Turmoil

British prime minister Teresa May survived a no-confidence vote midweek. The vote was called by her own Conservative Party backbenchers.

It was a useless vote. The hardliners dissatisfied with the exit deal May negotiated with the EU could not have possibly won that vote. But they called for it anyway.

All that exercise achieved was to further weaken May as she deals with the rest of Europe in the remaining weeks before the UK is due to leave the economic community. Beyond the existing deal, which the EU says cannot be subject to further negotiations, the UK is still seeking a number of legal guarantees.

In its present form, however, the exit deal is not likely to pass the British Parliament. In fact, the no-confidence vote was called precisely because May abruptly cancelled a vote on the deal by Parliament. May’s nose-counters were convinced the deal would be rejected by Parliament.

Should the British Parliament reject the deal negotiated by May, the Prime Minister may be constrained to resign. On March 29, 2019, the UK will exit the EU without a clear arrangement with the rest of Europe. That spells chaos.

Without a deal, the British economy is expected to plunge into a deep and indefinite recession. Hundreds of thousands of jobs could be lost. There could be shortages of numerous commodities traditionally imported from the EU countries. There will be capital flight, as the largest financial enterprises flee London to the safety of the cities on the continent.

This will be a self-inflicted Armageddon.

Brexit was a crazy idea to begin with. But the decision to leave the EU seemed so absurd many who wanted to remain in the common market did not bother to turn out to vote, believing that the proposition would be roundly rejected anyway. It was not. The rural voters trumped the urban voters. The nationalists won over the regionalists. 

This was the equivalent of the Bernie Sanders voters who thought the idea of a Donald Trump presidency was so ridiculous it could never happen. They did not bother to turn up to vote for Hillary Clinton. Now we have both Donald Trump and Brexit. The ridiculous sometimes happens.

Today, May is caught between the Brexit hardliners who dare to exit the EU without a deal and those who want a new referendum to reopen the question of leaving or remaining. Meanwhile, the deadline looms ever nearer.

Should Brexit produce the promised chaos, there could be political repercussions on all sides. The Scots, who want to remain in the EU and leave the UK, could revive their effort to secede. The Irish, who face the prospect of a hard border between Ireland and Northern Ireland, are agitated over the drift of things.

Reeling

The economies of Europe are plodding along rather well. But everywhere across the continent ruling parties are struggling in the face of nationalist and populist surges.

In Germany, Angela Merkel’s Christian Democrats were dealt telling defeats in a sequence of local elections. This led Merkel, perhaps the most stabilizing personality in European politics, to declare she would not seek reelection. A new party leader has been chosen to succeed Merkel – although that is not a guarantee the Christian Democrats could consolidate their hold on power.

Merkel’s immigration policy allowed large numbers of refugees to enter Europe provoked anti-immigrant sentiment. This reflected in strong electoral performances for the right-wing nationalist parties.

In France, Emmanuel Macron was swept to power on a program of pro-market and pro-Europe policies. All the traditional ideological parties were swept aside by what began as a movement rather than a party.

Today, Macron is a vastly weakened leader. His job approval ratings have fallen through the floor. Violent demonstrations forced him to retreat from his own policy reforms and yield ground to the populists.

Macron has yielded enough to imperil the fiscal discipline of the French state. But the protest movement challenging his hold on power continues to grow. This week, students have joined the ranks of those protesting in the streets. Macron’s government is reeling from street protests no one foresaw a month ago.

The UK, Germany and France are the pillars of European stability. In turn, a stable EU was a major driver of global growth.

Today, the UK seems to be on the brink of chaos. France is backtracking on its pro-market policies. No one is really sure how Germany’s policies will evolve post-Merkel.

Elsewhere in Europe, right-wing and populist forces seem on the rise. The newly installed populist government in Italy seems bent on defying EU rules on how much deficit spending it could indulge in.

The rest of the world relied on Europe for driving growth, promoting democracy and bringing a certain amount of certainty. This reliance became all the more defined after Trumpism brought so much unpredictability to America’s role in the world.

Today the rest of the world can only watch with much wonderment as political turmoil engulfs the traditional center of continuity and predictability in Europe. It is as if the old order has become unhinged. The emerging economies suddenly feel vulnerable as so much uncertainty builds up.

Many analysts are telling us the US is due for a recession. The UK, after a messy Brexit, could end up in economic chaos. France and Germany could be increasingly beset with domestically generated political tensions. The sum of all these is a global order with weakened poles of leadership.

2019 could bring us to even more interesting times.