Charlemagne: An ill wind from Germany

Make us reform, but not yet, say Europe's voters

EUROPEAN reformers have greeted the German election result with the desperate optimism of the Victorian Brits, holed up in the Indian city of Lucknow, who hoped against hope for rescue (“Dinna ye hear it? - dinna ye hear it? The pipes o' Havelock sound!”). It was Angela Merkel that failed, they say, not reform. She was a bad campaigner. Her programme was half-hearted because regional barons stifled her zeal. Voters were spooked by fears of a flat tax that was not party policy. Anyway, Gerhard Schroder had governed as a reformer.

All true. And all specious. The fact is that Mr Schroder called the election because his reforms had been rejected (he had lost all but one of the state polls since he announced the changes in 2003). Ms Merkel failed because she wanted to go faster. Contrast the German result with Japan, where Junichiro Koizumi also held a ballot because reforms were being stymied by his party. He won a decisive mandate. Had the German vote shown up similar sentiments, Europeans would now be hailing a boost to reform in a Union that has drifted since its proposed constitution was rejected in May. Instead, the election outcome is a setback for change, and for the whole European Union.

It is a blow to the EU because it means that both France and Germany - its strongest members - are now at risk of paralysis. Defeat in the constitutional vote stripped Jacques Chirac of credibility in Europe. Now Germany's voice will be muffled too. It is unclear who will be its next chancellor, which parties will form its new government and how stable it will be; but in any case, a weakened, introvert Germany seems even less likely than before to lead the EU forward. In a club of 25, of course, France and Germany cannot stitch up European policy as they used to. But it is still unusual, and worrying, when both seize up at once. Both are likely to grow more defensive, whether separately or in tandem. The EU will feel the creeping malaise.

Things could get worse. Over the next two years, the other two big economic powers in the euro area will also hold elections. Next up is Italy, where the leader of the movement challenging Silvio Berlusconi is a former EU commission president. This will tempt the prime minister to run as a Eurosceptic. If he were to win, the lesson from Germany and Italy would be that the key to electoral success in Europe lies either in stressing the need to “balance” reform (as Mr Schroder did) or in bashing the EU. That does not automatically mean the French, who vote for a president in 2007, will go down the same road. But their election campaign may well be fought on familiar (pro- or anti-reform) turf; after all, the referendum in France was dominated by talk of globalisation, economic stagnation and the “Anglo-Saxon” attitudes of the European Commission. Railing against the beasts from Brussels who are ruining our welfare states is becoming standard fare in election campaigns. In country after country, debate about reform is fractious; opposition to it is well galvanised.

That is not the same as saying European electorates have become hostile to liberalisation. The broad voting pattern in Germany was quite close to the one in Britain that produced a solid majority for the reformer Tony Blair. Ms Merkel's coalition got almost exactly the same share of the vote as his Labour Party; the difference in outcome was dictated in part by political systems, not by a vast contrast between Britons and Germans. It is also fair to add that the rise in the Free Democrats' vote points to a constituency for faster reform in Germany.

But the result is still worrying because it reflects a deep-seated ambivalence among voters across Europe. During the campaign, three-quarters of Germans identified “reform” as the only cure for their country's malaise. On the day, over half plumped for parties campaigning for little or no change. In France, the polls show worries about globalisation are only one of many national preoccupations; meanwhile small firms and shopkeepers are among the most admired institutions. Yet the French still rejected the EU constitution, partly in protest against the very forces of competition they claim not to fear.

A half-grasped nettle

The good news is that many Europeans realise things cannot go on as they are. The bad news is that they are loth to do anything decisive about it. The question is whether this consensus, in favour of doing nothing, will one day lurch towards reform.

The mere fact that Europeans are ambivalent is worth something: it is better than being in denial about the need for change. Resistance to reform is also greater in large countries than small ones, such as the Scandinavian states and the Netherlands, probably because (being small) they are used to external pressures. It is also worth pointing out that EU governments, however queasy, can't avoid at least trying to reform: the constraints that demography places on welfare systems will not go away.

But the fact remains that so long as voters are in two minds about this process, pro-reform majorities will be hard to achieve unless (as in Britain) the electoral system provides one. Ambivalence is likely to continue. What the German election showed is that while Europe's status quo is unsustainable (and voters know it), it is also comfortable, and too many voters enjoy that comfort too much to vote for change.

German voters rightly fretted over unemployment. But they should worry, too, about the employment rate: just one-third of citizens have full-time jobs; so each worker supports two others, and there are as many people on some form of benefit as in permanent employment. The German case is extreme, but most European states face similar pressures. This is not a sustainable social and economic system. Logically, this situation should go on producing votes against change until things become so bad that, as Britain found in 1979, “there is no alternative”. For the time being, Europe does have an alternative: a genteel but depressing process of stagnation.

Commentary features says that in many European countries voters seem to be saying 'Make us reform, but not yet'.

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