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Geo files: New Old Europe

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Euro-Zone Leaders Feel Fallout From Crises

European political leaders are losing popularity and authority at home as they seek solutions for the euro zone’s debt crisis and poor economic-growth prospects.

Fallout from the crisis, together with homegrown missteps, is stinging governments in Berlin, Paris and Madrid, and even affecting the popularity of Italy’s “Teflon” leader, Silvio Berlusconi.

French President Nicolas Sarkozy lost two junior ministers to expenses scandals on Sunday, at a time when his support is dropping amid a slowing economy and austerity measures. German Chancellor Angela Merkel is struggling to change the public’s growing belief that her government, elected only last fall, is divided and directionless. And Spanish Prime Minister José Luis Rodriguez Zapatero is struggling to push through unpopular budget cuts without a stable majority in Parliament.

“All these governments are being driven to make unpopular cuts by an international financial crisis that is beyond the control of national authorities, and this is making governments look bad,” says Jan Techau, an international political analyst at the NATO Defense College in Rome.

Euro-zone governments have been plagued by a string of economic challenges, highlighted by the Greek debt crisis and its pan-European fallout.

Strengthening the euro zone’s fiscal rules, repairing battered public finances and improving some countries’ economic competitiveness means tackling long-delayed overhauls of labor laws and benefit systems.

Across the zone, cuts to spending and entitlements are coming as a shock and sparking anger and action among labor unions.

Scandals and political fumbles have weakened some European leaders’ ability to convince their citizens that the painful measures are part of a strategy that will create a stronger economy later.

One saving grace for leaders of major euro-zone economies is that none of them face national elections before 2012—and in Mr. Berlusconi’s case, his opponents remain weak.

Mr. Sarkozy’s government said last month it will cut French public spending by €45 billion ($56.5 billion) over the next three years, and raise the normal retirement age to 62 from 60. The measures led to heightened media scrutiny of French ministers’ use of public money.

On Sunday, Alain Joyandet, state secretary for overseas development, resigned after admitting he hired a private jet for €116,500 to fly to the Caribbean for business when he could have taken a regular flight.

Christian Blanc, state secretary for the Paris region, also resigned after admitting he had spent €12,000 of taxpayers’ money on cigars—and smoked a third of them himself. The government ordered him to repay the full bill.

Mr. Sarkozy is scrambling to give his government a more frugal look to help sell his budget cutbacks. This year, he has cancelled presidential hunts and the traditional July 14 garden party at the Elysée Palace. Although Mr. Sarkozy has another two years before facing re-election, analysts say he tends to water down proposed overhauls when public opposition is growing too strong, and might do so again.

In Italy, Mr. Berlusconi’s approval rating has fallen to 41%, down from more than 50% last year, amid scandals over the premier’s personal and legal affairs.

Mr. Berlusconi’s center-right coalition scored a convincing victory in regional elections in March, but discontent has grown since then over an austerity package that calls for about €25 billion in cuts by 2012. The proposed cuts face resistance from center-right lawmakers and regional governors as well as labor unions.

Mr. Berlusconi suffered a blow Monday when his minister for federalism, Aldo Brancher, resigned just two weeks after Mr. Berlusconi appointed him, amid accusations that the minister was using his office to shield himself from a corruption trial.

German Chancellor Merkel, at the helm of Europe’s biggest economy, has also seen her approval ratings fall to 40% from higher than 50% in early May, when she agreed to the European bailout of Greece. Ms. Merkel had previously reassured German voters that Greece didn’t need rescuing.

German popular anger about having to aid struggling Southern European countries has damaged a government that was already beset by squabbles. Some in Ms. Merkel’s coalition are demanding firmer leadership from the chancellor, whose low-key style they say is allowing divisions and indiscipline to flourish.

Last week, the coalition needed three rounds of voting to secure a majority of federal and state delegates for its own candidate for German president, Christian Wulff.

That was seen as a major embarrassment for Ms. Merkel, and as a symptom of a wider problem.

“Merkel doesn’t inspire, she doesn’t rally. She doesn’t have a strategy, other than to stay in power and get things done as best she can,” says Josef Joffe, a prominent political scientist and publisher of German newspaper Die Zeit.

One of the stronger political leaders in Europe is Greek Prime Minister George Papandreou, whose Socialist government holds an outright majority in Parliament, albeit slim. Despite pushing through deep budget cuts in the face of large street protests, the Greek Socialists are still more popular than their opponents, according to opinion polls.

Mr. Zapatero, Spain’s Socialist leader, is looking less secure, since his government was able to pass budget cuts in May by only one vote in Parliament. Mr. Zapatero had assured the public no new cuts were needed, but the mounting euro-zone debt crisis and pressure from the European Union and the U.S. forced him to backtrack. Opposition leaders accused Mr. Zapatero of surrendering Spain’s economic sovereignty to the EU.

Spanish unions have called a general strike for Sept. 29 to protest overhauls aimed at making the labor market more flexible.

A majority of Spaniards would elect the center-right Popular Party if elections were held now, according to opinion polls.

Mr. Zapatero’s next big test comes with Spain’s 2011 budget, which Parliament must approve by year-end. His four-year term is due to end in 2012, but some analysts say the premier could call early elections if he can’t pass the budget. (Source: WSJ)

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Written by Theophyle

July 6, 2010 at 10:28 am

One Response

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  1. Geo files: New Old Europe…

    I found your entry interesting do I’ve added a Trackback to it on my weblog :)…


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