As always, the EU’s top brass waxed lyrical about the single currency, but this year their musings sounded more delusional than ever. In an opinion piece published across the eurozone, the presidents of the European Central Bank, Commission, Council, Eurogroup and Parliament praised the euro for giving the EU “stability”, “growth”, “jobs”, “unity” and even “greater sovereignty”, and for being an overall “success”.

Such self-congratulatory back-slapping is common among Eurocrats. In 2016, for example, as Europe was still reeling from the disastrous consequences of the euro crisis, Jean-Claude Juncker, then President of the Commission, said that the euro brings “huge” though “often invisible economic benefits”. This year’s statement, however, had a particularly Orwellian feel to it. The euro has not brought any of those things to Europe: the EU today is weaker, more fractured and less “sovereign” than it was 25 years ago.

Since 2008, the euro area has essentially been stagnating — and its overall long-term growth trend has been negative. This has led to a dramatic divergence between its economic fortunes and those of the US: adjusted for differences in the cost of living, the latter’s economy was only 15% larger than the euro area’s economy in 2008; it is now 31% larger. Today, the euro’s share of global currency reserves is significantly lower than its predecessors — the Deutsche Mark, French franc and ECU — in the Eighties.

But this is far from the only result of the euro’s failure. When it was introduced, it was hoped that the single currency’s “culture of stability” would narrow the difference in terms of its members’ economic performance. In effect, as the IMF has noted, the opposite has happened: “the envisaged adjustment mechanisms under monetary union have been insufficient to support convergence, and have in some cases contributed to divergence”. Added to this, exports between euro nations as a percentage of total eurozone exports have been on a downward trend since the mid-2000s.

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It seems clear, then, that the introduction of the euro was a mistake — but only if we take its proponents’ stated intentions at face value. For it is important to understand that the euro was always as much a political project as an economic one. And, from that standpoint, it has been an extraordinary success.

There’s a reason the foundations of the monetary union were only laid in the early Nineties, even though the idea had been around since 1970. That year, the first report examining the feasibility of monetary union was published. Known as the Werner Report, it stressed that, in addition to the creation of a European central bank as the issuer of the new single currency, “transfers of responsibility from the national to the Community plane will be essential” for the conduct of economic policy.

Seven years later, the MacDougall Report reinforced the need for a sizeable EU budget — of 5% or more of EU GDP — to underpin any European monetary union, with responsibility for it handed to a European Parliament. Given the reluctance of member states to move towards a fully-fledged monetary and fiscal union, which would have involved significant transfers between countries, the plans for monetary union floundered for another decade. However, new life was then breathed into the euro project in the late Eighties and early Nineties — not because the economics of the project had improved, but because the politics around the idea of monetary union had changed, especially at the level of Franco-German relations.

The official story is that the French, who had always been particularly reluctant to agree to any supranational authority, came round to the idea of a monetary union in the wake of German reunification, as a way of “shackling” German power. Germany, meanwhile, relinquished its much-loved national currency, the symbol of its post-war economic achievement, in order to quell concerns about its growing hegemony.

The reality, in fact, was more complicated. It is true that France hoped that monetary integration would constrain Germany. But France was also influenced by domestic developments — in particular the French Socialists’ neoliberal turn in the early Eighties, under Mitterrand. This led it to embrace the idea that “national sovereignty no longer means very much” and that “a high degree of supranationality is essential”, as Mitterrand’s finance minister, Jacques Delors, put it — an idea that Delors would then export to the rest of Europe during in his role as President of the European Commission from 1985 to 1995.

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As for Germany, the notion that the country reluctantly accepted to have the euro foisted upon itself, in exchange for its European partners’ acceptance of reunification, is largely a myth. German elites were perfectly aware that the eurozone would give an immense boost to Germany’s export-led mercantilist strategy, by ensuring a significantly lower exchange rate with the euro than it would have had with the Deutsche Mark, even in the face of persistent trade surpluses. In other words, the German elites viewed the euro as a way of reasserting their hegemony over Europe — the exact opposite of what the French were hoping to achieve.

For a while at least, history would prove the Germans right. They seized the opportunity to ensure that the future monetary union would be functional to German interests, partly by getting other member states to agree to the creation of a fully independent central bank — that is, fully insulated from a democratically elected polity — with the sole mandate of ensuring price stability. No wonder Helmut Kohl, Germany’s Chancellor, admitted to pushing through the euro “like a dictator” in face of a reluctant public, while Theo Waigel, his finance minister, boasted about “bringing the Mark in Europe”.

Why did other countries agree to join a monetary union destined to boost the German economy at the expense of other less export-dependent economies, such as Italy? There were certainly ideological elements at play, such as the rise of monetarism, but, as with France, the reasons were mostly political rather than economic. By the early Nineties, national elites in most European countries had come to view the euro as a “Trojan horse” with which to push through neoliberal policies for which there was little political support, by engaging in what Kevin Featherstone has called a “‘blameshift’ towards the ‘EU’”.

Moreover, by explicitly prohibiting the ECB from acting as lender of last resort and forcing states to rely solely on loans from the financial markets for their financing needs, the idea was that representative democratic institutions would be subject to the supposed “discipline” of the markets. Angela Merkel coined a rather ominous term for such a system: “market-conforming democracy”.

In short, the euro saw the light of day because national elites came to embrace the idea for different but convergent reasons: in some cases (such as Germany), it was a matter of gaining an economic advantage at the expense of other countries; in others (Italy, for example), it was a matter of gaining an advantage at the expense of domestic actors, even if that cost economic growth.

The result was an extremely dysfunctional monetary union. And when the financial crisis hit, and a series of credit-led economic booms — fuelled by massive capital flows from Europe’s core to the periphery — went bust, the implications of its structure hit home. Those members in a slump could not devalue. Since they could not print their own money, and because the central bank was unwilling to act as lender of last resort, they risked sovereign default, or national insolvency, as they came under attack from financial markets. Essentially, the euro was their downfall.

