Rudderless Europe is dragging an Italian anchor

For all the fuss about Donald Trump’s America, the epicentre of the crisis of democratic institutions is squarely in Europe. And with the Italian elections deepening that crisis, the only question is whether Europe will continue to falter or fall apart.

That Italians would register a massive protest vote is hardly surprising. Per capita gross domestic product is no higher than it was 20 years ago. Unemployment remains at almost twice the level it reached in 2007. And as discouraged workers abandon the labour force, the participation rate has dropped to 57 per cent, 10 percentage points below the European ­average, while close to 25 per cent of young people are not in employment, education or training, as compared with just 9 per cent in Germany.

Meanwhile, the country’s institutions have continued to deteriorate. According to the highly respected Res Foundation, corruption has not only returned to the levels it reached before the “Clean Hands” anti-corruption campaign of the early 1990s but become more blatantly venal, with a greater share of the proceeds going directly into politicians’ pockets, instead of financing political parties, as corruption traditionally did.

As if all that weren’t enough, Italy, which has 11 per cent of the EU’s population, has received 20 per cent of its asylum-seekers. Migrants, who historically were few and far between, now account for 9 per cent of the population, 20 per cent of births and 40 per cent of the individuals in absolute poverty, straining an already tattered social fabric.

Little wonder, then, that Italian voters spurned Matteo Renzi’s Democratic Party and Silvio Berlusconi’s Forza Italia, which they blame for decades of bad government, and instead flocked to the militantly anti-system Five Star Movement and the League (formerly known as the Northern League).

But their votes may have no ­effect. The reality is that Italy is on life support from the European Central Bank, whose large-scale purchases of Italian government bonds have slashed interest rates on public debt to one-third their 2012 level, staving off default.

The challenge for Italy’s President, Sergio Mattarella, is to reassure the ECB that Italy will not collapse, wiping out its bonds and forcing the ECB to take a huge capital loss.

With parliament likely to be deadlocked, Mattarella may well seek to do that by nominating yet another “technical” government, composed wholly or largely of experts, which would keep the country running but lack the political legitimacy needed for serious reform. That could buy time. But it would also ramp up voters’ frustration, with potentially disastrous consequences down the road.

Unfortunately, there is no sign whatsoever that the EU is capable of handling the risks that creates.

In part, that is because Italy is too big to save: a sovereign debt crisis in the eurozone’s third largest economy would swamp what little political appetite there is in the EU for bailouts.

But it is also because Italy’s woes are hardly its alone. Rather, they reflect, albeit in especially acute form, the contradictions inherent in what European elites call “the European project”.

That project, with its commitment to ever-greater integration, was supposed to entrench democracy. But as governments have transferred elements of sovereignty to European institutions, they have blurred lines of accountability, making it increasingly difficult for voters to know where decisions are taken or why.

The effect has been to separate policy from politics, making voters feel their choices don’t matter. And as policies have become less responsive to voters’ choices, voters have lost confidence in the major parties, which no longer stand for genuine alternatives. Instead, they have refused to vote — weakening governments’ mandates — or turned to extremist parties, which at least seem willing to voice their grievances.

Adding to the problems, the project has opened up a chasm between elites — who feel comfortable with the European level of decision-making and can always compensate for their own government’s failings by moving to Paris, London or New York — and the “deplorables”, who lack exit options and bear the costs of the policies those elites adopt.

In that sense, the European project has taken the continent back towards the 18th century, when the European nobility, which intermarried and adopted French as polite society’s common language, stood in stark opposition to the peasantry, which spoke local dialects and was stuck in its place of birth.

The wave of nation-building that followed the French Revolution transformed the cosmopolitanism of the elites and the localism of the masses into a shared national consciousness. Now, the divide between them has re-emerged, fuelling resentments that have long lingered beneath the surface.

No European country has escaped the fallout. Even in Germany, where the unemployment rate is lower than at any time since the late 1970s, the combined vote share of the governing coalition of Christian Democrats, the Christian Social Union and Social Democrats is almost 20 percentage points down from its postwar average — and recent polls suggest that, were an election held today, that coalition, which used to secure 80 per cent or more of the popular vote, would not even obtain a majority.

Angela Merkel therefore enters what is almost certain to be a final term as Chancellor with her authority severely weakened, if not entirely destroyed.

That leaves Europe largely rudderless, unable to make an orderly retreat, stand still or move forward, much less provide the international leadership it seeks to claim. It has responded as it invariably does: by recommitting, at least in rhetoric, to the policies that have brought it to its knees, amid calls for “more Europe” that are as strident as they are futile.

But facts are stubborn things, and they are steadily eroding the foundations of Europe’s economic and monetary union. Like the great empires, it may seem forever — until it isn’t.