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26Jun16

Tough Choices and Hard Lessons for E.U. After 'Brexit' Vote

The crisis ritual that will play out this week in Europe is all too familiar: Markets will gyrate. National leaders will huddle. A summit meeting in Brussels will extend deep into the night.

Until now, these tense moments have typically been resolved with vague statements of unity, awkward compromises and a determination to muddle through without any fundamental change in direction — until the next crisis comes along.

But Britain's vote to leave the European Union leaves the Continent's leaders facing difficult choices that may not be so easily kicked down the road or papered over.

"They can't pretend nothing happened," said Franco Pavoncello, a political analyst in Rome. "If they do that, the risk of further breakup and even disintegration of the euro might increase."

As Chancellor Angela Merkel of Germany, President François Hollande of France and Prime Minister Matteo Renzi of Italy meet on Monday in Berlin, and again with the heads of all 28 European Union members in Brussels on Tuesday and Wednesday, they will have to decide whether to continue pressing for immediate negotiations on the terms of Britain's withdrawal or to let passions cool in the hopes that some kind of deal might be worked out to keep Britain in the bloc.

They will have to decide whether the lesson to draw from the British vote is that the growing populist and nationalist backlash against the bloc needs to be acknowledged through fundamental changes or whether it requires a show of resolve by pushing ahead with plans for deeper integration.

And they will confront the potential for a change in the power dynamic among the bloc's biggest members, with Italy and to a degree France challenging the dominance of Germany and Germany's insistence on austerity economics as the cornerstone of European policy.

In an op-ed published Sunday in Italy's leading business newspaper, Il Sole 24 Ore, Mr. Renzi described the British vote as "an interesting opportunity to relaunch the European project." He suggested that it was time for the bloc to focus on economic growth and job creation rather than debt reduction.

"It needs to take back its identity," Mr. Renzi wrote of the European Union. Austerity policies have "transformed the future into a threat," he said, adding, "They spurred fear."

Europe will be working its way through all those issues as Ms. Merkel, Mr. Hollande and Mr. Renzi, among other leaders, face intense political problems at home, undercutting their influence and restricting their room to maneuver. Ms. Merkel and Mr. Hollande are facing general elections next year, and Mr. Renzi's fate could hang on a referendum on a new government structure in Italy this fall.

National elections in Spain on Sunday were a timely symbol of Europe's political shambles. The vote was the second in just six months after a December vote resulted in a political deadlock that left the country paralyzed in dealing with issues like rampant youth unemployment.

"Brexit raises a question mark for the whole planet," Mr. Hollande said during the weekend. Struggling with poll ratings of 15 percent, he took the unusual step of inviting his archrivals, the conservative former president Nicolas Sarkozy and the nationalist leader Marine Le Pen, to the Élysée Palace to discuss the way forward.

"This vote is a brutal shock — now the whole world fears a populist shock wave," the French foreign minister, Jean-Marc Ayrault, told the Sunday newspaper Le Journal du Dimanche. "We have to move quickly and show we understand the message of the people."

Calls in France for a referendum on the European Union mounted from both the far right and the far left, echoing sentiment in many other countries.

The prospect of spreading political chaos may bind the German, French and Italian leaders together when they meet in Berlin on Monday. There is talk of a Franco-German effort to breathe life into the Continent's key relationship with some sort of joint project, perhaps in defense — a field where Britain also remains deeply bound into the Continent through its membership in NATO.

Mr. Pavoncello suggested that a more likely vehicle for united European action is a restructuring of the European Union, centered on the founding members — Belgium, France, Germany, Italy, Luxembourg and the Netherlands — with different levels of membership on the perimeters.

It is not clear whether such actions would help build bridges among ordinary Europeans who feel alienated by globalization and leaders who often seem out of touch with the concerns of their citizens. At the moment, there is no apparent consensus on how to address the immediate issue of dealing with Britain.

European officials in Brussels and in the European Parliament pushed for quick negotiations on Britain's exit, even as Ms. Merkel, Europe's most powerful leader, said she saw no need to rush.

But Norbert Röttgen, a Merkel ally and the chairman of the foreign affairs committee of the German Parliament, noted that not even the Germans could afford complacency, especially with elections coming by the fall of next year.

If there is a lesson from Britain's vote, he said, it is that those who are pro-Europe need to make their case much more powerfully if they are to maintain popular support. "If we go on like this," he said in an interview, "the erosion will continue."

Opening up debate carries its own risks. The inclusion of Ms. Le Pen, whose far-right, anti-Europe National Front far outpolls Mr. Hollande's governing Socialists, in the weekend meetings in Paris accorded her a changed status in France, Mr. Röttgen noted.

In France, Germany and Italy, populist forces have been gaining influence, challenging established parties and raising questions about the future direction of the European project. Mr. Renzi has already seen the populist Five Star Movement win the mayoralty in Rome, Italy's capital, and in Turin.

Polls suggest his popularity is wearing thin. He has rammed through changes in labor law and public administration, and won concessions from Brussels on budget flexibility. But many voters sense no change. Mr. Renzi has said he will quit if he loses the October referendum.

That raises the possibility of his being out just weeks after Britain, where the mainstream political parties are in increasing disarray, chooses a successor to Prime Minister David Cameron, who has said he will resign by October.

Ms. Merkel, while secure politically for now, has endured powerful criticism in Germany for her decision to allow more than a million refugees from Syria and elsewhere into the country last year, highlighting the power of an issue that also drove the British vote to leave Europe. A far-right party, Alternative for Germany, has been making inroads in part in reaction to the influx of refugees.

[Source: By Alison Smale, Jim Yardley and Alissa J. Rubin, International New York Times, 26Jun16]
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