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What Changes Will the EU See in 2019?
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Europe's watershed year
This financial times podcast is supported by capital. One capital. One is reimagining banking by offering accounts with no fees are minimums that can be opened from anywhere in five minutes. Capital one. What's in your wallet capital? One NA. Welcome to wells weekly with me and see adventus any the world news editor on the show this week. We'll be asking what lies ahead for the European Union as the block enters a year of political uncertainty. Twenty nineteen will be momentous potentially historic or the union. Stop jobs are up for grabs through the cost of the year. Notably the president of the European Central Bank in the fall, the European Commission and the European Council who and which countries will get these key jobs will be largely driven by political dynamics in E U elections in may. And meanwhile, the EU elections will also be a big test of support for populous forces in less than twelve weeks. The UK is also scheduled to leave the union barring any surprise joining me on the line. From Brussels is Alex Barker, the FTC Brussels bureau chief and in the studio in London, Ben whole are. Europe editor addicts you must send some agitation in Brussels ahead of this potentially figure is a huge year and once in a generation really in terms of jobs fair where all of them come up at the same time. It's usually not synchronized in this way. And sitting aside, even the political context that in itself would really get this place into a lather. It will be a very complex negotiation that has to take in the politics from the European parliament elections the politics of who's up and down in the European Council. And also the kind of sense that needs to be a transformation of sorts here. Without the usual tools of the EU would use maybe twenty years ago of treaty change or renewal through that way. So the personalities that come forward will be quite an important sign of how this. Is changing or otherwise notice going to hinge on how well the populist. Parties are going to do in the mail elections. Many of them are eurosceptic or the very least against further integration. What are your predictions and the implications for the bulk will the kind of cool them anti you bloke is a bit too much of a compliment really because they don't really act as a block of the moment in the European parliament. There's lots of people who hostile to the u. But then over he coulda coordinating this various kind of groupings and at the moment, maybe a fifth of the parliament has really shoes with the European project would want to see it on wound. Take it apart. All least brought to a kind of minimum level where Member States become much much much more important. You could see that rise significantly in many Member States and to you politicians and now empower the mainstream center-right and center-left are. Struggling or a very much the doldrums in many countries. But even at the top end of the estimates of how and EU parties could do that always going to be a minority. It's going to be an opposition. And in the European parliament that tends to mean, you don't have that much power. But it does have a huge effect on the mainstream. Pro e u parties four three decades, the centre-right and centre-left have had a majority just those two groupings that is probably going to come to an end you'll have three or four Ponti coalitions necessary to get through any legislation in the EU to approve the commission president to do the day-to-day business of Brussels, and that will be much more complicated. It means Blang off a lot more political interests. And in a way, if you want to see a template of what could happen German politics. He's quite a good one because the FDA kind of appeared out of nowhere. They've not really got the hands on the levers of power. But they've made quite a big difference to the center and how difficult it is to operate. Ben. What are you thinking in terms of balance of power at how this new dynamic is going to shift the traditional center lesson to right? Balance of power in Europe. Will I would agree with Alex that sort of play new miracle terms the populist anti e forces may not see a massive surge? Basically for the reason that in many countries, they're already in first place or in very strong position. So they wouldn't see that much uplift. I think the big exception is clearly going to be Italy were Matteo Salvini is expected to emerge as one of the really big winners and may even use his victory in European elections to actually bring down the coalition and go for fresh general election in Italy. But we'll see I agree with Alex. Also that fragmentation of political landscapes at an e u level. On a national level. Just makes life a lot more complicated and pushes the center sort of closer together with the risks. Of course, the only alternative to the center to the grand coalition is the extremes. And that's obviously what those parties in those countries like the AFC and Germany are hoping that's the narrative that they want. I think the populists went to brilliantly in overall terms, but I think they will have the momentum coming out of these elections. And if there's a fresh general election in Italy and the question for me is a obviously can they form some kind of vaguely coherent