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Yet, by late 2010, European elites — the Germans, in particular — had rewritten history. The financial crisis was not the fault of an out-of-control system exacerbated by the dysfunctional nature of the monetary union; it was, they claimed, the fault of excessive government debt inflated by countries that had “lived well beyond their means”. The fact that most euro countries had registered primary fiscal surpluses in years leading up to the financial crisis, and that public debts had exploded only in the latter’s aftermath as a result of the massive bank bail-outs, was conveniently brushed aside. There was only one possible “cure”, Europe’s leaders proclaimed: austerity. The leading proponent of this theory was Germany’s ultra-hawkish finance minister, Wolfgang Schäuble, who died last week.

The imposition of such harsh fiscal austerity measures across the eurozone didn’t just raise unemployment, erode social welfare, push populations to the brink of poverty and create a genuine humanitarian emergency — it also completely failed to achieve the stated aims of kickstarting growth and reducing debt-to-GDP ratios. Instead, it drove economies into recession and increased debt-to-GDP ratios. Meanwhile, democratic norms were dramatically upended, as entire countries were essentially put into “controlled administration”. The result was a “lost decade” of stagnation and permacrisis that led to a profound divide between the eurozone’s north and south, and brought the monetary union to the brink.

This wasn’t simply the “automatic” outcome of the defective architecture of the monetary union. Rather, the European “sovereign debt crisis” of 2009-2012 was largely “engineered” by the ECB (and Germany) to impose a new order on the continent. Indeed, former ECB president Jean-Claude Trichet made no secret of the fact that its refusal to support public bond markets in the first phase of the financial crisis was aimed at pressuring eurozone governments into consolidating their budgets and implementing “structural reforms”. But the ECB then went further, resorting to various forms of financial and monetary blackmail — most notably in Ireland, Greece and Italy — with the aim of coercing governments to comply with the overall political-economic agenda of the EU.

In this sense, we could say that the euro crisis was both an economic disaster and a political success for Europe’s financial-political elites. After all, it allowed them to radically restructure and re-engineer European societies and economies along lines more favourable to capital, while creating one of the single biggest upward transfers of wealth in history — all in the name of the allegedly inescapable realities of the euro.

Since then, not much has changed in terms of the inner workings of the monetary union. Even the temporary suspension of the EU’s fiscal rules during the pandemic is in the process of being curtailed; a rehashed but fundamentally unchanged version of the EU’s fiscal framework is set to come back into force this year, spelling the return of austerity to the continent. That Germany has fallen from grace in the process, going from unchallenged European hegemon to American vassal-in-chief, is one of the great ironies of the past decade.

Nonetheless, when European elites say that the euro has been a success, they are unwittingly revealing a truth. From their perspective, it undoubtedly has; and their greatest success has arguably been to convince everyone that there is no alternative. To paraphrase Mark Fisher, it’s easier to imagine the end of the world than the end of the euro.

This was in striking contrast to her public image during the Greek debt crisis, when cartoonists depicted her in SS uniform resplendent with swastika. But those cartoons were for the masses only. The European political elites, all of them, happily voted with the Merkel government when it came to disciplining the Greek dissidents. They were as eager as the Germans to keep European monetary union alive. Merkel has left Europe to a political class to whom she has not only taught the trickery of two-level politics — national and supranational — but whom she has also, in part, brought to or kept in office. It is a political class that has bet its future on a Europe built around German hegemony.

In many parts of Europe, it is still considered a pleasant surprise to see a German who is soft-spoken with good manners, a wide heart and a big purse, smiling rather than shouting. This proved useful in her rise to becoming informal ruler of the continent. It also helped that she was a woman — someone who could be pictured as a nourishing mother as opposed to a punishing father.

But other things were more instrumental in her rise. When she took office, in 2005, major developments had recently taken place, and major decisions made, which certainly eased her career progression. In the Nineties, centrist political parties, of the Right as well as the Left, had been programmatically emaciated by the advance of neoliberal globalisation. Her party, the Christian Democratic Union (CDU), had been unable to reconcile ever more rapid capitalist modernisation with its traditional commitment to paternalist social protection. This left an ideological vacuum that would give her unprecedented room far for manoeuvre once she became leader.

It also helped that her main rival, the Social Democratic Party (SPD), was breaking apart over the Third Way social policy reforms of her predecessor, Gerhard Schröder — in particular Agenda 2010, which cut unemployment benefits and increased the pressure on people to accept job offers. Not only did the Agenda weaken the SPD for decades, but it spared Merkel, once she had ascended to the chancellorship, from having to implement the neoliberal reforms she had promised as opposition leader. Instead, she could allow the SPD, her partner in three coalition governments, to try to work out reforms to the Schröder reform, thereby reminding its constituents that it was responsible for policies they hated. Merkel, for her part, could claim for herself rising levels of employment and the balancing of the federal budget.

Rising employment and declining fiscal deficits weren’t just a result of the Agenda, though. Merkel’s third and most important long-term advantage was the work of the European heads of government who had created European Monetary Union in the Nineties. It is worth remembering that the common currency was a project not of German but of French and, to a lesser extent, Italian elites, who had hoped that a currency shared with Germany would force neoliberal restructuring in their own countries while protecting them from German financial competition. As it turned out, the former goal was defeated by domestic opposition, while the latter evolved into a Plan B: the southern member states would extract monetary and fiscal policy concessions from Germany in exchange for remaining in the union.

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For Germany, on the other hand, the monetary union was an economic godsend. It made the country the growth pole of Europe, the centre of a liberal economic empire. It also firmly established the preservation of the euro as Germany’s paramount national interest.

Unlike others in Germany, Merkel understood early on that preserving the monetary union would require side payments to its losers. These did not necessarily have to be financial but could be symbolic, for instance by occasionally allowing her colleagues on the European Council to outvote Germany. At home, Merkel had to overcome opposition to what the German public was always prone to see as excessive concessions to profligate southerners. To avoid conflict between domestic and European political needs, most side payments, especially the more expensive ones, had to be made under the counter, through complex operations deep in the bowels of that monster technocracy, the European Central Bank.

