The defeat of Italian Prime Minister Matteo Renzi’s proposed constitutional reforms in a referendum is the latest bellwether of rising anti-establishment sentiment in Europe. Renzi’s resignation is expected to usher in a period of political uncertainty in Italy at a time when the eurosceptic Five Star Movement has become the country’s most popular party. In Italy, as elsewhere in Europe and in the United States, populist movements are feeding off the perceived failures of governing elites “to deliver adequately inclusive growth and a sense of security in the face of transnational threats,” explains CFR’s Sebastian Mallaby in this written interview. If EU economies remain stagnant, Mallaby says, more voters may support fringe parties.
The Five Star Movement, which led the campaign against Renzi’s proposed reforms, wants to leave the euro. Is Italy now the leading risk to the common currency?
There is no immediate threat to the common currency in the wake of the Italian referendum and Renzi’s resignation. Although the Five Star Movement is skeptical of the euro and has called for a referendum on Italy’s eurozone membership, it has said that the referendum should be nonbinding. We have seen another populist movement, Greece’s Syriza, attack the euro while in opposition, then moderate sharply when it took power.
“For the moment, this populist tide is not strong enough to threaten the cohesion of the EU.”
In any case, it is not clear that either the Five Star Movement or the xenophobic, anti-euro Northern League will come to power in Italy any time soon; although Italian politics are chaotic and hard to predict, the post-Renzi vacuum is more likely to be filled by a new centrist coalition. So although there are deep fragilities in the structure of the euro, not least Italy’s unsustainable public debt and its fragile banks, there is no near-term likelihood of crack-up.
Does this vote reinforce broader concerns about the potential disintegration of the European Union amid a rising populist wave?
During the early stages of the euro crisis, starting in 2010, it was remarkable that popular fury at sky-high youth unemployment and budget austerity did not result in more radical parties coming to power. Now, belatedly, the loss of faith in the centrist parties that presided over the design of the euro is becoming clearer. The rejection of Renzi’s constitutional reform is one sign of this; others include the election of nationalist governments in Hungary and Poland, the likelihood that the right-wing eurosceptic Marine Le Pen will make it to the runoff in next year’s French presidential election, and the rise of the anti-EU Alternative for Germany (AFD) party.
For the moment, this populist tide is not strong enough to threaten the cohesion of the EU. The only major country with a genuinely anti-EU government is Britain, which will exit the union doing more damage to itself than to the rest of the continent.
Observers have pointed out similarities between recent campaigns in the UK, the United States, and now Italy: rejection of expert consensus, falling trust in media, and a rise in conspiracy theories. What is driving this visceral distrust of elites in such different contexts?
The broad loss of trust in elites must be explained by two factors: First, their failure to deliver adequately inclusive growth and a sense of security in the face of transnational threats, such as terrorism or the refugee crisis. And second, the coarsening of political discourse as a result of changes in the media landscape—including the rise of combative cable TV talk shows and the proliferation of blogs and social media.
“Now, belatedly, the loss of faith in the centrist parties that presided over the design of the euro is becoming clearer.”
Twenty years ago, if a policy expert offered an opinion, it was received respectfully, partly because experts seemed to be getting things right and partly because the media filtered out conspiracy theories and unsubstantiated claims and gave prominence to credible analysis. My favorite example of this is Alan Greenspan, the subject of my recent book. As the Federal Reserve chairman from the late Reagan era through to the George W. Bush presidency, Greenspan parlayed his expertise into extraordinary prestige and power. Today’s central bankers are in a more precarious position.
To what extent are supporters of rising populist parties in Italy, as well as France, Germany, and others, on board with their specific platforms? Are these parties just a vehicle for protest?
There is a large element of protest in these populist votes. In the United States, President-Elect Donald J. Trump’s policy positions were often unclear, but many voters liked that he seemed to be anti-establishment. In the UK, voters backed Brexit without knowing whether this would mean a hard or soft break with the EU, and there was a lot of wishful thinking about what deal the UK could negotiate.
In continental Europe, the same is true. What is most striking about France, for example, is not that Marine Le Pen is polling well, but that President Francois Hollande has approval ratings that are extraordinarily low—4 percent, according to one reading, making Hollande the least popular French president in more than three decades. Voters are signaling their disapproval of him, their sense of insecurity following terrorist attacks, and the plight of the French economy. These protest urges are stronger than any expression of support for the specifics of Le Pen’s plan.
The defeat of the far-right candidate in Austria’s presidential elections has been cast as a defeat for populism, yet the winning candidate also came from outside of the country’s two mainstream parties. Is the fragmentation of traditional parties now a permanent feature of European politics?
The Austrian vote illustrates the broader trend in European voting: the established parties of the center are shrinking and both fringes are growing. In many countries, this results in “grand coalitions”—the traditional parties set aside old rivalries and go into government together to keep the fringes out.
“For Europe more broadly, the worry is that continuing economic stagnation will discredit mainstream parties of both the right and left.”
But Austria is a case in which the mainstream parties—the Austrian People’s Party and Social Democratic Party—were outright beaten; the new president, who in the Austrian system is mostly a figurehead, is an independent who used to belong to the Green Party. However, he is pro-EU and appealed to the political center during the campaign.
For Europe more broadly, the worry is that continuing economic stagnation will discredit mainstream parties of both the right and left if they are sharinge the responsibility of government. In that case, more voters may back the fringes. The political fallout from the euro crisis has not played itself out yet.
This interview has been edited and condensed.