alliance in the European parliament. But will say can they develop a kind of coherent agenda for changing the way that EU works? If they want to return more power to the nation state in areas and how and when I think that will be the big question, but we already kind of seeing the pressure on national governments the pressure of this nationality stakes sometimes. Nativist forces. And you know, this is going to impact you policies, where do you think it's going to be the most striking on immigration on years and reforms where do you think we'll see more of that pressure? Will that's very good question. I mean, they've already had a very big impact on immigration by essentially stymieing, any EU efforts at a more coherent policy on the euro zone there perhaps less forceful than they were for the simple reason that the markets can always try and counteract any sort of populist moves as you seen in Italy, essentially, where market pressure. I think did play a big part in pulling the Rome government a little bit back into line. I think you may start to see it on single market competition. Rules, for example. These are the things where you might start seeing the impact of the sort of nationalist debate on the mainstream parties and mainstream governments pushing for a more kind of protectionist agenda in the EU. So in that way, the national. Sts can have an indirect effect on what's actually happening in terms of policy-making. What did you think I've actually think the so-called brussel fudges that you've witnessed for many years? Our other going to be more difficult to achieve and are we seeing a shift to the right to more protectionist agenda for Brussels to make big leaps forward. There's always going to be the degree of trust. And the European crisis was a whole mess at times. But in the end, they emerged with much deeper integration. One of the biggest leaps and integration since the creation of single market in terms of the banking union. That was created with the migration crisis that hasn't happened. It's still very much working off the kind of same basis as a was pre crisis, of course, there'd been improvements, but there's not been a big advance in terms of the integration of a truly European asylum system or truly European borders. And that's partly because. There was a lack of trust and a big political divide between the EU forces the anti immigration forces. And those who want to see a more common approach where as much more burden-sharing between countries and after the election, I think either via the parliament and certainly through the European Council where you're going to have a lot of more eurosceptic leaders around the table when issues like the EU's long-term budget come up that question of trust of solidarity is going to make that negotiation extremely odd. And you have a trillion euro budget that needs to be decided with a lot of money running from west to east a lot of grievances about the kind of unfinished business of the migration crisis, and it's going to be a very long and testy negotiation when they actually get down to it, probably and the funk German engine as it was being the driving force in all this in reaching. Consensus. But now micros presidency is being shaken by the June protest. The French president is very unpopular in Germany anger, America is deeply weakened. She has had to stepped down from the cheap of the CD. You g thing that this Franco German motto can steal drive and insert some momentum into EU reforms going forward. It's going to be difficult to see much momentum this year, I would say for the reasons you've just suggested unless of course, angular Merckel sees a chance to sort of seal her legacy in Europe with some bold move forward. Although that seems pretty implausible. So I suspect in Paris. They're already looking to the apres miracle era and wondering who will prevail. Is it going to be unaggressive crimp, Karen barrow, the new party leader? She a shoe in for the chancellorship or may still be a challenge from the right of the CD you I think how that plays out. It's still very unclear. I mean, the leadership. Election has left the party still pretty divided including over issues like Europe. So I think a lot of that will depend once again on German domestic political developments, and I call has portrayed himself as the bulwark against populace. And now, he's got material Salvini in Italy with you know, cozying up with Victorian in Hungary was Michael startegy to portray himself as the anti populist candidate a good idea. And the end, of course, in the Eliza they will say that it wasn't them who picked this fight. It was Salvini who picked the fight. But actually, of course, they readily accepted it it served their interests. He clearly sees himself as the leader of the sort of pro European Liberal centrist generation, but he is on the down Salvini is only up that makes it always going to be a challenging kind of competition to be fair to macro. I think the way they look at it as a cross a lot of this is about taking on Salvini and everything that he represents. But it's also about taking on the lapenne and everything that she represents in. Alvian lapenne of quite close and have quite similar world views, and that is probably his big threat domestically certainly in this election cycle European election. But he's in such weak position. Politically, it's hard to see how he could prevail