Matteo Renzi to the Rescue? European Union – Looking for a Leader to Reassert Its Role

PM: Matteo Renzi

To the pundits and other talking heads who wrote off Europe as a spent force: You ain’t seen nothing yet! The hand-wringing is about to be cut short as the old world prepares for a makeover. Indeed, the exercise may be long overdue but that doesn’t detract one iota from the role the European Union is destined to play on the global stage.

Numbers tell the story. With a GDP of well over $16.5tn (EUR12.9tn) that is unequalled by any power, the EU boasts the world’s largest economy. Significant though they are, the US and China play second and third fiddle when it comes to raw economic – and financial – power.

The differences become even clearer when taking into consideration the current account balance – a fairly accurate profit/loss indicator of any given economy. Since a number of years the United States is being run at a significant loss. Last year, the US current account balance, though narrowing, ran at a deficit of some $400bn (down from almost $800bn in 2010) whereas the European Union managed to obtain a rather healthy surplus of $95bn.

Money Matters

In fact, the US has been running current account deficits since the late 1970s with a one-off respite in 1991. Meanwhile, European surpluses have been fairly constant. In simplified practical terms this means that the US economy – including its assets and means of production – is slowly but consistently being bought up by non-US investors who supply the wherewithal to ensure the necessary zero-sum outcome on the balance of payments.

“If we want to save Europe, we must change Europe.”

– Matteo Renzi

These providers of liquidity are to be found in the countries producing surpluses on their current accounts: China, Norway, Russia, the countries of the Middle East and, indeed, the countries of the European Union. The United Kingdom, France, Germany, Luxemburg, and The Netherlands are amongst the largest investors in the US, not just when it comes to foreign direct investment, but also with regards to snapping up treasury papers.

Europe seems to derive an almost perverse pleasure in downplaying its economic might. The EU may not dispose of an impressive army to help throw its weight around; it does possess a nicely filled war chest with which to make waves. The union is home to over 505 million people, fully half of whom are waiting for consistent growth to deliver increased prosperity. The EU’s economy thus offers plenty room for domestic growth. The union’s already formidable GDP is ready for take-off as the less-developed nations of the former Eastern Bloc shake off the legacy of their unfortunate past and welcome the first post-communist generation into the productive demographic.

Military Might

Even militarily the EU is much less feeble than it is made out to be. With a combined annual defence expenditure of EUR192bn ($261bn), and fully 1.5 million military personnel of whom 425,000 are ready for instant deployment, the union is no pushover. Together, the 28 EU member states can field around 6,500 main battle tanks, 46,000 plus armoured fighting vehicles, over 2,100 self-propelled howitzers and close to 350 state-of-the-art attack helicopters.

The EU’s combined naval forces include four carriers (with two super carriers under construction in the UK), 18 assault and support ships, almost sixty submarines, and 170 destroyers, frigates and corvettes for a grand total of 550 plus ships. The combined EU air forces are similarly impressive with over 2,000 fighter jets and over 500 transport, tanker and air-lift planes.

These numbers may still pale in comparison with the forces the United States can and does deploy around the world. However, Europe is not about military conquest. In popular parlance: It has done that, been there and got the resulting t-shirt blown to shreds. Americans may think their country has a manifest destiny as leader of “the free world” – or some such slogan – Europeans have suffered wars and now know better than to conquer the world. Standing armies remain a necessity, but only for self-defence and a few humanitarian interventions should the need arise.

The Search for Common Ground

Europe of course still lacks a degree of cooperation, integration and, perhaps, an increased sense of togetherness. The European Union is very much a collective of cooperating nation states, each with its own unique make-up, history, and culture. Language remains a barrier to integration: The EU has no less than 24 official languages providing healthy incomes to a veritable army of translators and writers.