This does not mean that there were no tough negotiations on the magnitude of compensations due. Merkel tried to keep the price Germany had to pay as low as possible. But she also understood that the cost had to be sufficient to keep the currency union together. The transfers did not need to solve the continent’s structural imbalances. Their main purpose was political: keeping pro-EU governments in power by helping them fend off challenges from anti-euro parties and movements; providing them with the material and ideological resources to reward their supporters and thereby preserve ‘political stability’.

Very early in her tenure, Merkel realised that the central concern of German policy in Europe had to be defending monetary union against the disappointment of its original proponents. This required keeping alive the impression that the EU was run, if not by all members alike, then at least by a French-German “tandem”, and not Germany alone. Four French Presidents — Chirac, Sarkozy, Hollande and Macron — had to be reassured on this score.

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French aspirations for ‘European sovereignty’ — meaning French sovereignty extended to Europe as a whole — and for a shared ‘strategic culture’  —meaning the EU adopting French military doctrine and ambition — Merkel could satisfy only symbolically. In reality, German national security remained firmly in the hands of the United States and NATO. To keep both the US and France happy, German foreign policy had to rely on rhetorical obfuscation and double-dealing, disciplines in which Merkel excelled. German troops were sent to both Afghanistan and Mali, and would have had to be sent to other places as well had the government not had the excuse that under the postwar German constitution, out-of-area military missions have to be formally approved by the Bundestag.

Domestically, Merkel’s main project was to build a hegemonic neo-bourgeois political centre, with her party in the driver’s seat. Early on, she decided on the Greens as ideal partners who could inject urgently needed new blood and close the generation gap from which older parties suffer in a world of fast cultural change. In the end, however, the alliance with the Greens failed spectacularly. Shutting down nuclear energy after Fukushima and later phasing out coal pleased the Greens but raised the question of how to secure a growing energy supply. The answer was making Germany dependent on Russian gas, to the dismay of the United States. Russian gas also is resented by the Greens, with their “value-driven” idea of foreign policy. While she went along with Western sanctions against Russia over its re-possession of the Crimean Peninsula, Merkel at the same time founded her energy and climate change policy on the Nord Stream 2 pipeline, a project that her Green friends want to abort, as do her French friends, who are eager to sell their nuclear-produced electricity to Germany.

Similar difficulties and domestic-international complexities arose after Merkel’s decision to open the German borders for one million mostly Syrian refugees in 2015. While her refugee policy once more endeared her to the Greens and the new middle class, it divided her party and reinvigorated a then declining Alternative für Deutschland. It also forced her to negotiate an agreement on behalf of the EU with the Turkish dictator, Erdogan, in which Europe paid him considerable sums of money to act as the EU’s gatekeeper, preventing Syrian and other refugees from crossing into Europe. Also to control immigration, Germany insisted on a quota system in Europe for future refugees, knowing full well that it would be unacceptable to most other member states as it would involve a de facto Europeanisation of the German asylum regime. The result was passionate opposition in Eastern Europe and a split in the EU just as in the German electorate.

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Merkel’s migration policy was one reason why the recent Green advance was accompanied by a decline of Merkel’s own party such that in the 2021 election, the CDU/CSU became too small to form a successor government. In the end, the neo-bourgeois centre that Merkel had intended to build was to consist of a three-party coalition under the leadership of the SPD and a chancellor, Olaf Scholz, who as Merkel’s finance minister had done his best to learn from her. As the new government was sworn in, the outgoing chancellor was so alienated from her party that she seemed quite content to see her office turned over to a Social Democrat.

For her successors, Merkel’s will be a hard act to follow. Her manner of leadership by evasion — deferring decisions, delaying moments of truth, papering over conflicts with ambiguous rhetoric, substituting opportunistic improvisation for strategy and suppressing uncertainty by a public display of optimistic equanimity — requires specific personal skills. The same holds for Merkel’s extraordinary ability to get away with abruptly reversing decisions and making conflicting promises to different constituencies. From Merkel, two or three generations of European statesmen and stateswomen learned that leadership in the crises of today means nothing more and nothing less than making yourself appear optimistic enough to satisfy public desires for public displays of optimism.

Now, however, this may no longer be enough. Merkel’s equivocally friendly stoicism is unlikely to serve the next German government, or a German Europe, as well as it served her. During Merkel’s tenure, there was always enough money around to keep most of her partners reasonably happy — enough slack, in cash and time, for making the incompatible appear compatible. That this is no longer true was indicated, among other things, by the recent German coalition agreement, which could come to pass only because the parties deliberately abstained from discussing finance.

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But financial issues will soon assert themselves whether the parties want to discuss them or not, as the monetary union and the pandemic do their work, and German domestic needs make themselves felt. Note that already before Covid struck, there was a crisis of German physical infrastructure. Moreover, the new government, unlike Merkel’s Grand Coalition, will face an opposition in CDU/CSU that it cannot exclude from public debate on principle — as Merkel and all the rest excluded the AfD. This means, among other things, that questions will be asked and have to be answered on Germany’s ability to pay to keep “Europe”, meaning the monetary union, alive by keeping pro-EU governments in control in the south. For this, the ECB will have to invent ever more extravagant methods of direct state finance, including holding interest rates down close to zero in spite of rising inflation and cutting government debt by “fiscal repression”.

The list of unresolved problems Merkel leaves behind is long. It extends from the future fiscal and monetary constitution of the eurozone to Europe’s ever-increasing public debt, the relationship of the EU and its member states to the two hostile global superpowers, the United States and China, the European and especially the German relationship to Russia, the tension between German Atlanticism and French Europeanism, the status of national sovereignty in the EU state system, the future energy supply of Western Europe, and asylum and immigration policies, national and European. More issues could be listed, each urgent, some critical, none easy to resolve.