in May's elections. And meanwhile, in Austria, we have this interesting experiments in Europe of young pro European need, but also very conservative and very hotline on immigration and who's struck a deal with the fall rights g think that could be the templates going forward for the center rights in Europe Sebastian curves, the thirty two year old chancellor who has as you said formed a coalition government with the Freedom Party. I think a lot have already taken inspiration from him. If you look at public cassava, the Spanish People's Party leader since a right or Laura invoke here in France. They of both adopting pretty tough rhetoric on my Gration. Some people would say that they are simply aping the far, right and. And they may end up just legitimising the far, right, which of course, may turn out to be the case in Austria to so it can seem like an inspiration. But it may ultimately prove misguided and addicts meanwhile, the K 's leaving the EU how disruptive is it can be for the block has already turn the page. Would you think psychologically, certainly they turn to page quite a long time ago? The EU has been operating as if the Brits were kind of shadow force here for some time, they managed to maintain a degree of internal unity in the face of this kind of very complex drawn out business with the UK. But now it's coming to the crunch and with a few weeks away, the uncertainty is there the closer you get to the people who spend their days, negotiating Brexit. The more. There is a desire to just get this done to make sure the exit happens. There's more reluctance to see a kind of. Process web Britain could go into more elections or referendum. But obviously that potential is there for something that is drawn out. The likelihood of an extension is very high so much twenty-ninth being the data's seen here at least is very unlikely. And then suddenly you moving towards the European election day, which is in may, if the Brexit process runs beyond that, it starts making things very complicated for the kind of political calculations. They have who's running where which seeds, and then of course, if you get past July first, the new parliament comes in the new groups need to be formed. They have this dont formula for working out. He gets jobs competitive, relative power and things, and if the Brits haven't held their election that whole parliament might be undermined in terms of legal Jittasevi, and it would be very harmful to concentrate themselves. So there's a lot of thinking to do if Brexit is going to grind on through twenty nine thousand nine hundred show. It's can be very messy. And if you add up the fact that the economic prospects do not look so great anymore. You know, all the clouds gathering. It makes a pretty tantalizing year will be following all these developments very closely. And that's it for this week. My thanks to Alex Parker, and Ben ho till next week goodbye. This financial times podcast is supported by capital on capitol. One is building better Bank one that feels an acts nothing like a typical Bank. It's why they're reimagining banking and building something completely different. They offer accounts with no fiercer minimums. They also offer one of the best savings rates in America, and you can open a Capital One account from anywhere in five minutes, Capital One. This is banking reimagined open an account today. Inexperienced banking reimagined for yourself capital. One. What's in your wallet capital? One NA.
FT World Weekly
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Europe's Direction in 2019
Welcome to the presence. Inbox is see if our podcast, but the foreign policy challenges facing the United States. I'm Jim Lindsey director studies at the council on foreign relations. This week's topic is Europe. With me this week to discuss where Europe is headed in two thousand nineteen is Mitya's Matisse Matija assistant, professor of international political economy at Johns Hopkins University school of Advanced International Studies Matijas thank you for joining me today. Thank you for having me. Let's begin with the big picture question. How would you describe the political mood in Europe today? It's a it's a good question because Europe comes out of a decade of crises, and I would say the political mood right now is cautiously optimistic, but it has a couple of assumptions the assumption is that there will be some sort of soft Brexit outcome. Right. That's somehow threes. Mabel, get her deal through parliament. And that big risk will go out of the markets. The ideas that the yellow vests that have, you know, given busy than micro in front so much. Trouble in the last couple of months will slowly fade away after he's given great concessions that the Italian government won't do anything crazy when it comes through its debt. And it's it's it's economy, and it's and it's deficit, and I think the hope is also that this could be the beginning of the end of the kind of populist revolt that we've seen all over Europe. I think people expect populists both left and right to do. Well in the next upcoming European parliament elections in may which are held every five years. And that's kind of bellwether to see how Europe is doing. They expect them to do. Well, but no super well. Right that it's kind of the peak of of that moment. And then the center will hold in a way. Okay. Let let me dry you net. Maybe we'll begin with the European