Thu, Oct 05, 2017 - Page 9 News List

Political risk makes a comeback in Europe

The EU looked to have turned a corner as populists were beaten back in the Netherlands and France, but Italy, Austria and Brexit still pose risks

By Viktoria Dendrinou and Nikos Chrysoloras  /  Bloomberg

Europe’s biggest economy is consigned to complex coalition-building after votes were siphoned away from German Chancellor Angela Merkel’s bloc and her main Social Democratic rival, and flowed instead to the anti-immigration, EU-skeptic Alternative for Germany party.

Still, a majority of Germans say they support Merkel’s prospective three-way coalition with the Free Democrats and the Greens, and the chancellor remains the bloc’s most powerful leader.

What is more, Italy’s referendum this month is mainly a campaign platform for the Northern League and, in any case, is not binding.

In Austria, the Freedom Party has previously toyed with a referendum on EU membership or leaving the euro, but its leader, Heinz-Christian Strache, has since toned down his rhetoric in an effort to remove obstacles for a coalition.

Europe’s other secessionist movements may be far from emboldened by events in Catalonia after the EU refused to offered any prospect of membership even if the region did break away from Spain.

The upshot is the euro crisis and the worst of the refugee crisis are in the past, their place likely taken by long-simmering internal EU problems, said Daniel Gros, director of the Brussels-based Center for European Policy Studies.

“This is not a return to the ‘polycrisis.’” he said.

However, even without international support, the separatist movement is draining the political energy from Spain, a country that until recently was the poster child for European reform.

For an EU seeking takeoff for a new phase of integration, that in itself is bad news.

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