In a few years’ time, Merkel’s tenure may be remembered as a golden era when pious wishes still helped — a time when hard decisions could still be successfully postponed, dilemmas hidden by optimistic denial and benevolent neglect, and contradictions reconciled by all sorts of pocket money, borrowed or printed. Now, by contrast, things are about to get serious.

Final polls for Sunday’s elections in Emilia-Romagna, before Italy’s statutory blackout in the fortnight before a vote, had the candidate for regional president of the Left-wing Partito Democratico (PD) neck and neck with Lucia Borgonzon, representative of Matteo Salvini’s Right-wing Lega.

If defeated in Emilia-Romagna, it is difficult to see how the PD dare muster the nerve to continue as junior partner in the national coalition government with the ever weaker alt-Left 5Stelle (5 Star), which continues to tear itself apart. On Wednesday, in a further sign of disarray, Luigi di Maio resigned as 5Stelle leader but remains Minister for Foreign Affairs.

When it came to power after the last general election in 2018 the anti-corruption movement 5Stelle, founded by comedian Beppe Grillo — a Genoan version of Billy Connolly — was Italy’s most popular party, polling at 32.7% (compared to then coalition partner the Lega’s 17.35%). But it has haemorrhaged support ever since and is now on just 15% compared to the Lega’s 33%.

Its coalition partner, the PD, is in equally dire straits even if it does hang on to Emilia-Romagna. It has also seen its suppport plummet and last September it split when former premier Matteo Renzi – Italy’s attempt at Tony Blair — refused to accept the coalition with 5Stelle and resigned to form a new party Italia Viva, which is now polling about 4%.

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If the marriage of 5Stelle and PD, sworn enemies until they formed a government and currently fielding opposing candidates in Emilia-Romagna, does collapse it will almost certainly mean a snap general election, which a Salvini-led Right-wing coalition would win by a mile, according to the polls.

These place the Lega consistently on 33% — as much as its two nearest rivals the PD and 5Stelle put together. So, with its traditional allies, Silvio Berlusconi’s Forza Italia (6%) and the national conservative Fratelli d’Italia (10%), the Lega would have more than enough votes to get a working majority in Parliament.

Salvini would thus become Italy’s first elected prime minister since 2011 when Berlusconi resigned at the height of the Eurozone Crisis. None of the subsequent five was elected as premier — three were not even MPs or Senators.

Even Britain’s liberal-Left Guardian finds it impossible to praise Italy’s coalition government. The other day its Rome correspondent wrote that “the past four months have been marred by constant bickering and scant action on policy” and its budget “contains nothing that will tackle high unemployment or revive Italy’s long-stagnant economy”.

If the Lega wins Emilia-Romagna, then what might keep the coalition alive apart from a shared determination to keep Salvini out of government is the equally shared desire to keep getting paid bootloads of cash. Italian MPs are among the most rewarded on the planet, with a basic gross salary of €140,000 per year, which when expenses plus allowances are included rises to €230,000 per year.

Just as Boris Johnson’s Tories appeal to so many traditional Labour voters in red wall strongholds by pledging solutions to the problems those voters care about, so too does the Lega strike a chord with many former Italian communists in places like Emilia-Romagna.

All populists have this in common: they promise government programmes that combine, to a greater or lesser degree, Right-wing levels of patriotism and Left-wing levels of expenditure.

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And in Salvini the League has a charismatic leader who is popular with the working class because he shares their concerns and aspirations and who — like Johnson — has the gift of the gab and loves nothing better than to mix with ordinary people and have his selfie taken with them. And like Trump, Salvini is hyper active on social media with more than 3 .6 million followers on Facebook.

His latest ruse on the campaign trail was to press the intercom buzzer of a Tunisian immigrant family in a block of flats in Bologna whose son was said by local people to be a drug dealer. “Can I come up to your flat to speak to you about your son who local people round here say is a drug dealer?” Salvini said into the intercom. The scene was filmed and went viral. The son later told journalists he would sue those who sent Salvini to his family’s block of flats for defamation, but admitted he had been in prison for drug-related offences.

Before the collapse of the Berlin Wall Italy had the largest communist party outside the Soviet Bloc — the Partito Comunista Italiano  (PCI) — and Emilia-Romagna was its epicentre. This was the region where internationalism and then socialism first took hold at the end of the 19th century before evolving into communism after the First World War.

The PCI’s economic model ruled the roost in Emilia-Romagna for decades and consisted of publicly subsidised cooperatives which guaranteed jobs for the boys — party members — across huge swathes of the economy. The system worked because it was a closed shop.

Ironically, Emilia-Romagna is also where Benito Mussolini was born and then became the rising star of Italian revolutionary socialism as editor of daily newspaper Avanti! in Milan — before his expulsion from the party in 1914 after his refusal to oppose Italian entry into the war on the side of Britain and France.

He took that decision, as did the socialists in France and Germany but not Italy, because the war had made him realise that people — himself included — are more loyal to country than class and that therefore nations are superior to the internationale. In 1919, he founded fascism as a national, as distinct from international, version of socialism. The tectonic tensions that caused fascism are similar to those that cause populism — however different the consequences. Then as now patriotism, and what it means, played a crucial role.

At Brescello, the small town near the River Po used by Giovannino Guareschi as the model for his Don Camillo books, which pitted the communist mayor Peppone against the priest Don Camillo, Salvini posted a selfie on Facebook of himself next to the statue of Peppone with the caption:

“I bet today Peppone would vote Lega! You have no idea how many old communists have told me in the past few days: ‘The PD people prefer bankers to workers, this time I’m voting for you!'”

This was the region where at the end of the Second World War communist partisans massacred thousands of Italians without trial and covered it up for decades. Things have not changed that much; I live here, near Ravenna, and about 10 years ago received a bullet through the post with an anonymous death threat for my children because I had written an article stating that the Americans and British liberated Italy, not the partisans. The Communist partisans were, contrary to Left-wing propaganda, a military irrelevance, and they did not fight for democracy and La Patria but for communism and the Soviet Union.

