Since the banking crisis in Ireland, until the Spanish real estate collapse and economic chaos in Greece, the euro continued to face difficulties. Now, however, its existence is threatened by an even greater threat, one that it might not be able to overcome: democracy. Time magazine shows that in most of the countries forming the euro area there is not a substantial majority willing to make sacrifices in order to maintain the euro. Moreover, it’s being discussed for a long time about the “democratic deficit” in the euro area, which means that the European economic system is largely the result of political and business interests, lacking transparency and accountability. But so far, elite support was more than enough to keep the system intact.
But over the next few weeks, these elites could lose the authority. There will be elections in several key countries in Europe, and expectations regarding the evolution of political parties that support the euro are not very optimistic. In most European countries with financial issues, popular resistance to austerity policies is growing. Meanwhile, in countries that are still financially stable, voters willing to pay to save poor countries from bankruptcy is declining. The first round of presidential elections in France have shown a decrease in support for current president Nicolas Sarkozy. He was strongly committed to saving the euro and he is the second most important political leader in the euro area after German Chancellor Angela Merkel. Sunday, Sarkozy won over a quarter of the vote, less than his rival, Socialist Francois Hollande. Estimates for the second round of elections (May 6) is that Sarkozy will lose to his opponent by with eight points.
Francois Hollande does not oppose the euro, but rejects the policies of austerity and set a greater focus on growth. Sarkozy’s replacement with Hollande will weaken, most likely, “Franco-German axis”, undermining trust in European financial markets and leading to a loss of direction in the euro area, Time magazine commented. Although France is the most important country in the current set of elections, the same trend is obvious in other countries. Greek elections will be held on May 6, the same day as the second round of French elections. Surveys estimate the losses that will be recorded by the coalition of socialists and moderate conservative who support the implementation of austerity policies in Greece.
In the same weekend there will be local elections in some parts of Italy, expectations are that it will reveal a lack of visible enthusiasm for the current government. Even the Netherlands could find themselves losing the current government because of resistance to proposed austerity policies. Therefore parties that favor withdrawal of euro and re-introduction of the local currencies might come to power. “That would be a financial disturbance and could cause huge losses for banks, international financial institutions and governments. As a result, the parties that will win elections in European countries would have, most likely, to support the eurozone.” In addition, given that popular support for the euro is reduced, governments will be increasingly reluctant to take painful measures to maintain the unity of the euro area, write the cited publication. When leaders know that the majority oppose a policy and is not willing to accept its cost, they will be tempted to stay away and let things take their course.
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