Though Greece bears little resemblance to Belgium, and the Polish instinctively distrust the Germans (as do the Dutch and a host of others), the European Union is – for all its diversity – very much a contemporary version of the concert of nations (Vienna, 1815), providing for stability, mutual dependencies, growth and prosperity. It has been doing so since the 1950s.

As the UK mulls an EU-exit, expressing grave doubts about the union’s increasing say in domestic matters and its perceived lack of transparency, the country is seen to cling to its glorious past as the ruler of a quarter of mankind. For the British it may be hard to grasp and accept the fact that the empire has gone and that their green and pleasant land now stands all alone in a fast-changing world. Worse, the fair isle is about to be split in two as the rather unruly Scots seem to fancy the idea of becoming a fully sovereign state.

Exit Opportunity

The much-discussed pros and cons of a UK exit from the EU constitute an opportunity, as welcome as it is unique, to showcase the full extent of the union’s relevance to both individual citizens and nation states. The only possible good that may be produced by the UK turning its back to the continent could be summarised as a drop in London real estate prices, making life in the city somewhat more affordable to non-millionaires.

Frankfurt would be grateful. The German city stands to become the premier financial centre of the world in case the UK opts out of Europe. No multinational corporation would keep its European head offices in the UK as the union is decidedly unfriendly to those who do not belong. Economically it doesn’t make any sense to turn your back on a market of some 505 million avid consumers to which the country now enjoys full and unfettered access.

How some 57 million people crowded on a possibly divided island could possibly ensure lasting prosperity in a world of large trading blocs is a question the politicians of the UK Independence Party have so far utterly failed to address.

Cheap Calls

Politicians, and not just the UKIP ones, are the bane of the continent. Since the inspired generation of Adenauer, Monnet, Schuman, Spaak, and Mansholt – the great post-war visionaries who forged the Treaty of Rome that evolved into today’s EU – few politicians have dared take Europe to the masses. Fewer still have found the courage to explain in plain language the historical importance of the paneuropean edifice that was, and still is, being erected in Brussels. In today’s impoverished political landscape – in which debate has been reduced to parallel discourse – leaders with eloquence and vision are few and far between.

The pro-European lot are a sorry sight to behold. Take the leader of the Dutch Democrats 66 (D66), a staunchly pro-EU party, Alexander Pechtold. Explaining on primetime national television the great importance of the union, and the untold benefits it delivers to common folk, Mr Pechtold twice mentioned cheap calling rates: “Before, when you were vacationing in Greece or Italy, calling home might have set you back up to three euros a minute. Today, thanks to EU regulation and network integration that call can easily be made for pennies.”

Normally Mr Pechtold is a reasonable and reasoned man who abhors any and all forms of extremism. He appeals to people’s common sense and their ingrained sense of justice. However, when it comes to the EU, Mr Pechtold insists on spouting nonsense. It is almost as if one can hear the audience thinking: “So… because we now can call home cheaply while relaxing on a Mediterranean beach, we must also be ok with bailing-out all these almost-broke countries.”

Popular perception in the Netherlands, and elsewhere in the union, is largely based on the antics of pro-EU politicians who insist on running before the troops. Nigel Farage, Geert Wilders, Marine Le Pen and other euro-sceptics merely reap the electoral harvest sown by the likes of Alexander Pechtold.

The Untold Story

The story that almost nobody wants to tell is that the European Union is without doubt the greatest experiment at nation-building the world has ever seen. Never before in history has an assembly of independent and well-established nation states come together in order to voluntarily relinquish sovereign powers to a supranational body specifically set up to rule in the common interest of all states pertaining to the group.

After centuries of almost continuous war and strife, Europeans – perhaps rather slow on the uptake – have decided that the only way forward is through increased, and ever increasing, cooperation. The implementation of this simple concept has revolutionised the world. Before the European Economic Community (now EU) came into being, there were no trading blocs other than empires and a very loose, and rather dysfunctional, British Commonwealth.