elections again scheduled for may first off refresh our memories as to what's at stake. When you vote for a European parliament with how does it matter? Impractical. Terms, it matters because the European parliament, which usually meets in Brussels. But once a month for a whole week meets in Strasbourg, and you know is important for setting the political agenda for broadly, the European Union. They have broad, you know, legislative powers when it comes to trade, for example, or the environment. They also appoint the new incoming commission the executive of the European Union which will be installed separate from the council. The council is the heads of state of Europe, the commission is easily technocrats, but they're usually former politicians they get appointed and are based on portfolio and Zhong clunkers. The head of the commission in Donald toast is the head of the European Council. Act. Exactly. Yeah. So Yonker is outgoing discus outgoing. So it's a bit of a leadership change, and we'll have to see whether what role the European parliament is gonna play in this in in pointing that new commission. What's important? And I think what is. Is worrisome for political analysts and others? Is that for most people the salient sea of the European parliament is not that high? Right. It's it's the perfect opportunity for the French electorate or the Dutch electro, the Gehring electric to vote as a protest, right? And basically say you're giving real power that really matter. Exactly, right. So it's very safe the last elections in two thousand fourteen the first one in the UK was you you came the party led by Nigel Farage at European parliament has given him a great platform for out of which do kind of, you know, speak his. Exactly and mugging lapenne was came. I in in front, so this is unlikely to happen in national elections where people dig this a little more seriously. Okay. So my understanding is that traditionally a lot of Europeans don't vote in the parliamentary election turnout is fifty percent or less Hugh, expect to see a surge in turn out in two thousand nineteen or are we going to see low turnout, which is soon if it's low turnout you more likely to get highly motivated people net means perhaps better results for fringe parties. You're right since nineteen seventy nine when the first elections happened of for the European parliament. There's been going to secular decline in turnout. I believe in two thousand fourteen it was forty three point one percent, which was just basically stable from two thousand two thousand nine so it is very low, by European standards. I am. Reluctant to say that this going to be higher lower. That's going to be good or bad. Because I'm I'm not sure if you recall during the Brexit vote every analyst guaranteed as the higher turnout was going to be less likely. Brexit was going to happen. We saw a turnout over seventy percent and Brexit happened fifty to forty eight. So it's not clear that a higher turnout means more people that never voted before. Now feel so angry that they that they come out for the first time or that is just an any other election where it's just the kind of mainstream forces come out come out to vote that being said, I mean there there's a lot of resentment leftover especially against Europe. And that's true in all parts of Europe on the say in the south east, but Olsen north and European seemed to love to run against your hometown. Yes, complain about Brussels Brussels is the perfect excuse right or scapegoats for every reform that governments feel that they have to do anyway or that is good for their country. But it's not particularly popular. So yeah. You you rail against Brussels funder, it's for fiscal policy reasons, environmental standards, you have to implement or certain foreign policy decisions that not necessarily that popular at home, but you say because of European solidarity. This won't be half to do SOS talking about some of the individual countries and the challenges they face in two thousand nine hundred and let's begin with a country just recently wrote about for foreign affairs dot com, which is Britain, which faces Brexit which the deadline for leaving the EU is at the end of March. What do you see happening because right now, it seems that that no one in Great Britain has a majority for any particular plan. There's no majority for particular plan, whether it's leaving or whether it's remaining verges the stock as we were to back when I wrote that article for an affairs, which is about the twentieth end. So something we'll have to happen. Right. So there is a deal, which is the. Only deal the European Union negotiated which is the only plan that guarantees Britain leaving in an orderly fashion. What is truly astounding about this current situation is that this is to my mind, the only situation in foreign affairs in a very long time where the default scenario is not the status quo. The default scenario is Britain crashes out of the European Union with or without a deal on March twenty nine March thirtieth European time. So that's close right? That's less than one hundred days away. That's starting to get nervous in places like Dover and Calais as to what would happen if there's no deal all trade, get stuck. So what is the reason I'm as plan? Well, she's going to try to convince parliament she's scheduled to vote for the week very soon for the week of January fourteen she's