The Left can still control the writing and teaching of history through its command of the education system and media, but not the workplace and community where it has become increasingly irrelevant. And that is why more and more working people here are turning to the Lega.

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Then there is the issue of money: average annual GDP per capita growth in Italy since the introduction of the euro has been zero. Italy’s government debt is 131% of GDP — and GDP is virtually stagnant. The economy has been in more or less permanent recession for years. Adult unemployment is officially about 10% but in reality is much more, as not many more than half of working age Italians do actually work. Youth unemployment, meanwhile, is more than 30%.

To make matters worse, 600,000 migrants, the vast majority of whom were not refugees according to the UN, have arrived in Italy since 2013 by sea from Libya — 335 miles away from Sicily. The Left, in power on its own most recently with Renzi followed by Paolo Gentiloni until 2018, did nothing to stop the migrant flow until its dying days, nor create jobs or protect italian workers from globalisation. It kowtowed to the EU’s diktat that austerity is the only solution to the eurozone crisis. Obviously, the eurocracy loves the Italian Left but the country’s hoi polloi increasingly do not.

Salvini promised a crackdown on mass illegal immigration and as deputy prime minister delivered. Indeed, his 2018 closure of Italy’s ports to charity ships ferrying migrants to Italy from the Libyan coast was practically the only concrete achievement of the last coalition government of 5Stelle and the League — apart from 5Stelle’s introduction for the first time of a non-contributory unemployment benefit system. Needless to say the new coalition has re-opened the ports.

But Salvini’s migrant crackdown was hugely popular with ordinary Italians. He also promised, and still does, an end to austerity with huge infrastructure investment, the breeching of the EU’s budget deficit limits, a flat tax for small businesses, a crackdown on crime, tough import laws to stop unfair trade, and the defence of Catholic values and the traditional nuclear family — hence his frequent brandishing of a rosary during speeches.

Whether or not this is a cynical ploy from the divorced Salvini, and whether or not the party are “racist” as its enemies claim, his message is one that resonates with millions of Italians battered for two decades by the EU, the euro and the forces of globalisation, and disillusioned with the Left’s abandonment of class warfare in favour of the identity war. A familiar story all over the West.

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“The unexpected always happens; the inevitable never,” wrote Keynes. Yet for Europe, inevitability had characterised the first 14 years of this millennium. Between 2014 and 2020, however, that began to stall, and by 2025 the ‘inevitable’ liberal consensus has been replaced by the unexpected in the form of de Gaulle’s “Europe des Patries”, with big national government’s leading the way, and Thatcher’s Anglosphere. The neutral term for these developments is the Return of History – critics would say ‘catastrophe’.

Even the catastrophists, however, concede that this progress from inevitable to unexpected is traceable to the over-reaching of the Europeanists in Brussels, Paris, and Berlin in the period 2000 to 2014: The introduction of the Euro without the fiscal and monetary structures needed to sustain it; the adoption of Schengen’s internal “open borders” without first securing Europe’s external ones; Mrs. Merkel’s invitation to Syrian refugees to Europe, supported as it was by the European Commission, without first establishing efficient procedures for either vetting or deporting them; the stealthy moves towards independent European defense structures separate from NATO; and overall the gradual encroaching of European institutions on the national democratic prerogatives of the EU’s member-states.

Each one of these over-ambitious initiatives produced its own crisis from the (now perennial) Greek crisis to the migrant one. Taken together, however, they also fostered an overall crisis of legitimacy in European democracy as voters found that they couldn’t change policies they disliked by voting in national elections, since even politicians who had campaigned for change would explain afterwards that these issues were determined ‘at the European level.’ Policies at that level were determined on the inevitabalist basis of “ever closer union.” And unfortunately there didn’t seem to be any way of throwing the European rascals out.

When insurgent parties then arose demanding that more be done about controlling immigration, or imposing anti-terrorist border controls, or changing endless ‘austerity’ policies required by the Bundesbank, the European Central Bank, and Mrs. Merkel, the early response of both political and media elites was to denounce them as “populists,” or “nationalists” or simply “extremists” who were threatening, democracy, international order and even world peace. That argument worked well enough at Davos or Aspen but lacked electoral magic. Electorates began voting for extremists in such significant numbers that it seemed silly to dismiss them as outside the mainstream. And at the same time, the ‘mainstream’ Left visibly collapsed in half of Europe.

As the crises became sharper after 2014 – with the Brits voting for Brexit and the Italians electing a majority populist government – the voters were increasingly joined by intellectuals dissenting from the elite consensus. Dutch left-wing political scientist, Cas Mudde, has pointed out that populism was a democratic response by the voters to the fact that elites had removed entire issues – like the Euro or migration policy – from political debate. In effect they had silently imposed their own priorities.

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British social critic, David Goodhart, pointed out that most government policies reflected the interests and values of the mobile, highly educated 25% of people he called “Anywheres” over the rooted 50% he dubbed “Somewheres.” Brexit was inter alia a protest against that. Pierre Manent was one of several distinguished French intellectuals to see European politics as developing into a competition between an unrespectable national-populism and an arrogant cosmopolitan centrism – or, in his words, between populist demagogy and the fanaticism of the Centre. For him, the fanaticism of the Centre was the greater threat.

The bare bones of this evolution were evident in the European parliament where the mainstream parties of Left and Right had formed a coalition against the ‘extremes’ (that is, all the other parties.) Also evident was the determination of the Brussels Eurocrats to prevent the Brits leaving the EU—which they succeeded in postponing several years beyond the original departure date.

All the ingredients for serious political conflicts within and between European nations were present and combustible as 2019 came into view. One observer, Iain Kearns, entitled his dystopian analysis of Europe’s future: Collapse. What was needed was a strategy to draw the populists into conventional politics and government responsibility before they broke into them by electoral force.