The EU directly inspired the formation of today’s great blocs of countries seeking common ground and a shared future: Mercosur in Latin America, Asean in Southeast Asia, NAFTA in North America, Caricom in the Caribbean, the African Union, and many others. All these supranational structures were built on the mould first shaped in 1950s Europe. The Old World must have been doing something right.

Left Out

Yet, most Europeans feel completely left out of the processes unfolding and see the rise of the union as a scary show in a faraway place over which they have little to no control. That perception is not without a few kernels of truth. The EU’s powers-that-be do have a tendency to ride roughshod over the express wishes of voters, the prime example being the rejection by the electorates of France and The Netherlands in 2005 of the EU’s proposed constitution.

After the French and Dutch delivered their solid “No”, other member states cancelled their referenda in order not to suffer like blemishes to their reputations. Following the constitution’s defeat at the ballot box, the document was revised – and amazingly enough expanded upon – and rechristened as the Treaty of Lisbon to be duly ratified (if not rubberstamped) by the parliaments of all member states.

And then politicians from across the union wonder out loud why today voters refuse to participate in sham elections for a European Parliament that has virtually no say in any matters of importance and holds no budgetary powers to speak of. The few who still try to make their voices heard are now being told – by the UK government in this particular case – that the political bloc with the most votes may not deliver the next president of the European Commission – the entity in charge of the day-to-day affairs of the union. No matter promises made before the election took place last May.

Getting 28 member states to unanimously agree to anything is a thankless exercise at best, and a hopeless one most of the time. The practical result of the union’s insistence on unanimity is that only the most common and obvious policies are set out. All members agree to the earth being round and spinning on its axle while traveling an elliptical route around the sun. This is about as far as commonality will get you. Almost anything beyond the most basic of understandings is apt to be controversial and draw loud protests out of some far corner of the union.

Tried, Tested, Failed

The alternative to rule by unanimity has also been tried and tested. It may be seen in action as Germany and France team up – with Italy and Spain in tow and the UK going half-heartedly along as a good sport – to bully the lesser powers into compliance with whatever has been decided for them. The perception, popular in some quarters, that Germany won the war forty odd years after its conclusion is not entirely devoid of reason. Armed with the purchasing power of 80 million hard-working and thrifty Germans, Mrs Angela Merkel is swinging her purse in ways that Margaret Thatcher couldn’t even have conceived of.

However, the dictates of Chancellor Merkel, the thinly-veiled threats of Prime Minister Cameron, and the indecisive mutterings of President Hollande do not contribute in the least to the unlocking of the EU’s phenomenal potential. Quite the contrary, the ongoing rivalries between uninspiring leaders; the never-ending stream of silly mandates thought-up by bored Brussels bureaucrats; the spineless resolutions of the Council of Ministers; and the refusal to allow for more openness, all conspire to deprive Europe of its true calling – to be a beacon of freedom, liberalism, reason and prosperity in an often dangerous world. The lighthouse serving that vital role previously is currently dimmed as it slays phantoms around the world by remote control or otherwise.

Matteo Renzi Appears on Scene

To keep to the analogy, a light is flickering down south, in Italy. That country’s youthful Prime Minister, Matteo Renzi, was the only head of government in the EU to receive an unequivocal mandate from voters to proceed with the European project. Prime Minister Renzi (39) ran on a refreshingly simple and straightforward platform: “If we want to save Europe, we must change Europe.”

On top of Mr Renzi’s wish list is a drastic move away from staid orthodox monetarist policies that keep economies gasping for liquidity, wreck societal cohesion, cause infrastructure to crumble, and hurt industry. “Europe must shift its focus to growth, employment and reform. Without significant investment in jobs and growth, any measure linked to austerity is bound to fail.”

In order to get his vision on the agenda, Prime Minister Renzi must first put his own country’s economy – the third largest in the Eurozone – on a track to sustained growth. He has unveiled comprehensive policy initiatives to rid Italy of its stifling bureaucracy, inject dynamism into the country’s vast network of state-run corporations, increase the competitiveness of the country through increased productivity and reduce clientelism in politics.