going to try to convince the Europeans the European leaders especially miracle in Germany mccowan in France to come up with some. Sort of clarification on the Irish border, some sort of guaranteed that European Union has no intention whatsoever of annexing Northern Ireland's to to its own territory and hope that as we get closer to the deadline that she will threaten she may threaten the thing. She has already between the lines would a second referendum, which will which may will ruin the dream of the Brexit series because the referendum result may be reversed. And but the Brexit tears, or at least a hard Brexit tears are upset because they don't see this deal is true taking Britain entirely out of the EU because too many EU regulations and rules still apply. Yes. So, of course, their promise of Britain, leaving the EU in kind of clean fashion and a complete taking back control, divorced and stuff. Exactly. Like, so basically them becoming the equivalent of the United States or Canada was always based on somewhat fairytale assumptions about. The economic impact of this. Right. So in a way, I mean, I you somehow have to admire threesome may for pulling this off right at the end of the day. There is the illusion at least of taking back control with her plan. But it's going to take a very long time to get there. Right. So she wants to have a Brexit that respects the referendum result. But also saves job saves supply chains and so on the only way to do this is to stay really close to Europe and only started to diverge much later on right and much more gradually. So that does mean that into short run they're going to be subject to control of the European Court of Justice their borders are still going to be fully controlled because they don't want. They can't leave the customs union. They can't leave the single market quite yet. There's a transition period. And so it looks like if this deal goes through and this would mean a little of her members of parliament are heard conservative members of parliament changing their minds on. The current out very outspoken stance on Brexit. If this does happen. And I think a lot of people still assume that it will that means Brexit is going to be with us for a long time to come. Because it's going to be new deadlines is going to be new decisions to be made and is going to be a very long process. That's not going to go away. So what's your call? How this is going play out in the end. I think there's there there. There's going to be a vote in mid January January sixteen or something around there. I think it's going to be voted down. And I think margin it's not going to be that significant. Right. And I think than Europe will have to make come up with some other concession, and then I think they will have to vote again, probably sometime in February maybe even early March, and that I think the threat looming threat of a hard. Brexit will will focus the minds or alternatively, Jeremy Corbyn, the leader of the labour party will make one hundred eighty degree u-turn fully embrace a people's vote a second referendum and. A lot of pressure from members of the labor party. Do just that eighty six percent of labor party members are in favor of a second referendum. But I think he rightly is afraid of what this could start right? First of all there are millions of labour voters who want to leave right? He doesn't want to look at the who voted where for leaving the EU. You can see a lot of labor strongholds exam for exit and maybe for very different reasons than some some Tory Tory levers, but they still voted leave. So they don't wanna feel betrayed. And also, there's no guarantee at this point that a second referendum will give us a different result. Right. And even if it does give it exact the opposite result fifty to forty eight in favor of remaining what does that solve right? Well, there's also the question what the referendum will be about. And and the question will be a whole sort of knock down drag out fight about that. Okay. So we have we have Britain. It's it's going through its convulsions. Let's go across the English channel. If I can use that phrase and talk about France, I'm old enough to. Remember when this chrome was elected president in everyone had these high expectations for what he was going with Chievo. He was young charismatic can bring a different approach to politics in policy in France. He overcame sort of the two existing standard-bearer parters parties. Now, all of a sudden eighteen months later things don't look so good. I happen to be in Paris when the protests turned violent in the Meudon is in France seemed pretty sour a lot of people even people who voted for Macron soured on him. Would you see France going in twenty nine thousand nine? Yeah. I think FRANZ is the key in for Europe. Right. I mean Muko has to succeed for Europe to succeed. It seems to me. I mean, he was the lucky president and he came to power because the left and the right imploded. And there was the all alone standing in the centre. Right. And so he had fears opposition from the extreme left and the extra. Right. But the way the electoral system works in France made it very different than in the United States. Right. If if we had a US electoral college in France, mugging lapenne would have been president and on on on one round because she won most of the precincts. So he got lucky there. And then he got lucky with the parliamentary