Donald Trump the 45th president of the United States does not offer Europe choices or loopholes. He simply turns the page and announces a new world order where America is first, strong, secure, prosperous and proud. Nato is obsolete and America is no longer paying for Europe’s defense.
Europe is advised. Donald Trump means it. It will force Europe to wake up from its quiet life reorganize and come to grips with new rules, new treaties and new problems. The new presidency comes at the worst time with elections in France and Germany, Netherlands scheduled this year. The Brexit decision appears to be finalized when it passed overwhelmingly in parliament.
However, there are other long-standing problems that have resurfaced. France’s far-right presidential candidate Marine Le Pen called on voters across Europe to “wake up” and follow the example of US and British voters. “2016 was the year the Anglo-Saxon world woke up. I am certain 2017 will be the year when the people of continental Europe wake up.”
Grexit was coined long before Brexit. European creditors need to approve the second round of Greece’s bailout. The money is critical for Athens to repay $6 billion due in July. Senior EU officials said there has not been enough progress for the finance ministers to approve a deal. The government has been sent back to the drawing board to find new spending cuts and revenue. Greece has been facing a deep economic crisis for nearly a decade now, with public debt more than tripling compared to the prior crisis figures. In January, a confidential report by the International Monetary Fund (IMF), which is one of the main creditors for Athens, said that the country is likely to face an “explosive” surge in public debt with only significant debt relief capable of easing the situation. There is small hope that an agreement can be reached by February 20th before the next Euro group meeting. Officials in Athens are not optimistic. There is resistance against any further austerity. The calls to dump the Euro and return to the Drachma are getting louder.
Britains Prime Minister May has pledged to invoke the so-called Article 50 that kicks off the Brexit process in March. Once Article 50 is triggered, there is no turning back. So analysts expect more volatility in stocks and currencies.
Also in March, the Dutch head to the polls for elections. Prime Minister Mark Rutte is coming under pressure after his Justice minister resigned. The populace leader of the far-right Freedom Party, Geert Wilders, holds strong anti-immigrant and anti-E.U. views. This has made him a strong candidate in the upcoming election. His victory could put the Netherlands on a path to leave the Eurozone. Analysts, however, expect a more mainstream party to form a coalition without him…..but that is what they predicted for the American elections.
In April or May, the French also go to the polls. Given the scandal surrounding the French president, the Nationalist Front Marine Le Pen has made gains in the polls. She is hoping for a similar political shakeup in France and an end to the country’s membership of the Eurozone. This would be a fatal blow to the shared currency project. Le Pen has taken the lead in several polls but isn’t expected to win the election.
Italy isn’t slated to hold another election until 2018. But analysts have started to brace for a June ballot because the country’s court last week struck down the 2015 election law passed by the former Prime Minister Renzi. That would add to an already unstable landscape in Italy after Renzi stepped down in December following the referendum defeat on a constitutional reform plan. Of all the major EU members, Italy poses the most significant political risk in 2017. Italy no longer has a center-right alternative to the current governing party that makes the country more vulnerable. The populist five-star movement has gained popularity and a win for them would be feared to put Italy on the path out of the Eurozone.
The stable heavyweight of the European economy is Germany. They are headed to the polls on September 24. Analysts are speculating that Angela Merkel could hold on to the leadership despite her popularity being marred by terrorist attacks, immigration issues, and rising inflation. Germany’s social Democrats have chosen Mark Shultz, the popular ex-president of the E.U. to stand against Merkel. He has promised to make the election exciting and focus on the hard working people.
I expect new leadership in Europe. Nationalism, trade war and U.S. isolation will not be economically beneficial to our trading partners. These conditions will mirror the 1930’s and they gave us Franco, Tito, Tojo, Mussolini, Stalin, and Hitler. It was Europe that dragged the world into war…Twice. Third time is a charm.