Editor's Note: Dani Rodrik is a Professor of International Political Economy at Harvard University and he is the author of The Globalization Paradox: Democracy and the Future of the World Economy. For more from Rodrik, visit Project Syndicate or follow it on Facebook and Twitter. The views expressed in this article are solely those of Dani Rodrik.
By Dani Rodrik, Project Syndicate
As if the economic ramifications of a full-blown Greek default were not terrifying enough, the political consequences could be far worse. A chaotic eurozone breakup would cause irreparable damage to the European integration project, the central pillar of Europe’s political stability since World War II. It would destabilize not only the highly-indebted European periphery, but also core countries like France and Germany, which have been the architects of that project.
The nightmare scenario would also be a 1930’s-style victory for political extremism. Fascism, Nazism, and communism were children of a backlash against globalization that had been building since the end of the nineteenth century, feeding on the anxieties of groups that felt disenfranchised and threatened by expanding market forces and cosmopolitan elites.
Free trade and the gold standard had required downplaying domestic priorities such as social reform, nation-building, and cultural reassertion. Economic crisis and the failure of international cooperation undermined not only globalization, but also the elites that upheld the existing order.
As my Harvard colleague Jeff Frieden has written, this paved the path for two distinct forms of extremism. Faced with the choice between equity and economic integration, communists chose radical social reform and economic self-sufficiency. Faced with the choice between national assertion and globalism, fascists, Nazis, and nationalists chose nation-building.
Fortunately, fascism, communism, and other forms of dictatorships are passé today. But similar tensions between economic integration and local politics have long been simmering. Europe’s single market has taken shape much faster than Europe’s political community has; economic integration has leaped ahead of political integration.
Read: The instability of inequality.
The result is that mounting concerns about the erosion of economic security, social stability, and cultural identity could not be handled through mainstream political channels. National political structures became too constrained to offer effective remedies, while European institutions still remain too weak to command allegiance.
It is the extreme right that has benefited most from the centrists’ failure. In Finland, the heretofore unknown True Finn party capitalized on the resentment around eurozone bailouts to finish a close third in April’s general election. In the Netherlands, Geert Wilders’ Party for Freedom wields enough power to play kingmaker; without its support, the minority liberal government would collapse. In France, the National Front, which finished second in the 2002 presidential election, has been revitalized under Marine Le Pen.
Nor is the backlash confined to eurozone members. Elsewhere in Scandinavia, the Sweden Democrats, a party with neo-Nazi roots, entered parliament last year with nearly 6% of the popular vote. In Britain, one recent poll indicated that as many as two-thirds of Conservatives want Britain to leave the European Union.
Political movements of the extreme right have traditionally fed on anti-immigration sentiment. But the Greek, Irish, Portuguese, and other bailouts, together with the euro’s troubles, have given them fresh ammunition. Their Euro-skepticism certainly appears to be vindicated by events. When Marine Le Pen was recently asked if she would unilaterally withdraw from the euro, she replied confidently: “When I am president, in a few months’ time, the eurozone probably won't exist.”
Read: Europe's darkness at noon.
As in the 1930’s, the failure of international cooperation has compounded centrist politicians’ inability to respond adequately to their domestic constituents’ economic, social, and cultural demands. The European project and the eurozone have set the terms of debate to such an extent that, with the eurozone in tatters, these elites’ legitimacy will receive an even more serious blow.
Europe’s centrist politicians have committed themselves to a strategy of “more Europe” that is too rapid to ease local anxieties, yet not rapid enough to create a real Europe-wide political community. They have stuck for far too long to an intermediate path that is unstable and beset by tensions. By holding on to a vision of Europe that has proven unviable, Europe’s centrist elites are endangering the idea of a unified Europe itself.
Economically, the least bad option is to ensure that the inevitable defaults and departures from the eurozone are carried out in as orderly and coordinated a fashion as possible. Politically, too, a similar reality check is needed. What the current crisis demands is an explicit reorientation away from external financial obligations and austerity to domestic preoccupations and aspirations. Just as healthy domestic economies are the best guarantor of an open world economy, healthy domestic polities are the best guarantor of a stable international order.
Read: A gravity test for the Euro.
The challenge is to develop a new political narrative emphasizing national interests and values without overtones of nativism and xenophobia. If centrist elites do not prove themselves up to the task, those of the far right will gladly fill the vacuum, minus the moderation.