elections. And so suddenly, you had this novelty where politics seemed to be gone, right? And here was a man who's young useful ran on a platform of reform and people seem to embrace it at least early on. But I was always skeptical that this was going to be so successful. Because at the end of the day. It's not that his predecessors hadn't tried this before or long tried this sack was each this. She hook right this, right. And they always met with very violent protests on the streets. So I think the only surprise really was that it took so long for the yellow fests in this fashion to appear on the streets of Paris and industries of all over fronts. I mean, he has done in the end with all his predecessors have done. He has given significant concessions. And because he's micro on because he's FRANZ and because the European Union is desperate. They have let him get away with this right within the kind of constraints of the new fiscal compact and in new restrictions on fiscal policy that the euro-zone spending money he doesn't have. Yes. I mean borrowing end as long as the the stance of the European Central Bank is accommodating and interest rates are low. This is not a disaster. But the knock on effect, of course, has been that this has let Italy of the hook. Let's talk about Italy Kasit has a very strange coalition government, which is I guess trying to do different things and do things differently in terms of governing. Italy it's it began a showdown with the European Union about these fiscal targets. How do you see that playing out? I was actually surprised that the commission and the Italian step back from the brink because you have on the one hand, right? The the league leader Mateo, Sal. Vini who's very strong in the north. And then the leader of the five star movement, which is this kind of centrist radicals, sometimes left-wing sometimes right wing. I never saw a party type like. Graduate school about party politics. And and so so Vena and Demayo both thrive on conflict with the European Union and saying a Europe is constraining us right there. They are not allowing us to implement or promises that we were elected to have a man, they don't and so on and they remain remarkably popular, right? I mean, there are the envy, I think of the rest of Europe. I mean their approval ratings are above sixty percent, right. Which is only something that President Trump here president micro in fronts can dream of. And so what is interesting is. I think the commission euchre who's in the outgoing. But older statesman knows that baking a fight with. It's a big open fight on their fiscal policies on their you know, basic minimum income that they wanted to south their tax cuts that they wanted to north. We'd basically blame everything on Europe and would be the Sastre in the elections in in may twenty nine thousand nine. And so I think that was wise, but it's not going away to problem. Right. So the the ten years over culminating monetary policy are coming to an end. This is the first month January twenty nine nineteen nine where there's no new purchases of bonds by the European Central Bank. Right. So they're easing out of their program of quantitative easing. And so slowly you see even in the United States interest rates are going up the climate is turning economically. And so I think the markets take a less benign stands on new Italian that that's being created. And so very quickly. If we see that growth is slower than expected and the deficit is higher than expected quickly financial market operators. Participants are looking at isn't saying we want higher risk premium for this. And this could very quickly snowball. So just very quickly and for people who aren't up on markets in market lingo, what sort of the worst case scenario if you have a situation, which one day investors, wake up and look and say. Connie's not growing as fast as we thought. And the budget deficits a lot bigger than we thought in Italy sort of just give me a sense of what that means. Well, immediately any hedge fund any pension fund, any money manager out there, who's managing any sort of money will look at Italian debt, and there's a lot of it. Right. I mean, the the biggest debt market is the US full of by Japan. Dan, Italy, it's bigger than Germany and or fronts, but these are safe assets there AAA racists. And so what you'll see the rating agencies in in a scenario floor growth or a bigger than expected deficits will say we'll put on a negative outlook. Or they will downgrade that that that will actually force lots of pension funds to older medically seldom don't they have to hold on certain amounts of very high quality right over investor grade rating, and so that can have a very quick skating. Affect of everybody expecting yields to go up and prices to go down of these bones. Right because they move in opposite directions to start selling. There's an anti. Patient and then quickly you see interest rates go from three four five percent. And that's on sustainable for one hundred thirty percent of their GDP. That's currently held in debt. And then with an ECB. That's now saying, well, we cannot buy more that unless they enter a program with the IMF, and the European Commission was just government won't wanna do then quickly. You have the makings of the next year. Oh crisis. So you have a nature political and economic crisis on you're absolutely in. No one really knows what the