A Populist Surge Is Pulling Three U.S. Allies Into Political Crises

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Leaders in America’s top 3 European Allies face Crisis

  1. Britain: Teresa May tries to manage a Brexit vote motivated by anti-immigration
  2. France: Emmanuel Macron faces rioting in the streets over a carbon tax
  3. Germany: Angela Merkel has to step down as leader amid backlash over middle east immigration

Trump’s trip to Europe was a complete disaster, and not because he acted like a boorish bully

On his recent visit to Europe, he managed to convey once again his contempt for America’s European allies, and to demonstrate that he places more value on his own personal comfort than on the sacrifices that US soldiers have made in the past.

The trip itself cost millions of taxpayer dollars, yet Trump chose to skip a key ceremony honoring US war dead at Aisne-Marne American Cemetery because it was raining.

The White House offered up a cloud of unconvincing excuses for Trump’s absence, but other world leaders were not deterred by the fear of a few raindrops, and neither were past presidents ObamaClinton, Bush, or Kennedy back in their day.

By choosing to stay warm and dry in his hotel room while other world leaders acknowledged the heroism of those who fought and died for freedom, Trump gave the concept of “American exceptionalism” a whole new meaning.

Overall, Trump seemed intent on proving that while the obligations of being president might force him to go on such trips, he doesn’t have to behave himself while he’s there.

For example, Trump is correct to accuse China of engaging in a variety of predatory trade practices and of failing to live up to its World Trade Organization commitments. He is also right when he complains that Europe has neglected its own defenses and relies too much on American protection (though he still seems to think NATO is a club with membership dues)..

He is hardly the first US official to criticize European defense preparations but being unoriginal doesn’t make it wrong.

Trump is also correct in his belief that Europe, Russia, and the United States would be better off if the divisions that presently divide them could be bridged or at least alleviated.

It would be better for Europe if Russia withdrew from Ukraine, stopped trying to intimidate the Baltic states, and stopped murdering former spies in foreign countries.

It would be good for Russia if Western sanctions were lifted and it no longer had to worry about open-ended NATO expansion. And it would be good for the United States if Russia could be pulled away from its increasingly close partnership with China.

For that matter, Trump wasn’t wrong to see North Korea’s nuclear and long-range missile programs as a serious problem that called for creative diplomacy.

The real problem is that Trump has no idea what to do about any of these issues, and he seems incapable of formulating a coherent approach to any of them. To the extent that he does have an actual policy toward Europe, for example, it is the exact opposite of what the United States ought to be doing.

Trump’s broad approach to Europe is one of “divide and rule.” He’s called the European Union a “foe” of the United States, and he has backed a number of the political forces that are now roiling the Continent and threatening the EU’s long-term future.

He endorsed Brexit, expressed his support for Marine Le Pen in France, and thinks well of illiberal leaders like Viktor Orban of Hungary and Andrzej Duda of Poland. Why? Because he thinks dividing Europe into contending national states will allow the larger and more powerful United States to bargain with each European state separately rather than face all of them together, and thus secure better deals for itself.

This approach might be termed “Neanderthal realism.” Playing “divide and rule” is a good idea when dealing with real enemies, but it makes no sense to sow division among countries with whom one has generally friendly relations and close economic ties, and when their collective support might be needed in other contexts.

This approach also runs counter to Trump’s stated desire to reduce US security commitments to Europe and to get Europe to take on greater responsibility for its own defense.

If you really want the United States to get out of the business of protecting Europe, you should also want Europe to be tranquil, capable, prosperous, and united after the United States withdraws. Why? So that Washington doesn’t have to worry about developments there and can focus its attention on other regions, such as Asia.

A Europe roiled by xenophobia, resurgent hyper-nationalism, and persistent internal wrangling wouldn’t be to America’s advantage; it would be just another problem area we’d have to keep an eye on.

Nor would a divided Europe be of much use in addressing any of the other problems on America’s foreign-policy agenda.

Why doesn’t Trump see this? Possibly because he is reflexively relying on the same tactics that brought him to the White House.

It has worked tolerably well here in the United States, because a lot of Americans are still angry or fearful and Trump is both shameless and adept at fueling those emotions. This same instinct leads him to behave abominably abroad: Insulting British Prime Minister Theresa May and London Mayor Sadiq Khan, deriding Prime Minister Justin Trudeau of Canada as “Very dishonest & weak” or derisively tossing Starburst candies to German Chancellor Angela Merkel during a meeting of G-7 leaders.

.. The problem, of course, is that the boorish behavior and conflict-stoking policies tend to backfire on the world stage.

.. Trump’s bullying bluster didn’t win big trade concessions from Canada, Mexico, or South Korea; the shiny “new” trade deals Trump negotiated with them were nearly identical to the old arrangements and in some ways inferior to them.

And given how Trump has treated America’s allies, why would May, Merkel, Macron, Abe, or Trudeau do him (or the United States) any favors? The declining US image abroad compounds this problem, as foreign leaders know their own popularity will suffer if they help Trump in any way.

