Saturday, April 08, 2006

Political Instability in Europe's Core - Apr 7

I have another very good article from stratfor as it concerns the EU. To provide some prophetic context, I have a link that should be read first.

The Man in Black

Stratfor -- Predictive, Insightful, Global Intelligence

Political Instability in Europe's Core
Apr 07, 2006


France has a prime minister waiting for a pink slip and the German government is wobbling impressively. With the most important states in the European Union obsessed with internal issues, those seeking European stability will need to look elsewhere -- and will likely be disappointed.


Europe is becoming an exceedingly interesting place. Union and student protests in France have reached the point that the government is flirting with collapse. Opponents of Prime Minister Dominique de Villepin's youth employment law have proven capable of getting a million people out into the streets repeatedly, and Interior Minister Nicolas Sarkozy now has successfully hijacked de Villepin's authority, and is leading negotiations with the country's power centers himself. Between the loss of public respect and government authority, de Villepin's days in government are numbered.

And unless President Jacques Chirac wants to risk history repeating itself and play Russian roulette with the French street, he cannot allow his prime minister to remain at the big desk much longer. Only two questions remaining at this point: When will de Villepin clean out his office? And will he pull anyone down with him when he falls?

In Germany the situation is hardly as dramatic, but nearly as serious. There, the problem is twofold. First, labor reforms have triggered sporadic strikes among public sector workers, doctors and metal workers, involving about 30,000 people.

The strikes constitute the first real domestic challenge to the government of Chancellor Angela Merkel. While Merkel has racked up considerable successes in international relations, her left-right coalition has not been tested domestically, and these strikes are proving particularly problematic. They are against regional and local governments, severely limiting Merkel's ability to address them, yet their near-nationwide character consistently paints the chancellor in a negative light.

Second, the strikes are contributing to growing spits in her government coalition between her own center-right Christian Democratic Union and the typically labor friendly Social Democratic Party (SPD). Fear of breaching the bond between the SPD and its labor supporters led Vice Chancellor Franz Muentefering to unilaterally suspend plans for a package of labor reforms March 29 that were supposedly a key plank of the coalition agreement.

Since then, intracoalition disagreements have erupted over health and energy issues as well. Taken together, the level of mistrust within the coalition is nearing the point where it is becoming awkward to talk about a coalition existing. And no coalition means no government.

With both France and Germany obsessed with internal issues, and approaching or flirting with government collapse, all European developments are on hold. Consequently, upcoming events in Italy are now being viewed in a very different light.

Italy faces national elections April 9-10, in which a left-wing coalition led by former Italian Prime Minister Romano Prodi faces the right-wing coalition of Prime Minister Silvio Berlusconi, with Prodi's coalition holding a slight statistical edge in the last opinion poll before the election (taken two weeks ago). In theory, Italy has a new electoral system guaranteeing the winning coalition a firm majority in the Italian Parliament's lower house, granting Europe some political stability in at least one of its major countries. But in practice -- this is Italy, after all.

If one can put aside the vitriol of the campaign, which regularly has included slurs related to substance abuse and the male anatomy, and both coalitions are more than a touch unwieldy. Berlusconi's coalition has had its Northern League component openly discuss going its own way. And the Communist Refoundation, a faction in Prodi's coalition, is responsible for torpedoing not just a previous Prodi election victory, but also a previous Prodi government.

Even if Italy's famously unstable coalitions hold, there is still the pesky issue of the Italian Parliament's upper house, which uses a region-based electoral system instead of a nationally pooled method of proportional representation. Even if one coalition manages to stick together and dominate the lower house, it might not control the upper -- forcing the country into a fresh election.

Copyright 2006 Strategic Forecasting Inc. All rights reserved.

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