knock on that big. But forget even the knock-on effects because Italy is too big to bail, right? I mean grease grease was a big problem. But it was a small part of the economy Italy's close to twenty percent of the euro-zone economy. It's a big big chunk. Well, let's talk about the country that is for many years been the savior of the year, you the basically the driver of the train, and that is Germany were seeing what appears to be at least the beginnings of significant transition. There Chancellor Merkel is stepped down as head of the party's been succeeded. By her Pershing Alcock caused the say in Germany, what what do you what do you make of the German political situation today in where do you think Germany is headed? Yeah. Germany is. I mean in in many ways at least since we're we're to one of the most boring countries in Europe. Right. I mean, there's there's there's even since I've been alive. I think there's only been four chancellors is is very slow transition people. Hold power for very long, the CD you to Christian Democratic Centre. Right. The SP the social Democratic Left alternate empower. But what we have seen in the last twenty years is that they have governed together. Much more often than not. And I will worries me is that Germany could go away. Australia's gone, right? Is that people get so tired of these grand coalitions that they go towards the extremes. Right. And that something like we see in Australia, the extreme right party becomes part of part of the government. I don't see this is going that way in Germany that soon because. What you see is that the traditional parties are losing as many votes to the green party as they're losing them to the the new kind of extreme right altern, alternatives Deutschland alternative for Germany party. But it is going to be interesting because there in may in Germany, how well to see you and the SPD's will do will be very important for the grand coalition and for Markle's future because what could happen. This is the perfect moment for protests voters, right? It doesn't matter. It's the European parliament. So if the AFDC does very, well, if the SPDC's fulls further down from twenty percent of the vote to fifteen or even ten percents, then they may be so much pressure on the social Democrats to say, okay, we have governed ourselves into oblivion with Markle we need to get out of this grand coalition need product differentiation. And so they going to go into a position, and then America is going to be in a position where she can no longer govern. And that could well be the moment next summer right in this is soon or in the fall. Where eater new elections led by AK Unidad, come Colin bar, right? I can't wait for President Trump to say to different. Ak k and and then it'll be interesting to see what what kind of coalition. She can she can bring together because it is likely that the greens will enter government, and that will then bring a very different dynamic in Germany. Let's talk about eastern Europe a lot of concern about. Variously called the democratization the growth of liberal democracy in in places like Hungary. But also, I think great concern about Poland. Do you share the pessimism my hair for many people about political trends in eastern Europe? I do and and I share the pessimism. Because I see all the other crises the euro crises Brexit, the refugee crises, I see them as relatively manageable. Right. And even there with some political goodwill and some reform of of the EU system, they could they could become very manageable. And I think the end Brexit is a problem for the UK. It's mostly an annoyance for for the European Union. But the values the would Hungary has become under Orban's what Boland is has been doing under its in. The government goes against everything Europe stands for right? And what worries me to most? And that's the kind of more sinister aspect of the single market. And of the European Union is that it's allowed would here shman, the political scientists gold album voice and loyalty is that exit means that if you look at Hungary, they under ten million people now about a million and a half of young educated people have left to work in Berlin and London, and they don't vote anymore and they're the natural position. And so urban has managed to consolidate his power partially. Thanks through Europe. Right. And so we see this happening in order parts in Romania to some extent be we'll definitely see even more of this in the in the western Balkans. If there's enlargements that goes to goes further, I think for now we've put the it'd be hit the polls button. But it's something to think about and it's it's not unlike you know, what you see in the United States. So the Earl the rural urban divides people kind of Soulard, hardcore red states that seemed to be voting Republican until turns and is because a lot of. Liberal progressive people have left to the same cities are bluest blues can be exactly and so that that will worries me a bit Oregon has consolidated power by purely democratic means, right? I mean, he has done so changing the constitution with two thirds majority. Poland is more is trickier because they have literally gone against the rule of law. And I think so they have a harder time to to to to to go further along with this that being said it it is. And that's where the European elections are important in may will the European People's Party the home of