the political spectrum in Italy and France, with traditional centre-right parties sliding almost into irrelevance; in Sweden and Finland the new and old right are wrestling for the same space.
What factors explain these changes? The political transformations of the last decade in Europe cannot be explained by the Great Recession only. Numerous academic studies have analysed the impact of economic transformations and crises on the political systems of capitalist democracies in the context of globalisation (Bartels, 2008; Beramendi, Häusermann, Kitschelt and Kriesi, 2015; Bornschier et al., 2008; Iversen and Soskice, 2019).
The political transformations of the last decade in Europe cannot be explained by the Great Recession only
There have been social changes with economic implications (for example, the expansion of education and the increased participation of women in the labour market), while economic changes such as outsourcing and the growing segmentation of the labour market between "insiders" and "outsiders" have had a major social impact.
As a consequence of these transformations, the social and economic structures of advanced democracies have evolved in recent decades. As shown in Graphic 2, countries share similar trends. An example is the decrease in the number of production workers and the relative increase in the percentage of directors and technical professionals.
Graphic 2. Changes in employment distribution by social status, 1992-2015
However, there are still important differences in the economic and social structure of the various countries, which is also reflected in the development of their party systems. Politically, these structural changes have led to a growing fragmentation of the interests of voters. Traditional parties can no longer keep such wide voter coalitions under the same umbrella.
For instance, it is increasingly difficult for social democratic parties to reconcile the interests of their electoral coalition, traditionally composed of the new middle classes and the old working classes. Something similar is happening to centre-right parties in Western Europe, with strong tensions between their liberal voters and those who are more traditional on the cultural dimension and chauvinistic/protectionist on the economic dimension.
These trends suggest the following questions about the possible impact of the pandemic:
Will there be another wave of political change?
The Covid-19 crisis may further accelerate the pace of political transformation in Europe. This will depend, among other things, on the magnitude and duration of the economic shock in each country. This was the case after the last crisis, when the governments that had to manage the crisis were systematically penalised by the electorate (Bartels, 2008; Hernández and Kriesi, 2016), especially in southern Europe (Hutter, Kriesi and Vidal, 2018).
The Covid-19 crisis may further accelerate the pace of political transformation in Europe
During the first phase of the pandemic, however, many governments have experienced a bump in popularity. This could change as the politicisation of the crisis deepens and governments are forced to make increasingly divisive economic decisions, or if it is necessary to reverse the exit from the current lockdowns.
The electoral calendar could also influence the fate of governments facing this crisis. For example, no general elections are scheduled in southern European countries in the coming months, while there will be elections in Germany and the Netherlands in 2021 and France in 2022.
The management of the pandemic and its economic consequences is expected to monopolise the political debate in the months leading up to these elections. It is also possible that the fallout from the pandemic may shorten some legislatures.
What will be the speed of these changes?
Europe faces this crisis with a more precarious political situation than in 2008. Anti-establishment parties are in a better electoral position than in the past. In Italy and France, for example, the most probable alternatives to the current governments include radical right-wing anti-European forces, such as the Northern League in Italy and National Rally in France.
Anti-establishment parties are in a better electoral position than in the past
The electoral change during the previous crisis occurred gradually over a period of two or three elections (Hutter et al., 2018). In the first phase, voters punished the government and the traditional opposition parties won elections. This happened in Greece in 2009, Spain in 2011, and France in 2012.
However, this time anti-establishment parties in some countries could come to power in the first phase of the electoral cycle. As a result, changes could happen more quickly.
What is the future of populist parties?
The message from populist parties may lose some appeal in the short term. In extraordinary circumstances, centrist positions that support the recommendations of experts could reap benefits. Furthermore, populist parties in many countries are already perceived as part of the system and so have lost some of their political innocence.
However, in the medium and long term, these parties may enjoy another window of opportunity if issues such as closing borders, strengthening the nation state, or doubts about some forms of globalisation gain prominence in the political debate. After all, populist parties have long been building their reputations around programmes that include such issues.
However, as Cas Mudde argues, these parties have not all responded in the same way to this crisis. Their fates, therefore, may vary considerably from country to country.
2. European Union politics
Every time a shock hits the European Union, commentators like to quote the well-known phrase of one of its founding fathers, Jean Monnet: "Europe will be forged in crisis and will be the sum of the solutions found to these crises."
The problem is that the EU has just emerged from a decade of major crises, having faced the 2010-2012 euro crisis and the 2015 migration crisis (to which must be added Brexit, and deteriorating rule of law in Hungary and Poland).
What do these episodes tell us about the potential impact of the pandemic on European integration? It is worthwhile remembering that EU decision-making over the past decade has been influenced by two long-standing trends.
