The Populist Muddle

The European Union’’s ability to solve problems by muddling through various compromises will help the EU to survive, according to The Economist.  That might be true – provided individual states do not get into a worse muddle, unable or unwilling to find the compromises necessary to get out of it.  This particular muddle is called national populism and the most recent example of wallowing in it has come – perhaps rather unexpectedly – from Slovakia.

At first sight it seems a banal issue that no EU member takes seriously. Slovakia under its new Prime Minister Iveta Radičová is the only member of the euro-zone that has refused to lend money to Greece even though committed to do so by the previous government of Robert Fico. Slovakia has thus violated a fundamental rule without which the 27-member European Union would have ceased to exist long ago: that new governments meet the obligations of their predecessors.

A few days later Radičová’’s cabinet – albeit only hesitantly and conditionally – agreed that it might contribute 4.4 billion euros to the European Financial Stability Facility, created to rescue other euro-zone countries that may get into difficulties in future.  However, in spite of a lecture on European solidarity that Radičová had to endure in Brussels, on her return home she said things no other Slovak politician has said before – such as accusing Brussels of behaving irresponsibly and stepping up its moral gambling in the form of a hasty bailout of euro-zone members for which Slovak citizens will now have to pay more.

It seems like a repeat of the 2004 scenario: no sooner did the countries of Central and Eastern Europe join the EU, having agreed to give up part of their sovereignty, and their politicians ripped off their masks and started being rude to Brussels, defending their national interests tooth and nail. Back then it was the Czech Republic and Poland that set the example. These days it is Slovakia, a country that joined the elite euro-zone club less than 18 months ago with a loud fanfare and now speaks dismissively of irresponsible indebted countries that failed to introduce Slovak-style reforms. It would be quite understandable if this experience made the euro-zone states more cautious about who should be allowed to join next.

Sometimes Slovak politicians resort to arguments that verge on the ridiculous. Finance Minister Ivan Mikloš protested that Slovakia’’s contribution to the rescue fund (based on the country’’s contribution to the European Central Bank) is disproportionately high, given Slovakia’’s low standard of living.  When some in the EU had voiced concerns that Slovakia was too poor to join the elite club, Slovakia complained indignantly about double standards. Now it is Mikloš who is demanding just such a double standard.

In fact Mikloš himself would be quite happy for Slovakia not to join any rescue fund even though it may end up outside its umbrella since he believes it is the job of his government to carry out the kind of reforms that will prevent such a situation from arising in the first place.  If he is not willing to help and does not intend to seek help, the question arises whether it would not be better for Slovakia to simply leave the EU and the euro-zone (and perhaps also NATO for good measure, and set about creating its own independent army).

It is not clear if Slovakia’’s new government is really serious about wanting to make the country’’s financial contribution to the rescue fund conditional upon the adoption of a clear mechanism for regulated bankruptcy in the countries affected. Does it not realize that this would require a modification of the Lisbon Treaty, something that is unlikely to garner a lot of support? It is also not clear to what extent they feel bound by their own populist pre-election promises (it is quite possible that it was the campaign against contributing to the bailout of Greece that significantly contributed to the current coalition’’s election victory) and how far they are really convinced by their own arguments.

Thanks to its euro-zone membership Slovakia enjoys a high rating and the lowest government bond interest in Central Europe. But instead of explaining to its citizens the importance of solidarity within the EU in general and the euro-zone in particular, the government now declares: when we carried out our reforms nobody helped us either (Mikloš), or we are expected to pay the debts of those who did not follow our path.  Iveta Radičová and her new government are thus riding a wave of national populism instead of promoting a sense of Europeanness.

How is this possible, given that most parties and politicians that are part of the current coalition were among those who led Slovakia into the EU, for which they deserve historical credit? If we ignore conspiracy theories claiming that Slovak politicians just carry out Germany’’s wishes to spite France (Slovakia’’s demands, including the idea of a controlled bankruptcy, are basically identical to Germany’’s) the government’’s current position can be explained by a mixture of economic arrogance and parochialism. The problem is that the two strongest parties in the coalition are dominated by economists whose (neo-)liberal views have not been shaken by the financial and economic crisis, while Prime Minister Radičová has not yet shown any signs of independent thinking on this issue.  The only politician who has really been exposed to European thinking is the Christian Democratic Party (KDH) chairman and former European commissioner Ján Figeľ (it is no accident that the KDH ministers in the cabinet were the only ones not to vote against the Greek bailout).

It would be premature to draw conclusions from a single embarrassing episode whose roots go back to the time when the current ruling parties were still in opposition. However, all the above quotes hint at an emerging ideology of euro-scepticism and national egotism and all of them are eerily reminiscent of statements from the Czech ODS (Civic Democratic Party). Brussels must already have noted that the weirdly neurotic Czech Republic has now been joined by an unpredictable Slovakia. So far the damage has not been too great, although the Financial Times has already pointed out that Slovakia’s lack of solidarity raises long-term questions about political unity within the euro-zone and mutual willingness to help each other.

In discussing the future of the EU the Economist is right to focus on the larger countries, especially Germany and France. However, when little Slovakia, whose population is among the staunchest supporters of the EU and the euro, suddenly produces a government that wallows in euro-sceptical populism, it is a signal that needs to be heeded. For it might mean that hopes of muddling through compromises are not as great as we might have expected.

Translation: Julia Sherwood

This commentary appeared in the weekly Respekt.

We are grateful to Martin M. Šimečka for the permission to publish this text in English.