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Combatting populism

24 Nov 2014 By Hugo Dixon

A spectre is haunting Europe – the spectre of populism. In Britain, France, Italy and Spain – and in smaller countries such as Greece – the old political order is facing challenges from populist movements, whether of the right or the left. Of the major European Union economies, only Germany is largely untouched, although the rise of the anti-euro party AfD has become a cause for political concern.

Last week saw the UK Independence Party (UKIP), a right-wing populist party, win its second seat in the British parliament via a by-election. Podemos, a Spanish left-wing populist group whose name means “we can,” is leading in the opinion polls despite being founded less than a year ago. In France, the right-wing Front National leader Marine Le Pen is now considered a serious contender for the 2017 presidential election, while in Italy the hard-to-categorise Five Star Movement is a force to be reckoned with.

With the exception of Greece, where the radical left Syriza movement may take control of the government if there is an election next year, none of the populist groups is close to power. But if the traditional parties continue to fail the people for another electoral cycle, the populists could storm the barricades.

The establishment has a lot to answer for. In some countries, it has been corrupt. In others, it has merely had its nose in the trough, enjoying the fruits of public office. Everywhere, politicians have spent inordinate amounts of energy spinning stories so they can hang onto power rather than solving problems. They have lost touch with their electorates.

However, the cures proposed by the populists are worse than the disease. UKIP wants to pull Britain out of the European Union. The Front National wants to destroy the EU. The Five Star Movement wants to yank Italy out of the euro. Podemos wants to audit part of the national debt before writing it off. Syriza wants to write off half of Greece’s debts.

Such policies, if ever implemented, would create a new set of economic crises. Policies such as pulling out of the EU would involve losing full access to its single market. Abandoning the euro, disastrous though it has been, or unilateral debt write-offs would lead to bank runs and capital controls. The armies of the unemployed would rise, not fall.

Populism is good at tapping into discontent but it comes up with bad, superficial solutions. That, indeed, is perhaps the most appropriate definition of, the phenomenon.

But what is the best way of tackling the spectre? Action is needed on two fronts.

First, Europe needs to fix its economy. The economic malaise throughout the euro zone is not the only factor behind the rise of populism. But it has certainly fuelled it – and will continue to unless it is addressed.

A grand bargain involving national governments, the European Central Bank and the European Commission is desperately needed. Governments have to press ahead with structural reforms to improve the “supply side”; the ECB has to loosen monetary policy further to boost demand and get inflation up to its target; and the commission needs to come up with an ambitious EU-wide investment programme to give the economy a fiscal boost.

Jean-Claude Juncker, the commission president, is due to present his investment programme this week. In theory, with interest rates so low, it should be possible to come up with something that moves the needle. But it is unclear whether Germany, which has a huge sway over EU policy, would agree.

But even if the economy is fixed, that won’t be the end of populism. Look at Britain, where growth is strong but so is UKIP. The lack of integrity in politics is the second big factor fuelling populism.

This is borne out by research by two British academics, Will Jennings and Gerry Stoker. In a recent essay, as part of a series on populism published by the Policy Network, a UK think tank, they summarised the mood of the electorate as follows: “What emerges is a sense of being failed by a political class that lacks the competence and strength of character to follow the right policy options and, above all, is regarded as too short-termist, media-obsessed and in cahoots with the rich and powerful to provide leadership in the public interest.”

There are similar feelings across Europe. But what can be done to re-establish trust with the people and put integrity in politics centre stage?

As Hopi Sen, another author in the Policy Network’s series of essays, puts it: “Politics after a crash is like a faithless boyfriend… Does a loud pledge of loyalty… mean much in that situation?”

There is, admittedly, no easy solution. But part of it, certainly, has to be zero tolerance towards corruption and cheating. Part of it, too, should be to acknowledge the failings of politics while not, as Sen puts it, pretending that politics can cure every ill.

New faces would also help. One of the things that the electorate doesn’t like about the current generation of politicians is that many of them have spent virtually their entire adult lives climbing the greasy pole and are so compromised by the experience that it is hard for them to look clean.

Ideally, new parties of the centre would be formed with politicians who are not tarnished by the old style of politics but equally not purveyors of populist non-solutions. There has not yet, though, been much sign of these emerging.

European politicians have to both display integrity and show they can be effective. Otherwise, they will continue to tremble at the rise of populism.


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