The first is that European integration has started to touch what can be considered as "core powers" of the state. As Genschel and Jachtenfuchs (2018) argue, the problems derived from the incomplete design of the Economic and Monetary Union, and the lack of a common immigration policy, generate strong externalities that demand joint action. However, the integration of tax and spending policies to make the eurozone sustainable, and the control of frontiers to better manage migration flows, are complicated issues that form part of the core sovereignty of states (unlike the harmonisation of national legislation to create the single market). This qualitative leap in integration requires investing more political capital than in the past.
The second trend is the crystallisation of the end of the "permissive consensus" as indicated by Hooghe and Marks (2009) by which voters accepted (in a more or less uncritical way) the decisions of the European elites. Globalisation has become a new dimension of political competition in almost every member state. To win votes, Eurosceptic parties have linked the cultural, social, and economic tensions arising from globalisation with the deepening of European integration.
Despite these challenges, when shocks create a strong interdependence among member states that jeopardises the survival of the EU, political leaders eventually take decisions to deepen integration (Schimmelfennig, 2018). But they respond with solutions that reduce the perceived political cost and minimise the loss of powers considered crucial by governments.
This explains, for example, opposition to joint debt issues and a common fiscal policy, as well as the tendency to leave much of the responsibility for stabilising the eurozone in the hands of the European Central Bank (ECB). Instead of attributing these powers to the European Commission, an intergovernmental institution (the European Stability Mechanism) was created, and its key decisions are taken by unanimity.
Solutions reached for previous crises do not resolve all the existing vulnerabilities
Although integration is advancing, the resulting balance is problematic for two reasons. Firstly, the solutions reached do not resolve all the existing vulnerabilities and expose the Union to future crises (Jones, Kelemen & Meunier, 2016).
Secondly, the decision-making process creates political tensions that can undermine electoral support for the European project and be exploited by Eurosceptic parties (see how the German party Alternative für Deutschland emerged in the heat of the controversy about the Greek rescue, or how the Italian Northern League exploited the migration crisis to successfully push its nationalist programme).
Initial reactions to the Covid-19 outbreak suggest that the EU seems to be following the lines described above. Responses to the pandemic have been dominated by the member states (which have responsibility for health policies). The European Commission has used its powers in the internal market to contain national protectionism in areas such as the export of medical equipment. But Brussels is struggling to control government decisions on exiting from lockdown.
Responses to the pandemic are dominated by member state decisions
However, it is at the economic level where glimpses of previous situations are most clearly seen. The relaxation of spending and state aid rules has enabled states to take measures countering the negative impact of Covid-19, some of which may be supported by European funds. The ECB has acted vigorously through its Pandemic Emergency Purchase Programme, albeit after a tentative start that served as a reminder of the delicate political balance the ECB finds itself in.
But, as during the euro crisis, European leaders have different time horizons when negotiating more far-reaching measures. Some governments face greater political and economic pressure to agree on how to finance recovery (such as Italy) than others (such as the Netherlands).
Furthermore, these difficult discussions have reopened political fractures that tarnish the image of the EU, even in traditionally pro-European countries like Spain.
Given the above, the following questions arise about the impact of Covid-19 on European integration:
How long will the status quo last?
Member states often act decisively when facing crises that reveal strong interdependence, but it is difficult to anticipate the threshold beyond which the existing equilibrium becomes unsustainable.
Will cooperation on health accelerate if a second wave of infection arrives? Will the looming economic shock generate sufficient pressure on eurozone countries for solutions to be reached that strengthen economic and political stability within the zone?
It is difficult to anticipate the threshold beyond which the existing equilibrium becomes unsustainable
More intergovernmentalism or more supranationalism?
Following the euro crisis, the European institutions gained more powers in some areas (such as the ECB in relation to financial supervision, and the Commission in relation to macroeconomic supervision). Moreover, new intergovernmental institutions, such as the European Stability Mechanism, were created.
Current discussions on the creation of a recovery fund linked to the Multiannual Financial Framework (the EU budget) suggest that member states are open to exploring supranational solutions. But given the trends mentioned above (to which it must be added the difficulties of reforming EU treaties), it may be difficult for states to deviate from the recent intergovernmental tendency.
In a scenario where agreements cannot be reached, could formulas be agreed for differentiated integration, or even partial disintegration?
Variable geometry at the European level already exists (see the Schengen Area or existing opt-outs), and flexibility is theoretically a good tool for managing growing heterogeneity within the EU (Leuffen, Rittberger and Schimmelfennig, 2013).
It is therefore unsurprising that ideas such as debt issuance by a subset of states have been resurrected. But these types of proposals imply economic risks (would joint debt issues be credible without Germany?), as well as political risks (would France be able to break the Franco-German axis?). These dilemmas would be even greater if ideas such as the exclusion of a member state from integration areas (such as the eurozone) were raised again.
Measures adopted to combat Covid-19 have temporarily suspended some of the key rules underpinning the single market
Is a reversal of integration possible?
Measures adopted to combat Covid-19 and its economic effects have led to the temporary removal of some of the key rules underpinning the single market (such as open borders and the prohibition of state aid).