It was the voters who ensured that no catastrophe occurred. They did so in the first instance by giving the mainstream centrist parties of Left and Right a smaller combined share of the total vote in May 2019 than in any previous European election. They barely cleared the 50% mark between them, and the ranks of the centre-right European People’s Party included a large delegation from Viktor Orban’s Fidesz party, which dissented from the centrist ideology of ever-closer union and centralising power in Brussels, while being firmly committed to Hungary’s EU membership. There would be no more pressing for further European integration or, in the jargon, ‘More Europe’.

The second instance was the German election of Fall 2019 when the voters similarly reduced their support for the Social Democrats and Christian Democrats and gave a larger share of their votes to the populist AFD, the Bavarian CSU, and especially the once-centrist Free Democrats (who had adopted a more populist tone in the campaign), in a parliament that shifted overall to the Right. Chancellor Merkel was unable to form a new coalition with her past allies, the Social Democrats and Greens, and resigned.

Her successor, Wolfgang Schauble, gave up the Bundestag speakership to become CDU leader and Chancellor. He presented himself as a “caretaker Chancellor” but proved to be a very active one indeed. He set out to divide the AFD, tempting ambitious individual MPs to leave their “untouchable” party and become respectable by joining any of the parties in his new coalition, which was comprised of the CDU, the CSU, the FDP, and a faction of the Greens. In this way he brought moderate populists into government and constructed a durable conservative majority rooted in compromise between social traditionalists, free market (or corporate) business interests, moderate environmentalists, and a patriotic citizenry.

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Europe 2025: the beginning of the end

By James Bloodworth

Schauble, a long-standing supporter of Euro-integration, was expected to re-affirm Germany’s attachment to the Euro. For a while he seemed to do so. Then, to people’s surprise, Schauble announced on a Sunday evening in February 2020 that at midnight Germany would revert to the D-Mark at a fixed exchange rate for one week, after which it would be allowed to float. Outside Germany only the head of the European Central Bank and the French president were informed in advance.

This was unexpected, but in retrospect seemed inevitable. Economists on all sides had long agreed that the Euro was the Shirt of Nessus: it was painful to keep it on and painful to take it off. But it eventually dawned on them that the pain of staying in was indefinite, that of leaving was transitional.

Realising this in 2014, Schauble had proposed helping Greece to leave the single currency with a parting gift of billions to get the Greeks over the transition. Merkel had vetoed this. Now Schauble followed his own judgment and saw an independent D-Mark establish itself at a higher exchange rate while the smaller Euro fell and made the countries of southern Europe much more competitive. Schauble called a conference with Eurozone members a week later which agreed on additional changes: some northern EU-members later joined the D-Mark bloc, while Macron’s France sensibly decided to choose the Euro and prosperity over the D-Mark and gloire.

After brief market turbulence, Europe settled down into being a two-currency trading bloc with more balanced overall economic relations. German industry lost the super-advantage of an undervalued exchange rate, but this was compensated for by the gradual recoveries of markets in Greece, Spain, and Italy.

In this new economic environment Europe was no longer moving in a centralising direction: integration would be achieved on lines that were both more national and more liberal. That left President Macron of France, who was reliant on German generosity for his program of reviving the European project, without a policy to his name. He pursued one of domestic economic reform, but that lost as many votes as it won. He is now an unemployed Man of Destiny short of a great cause.

This presented an opportunity for the Gaullist wing of the conservatives, however, which had lacked influence in recent governments. Not only did it allow them to revive the General’s concept of Europe des Patries in favourable circumstances, but it also opened up the possibility of winning votes from the populist Rassemblement National (formerly the National Front.) Under their new leader, Laurent Wauquiez, The Republicans set about enticing the populist Right’s more attractive celebrities – notably, Marine Le Pen’s telegenic niece, Marion Marechal-Le Pen – over to their side for a campaign of respectable nationalism in the 2022 election. They won hands down. By 2022 the continental EU had populist or semi-populist governments in its three largest member-states.

Together with the new environment of economic optimism, this upsurge of qualified populism had a wider impact. Some countries like Italy decided to imitate EU member-states like Sweden, Hungary and Denmark that had opted to retain their own currencies. Stricter border controls had already been restored in response to rising threats of terrorism and illegal migration. EU Commission proposals for tax harmonisation were placed on the back burner, and harmonisation of regulation was increasingly rejected in favour of the principle of “mutual recognition” of national rules (ironically, a rock on which the Brexit negotiations had foundered earlier). Europe’s courts were increasingly inclined to respect national laws that reflected strong popular sentiment, and powers taken earlier by Brussels were returned to national parliaments. ‘More Europe’ was replaced by ‘Europe a la carte’ as a general principle of Euro-governance.

Contrary to much pessimism in the establishment, these transfers of legal and economic power did not result in a less dynamic European economy. Instead, over time they transformed the EU from a cartel of governments into a market of governments (as Margaret Thatcher had called for in a 1991 speech in the Hague.) In order to attract and keep businesses and talented people in their jurisdictions, individual EU governments had to craft tax-and-regulation packages at least as good as their competitive neighbours. Forcing governments to compete in this way proved to produce better economic results than dictating a level playing field from a single city in Belgium.

Still more unexpectedly, these power transfers also promoted both more vigorous and inclusive democratic politics, and a more heightened sense of national identity and community throughout Europe. Populists of Right and Left, some in coalition, some in majority parties, some in opposition, proposed, opposed, debated, and amended legislation. They became part of ‘the System’ and they expanded it. They just don’t seem very threatening any more.

Nations, regions, and localities have the freedom to bring in laws and regulations that reflect a national or local consensus, rather than a European elite orthodoxy. Neither Swedish urban secularists nor rural Croatian conservatives get exactly the moral and religious laws—for instance on abortion—that they want across Europe. But there is no persecution, residual but shrinking discrimination, real debate on contested issues, and a pan-European spirit of ‘live and let live’ that tolerates local option on many questions while gradually changing minds in both directions.

