Published in Business Spectator (Melbourne), 25 February 2010

http://www.businessspectator.com.au/bs.nsf/Article/Tony-Abbott-David-Cameron-Angela-Merkel-pd20100224-2Y56H?OpenDocument

The Australian political landscape has been substantially redrawn since the surprise election of Tony Abbott as opposition leader in December. What has confounded many commentators in particular, is that Abbott has made firm decisions to move coalition policy into more conservative territory – something that many thought would push the coalition further behind in the polls, when in fact it has done quite the opposite. If only the same could happen in Europe.

The EU’s current economic and political crisis is testing the elites in the continent’s capitals. The fallout from the financial meltdown has seen budget deficits balloon with the threat of a sovereign default no longer a remote possibility. If there ever was a time that required strong leadership and a clear political compass, it is now.

Yet in the face of these challenges, the current generation of Europe’s centre-right leaders looks strangely bewildered and disoriented. There is no recognisable narrative that guides them through the decisions they now have to take, no uniting belief they still hold.

Neither German Chancellor Angela Merkel, nor French President Nicolas Sarkozy, let alone Italian Prime Minister Silvio Berlusconi are known for their coherent political philosophies. This partly explains why instead of reasoned sets of policy, Europeans are treated to a mixture of uninspired muddling through. Only optimists would label this pragmatic. Realistically, it should be interpreted as the result of an intellectual void at the heart of Europe’s centre-right parties.

That the centre-right would come to dominate Europe again was not to be expected only a decade ago. At the beginning of the century, many commentators had proclaimed a new age of social democracy. With Tony Blair in Britain, Gerhard Schröder in Germany, Giuliano Amato in Italy, Wim Kok in the Netherlands, Lionel Jospin in France, Göran Persson in Sweden or António Guterres in Portugal, Europe was essentially governed by a united social democratic bloc.

As it happened, most of these centre-left governments had been thrown out by their electorates at one stage or another, yet their impact is lasting much longer. This was mainly because the centre-right politicians that replaced their social democrat predecessors believed that the political discourse had shifted left. In order to claim the centre-ground, so they thought, they had to move to the left as well.

Two factors were instrumental in reinforcing this left-wards drift of the centre-right: the financial crisis and climate change. When banks and insurance companies became ailing in the wake of the US sub-prime crisis, this obviously did not contribute to the popularity of market based policies. Never mind that the crisis was arguably caused at least as much by governments and central banks as by allegedly greedy bankers. But it would have taken courage to stand up for the principles of sound market based policies – a courage that hardly any European politicians still possess.

Climate change has also altered the general outlook of Europe’s politicians. If greenhouse gas emissions were indeed a problem, then it is clear that without state interventions it cannot not be solved. But since energy consumption is ubiquitous in industrialised societies, this opens a wide scope for action by governments and regulators. Needless to say, it also means pushing back market mechanisms in favour of more state control. The centre-left never had much trouble accepting this view, and centre-right politicians certainly cannot resist the temptation to extend their reach, either.

The combined effect of all these developments is a political class in Europe in which left and right have almost lost their meanings. Instead, Europeans are merely offered a variety of social democratic fashions with different labels attached to them. Blue may be the new red, but the patterns are still the same.

No other leader exemplifies this centre-right arbitrariness as much as Angela Merkel. She had once started out as an economic liberal until she realised that such a stance would not win her lasting popularity. After that, the supposedly conservative Merkel clearly had no trouble governing with her party’s former arch-rival, the social democrats. At times, she seemed to have more in common with the social democrats around her cabinet table than with her own party.

Last year’s election has returned Merkel as chancellor, albeit with the liberal Free Democrats as her new coalition partner. In theory, this should have meant a more pro-business government. In practice, however, Merkel’s own party is now blocking any attempts at tax reform or labour market deregulation that they had once fought for. To infuriate the Liberals further, Merkel’s environment minister is pushing for a fast phase out of nuclear power. It’s a policy originally put in place by the Greens and vehemently opposed by Merkel’s Christian Democrats, but it fits well into her politics of ‘whateverism’: She will do whatever it takes to keep her in the chancellery.

The parties of the right have abandoned all the instincts that had once guided them. This leads to ironic role reversals when social democrats suddenly appear more market driven than their centre-rights rivals. The British Labour Party, for instance, had just abolished some draconian planning regulations for out-of-town supermarkets. Under the so-called ‘needs test’, retailers first had to prove to local planning officers that a new supermarket was needed – a travesty for a supposed market economy in which consumers are meant to make such decisions. However, Tory leader David Cameron has already announced to reintroduce this piece of planning should he be elected Prime Minister later this year. With ‘Conservatives’ like him, who still needs socialist alternative?

But this precisely is the problem for Europe – the centre-right has given up on providing voters with a set of clear alternatives to the social democratic consensus. In no European country would one find a respectable and non-extremist party to argue for free trade instead of aid; for more national democratic accountability instead of pushing power to the anonymous Eurocrats in Brussels; and for more carefully constructed climate change policies instead of a rush towards costly subsidies for renewable energies.

Europe’s centre-right has instead embarked on the task of presenting themselves as the nicer social-democrats, purging themselves of any trace economic liberalism and any old-fashioned conservative instincts.

Unfortunately, this unprincipled race for popularity will do nothing to restore Europe’s competitiveness. The continent does not need politicians wishing to win beauty contests, but leaders willing to tackle the manifold problems in Europe’s increasingly sclerotic, over-regulated and over-taxed economies.