If the health and economic effects of the pandemic continue, what will be the impact on the integrity of the Schengen Area? And what is the risk that some governments will use the situation to launch undercover industrial policies that undermine fair competition within the single market?
Will the crisis open a new opportunity for Eurosceptic ideas?
In line with what was discussed in the first section, this crisis could be exploited by Eurosceptic "political entrepreneurs" to gather support for their programmes (de Vries and Hobolt, 2012).
Eurosceptic 'political entrepreneurs' could exploit the crisis to gather support for their programmes
At the same time, recent studies show that crises, such as those of the euro, have made Europeans evaluate integration more in cost-benefit terms than through an identity prism (Hobolt and Wratil, 2015). This means that opportunities could be created for pro-European parties to counteract the identity-based strategies pursued by Eurosceptics.
At the international policy level, the pandemic has hit a global order characterised by increased competition between the major powers and a wilting multilateralism (Wright, 2017).
The election of Donald Trump as president in 2016 made inter-state rivalry the main concern of US foreign policy. Moreover, China has made its global ambitions clear, while Moscow has developed a more aggressive and multifaceted foreign policy (using everything from military force to disinformation) to achieve the place that Vladimir Putin believes Russia deserves in the international order.
How has Europe responded to this new landscape? In terms of foreign policy, the divisions between member states have continued to undermine the EU’s ability to influence the major geopolitical challenges.
For example, the lack of a clear political strategy on Russia has led to lasting instability in Ukraine, and Europe has lost much of its relevance in the Middle East. Internal arguments have also hampered the formation of a common position on China, and weakened the EU's ability to respond to new global assertiveness shown by Beijing.
However, at the same time, the EU has attempted to respond more vigorously to the new context of "deglobalisation" arising from trade and technological wars.
For example, in response to tariffs on aluminium and steel imposed by Washington, Brussels increased its tariffs on symbolic goods produced in US states home to some of the key leaders of the Republican Party.
In the middle of trade wars sparked by Washington, Brussels has continued to negotiate free trade agreements with other countries
The Union has also responded to Trump's boycott of the World Trade Organization by creating an ad-hoc trade dispute resolution system that China has joined. And in the middle of the trade wars sparked by Washington, Brussels has continued to negotiate free trade agreements with other countries (including Japan, Singapore, and the Mercosur states).
Growing concern about China’s investments in strategic assets (especially, but not only by Germany) has led to a timid attempt to create a European investment control system. And the Commission has announced that it will propose actions to counter the distorting effects of state subsidies by third countries, as well as rules limiting access by foreign companies to the EU public tender market.
In short, during the second half of the last decade there has been a "strategic awakening" by the EU, with the von der Leyen Commission adding the adjective "geopolitical" to its agenda, and several European leaders mentioning in speeches the need for Europe to pursue its "strategic sovereignty."
Many European leaders openly acknowledge that the EU can no longer count on Washington to impose order globally
Given the global nature of the pandemic, it is worthwhile asking the following questions about how it may affect Europe's geopolitical prospects:
Will the transatlantic gap widen?
Although they are the world’s two most interconnected regions, the relationship between Europe and the USA has deteriorated considerably in recent years (Riddervold and Newsome 2018).
While Trump's election explains much of this deterioration, many European leaders openly acknowledge that Europe can no longer count on the USA to impose order globally. Covid-19 seems to have reinforced this impression, given Washington's refusal to coordinate the global fight against the pandemic.
Will European divisions in the relationship with China increase?
One of the consequences of the euro crisis was significant investment by Chinese companies in several European nations, some of which are now more receptive to the interests of Beijing.
China’s early management of the pandemic, and subsequent propaganda campaign to gain influence in Europe, seem to have been counterproductive. But Beijing’s ability to use its economic and financial power to gain influence during moments of Union weakness must not be underestimated.
Will there be more or less understanding with Russia?
The Covid-19 crisis arrived in the middle of a controversy generated by French President Emmanuel Macron when he began resetting the relationship with Moscow to escape the impasse created by the situation in Ukraine. However, recent Russian disinformation campaigns centred on the pandemic will not help improve relations.
But beyond the short term, what impact will Moscow's management of a domestic Covid-19 outbreak have on its attitudes towards Europe?
Will there be an acceleration of strategic protectionism in the EU?
The outbreak appears to have fuelled European fears about purchases of strategic assets by China. Will the state aid debate open a window of opportunity for those who advocate creating national champions to the detriment of European competition policy?
Moreover, the pandemic has created additional concerns about overdependence on the supply of some products. But will be the actual ability of the EU to attract to Europe and its vicinity the production of certain key goods?
What will happen to free trade agreements?
Partly as a consequence of the political changes described in the first section, ratification of trade agreements was becoming difficult (as the debate over the ratification of the Comprehensive Economic and Trade Agreement between Canada and the EU revealed). Will Covid-19 significantly affect public attitudes about free trade and the ability of governments to ratify treaties?
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