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Edition
18/09/2019
The laborious transformation of the Spanish political system
Will the Spanish people be going to the polls for the fourth time in four years? This is the question on everyone's lips one week from the 23 September deadline* by which Pedro Sánchez must have reached an agreement, failing which fresh elections will be held on 10 November. With the left tearing itself apart amid ego struggles and communication battles, political families have continually passed the buck for this likely election in a summer saga punctuated by verbal sparring and U-turns.The summer sagaWith 123 seats, the PSOE won the 28 April elections but lacked a parliamentary majority, which means it must reach a compromise with other groupings to form a government. Pedro Sánchez waited until mid-July, when the great regional bargaining was over**, to appear before the Cortes Generales for a vote he already knew he would lose. Elections to the autonomous communities' legislatures on 26 May confirmed what was already apparent the day after the general election. The debate that is crystallising around the Catalan question, between the nationalists (who are defending greater regional autonomy, if not independence) and the constitutionalists (who are advocating for strict compliance with the Constitution), has been set aside while the left-right divide has come roaring back to the fore. Albert Rivera's strategy to establish his Ciudadanos (Citizens) movement as the main right-wing opposition party has been called into question neither by Ciudadanos's lacklustre showing in the regional elections nor by the defection of some of the party's founding members, thus removing any possibility of a centrist coalition. The socialist leader therefore has no choice but to try to reach a compromise with the far left. This seemingly natural rapprochement is struggling to evolve into an agreement in spite of numerous appeals from civil society. The May 2018 alliance that made it possible to overthrow Mariano Rajoy's government appears to have been more a marriage of convenience than a genuine convergence of ideas.Pedro Sánchez would like a Portugal-style government in which the PSOE would govern on its own with the support of Podemos. But this desire, stated by Sánchez since July, has come up against the purple formation's own desire to govern. The PSOE does not want a "government within a government". What the socialists are most afraid of is Pablo Iglesias having a seat in the Council of Ministers. They fear they might not be able to manage the presence of a divisive political figure, some of whose positions contrast sharply with theirs, notably on the Catalan question.In spite of Pedro Sánchez's proposal a few days before the investiture to offer some Podemos figures roles in government, Pablo Iglesias categorically refused to play second fiddle, opting to abstain in the second vote in Congress. Buoyed by having consulted his electoral base (with 70% of those registered taking part in the consultation), he feels that, with over 40 members in the Congress of Deputies, Podemos is entitled to form part of a coalition government, with each party's involvement in proportion to the number of votes it commands.After this abortive attempt in mid-July, talks remained deadlocked throughout the second half of the summer. Pedro Sánchez's refusal to meet with Pablo Iglesias, and the hostility that has taken root between the two, has ended up creating a climate of widespread distrust between the two political formations.Gearing up for a repeat performanceWhile nothing is settled yet, the various parties are already in campaign mode. However, these fresh elections could culminate in a similar situation to that seen in April. The latest opinion polls predict a win for the PSOE (with between 139 and 147 seats), which would gain influence in the Cortes Generales, though without securing a majority. However, this is a risky bet for Pedro Sánchez. Voter fatigue in the face of yet another election could be costly for the PSOE at a time when the head of government's image as someone who is able to compromise is seriously dented. Most opinion polls suggest that voters would prefer an agreement between the two left-wing parties over fresh elections. This is even more the case since the Socialist Party, which had benefited from the repercussions of its social policy, will have to present a much less positive report card to the Spanish people.Lastly, during the April 2019 elections Pedro Sánchez faced a disunited right caught up in a leadership battle – a mistake the right is unlikely to repeat. Regional pacts showed that it was possible for the three right-wing parties to unite more broadly, or even to back a shared electoral list. In any case, that is the direction in which People's Party leader Pablo Casado is leaning: he would like to bring conservatives together under a single banner, España Suma. Such an alliance would command almost 150 seats. However, another scenario remains a possibility – at least, the business community hopes so. Albert Rivera's coming defeat could force the centrists to review their strategy and reach out to the socialists. The undoubted loser would be Podemos, which would emerge much weakened.The cost of paralysis Following repeated elections in 2016***, Mariano Rajoy was only able to form a government at the price of the socialists abstaining. There is no guarantee that Pablo Casado will adopt the same approach towards Pedro Sánchez. Unless a surprise deal is struck before 23 September and there is a clear majority in the next Parliament, Spain is once again heading into the unknown. The prevarications of Spanish politics – which, for the time being, are far removed