It turns out that what alienated people in our societies wanted was less to impose their own opinions than to have them treated with respect as part of legitimate debate. They took the ‘free’ in ‘free society’ literally and seriously.

One change in particular has been crucial: a powerful social taboo has been removed. Until the mid-teens of this century, it was politically risky and socially dangerous for people to say that they liked their country as it was, together with its customs and traditions, and that they would oppose policies, such as mass migration and multiculturalism, likely to change its character markedly. This had long been the opinion of most ordinary citizens, yet, as Ed West in The Diversity Illusion and Douglas Murray in The Strange Death of Europe had pointed out, they were routinely stigmatised as “racist” by parts of the media and cultural leaders.

The surprisingly deep elite prejudice against nationalism and the nation-state changed in part because of the intellectual challenges mounted by writers like Manent, Goodhart, Mudde, West, and Murray, and in part because the establishment’s anti-nationalism so overreached, arguing national borders were incompatible with human rights, that it discredited itself with most people.

More visibly, however, it was halted in politics by the fact that Hungary’s Prime Minister, Viktor Orban, won electoral landslides while declaring that Hungary was a nation with a Christian tradition and a specifically Hungarian culture. Like other nations, it should be treasured and protected from abrupt cultural, demographic, and national transformation—especially one imposed from outside. Other parties, not only in Central Europe, followed his example. He was accordingly credited with the rise of a new conservative cultural politics (usually called ‘illiberalism’ by him and his critics, misleadingly in my view) that led to the victories of populist parties in elections across Europe.

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The far right's plans to capture Europe

By Ian Birrell

As 2025 approaches, Orban is the moral leader of the dominant conservative populist wing of European politics, but his practical influence is limited by the fact that he is the prime minister of a small country. There is talk of his helping to create a new Carpathian Federation that would increase the influence of Central Europe within the EU.

What were the Brits doing while these events were unfolding? After the 2017 election Prime Minister Theresa May had been persuaded by Remainer Cabinet Ministers and officials to adopt policies for Brexit that brought her into conflict with the large majority of her own party. That produced a weak paralysed government, divided against itself, several failed initiatives starting with the so called Chequers Fiasco, and a policy stalemate that might have lasted indefinitely if a military scandal had not erupted to change public opinion on the Brexit debate.

Anxious to make Brexit as ‘soft’ as possible and thus more acceptable to the EU, officials in the Cabinet Office and the Ministry of Defence had committed the UK to far deeper participation in the EU’s independent defence structures than the Cabinet or Tory MPs knew or would have approved. Ominously the new EU defence establishment felt they needed a success – especially since Russia had been making threatening noises towards Montenegro and Macedonia. Accordingly, Brussels decided to handle the Russian threats outside of NATO. British troops were actually in the air to join an EU deterrent force on the Greek-Macedonian border when the scandal broke. The government fell.

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Liberal smugness will destroy the Left

By Giles Fraser

A new government with a distinctively Brexiteer cast of mind and characters was appointed in an atmosphere of acute Euro-skepticism and public anger. Looking around desperately for policy options, ministers discovered a free trade and migration deal with Australia, Canada, and New Zealand that had apparently fallen behind a filing cabinet in the Treasury. Polls had always shown this so-called CANZUK Option was popular with the voters in all four countries.

Ministers also realised that it could be a clever preliminary and/or roundabout way of striking a trade deal with the US, without looking like Britain becoming the 51^st state option. Both trade deals were acted on fairly quickly, and after a period of serious but temporary disruption (which the public in its new mood accepted without too much complaint), they began to stabilise the UK economy on different lines. More important, the new government moved the UK into the first lane of economic and technological development by gradually moving its supply-lines from the relatively quiescent ones in Europe to the far more dynamic ones in the wider US and Anglospheric worlds.

And what happened to the EU? Well, it didn’t collapse. Indeed it prospered. But the EU Commission did less well. As Marshall Foch once said of the graduates of the St. Cyr military academy, it could be said of the Brussels mandarins: “They know everything. Unfortunately, they don’t know anything else.” So as the Commission and other centralised EU institutions saw their power diminish in the new Europe des Patries, its leading figures gradually resigned or retired to become professors of European politics at Ivy League universities and centre-Left think tanks in the US.

From there they tell us how to arrange the world rather than merely Europe. The world rolls on. It is an arrangement that seems to suit everyone.

A regional Parliament now looks likely to be suspended and its elected members sacked, as the national capital imposes direct rule. Local TV and radio stations are set to be taken over, depriving an ancient civilisation – with its own language, culture and distinct identity – of a national voice.

Hundreds of thousands have taken to the streets in protest. And most worrying of all, perhaps, rival regional and national police forces are at loggerheads. Those employed and trusted to contain violence are now in danger of perpetrating violence among themselves. Welcome to the eurozone’s fourth-largest economy. Welcome to modern Spain.

This crisis in Catalonia has been many years in the making. Since the ‘unofficial’ referendum on 1st October, though, events have escalated to such an extent that we could be at a historic turning point. Last weekend, Spanish Prime Minister Mariano Rajoy announced plans to invoke Article 155 of the Spanish Constitution, dissolving the Catalan government and curtailing the power of the regional Parliament, with national authorities taking charge of Catalonia’s media and police force.

This coming Friday, the Spanish Senate, where Rajoy’s conservative Popular Party has a majority, is expected to approve these plans – the first use of such emergency powers since Spain’s modern constitution was written in 1978. While Article 155 allows the central government to strip the autonomy of a region that is “seriously prejudicing the general Spanish interests”, Catalonia’s emboldened separatist movement is unlikely to accept Madrid’s actions. Rajoy’s tactics will surely provoke further conflict, rather than peace.

The implications of what is happening in Catalonia will reverberate across Europe and the wider world. As this crisis reaches boiling point, evoking chilling echoes of Spain’s violent past, the silence from the European Union has been deafening – not least as any Brussels edict would add more fuel to the separatist fire.

