It’s about to get lonely on the EU Bridge for Angela Merkel
The „No“ camp will succeed in the Italian referendum on Sunday, which will mean the end or near end of Matteo Renzi and new political pressures from his leftist nemesis Beppe Grillo to restructure Rome’s debt deal. Grillo’s looking long-term. If you go to his blog, he’s has an entry on the need to prepare now for civilization’s collapse. I wouldn’t go quite that far. Not quite yet anyway.
As many as eight Italian banks will though be teetering Monday morning and thousands of worried citizens could start pulling out their cash and wondering if their private pensions and savings accounts are safe as well. What kind of banks are we talking about ?
The world’s oldest bank, Monte dei Paschi di Siena, along with Popolare di Vicenza, Veneto Banca, Carige, Banca Etruria, CariChieti, Banca delle Marche, and CariFerrara could all end up without enough capital funding if customers and shareholders sense weakness.
Italy’s banks could require an infusion of € 40 Billion after the „No“ Vote. That’s not exactly a new boost of confidence in the Euro zone for German tax payers. Formerly unassailable Deutsche Bank will be hit by the referendum. It has a web of Italian exposure and has already lost half its value this year. The threat of contagion to German banks will further undermine faith in the Euro zone and further European integration among German voters. And that means more pressure for the beleaguered Ms.Merkel. Her ally Francois Hollande is on the way out, the nationalist Francois Villon could be on his way in.
Enter Norbert Höfer and “Austria First”
Across the border in Austria, voters are also going to the polls and my political instincts tell me there will be a victory for the far-right’s FPÖ under Norbert Höfer by a small margin. Any larger margin will mean the forces of deglobalisation are gathering strength much faster than thought. He’s been described in the British press as a “wolf in sheep’s clothing” and his election would be the first time a far-right politician has risen to power in Austria – since – well ahem – you know when. Höfer bristles at being called an “extremist” with his views on de-Islamization, deportations, border walls, and “Austria First”. Ironically, it’s Austria’s Serbian minority that looks set to tip the vote’s balance in Höfer’s favour. Another “global aspect of deglobalisation.”
A “No” to Renzi, a “Yes” to Höfer and a Yawn in Berlin
Ms.Merkel will understandably play down the results. She’ll give Höfer the Trump Reception and call him at the netherworld ends of diplomatic acceptability. She just lost the loathed Monsieur Holland in Paris, she’s not communicating well with Theresa May, ex-pal Vladimir’s not feeling the love and Donald is cutting bait in a new way.
The Charles De Gaulle sails into the Sunset
It was just August when the New Big Three announced a New Europe. On a sunny day in the Mediterranean , Matteo and Hollande who stood shoulder to should with Angela Merkel on France’s only air craft carrier the Charles De Gaulle, pledging to be the New Trio that would lead Europe into a brighter post-Brexit future. They laid a wreath at the tomb of Altiero Spinelli, communist who was an early backer of the European Project. It wasn’t a reassuring spectacle at the time for the small and medium business owners in the three countries. They will be among those thrilled that Hollande is gone, and the Renzit will be a reality or close to it. Where does that leave Germany? The Charles De Gaulle has just sailed away.
Battleship Austria has sailed in to take its place.
Even if Höfer fails to win (which I doubt) the Right is ascendant across Europe. And it wants to gut the EU. The Post-Maastricht EU is in real danger of falling apart not only from the Brexit and votes like the one today, but there is massive pressure for a Nexit and a Frexit as well. This will be accelerated by the next banking crisis which is waiting in the wings. To “reduce the shrinkage” – Brussels and Berlin must act now, and decisively to shore up the gains of the last fifty years.
The EU’S Reform Summit : Now Before it’s too Late
Angela Merkel should announce a major EU Reform Summit while she still has the currency to do so. To restore public trust and gain good will, she should announce this is being done in response to shifting public attitudes towards deeper integration, which has already called into question by the German President. The summit can take place in the Spring and have two goals 1.) a return to pre-Maastricht Europe 2.) securing external borders and restoring Schengen. Europe has overreached. She does not have the resources, will nor cohesion to successfully manage the challenges we’re confronting from the rise of Russia and China to collapsing economies in the MENA region and the threat of radical Islam. We can find new strength in decentralisation and secure borders. This is not a step back. It is a way to protect past gains and future prospects.
Brian Thomas 
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