Europe cannot be reformed without total commitment from Germany, because of its economic clout.
In 2008, globalization was saved in extremis from a total crash because the financial sector was rescued, at the cost of the break-up and impoverishment of the middle classes, which brought about a wave of populism in democracies that began 2016.
Then, in 2020, the coronavirus epidemic showed populist leaders in their true light, revealing their incompetence, irresponsibility and inability to deal with crises.
In the USA, the epidemic has already caused 130,000 deaths and is out of control. The economy will recede by 8% of GDP and 45 million people have been put out of work whilst there is a new bubble on the financial markets. The country is deeply divided. For the first time since 1945, America is not taking part in any major international shake-up, at a time when China is engaging in global diplomatic activism.
Donald Trump is entirely to blame for this. Apart from his erratic and irrational decisions – denial, stopping testing, recommending injections of disinfectant… – he has denigrated and politicized prevention measures – including the wearing of masks – which has directly contributed to the spread of the coronavirus.
In the UK, there have been 44,000 fatalities of which, according to Professor Neil Ferguson of Imperial College, more than half could have been avoided if Boris Johnson had not taken too long to decide on lockdown. The fall in business activity will probably be 11.5% of GDP, putting over 10% of the working population out of work and causing debt to soar above 100% of GDP. Furthermore, the epidemic is wiping out the Global Britain strategy because national frontiers have come into force again and the UK finds itself cut off from the single European market and from European renewal at a time when globalization is turning into large regional blocs.
In Brazil, 60,000 people have died and the epidemic is being exported from this country to the whole of Latin America. This is because Jair Bolsonaro is not putting up a fight against the epidemic but rather against the means of stemming it, notably by organizing demonstrations to oppose lockdown. Despite the deliberate decision to favor the economy over healthcare, GDP will plummet to over 8% of GDP in 2020, causing unemployment to soar to 18% of the working population and debt to rise to 90% of GDP.
The USA, the UK and Brazil were completely unprepared for such catastrophes. The origin of the disaster is political and closely linked to the egotistical nature of populist leaders and the way they govern. They nurture the denial of reality, disdain for science, the primacy of emotions over reason, and continually confuse the running of the nation with their personal affairs.
The reverse side of the coin shows that it has been the democracies that have remained faithful to their values, to the mechanism of counterbalances and to the rule of law that have put up the best resistance to the health and economic crisis, i.e. South Korea, Taiwan, Germany, Switzerland and New Zealand.
Angela Merkel is the embodiment of this. And yet, the epidemic has not gone very far in eradicating populism.
First of all, faced by their demonstrable failure, populist leaders are rushing headlong into provocation, the unleashing of passions and the questioning of democratic principles.
Above all, the violence and complexity of a crisis that is sanitary, economic, social and political, strengthens the factors that determine populism: the disintegration of the middle classes, accelerated by the multiple bankruptcies of artisans, shopkeepers and entrepreneurs and the arrival of mass unemployment; the rise of inequality; spiraling social hatred and violence; the fall in community spirit and the fracturing of nations; distrust of the institutions and leaders of democracies. This makes the risk of a second wave of populism even higher than it is for a second wave of the coronavirus.
For the second time in twelve years, democracies are having to commit 20 to 30% of their GDP, in the form of additional public debt, to avoid the collapse of their economies and societies. There will be no third time. Contrary to the 2008 crash, crisis recovery cannot be limited to re-priming the bubble economy.
Recovery means building up a new political, economic and social pact, modeled on those free countries that have shown themselves to be the most resilient to the crises of the 21st century, i.e. South Korea, Taiwan, Australia, New Zealand, Germany and Switzerland. The true antidote to populism is not the coronavirus but the reinvention of democracy.
(Column published in Le Figaro,13th July 2020)