Markle the home of other center, right political leaders in Europe will they keep protecting or bun because he sparred of their grouping. Right. And that is I think the big question for next summer for Europe. What do you see is driving this d democratization if I can call it? The rise of the seal liberal, populism Europe. Is it fundamentally about economics as we often hear? Is it about identity is it about Russia manipulation in? What what do you see is? Ause because it's very different Europe today than in twenty years ago, ten years ago Russia isn't helping that's that's for. Sure. Right. But I think to point the finger through Russia and to blame them for everything is just a little bit too, easy, right? Unless every everything else would the hook. I think it's a combination of can, you know, stagnant and economies stagnant median wages that then opens up a great political space for, you know, encouraging all kinds of resentments and who better to blame than than than migrants. I didn't. And I mean, it it's funny. Right. I mean every time at Christmas. I mean, Charlemagne the economists had a great goal among this every Christmas is all these kind of, you know, global Globetrotters that live in these great cities that go home to these rural parts of Europe. And then they have these long dinner conversations. Very it's it's basically pro anti Europe or progressive or more conservative, and and so on and I think that's that's definitely at work. Right. I mean, we, and that's not just a European problem. It's a problem. Evolved events democracies is what are we doing about the left behind right about the big parts of our democracies that are thriving that are no booming right there. They're attracting talent, right? That the people are leaving and his little people left behind that feel that this democrat isn't working for them. And I think in Europe, particularly right because it is aging and because we do need immigrants as part of a more dynamic labour force. It does make it seem that there's a threat there of other people that are not adapting or adopting a European culture. Does he nodded states, and you have stake in what's happening in Europe? And if so is there things the US should be doing or not doing. Absolutely. I mean Europe traditionally is always even though Kissinger's quip stands that. There's no one phone number, even though I think most American leaders now, kolber Lynn and the chancellor in Berlin, whoever that may be but Europe is the first place to call up. On for the United States when it's about global crises when it's about foreign policy. I mean NATO even does seem sometimes shaky still kind of the bedrock of transatlantic security. So I think the US has an interest in it kind of smooth Brexit process right wetter. It goes through an orderly fashion, or whatever it gets reversed in an orderly fashion. Right either way, you don't want another financial crisis to to to happen because of this. And that I think the the second point right is the last global financial crisis was triggered in. Or are these starting in the US housing market? But it's not unthinkable that the next global downturn recession crisis comes from Europe. Right. And so broadly accommodating stance of the centrist forces in Europe, center-left and center-right for broadly incremental reforms and kind of to keep the European Union assaulted. Fooding is by all means in in the interest of American foreign policy and also just from a trade point of view. Right. I mean, it's much easier to to have one counterpart and counterpart that has the same standards globally. Right. Then that's I think the big lost opportunity with T tip, and you know, who knows key tipping, the the design trade and investment partnership. I mean, current President Trump is always keen to do a deal. I mean, there is actually, you know, the the big selling point for both Europe and America is that detail could set the global standards do ours standards for the rest of the world, right? And that we both could benefit from tremendously. And so getting more likely we're going to get US tariffs on German cars champion cars already get T tip. I I agree with you. And so I think that that is going in the in the wrong direction. Because again, if you look at how shaky markets have been ever since thanksgiving that. Is something that will that will impact how how financial markets are behaving on that sober note. I'm going to close up the president's inbox for this week. I want to thank my guest Matijas Metais for joining me here. And also for plugging one of the great books in political science by Albert o Hirschman exit voice and loyalty, it's actually really short. And it's really worth the read because it has some very powerful insights Matijas. Thank you for joining me. Thank you, Jim please subscribe to the president's inbox on apple podcast, or wherever you happen to listen to your podcast levers review. They help us. Get noticed improve the show opinions expressed on the president's in boxer solely those are the host or guests not of see afar, which takes no institutional positions. Today's episode was produced by Kevin lisera Zo, we've seen you producer. Jeremy Sherlock, Sydney. Burton was a recording engineer special. Thanks, go out to Corey Cooper and Gabrielle Sierra. For their systems. This is Jim Lindsey. Thanks for listening.
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