This Spanish crisis brings into focus, then, the growing power of populism, as a vibrant electorate distances itself from a remote supra-national body. But millions of Catalans are also questioning the nation state itself, as they feel it doesn’t represent their interests.

There is no doubt that Catalonia’s referendum was unconstitutional. While 90% of the votes cast just over three weeks ago backed independence, the turnout was only 43%. Some three million of Catalonia’s 5.3 million voters refused to take part in an illegal referendum.

Having said that, Catalans have been pushing for independence for a very long time. Separatism has century-old roots in this part of Spain, and was one of the factors that plunged the country into civil war in the 1930s – resulting in General Franco’s long dictatorship. In 2006, after an entirely legal referendum in Catalonia, a plan to give the region more autonomy was approved by both Catalan and Spanish lawmakers. The transfer of powers, though, was partially revoked by the Spanish Constitutional Court in 2010, after Rajoy’s Popular Party campaigned vehemently against it. That resulted in a million-strong demonstration in Barcelona, Catalonia’s regional capital. ‘Som una nacio, nosaltres decidim’ the protesters cried in their own Catalan language. ‘We are a nation, we decide’.

Since then, attitudes have hardened, not least due to economics. Catalonia accounts for a fifth of Spanish GDP and 25% of the entire nation’s exports. While Catalonia generates an income per head that is 15% above the EU average, the rest of Spain registers a figure 10% below.

During the eurozone financial crisis of 2010-2012, the meltdown of Spain’s banking sector provoked a prolonged recession. During that period, prosperous Catalonia pushed for a better fiscal deal that it didn’t get. Since then, the Spanish economy has partially recovered but Rajoy’s assumption that an economic upswing would see a tempering of demands for independence has been proved wrong.

Watching this Catalan crisis, I’d make two observations. The first is that, when it comes to separatism, economics wins. Why is the impetus towards Catalan secession so strong – and possibly unstoppable? Because Catalonia itself is a viable economy, which has little debt of its own and transfers around 8% of its GDP to Madrid each year – a sizeable subsidy to the rest of Spain. Meanwhile, momentum towards Scottish independence has stalled because Scots have been reminded their country is a huge net recipient of funding from the rest of Britain. The collapse in oil prices from an average of $86 a barrel during 2014, the year the referendum took place, to just $41 the year after, has certainly focused minds. As crude prices have fallen, the projected finances of a post-independence Scotland look a lot less clever than they once did – something that’s been reflected in subsequent opinion polls.

Economics also helps explain why two wealthy Italian regions just voted for greater autonomy from Rome. Last weekend, both Lombardy and Veneto opted for more regional powers. Lombardy is home to financial capital Milan, while Veneto contains the tourism magnet that is Venice. While referenda are non-binding under the Italian constitution, both regions could use these results as leverage, as they argue to retain more of their own tax revenues. Between them, Lombardy and Veneto drive 30% of Italian GDP – a GDP that has yet to fully recover the level it reached ahead of the 2008 financial crisis.

In Italy – as in Spain – wealthy regions are looking to distance themselves from nation states they believe are dysfunctional and corrupt. As the Western world loses its hegemony, and living standards come under threat, successful regions will want to keep more of their own wealth for their own people. This is a trend that’s set to become more defined.

My second observation relates to this Catalan crisis in the context of the broader EU. Events in Catalonia are not the fault of Brussels – the blame lies, instead, in the bull-headed stubbornness of successive Madrid governments. The EU’s response, though, since early October has been risible. And what we are seeing in Catalonia – a breakdown of trust between voters and leaders they view as distant and unaccountable – increasingly applies to Brussels as well.

During the Catalan referendum, the Spanish government sent in riot police that smashed up polling stations and attacked voters of all ages. Elected Catalan leaders were then jailed on charges of sedition, with each side accusing each other of staging a coup. This is terrifying stuff – particularly in a country that emerged from fascist dictatorship just 40 years ago, and where the memory of civil war looms large. “There is no room nor space for any kind for mediation or international initiative or action,” said European Council President Donald Tusk, reading out a statement no doubt written for him by the eurocrats. It is difficult to think of a less inspiring, more insipid response.

Across the EU, electorates are increasingly moving away from the mainstream (Matthew Elliott examines the causes in an article for UnHerd today). In France, Marine Le Pen won over a third of the popular vote earlier this year, and the support of almost half of those aged between 18 and 25. Recent votes in Germany and Austria have seen a surge in support for hard-right nationalists. In Holland, Gert Wildeers was recently beaten, but his anti-EU party doubled its number of Parliamentary seats and is now firmly established as the official Dutch opposition. Even in prosperous Scandinavia, anti-establishment parties such as the Swedish Democrats and the True Finns are amassing support, on a message of Euroscepticism.

The ‘European project’ is under pressure on a variety of fronts. Events in Spain are merely the latest threat. If Catalonia manages to gain independence, a large eurozone economy will suddenly become fiscally much weaker. Investors have so far avoided panicking about Catalonia. Bond yields have remained relatively stable, on expectations a compromise deal will emerge.

If secession looms into view, though, Spain’s national debt could rise from around 100% of GDP to 120%, once the liabilities are shared with a departing Catalonia and the region’s chunky economy is then removed from overall national income. That could spark a return of the euro-zone bond crisis, despite endless money-printing by the European Central Bank. That’s why Madrid is under so much international pressure to prevent Catalonia from leaving.

When it comes to democracy, the EU has a bad name. Referendums in nations ranging from France to Denmark to Ireland have been re-run over the years, under huge pressure from Brussels, when electorates have failed to produce the correct – that is, pro-integrationist – answer. Just as Brexit is a challenge to such centralisation, so are secessionist pressures from the Catalans.

Catalonia must surely be granted the opportunity to determine its own future ­– and soon. The region should be allowed to vote to decide its destiny, whatever the views of the rest of Spain. Unless the EU supports this, it will be seen – again – as anti-democratic and remote. If the Catalonia quits Spain, though, any resulting bond crisis could tear the eurozone apart.