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COLUMN - The vulnerability of the European elite

Source: Thomson Reuters Foundation - Wed, 6 Feb 2013 10:09 PM
Author: Reuters
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(John Lloyd is a Reuters columnist but his opinions are his own.)

By John Lloyd

Feb 6 (Reuters) - Storms in the Mediterranean, calmed in the latter half of last year, now whip up again. Greece's woes hardly surface in the rest of the world now, but they're deep and the people remain restive. Seamen struck last week over unpaid wages and extended the strike this past Sunday. The strike cuts off the many islands around the country, and limits exports and imports. For a country so defined by the sea and shipping, it takes on an iconic quality. A 24-hour general strike has been called for Feb. 20: Golden Dawn, the far-right party that targets immigrants and that stands third in the polls, held a thousands-strong rally in Athens on Saturday. No one can say whether the lid will stay on until matters improve - or, indeed, if matters will improve.

Greece's recent history makes its troubles largely discounted internationally. But along the world's most famed stretch of water, from which both European and Middle Eastern civilizations drew their inspiration, is Spain, a much larger economy, a weightier state, one whose Spexit could not be contemplated, which is why its failing banks received special care and attention from the European Central Bank to stay in business.

Mariano Rajoy, Spain's prime minister, had been neatly packaged by the news media as "dull but honest" - one who would apply himself with patience and a clean conscience to the hard grind of leading Spain out of its post-bubble miseries. That narrative was brought to an end last week with the publication in the daily El Pais of details of the parallel accounts that one of Rajoy's former colleagues, the onetime treasurer of the center-right People Party (PP), Luis Barcenas, had kept. These purport to show that Barcenas had paid out generous and secret amounts, from a Swiss-based slush fund, to senior party officials, including Rajoy. Barcenas, treasurer from 1990 to 2008, had already resigned because he appears implicated in a separate scandal involving kickbacks to PP officials in return for public contracts.

These and many other scandals now rock the Spanish political scene. The editor of the Spanish edition of Foreign Policy, Cristina Manzano, writes that "this cancer has reached all levels of institutions and society, from the King's son-in-law to major political parties, from small and large municipalities to NGOs and foundations, from the Chinese mafia to the Russian mafia, from lifelong career politicians to flamenco celebrities."

Suddenly, Spain, apparently stabilized and in good hands, is fragile under questionable leadership. It's not clear yet whether Rajoy is guilty of what the Barcenas documents show; he has denied the allegations in unambiguous terms, and his party has a large majority. Yet the European markets lost their cool on Monday, and the Spanish 10-year bond yields zipped up once more to last year's levels, after having settled down nicely. As Rajoy was entering his scandal hell, leaders in snowy Davos were debating his plight. To be more specific: They were debating the context in which he, and many others, now find themselves. That context now has a name: the "vulnerability of the elites." The concept was coined by Ian Bremmer, head of the Eurasia Group and a fellow Reuters columnist, in a report he did for the annual meeting of the present masters of the universe. It received some mockery - poor things! So rich, so powerful, and so vulnerable! - but it has a serious point. In Bremmer's view, there's a malign mix, in both democratic and authoritarian states, of corruption; vast wealth; leaping unemployment, especially among the young; insecurity in the middle classes; and growing poverty at the bottom of the social heap. Moreover: "The lack of economic prospects has eroded people's trust in, and support for, their political leaders, whose actions are rarely understood let alone approved."

Rajoy's Spain, if suspicions are confirmed, will be a poster child for this view: corruption at every level, wealth made and kept by those who inflated the bubble - and unemployment at 25 percent of the nation's youth, and rising. "Scandals involving leaders," Bremmer writes, "can distract whole nations for weeks on end, while more important business remains undone." Of course, if the allegations are proved, Rajoy must answer to them - but his fall could undo more than important business. Scandals are now the medium though which much political news is reported, to the exclusion of the rest of the news. In that sense, the elites truly are vulnerable.

Between Greece and Spain, though, is a man for whom scandal is a way of life, and a means of achieving and holding power. Silvio Berlusconi, his much-lifted face still capable of the broadest of smiles, is stumping the country. He's promising not just to cut a much-hated property tax imposed by Prime Minister Mario Monti but also to give back, in cash, what Italians have already paid.

Monti, wholly inexperienced as a politician but seeking power to pursue his economically liberal program, cannot seem to get the electoral alliance he made with traditional politicians out of the 13 percent to 14 percent range. The left leads, with 33.6 percent in the latest surveys. Berlusconi's right-wing alliance is a mere five points behind, and rising slightly. Beppe Grillo's populists are at 18 percent. Monti, the hope of Italy in most other leaders' eyes, simply cannot get his message of further austerity and hard work to touch the imaginations of an electorate that still seems, in significant part, to believe in miracles, or at least the possibility of the good times rolling again.

The idea that Berlusconi could again lead his country, or have a major influence on its governance, was the second reason why markets were spooked at the start of this week. The former Italian prime minister and billionaire defies vulnerability, unlike Rajoy. At 76, Berlusconi tours the country, grabs every TV appearance he can, lauds pre-war fascist leader Benito Mussolini, rows with two left-wing TV presenters and comes out the victor. He is a phenomenon, a man in a million: and once more, he drags down his country in pursuit of power. The Mediterranean is a rough place to be.

(John Lloyd co-founded the Reuters Institute for the Study of Journalism at the University of Oxford, where he is Director of Journalism. Lloyd has written several books, including "What the Media Are Doing to Our Politics" (2004). He is also a contributing editor at FT and the founder of FT Magazine.)

(John Lloyd)

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