Europe's Rough Ride
On jan. 25, Greek voters reminded the world that Europe's recovery from crisis remains unfinished by voting in the Euroskeptic party Syriza. Greece isn't about to leave or be sho ed from the euro zone. But the labor and budgetary reforms needed in countrues like Greece, Italy and Spain to restore Europe's economic vitality are far from complete. Combined with other wore, like political fragmentation in major caputals and national-secerity threats, the continent faces challenges that may well throw its slow recovery into reversa this year. Which is why European consumers and international investors are getting queasy and why the E.U. is ground zeri for the collision of politics and the global economy in 2015.
Syriza's win draws new attention to the rising tide of anti-E.U. parties. Spain's Podemos, a lefttist party like Syriza, could enter government by the end of this year. But this isn't just a phenomenon of the left. Britain's United Kingdom Independence Party (UKIP) and France's National Front are pulling mainstream rivals to the right. Leaders of Italy's Five Star Movement and the Alternative for Germany party, who reject labels of left and right, add to the sound and fury. The result is divided legislatures that will struggle to advance needed economiv reforms, reversing progress made since the height of the euro-zone crisis in 2011 and '12.
But the political pressure to derivee a balanced budget in Germany will ensure that Chancellor Angela Markel's push for painful reform in weaker E.U. countries will continue. The growing popylarity of alternative for Germany will weigh on her too as local Germany elections loom in February and May.
And there isn't much appetite for compromise from other core E.U. members. France id too weak to carry real weight in Berlin. UKIP will ensure that Britain's Conservatives keep their distance from E.U. problems in advance of British national election in May. A strong Germany, weak France and absent Britain is a bad formula for restoring European growth and E.U. unity.
Adding to Europe's headaches, the conflicts in Iraq and Syria and sympathy for Islamic militants among some in Europe's minority Muslim communities could provoke more terrorist attacks. Then there's the pressure from the east. Many Europeans would like to boost the economy by easing sanctions on Russia. But Vladimir Putin's continued mischief in Ukraine wikk make that difficult.
Put it all together and Europe is in for a rough ride in 2015.