[SCMP Column] Europe at Crossroads

April 24, 2017

Whatever the outcome of yesterday’s French Presidential election, the likelihood is that we have woken up this morning to a Europe that is in the process of being redefined. As we pause for the second-round run-off on May 7, we are stepping into a “French May” unlike any we have witnessed before. 

And who would have expected a “May Anglais” too – or should we say “la May Anglaise” – with Britain’s feisty new Prime Minister sweeping Brexit-fixated Britain into a wholly-unexpected general election? Surely there is a certain symmetry in Britain going to the polls on June 8, just three days before the French complete their political upheaval with National Assembly elections on June 11.

As we went to bed in Hong Kong last night, the result of the French leadership election was too close to call. The four leading candidates were neck and neck. The independent Emmanuel Macron was claiming 24 per cent support, with the rightwing Marine Le Pen claiming 22.5 per cent. Centre-right Francois Fillon claimed 19.5 per cent, and leftwing firebrand Jean-Luc Melenchon claimed 18.5 per cent.

Perhaps most significant, eight of the total 11 Presidential candidates were campaigning to take France out of the European Union.

By about the time you read this, we will be learning which two candidates led the field, entitling them to go forward to the May 7 final run-off. The most sanguine of forecasters were expecting the run-off to involve Macron and Marine Le Pen. They are sanguine because in such a run-off, the country’s moderate forces are expected to ensure a victory for Macron – and Macron is an avowed pro-European.

The nightmare outcome would be Le Pen and Melenchon emerging as the front runners who would go forward to the May 7 run-off. Both are calling for a referendum on France leaving the EU, and both want to get rid of the Euro. If these were yesterday’s victors, expect a monstrous day for the equity markets today, and a sharp fall in the Euro.

But as French historian Jean Garrigues noted last week: “Whoever the next president, the political landscape will emerge shattered and chaotic” after what has been an extraordinary election campaign. The country’s two main parties of the centre have been shredded by scandal and internecine division. Populist resurgence has thrust the deeply unlikeable Marine Le Pen and the firebrand leftwing Jean-Luc Melenchon into real contention for leadership.

Around 30 per cent of voters were saying on Friday that they were not sure whether they would turn out to vote, and of those committed to vote, a striking number were not yet sure who they would vote for. A shocking 68 per cent of Macron supporters were telling pollsters on Friday that they might yet change their vote. The last time France saw this level of uncertainty was in 2002 when Jean-Marie Le Pen, father of Marine, slipped through to the final round of the Presidential contest, eventually to lose to Jacques Chirac.

Those sanguine about a Macron victory seem to forget that he has no party, and no representatives in the National Assembly that will be elected on June 11. As one academic noted: “How exactly Macron might govern, and with whom, remains unclear.”

So the betting odds are that French voters will pull back from the brink, but the harm done by walking so close to the cliff-edge is significant – and will almost certainly change the nature of France’s commitment to the “European project”. Even with Macron victorious, expect calls for reform of how Brussels and EU institutions work.

While the EU is likely to emerge challenged and weakened by Brexit, a “Frexit” championed by Le Pen or Melenchon would almost certainly be fatal. Britain was a late-comer to the EU, and anyway never adopted the Euro. But France and Germany are the EU’s “indispensable members”, pivotal to the post-World War 2 balance of power in Europe.

As Oxford academic Sudhir Hazeeresingh noted on Saturday: “Germany alone would not be able to bridge the wide gap between the east and the west and the south and the north.” That has always been true since the original creation of the European Iron and Steel Community, but is has never been so extremely true as today, with the EU still a walking-wounded economic region since the 2008 global financial crash.

But while we hold our breaths this morning over “le French May”, across the Channel in the UK a political master-stroke by “la May Anglaise” has for the first time in nine months made me feel that all is not lost for the UK in the Brexit process. If she wins her snap election with a historic landslide on June 8, as most pundits expect, she will have achieved multiple Houdini miracle escapes at one go. She will get off her back the hard-line Brexit fringe that is threatening to hold her to ransom in the exit process. She will win herself the flexibility to make the difficult and perhaps unpalatable compromises that will inevitably have to be made with the EU over the next 23 months of exit negotiations.

Perhaps most important of all, she will make ‘honest men and women” of the British MPs – many in her own Conservative party – who last summer campaigned to stay in the EU, only to find themselves rebutted by their constituents. Many of these have since June been sitting on the fence, hoping beyond hope for Brexit somehow to be extinguished. But they will now be forced off the fence. This will clarify the Conservative party’s mandate to press ahead with Brexit, and will make “la May Anglaise” impregnable. I still believe the Brexit decision was a mistake, and will in net terms harm the UK economy, but now for the first time, I think it may not be ruinous either for the UK or the EU.

So we are half-way through this marathon of 2017 populist elections with less harm done than we might have feared at the turn of the year. Austria’s Norbert Hofer has been seen off, as has Holland’s unsavory Geert Wilders. A Macron victory in two weeks time would allow widespread sighs of relief. And if the recent in-fighting of Germany’s far-right Alternative for Germany (AfD) continues unabated, we might just see Angela Merkel – increasingly seen as the anchor of EU stability – back safely in office after Germany’s September elections.

And perhaps most cheering of all, this flurry of European activity has for a whole week kept Donald Trump off the front pages. Such a pleasure.
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