Crisis brewing in Europe

brexitA quiet crisis is brewing in Europe, triggered by the BREXIT vote.  Currently the EU is undergoing a turmoil which it has not witnessed before and its very cohesion is being threatened. Problems of unwanted immigration led to the unexpected Brexit vote which sent shockwaves throughout Europe.

In Austria recently, most people expected the ultra- right wing forces to win which were gaining momentum, but unexpectedly such speculations proved to be wrong.  Moderate and a liberal, Alexander Van der Bellen, defeated the strong right wing neo fascist Freedom Party presidential contender Norbert Hofer. It sprung a great and pleasant surprise for European liberals as Bellen was backed by Austria’s Greens, a left leaning pro Europe party.

Hofer promised to bring Austria back to its past glory—like all nationalist leaders continue to do. He has a broad based appeal and 46 percent of the people voted for him for his expressed anti-immigration sentiments. Parliamentary elections are due in 2018 in Austria and the Freedom Party is leading in opinion polls, claiming support of one third of the total votes. Can Van der Bellen stop the formation of a Freedom Party led government if it were to win the general elections? Such an action, however, could lead to a constitutional crisis.

In Italy, the anti-establishment Gold Star movement and the Right wing Northern League, which want to copy a Brexit vote in Italy, are gaining ground. Prime Minister Matteo Renzi from the Democratic Party resigned because he had proposed controversial constitutional changes and he agreed to step down in case the referendum went against his proposal. He wanted to get a rescue package from the European Stability Mechanism to bail out some of Italy’s debt ridden banks and in particular the third biggest lender Banca Monte dei Paschi di Sienna. But since he has been ousted now, the banks will remain in trouble. Italy has one of the slowest growing economies in the EU. Both Italy and Austria are facing rise in unemployment.

In France, Marine Le Pen, who is the leader of the National Front — a party founded by her father, Jean Marie Le Pen in 1972, is a strong presidential candidate in the 2017 elections. She is anti- Muslim, anti- immigration and is pro exit from the EU. If elected, she said she would stop free education for illegal immigrants’ children who are mostly Muslims from North Africa. France has faced two terrorist attacks and people are tense about such attacks in future. It has the biggest Muslim population in Europe, comprising 11 percent of the population. Yet in many ways the Muslim population is well integrated in French society and 72 percent of the population view them favourably, according to Pew Research Institute in 2011. They however mostly live in metropolitan suburbs ( banlieues).

In the Netherlands, Geert Wilders is a populist leader from the Party of Freedom who, like the rest of the rising stars in the EU political scene, is an Islamophobe, anti- immigrant and a Eurosceptic. He is riding a wave of support in the Netherlands and the Dutch elections are due in March 2017.

The entire EU has had it good for a long time, getting their strength back after the World War II through hard work and reconstruction, making economic advances. They have been cooperating with each other which led to the birth of the 29-member European Union and the European Monetary Union. Borders were abolished and the Euro became the common currency for 11  Eurozone members in 2002.

The US and the bigger and stronger members from Europe —Germany, France, Italy, UK — became members of the G7 which has dominated the world for the second half of the twentieth century. Most EU members with their colonial past have now turned anti-immigrant. They already have a substantial immigrant population like UK, France, Holland and Germany.  Almost all living in the EU have been used to a welfare system that looks after their citizens from cradle to grave as far as education, housing, health and old age pensions are concerned.

This equilibrium has been upset by the new wave of refugees arriving from the Middle East in large numbers. Illegal immigration from Africa and Asia, including India into the EU, has been going on for a long time and news about the tragic death of boat laden immigrants trying to make  a better life for themselves, have hit the headlines often enough.

In a few years, the EU might become a fortress which already it is in many respects. There will be more racist attacks and as they suffer trouble at home, their view of globalisation and inclusion of the third world in their trade and investment pattern may fade. Their long term growth rate may, however, be compromised with their isolationist behaviour.

India has not been greatly affected by Brexit. There has not been a sizeable blow to the bilateral relations. Of course, the formal Brexit has not happened as yet and it may take a couple of years. The matter of a formal Brexit from the EU through the application of Article 50 of the Lisbon Treaty is in the British Supreme Court now.

The EU’s policy of hiring software workers from India may not change much, but the workers’ mobility across the EU may be affected with more right wing forces gaining strength.  Some of the EU countries may turn protectionist and their import policies towards countries like India may be impacted. As it is, there are many hurdles that Indian exporters have to cross even while strictly adhering to the laws and rules of the EU. For example, the export of food items has to conform to strict phyto-sanitary regulations of the EU. The EU India FTA has been under negotiations for almost 10 years and it still has not been signed.

The EU wants India to open up its wines and spirits market as well as allow freer imports of new and second hand cars from the EU. There are many other points of contention like opening up the retail sector, but with a change of government in some of the member states, India and its biggest trading partner, the EU, may face further disagreements on the terms and conditions of EU-India FTA in the future.



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