from market concerns – mask a political model that is on its last legs and struggling to emerge into something new. The need to learn to compromise is running up against the strategies of the two main parties, which continue to ignore the diversity of the political chessboard by favouring vassal relationships with new political formations. This paralysis has a cost. In the medium term, it constrains the State's ability to act and delays the implementation of structural policies needed to confront a deteriorating economic environment. While the consequences of the political deadlock are partly cushioned by Spain's federal structure, with regional governments continuing to operate, the autonomous communities could in turn be constrained. If a preliminary 2019 budget is not approved, they are likely to experience funding difficulties and are making their discontent known. They are requesting the release of a €5 billion advance in respect of excess taxes collected by the Treasury. But a government that is confined to managing day-to-day business cannot release these funds. This obstacle to autonomous community funding is not the only short-term consequence of the legislative paralysis. Delays in transposing European directives put Spain at odds with the European Commission, which could lead to financial penalties. Nor will there be room in the legislative calendar to pass a new budget before the European semester begins, and it is highly likely that the 2018 budget passed under Mariano Rajoy will continue to apply in 2020. Meanwhile, the socialists remain in government without being able to govern. Face with what looks set to be a messy post-summer period, with the possibility of a hard Brexit and the anniversary of the 2017 Catalan referendum on 1 October, the socialist government's room for manoeuvre remains extremely limited without any legislative approval.Sofia TOZY - sofia.tozy@credit-agricole-sa.fr* Pedro Sánchez had two months with effect from the first investiture debate to reach an agreement. This deadline expires on 23 September.** The period during which coalitions were formed following elections to the autonomous communities' legislatures on 26 May. *** The same situation arose in 2015 when Mariano Rajoy, having failed to put together a majority following the December elections, was forced to call fresh elections in 2016.
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Edition
11/09/2019
Italy: to speak of political normalisation is saying a bit much
After members of the Five Star Movement (M5S) voted to approve the formation of the new government, the M5S/Democratic Party majority has finally seen the light of day in Italy. In the end, the demise of the "Frankenstein coalition" – the nickname given to the M5S/League coalition highlighting the improbability of such a union of extremes – was a short-lived phenomenon.Roma caput mundi This alliance between populists and nationalists, united on behalf of the people against foreign powers, was closely watched all over the world.According to Steve Bannon, former advisor to Donald Trump, "Rome is once again the centre of the political universe.Right- and left-wing populations have agreed to set aside their differences and come together. The destiny of the people's revolt against global elites depends on this experiment*."This experiment was made possible by the rearticulation of politics so that, instead of seeking to unite people around the highest common denominator as defined by the activities of traditional parties, the aim is simply to rack up as many members as possible. Rather than encouraging convergence towards the centre, this has the result of combining extremes to usher them out of the margins of the system and back into its core. The terra incognita of democracyOf course, this political transformation has very real causes. However, it also reflects behaviours inherited from the omnipresence of social media, which remove intermediation and put everyone on the same level (that of the "like"), with the goal of securing instant engagement and immediate buy-in. Social media provide a social validation channel that meets the need for recognition and approval. However, the algorithms used by social media also bring to the fore those stances that best tap into people's aspirations and fears. Populist movements have succeeded in seizing upon this social transformation and promising to release people's energy, giving them the impression of moving back into the spotlight, shaping history and taking back control. The conflict is thus restated in terms of a battle between the individual – or the collective of all individuals (the people) – and the elites who have robbed the people of their central role. For populist movements to succeed, they must offer something more than representative democracy. The slow, impenetrable rituals of representative democracy do not fit comfortably with the impatience of consumer voters or with the instant political commentary made possible by social media, which favour experience and feelings over facts. Whereas intermediated democracy relies on accurate facts, through parliamentary and institutional oversight, direct democracy allows objective reality to be thrown off to elevate the intensity of narrative, so as to harness aspirations and fears. It flatters by rejecting expert opinion and instead approving every individual's opinion, putting knowledge and information on an equal footing. Manifestos are defined by consumer voters with no concern for overall consistency, with the result that ideological barriers are completely dissolved – which, in the end, facilitates the union of extremes.The myth of civil societyThe desire for a virtuous, uncorrupted civil society is nothing new in Italy. After the "clean hands" investigation that turned the Italian political landscape upside down by sweeping aside more or less the entire political class, this vision was embodied by a technocratic government in the early 1990s. With the economic crisis having taken its toll, it is now time to punish the political elite for having betrayed the popular mandate by pandering to the interests of a minority. Even before the League – with its new leader Matteo Salvini – embraced the people's crusade against foreign powers, M5S was defining itself as a populist party relying on two traditional levers of populist expression: the rejection of parties, the old media and representative democracy; and the rejection of economic oligarchies. This latter characteristic, not present when the movement was born and as it became established at the local level, intensified as it developed at the national level. While some of its aspects are quite contradictory, all can be summarised as falling into an anti-globalisation, anti-rapid-development, anti-industrialist, green and post-materialist pattern.Shooting stars M5S is a post-ideological algorithm, a platform devoid of political content (the Rousseau platform, managed by a private company) wherein members make all the decisions through an ongoing online consultation process. The platform selects the most worthwhile comments and identifies the themes that "work" based on user feedback. Themes are highlighted based on the intensity of reactions. The platform has no vision or manifesto other than to serve as the vehicle for a shift to a new regime of direct democracy. It captures the consensus and adapts to the most popular position, leading the movement to run contradictory campaigns.Its seemingly open architecture, while based on bottom-up participation, is locked down and controlled from the top down. There is no shortage of participants, but few are aware of the system's characteristics.M5S thus positions itself beyond the traditional left/right ideological divide. While, during its first few years, the movement was almost exclusively based in the north of Italy and, in particular, in traditionally left-leaning regions, since 2012 its presence has mainly expanded in the south. Its original electoral base thus consisted of the far and moderate left and abstainers. Starting in 2012, the movement siphoned off voters from the Berlusconi right and the Northern League; since 2013 it has conquered the centre-left electorate.At its height (32.7% of the vote in the March 2018 parliamentary elections), the movement was characterised by an electorate with a highly differentiated social and ideological profile, with 45% of voters falling outside the left/right divide and the rest scattered across the political spectrum. M5S thus had its centre of gravity in the centre and was highly competitive.However, its strengths were also its weaknesses. Its ideological lack created an opportunity for a minor role for the League, which, with 17.4% of the vote in 2018, would not otherwise have been able to come to power. Countless promises also lead to major disappointments. And, while the League took advantage of its involvement in government to push those decisions that were most promising for its electorate, often pulling the wool over M5S's eyes, M5S had to face up to reality and the economic inconsistency of its manifesto. In the end, after a year in power, its share of the vote almost halved to 17% in the May 2019 European elections, with some of its voters joining the ranks of the League or opting to abstain.Frankenstein 2.0?The contortions arising from the alliance with the League sounded the death knell for this coalition, which resulted in an increasing number of blockages and maverick votes on government proposals in Parliament. M5S's vote in support of the nomination of Ursula von der Leyen as European Commission President, opposed by the League, was a clear message from the movement – or at least its executives and elected representatives – to the Italian opposition. M5S entered into a process of institutionalisation, thus opening up dialogue with traditional parties, and in particular the Democratic Party. Having gambled that such an alliance would be an impossibility, the League called for a snap election. But it underestimated the strength of parliamentary democracy and its ability to rebuild consensus without going to the polls. The movement's elected representatives and executives heavily influenced the people's vote of M5S members on the Rousseau platform, which confirmed 79% backing for the formation of a new government with the Democratic Party.How are these two lifelong enemies going to govern together? Their respective manifestos are not as far apart as those of M5S and the League, and are closer than they were a few months ago: by shedding its right-wing electorate, M5S has become more consistent. There is convergence on matters of taxation, work and education, and the two parties are moving closer on the issues of immigration and security. While there are many more differences on institutional issues, the condition that is hardest for M5S to swallow – the requirement to recognise representative democracy – had already been imposed by the Democratic Party as a prerequisite to any alliance.The tug-of-war between direct and intermediated democracy is not over yet. The stability of the new government will depend on electoral equilibrium between the two sides. The government will need to act in a way that reflects the interests of both parties; if the consensus is shattered, anti-establishment forces could yet regain the upper hand. Paola MONPERRUS-VERONI - paola.monperrus-veroni@credit-agricole-sa.fr* Giuliano da Empoli: Il diavolo veste Bannon, Il Foglio, 1 October 2018.