That is why outgoing Greek Prime Minister George Papandreou had the right idea with his aborted call for a referendum. That move was a belated attempt to recognize the primacy of domestic politics, even if investors viewed it, in the words of a Financial Times editor, as “playing with fire.” Scrapping the referendum simply postpones the day of reckoning and raises the ultimate costs to be paid by Greece’s new leadership.
Today, the question is no longer whether politics will become more populist and less internationalist; it is whether the consequences of that shift can be managed without turning ugly. In Europe’s politics, as in its economics, it seems there are no good options – only less bad ones.
The views expressed in this article are solely those of Dani Rodrik. Copyright: Project Syndicate, 2011.
The French and American presidents, speaking during what they believed to be a private encounter this week, failed to realize that a simultaneous translation of their conversation was being broadcast to journalists outside the room.
During a discussion on Israeli-Palestinian policy, Sarkozy gave an unapologetic assessment of his views of Netanyahu, saying: "I cannot bear him, he's a liar."
Damaging his pro-Israel credentials, the U.S. president did not demur.
Instead he exacerbated his sin in the eyes of pro-Israeli Americans by retorting: "You may be sick of him, but me, I have to deal with him every day."
It's our nightmare too!!!!
Extremism – left or right – targets social groups that feel disenfranchised, as they don't have the chances and abilities to keep up with meritocrats, career builders and social climbers, who are mostly internationalists. They are often victims of social Darwinism and globalisation. What they resent most is to see foreigners being better off than they.
Just think. When the republicans regain power, they will start a war with Iran (totally unfunded of course). Then we can draft all the Poor people to fight (die) in the war (just like republicans want) and we can give "no bid" contracts to the rich people. Killing two birds with one stone!! We can use Iran's oil to pay for the war. And when the war is over, Iran will sell us cheap oil!! Just like Iraq!!!!.........Oh wait......Never mind.
First we do not have a draft, Second most of the people I deployed with were Middle class, ( I work in High tech)....More and more of the fighting is with Automated systems.....Case in point 1 Brigade has the combat strength of a division from 20 years ago....I agree occupying a country is hard work, from now on we will simply destroy them and starve them out like middle age siege warfare....when the Iraqi power grid would go down, we had to send in water trucks to keep the Hajjis alive:-).......electrical power = water and food in modern city
Hi mom this is my current event. Please call my name or come to my room if you got it. I hope you like it.
Who told you to post such a meaningless comment like that?
The very best that could possibly happen to Europe is the breakup of the Eurozone!!!! Like the First World War, the idea of the Eurozone is proving to be a truly bad one. One the other hand, it was right-wing extremists like Hitler and Mussolini who brough Germany and Italy out of their depressions respectively. Today Europs has no such leaders who are really anything but a bunch of useless bureaucrats waiting to carry out orders fron Washington D.C.,sadly enough!
Well said. Completely agree.
"In Finland, the heretofore unknown True Finn party capitalized on the resentment around eurozone bailouts to finish a close third in April’s general election."
The party Perussuomalaiset was resgistered in 1995 and sees itself as the successor of Suomen Maaseudun Puolue which in turn was registered in 1967. The English version of the name Perussuomaliset, True Finns, was adopted after Perussuomalaiset got a landslide victory in 2011 elections.
As for the far right movements, True Finns are an organized far right party mainly for foreign "experts" who seem to base their expertise on yellow press. It is true thet there are some True Finn parliament members that have displayed far right tendencies but seeing these newly hatched members of parliament as a far right threat – it is absolutely ridiculous! While some of it's members have expressed far right opinions, the party as a whole has not supported them. It seems that quite much of the support to True Finns comes from peopke who see that the conventional parties have lost their touch with the people. The recent messes in fund raining for elections (including the open statments by older members of the parliament telling that they will not reveal their funding as there is no sanction in the law), the poor preparation of laws to be voted upon, and more currently the mess the Eurozone is in has to some extent alienated the people from old parties. True Finns is instead a solid anti-EU party so it enjoys support from the growing base of EU- and Euro-sceptics.
There is also an interesting article in the New Scientist (The underhand ape: Why corruption is normal) on corruption. The oservation that corruption is normal does not mean that people will wccept it as a normal practice, In North Europe corruption is not generally accepted while in some of the PIIGS it is business as ususal. When the eshtablished parties are suspected of corruption or favoritism, it tends to affect the voting. And as the only alternative seemed to be True Finns, they probably got also votes that were primarily protests against old parties. Some "expert" then in a rush interprested this as a collective move to the far right.
Oly time will tell whether True Finns is a right wing party or not. They are a true populist party as they do speak directly to the people – something the older parties tend to forget.
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