.. Trump’s personal conduct is not even the biggest problem. Arguably, an even bigger issue is the strategic incoherence of his entire transactional approach. His overarching objective is to try to screw the best possible deal out of every interaction, but this approach instead makes it more difficult for the United States to achieve its most important foreign-policy goals.

.. Threatening trade wars with allies in Europe or Canada makes little sense from a purely economic perspective, for example, and it has made it harder for the United States to address the more serious challenge of China’s trade policies.

If Trump were as worried about China’s trade infractions as he claims to be, he would have lined up Europe, Japan, and other major economic actors and confronted China with a united front. Similarly, pulling out of the Iran nuclear deal and threatening allies with secondary sanctions not only raises doubts about America’s judgment (because the deal was working, and the Europeans know it); it just fuels further resentment at America’s shortsighted bullying.

.. It is increasingly clear that Trump was never the brilliant businessman he claimed to be; he got most of his wealth from his father using various shady tax dodges, and the Trump Organization may have been heavily dependent on illegal activities like money laundering.

.. We should focus less on his personal antics and inadequacies and focus more on his inability to formulate effective policies, even on issues where his instincts are in fact mostly correct.

.. Sadly, the 45th US president possesses a world-class ability to get things wrong, even when he’s right.

Can the Euro Be Saved?

Across the eurozone, political leaders are entering a state of paralysis: citizens want to remain in the EU, but they also want an end to austerity and the return of prosperity. So long as Germany tells them they can’t have both, there can be only one outcome: more pain, more suffering, more unemployment, and even slower growth.

.. The backlash in Italy is another predictable (and predicted) episode in the long saga of a poorly designed currency arrangement, in which the dominant power, Germany, impedes the necessary reforms and insists on policies that exacerbate the inherent problems, using rhetoric seemingly intended to inflame passions.
.. Italy has been performing poorly since the euro’s launch. Its real (inflation-adjusted) GDP in 2016 was the same as it was in 2001.
.. From 2008 to 2016, its real GDP increased by just 3% in total.
.. the euro was a system almost designed to fail. It took away governments’ main adjustment mechanisms (interest and exchange rates); and, rather than creating new institutions to help countries cope with the diverse situations in which they find themselves, it imposed new strictures – often based on discredited economic and political theories
.. The euro was supposed to bring shared prosperity, which would enhance solidarity and advance the goal of European integration. In fact, it has done just the opposite, slowing growth and sowing discord.
.. Emmanuel Macron, in two speeches, at the Sorbonne last September, and when he received the Charlemagne Prize for European Unity in May, has articulated a clear vision for Europe’s future. But German Chancellor Angela Merkel has effectively thrown cold water on his proposals, suggesting, for example, risibly small amounts of money for investment in areas that urgently need it.
.. In my book, I emphasized the urgent need for a common deposit insurance scheme, to prevent runs against banking systems in weak countries.
.. The central problem in a currency area is how to correct exchange-rate misalignments like the one now affecting Italy. Germany’s answer is to put the burden on the weak countries already suffering from high unemployment and low growth rates.
..  The alternative is to shift more of the burden of adjustment on the strong countries, with higher wages and stronger demand supported by government investment programs.
.. Matteo Salvini, the party’s leader and an experienced politician, might actually carry out the kinds of threats that neophytes elsewhere were afraid to implement. Italy is large enough, with enough good and creative economists, to manage a de facto departure – establishing in effect a flexible dual currency that could help restore prosperity.
.. Whatever the outcome, the eurozone will be left in tatters.
.. It doesn’t have to come to this. Germany and other countries in northern Europe can save the euro by showing more humanity and more flexibility. But, having watched the first acts of this play so many times, I am not counting on them to change the plot.

Why “America First” Means “Europe United”

despite the formation of an anti-establishment coalition government in Italy, and the rise of populist parties across Europe, opinion polls suggest that support for the EU is now higher than it has been in decades. According to a recent Eurobarometer survey, if a referendum on EU membership were held today, 83% of Europeans would vote to remain in the bloc; and a record-high 60% regard EU membership as a “good thing” for their country.

.. In other words, while populism can certainly sow political divisions within the EU, there is little evidence that Brexit itself has caused a domino effect.

The Brexit ringleader Nigel Farage might like to think that Italy’s new populist government represents a success for his brand of go-it-alone nationalism, but it turns out that Europe’s populists are of a different breed than those in the UK. Though financial markets have  at the prospect that Italy’s new leaders could drive their country out of the eurozone, polling conducted after the election in March showed that 60-72% of Italians would not support such a move.

.. Just 32% of citizens believe that “things are going in the right direction” for the EU

.. Trump’s tariffs have thus provided a perfect opportunity for Germany’s grand-coalition government to meet Macron halfway on his ambitious proposals to reform the EU and the eurozone.

.. Trump revels in the chaos he sows. He regards international relations as a zero-sum game of winners and losers, and, to the extent that his foreign and trade policies make any sense at all, they are transactional. By contrast, the EU’s modus operandi is one of collaboration and compromise. And now that these two worldviews are colliding, each is likely to be emboldened.