Gauging by the poll numbers, Mr Renzi has struck a chord. His moderately progressive Democratic Party trumped all others, claiming 40.8% of the popular vote in the May 25 election for the European Parliament (EP). The party now holds 31 seats in the 751-strong EP, displacing Germany’s Christian Democratic Union as the largest parliamentary caucus.

Delivery Time

After his stunning victory at the polls, it is time for Prime Minister Renzi to start delivering on his promises. His performance may not just benefit Italy; Mr Renzi’s success at home may well be a harbinger of a fresh start for Europe. A year shy of forty, Prime Minister Renzi is much aware that he is one of the first of his generation to lead a major European power. As such, Mr Renzi has been handed an opportunity to not just set a new agenda, but also to capture the changing zeitgeist and perhaps become the man Europe has been waiting for to lead the continent across the watershed.

This former mayor of Florence, who took Italy’s national political scene by storm earlier this year, is widely considered a future heavy-weight in European politics. Though the continent boasts a few other promising politicians eager to carry out the needed reforms – Swedish Prime Minister Fredrik Reinfeldt (48) and his Dutch counterpart Mark Rutte (47) come to mind – only Matteo Renzi is backed up by a large nation that explicitly mandated him to impose a new style of politics, not merely on Italy but, more importantly, on Europe.

Everything points to Mr Renzi being aware of the weight that now rests on his shoulders: “If mainstream politics becomes convinced that it has survived the danger and goes back to shut itself away again, the eurosceptics will come back with great strength. If we had not done an electoral campaign in the midst of the people, in the piazzas – hard-nosed and open-faced in a very strong way – we would have been carried away, as happened in other countries.”

A Battle as Usual

Meanwhile, now that the European elections are over and a new parliament has been installed in Strasbourg, the battle is on for the nomination of the successor of Mr José Manuel Barosso, president of the European Commission. As 28 heads of government jockey for position behind the two main candidates for the job, Brussels reverts to its politics-as-usual mode that most eligible voters couldn’t be bothered with a few weeks earlier.

Not a single one of the 28 heads of government engaged in the struggle for power – not excepting Matteo Renzi – has stood up to demand attention be paid to the issues at hand: The worrisome alienation of electorates throughout the union; the alarming levels of unemployment affecting young Europeans; the lack of a vision for the continent; the abject failure of the union’s European Neighbourhood Policy in the Ukraine; the dangers posed by an assertive and unpredictable Russia; and the patently unlawful and unfriendly activities of US spy agencies on EU territory. These are but some of the issues that may appeal to people in all EU countries.

Instead, EU leaders such as the president of the European Council Herman van Rompuy explain in fine detail why a directly elected commission president is an inconvenience. This “Mr Compromise” is his own worst enemy: Sorely lacking originality in both ideas and action, Mr Van Rompuy leaves no stone unturned to keep the current status quo intact and to ensure that Europe muddles along from one crisis to the next.

Renzi to the Rescue

In that sense, the UK’s dogged insistence on immediate change is to be appreciated. However, due to its long-standing tradition of scepticism towards the EU, Britain is unable to obtain any tangible results. The growing popularity of the blindly anti-European UK Independence Party further undermines Britain’s negotiating position.

Yet, Italy’s Matteo Renzi may come to the rescue. Should Mr Renzi decide, as he well may, to join forces with the UK, Sweden, The Netherlands and Denmark, his support may well tip the scales and make Mrs Merkel think twice before dictating the terms of surrender in the current tug-of-war over who’s to hold the 12th presidency of the European Commission.

Strengthened by his strong mandate, Mr Renzi could indeed make as much of a splash in Brussels as he did in Rome. For the sake of the union, and thus for the greatest effort at statecraft the world has ever seen, it is to be hoped that Italy’s young Prime Minister hears his calling.