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Edition
04/09/2019
Europe: post-summer agenda
After finally being nominated and approved by the European Parliament, European Commission President Ursula Von der Leyen will soon have the names of the (27) candidates put forward by the member countries as commissioners. She will then have to distribute portfolios and put her team through European Parliament hearings before the new Commission takes up its duties on 1 November.Never will a Commission have been faced with such an arduous task. It is going to have to get on with completing the institution-building work left unfinished by the Juncker Commission. It will have to keep its members united by responding to the increasingly strongly expressed need to increase the legitimacy and democratic responsibility of its institutions and reaffirm the benefits of Europe-wide integration. And, above all, it will have to redefine Europe's place in the geopolitical confrontation between the United States and China, in a world that is no longer as it was five years ago.A more political role in response to existential questionsIndeed, it will be necessary to redefine the very concept of European sovereignty; to make the shift from the primacy of the economy to giving consideration to geopolitical strategy in the face of superpowers that are blurring the lines between economic competition and security issues. Europe will have to navigate the transition from internal integration based on rules, policies and a single currency to a managed relationship with the rest of the world. Security considerations will need to be elevated from the national level to the Europe-wide level. What is at stake is Europe's ability to continue to define the rules of the global game and avoid being technologically dominated. There is also a need to counter alternative models of governance (thinking in particular of autocratic systems) that might be imposed by dint of technological and economic leadership.Strategic thinking and economic actionThere will be a need to think and act strategically, to secure the supply of goods and services crucial to future development. This will mean boosting technological, financial and security capability, pushing back technological boundaries and regaining control over physical and financial infrastructure, which competitors can use as a powerful means of leverage. It will thus be necessary to draft an industrial policy that breaks away from simply guaranteeing competitive conditions for operators and moves towards a more proactive vision that identifies sectors with high future potential and mobilises financial and regulatory resources to support them. These policies will need to be projected beyond the confines of the single market to engage with global competition; meanwhile, the internal market will need to be protected from technological monopolies and those built up beyond the purview of market rules. To achieve this, European budget expenditure will almost certainly have to be reallocated. The roles and hierarchies of EU policy are going to have to be rewritten to ensure greater complementarity between industrial policy, competition policy and trade policy so as to be able to respond to security requirements and a geopolitical strategy defined by foreign policy.A green deal to reconquer the technological frontier and regain political legitimacyThe green deal spoken of by Ursula Von der Leyen could meet these objectives. It would represent an opportunity to modernise the European economy, revitalise industry and secure the jobs of the future. Europe could gain a first-mover advantage to build up a competitive edge and use its regulatory heft to impose global standards by leveraging the size of its internal market.It could thus respond to growing demand from citizens, provided the transition is economically and politically sustainable – i.e. that the associated gains and losses are fairly distributed. The overarching nature of a green deal means negotiations could be opened up on enough fronts for every stakeholder to be able to secure an advantage and be properly compensated for any losses.Abandoning the fragmented exercise of power and going beyond national preferences in managing geopolitical issuesThis strategic vision requires the principle of "unity in diversity" to be rethought, bearing in mind that, in many areas, it will not be possible to abandon the principle of unanimous voting in favour of qualified majority voting – especially since the superpowers will bring all their weight to bear to undermine unity by playing up to national preferences. That being the case, a variable-geometry Europe will probably emerge, moving at different speeds in different areas, with a core forging ahead followed by those who are able to and want to follow. It will be the ability of this pioneering core to deliver that will lay the foundations for renewed attractiveness and ensure the European level continues to have a worthwhile role to play.Paola Monperrus-Veronipaola.monperrus-veroni@credit-agricole-sa.fr
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