Leadership and Democracy

Alexander Privitera

AGI Non-Resident Senior Fellow

Alexander Privitera a Geoeconomics Non-Resident Senior Fellow at AGI. He is a columnist at BRINK news and professor at Marconi University. He was previously Senior Policy Advisor at the European Banking Federation and was the head of European affairs at Commerzbank AG. He focuses primarily on Germany’s European policies and their impact on relations between the United States and Europe. Previously, Mr. Privitera was the Washington-based correspondent for the leading German news channel, N24. As a journalist, over the past two decades he has been posted to Berlin, Bonn, Brussels, and Rome. Mr. Privitera was born in Rome, Italy, and holds a degree in Political Science (International Relations and Economics) from La Sapienza University in Rome.

In a first poll taken since Silvio Berlusconi’s departure, and while the new Italian Prime Minister Mario Monti was still putting his cabinet together, Italians expressed relief at the outcome of the political crisis. A wide majority backs the new government of technocrats. Support for a continuation of the Berlusconi rule slipped into the single digits.

Of course, polls are merely snapshots of a public mood that could sour quickly. Ordinary Italians are only now beginning to feel the effects of the country’s debt crisis. Up until last summer, the euro crisis was seen strictly as a Greek affair, and Italian public opinion was more focused on the sexual adventures of their Prime Minister Silvio Berlusconi. For months, Italians believed that their country was immune from contagion, so they will undoubtedly have difficulties accepting the series of painful reforms that will be enacted once the Monti government is fully up and running. The country will likely slip into mild recession, which will lead to even more belt tightening and increasing uneasiness amongst citizens.

Still, the fact that Italians are at least willing to embrace the former European Commissioner Mario Monti is an encouraging sign. In his first appearance before the Senate, the new prime minister told the country that the time window for reforms was limited, and that the country needs to act quickly in order to save Italy, the Euro and Europe. In the past few days, several commentators have dismissed the Greek and Italian technocratic experiments as lacking democratic legitimacy. They point out that it was the financial markets and the Brussels Leviathan, rather than the voters, which forced elected governments from power. But both new governments in Athens and in Rome are backed by their respective parliaments. And in modern, representative democracies this is all the legitimacy they need.

Furthermore, few Italians would argue that their recent political past represented a system of mature democracy. Most have not trusted their governments to do the right thing for decades. The political system in Italy is dysfunctional. As a result, Brussels and outside forces have traditionally been welcomed and seen as a benign influence, rather than an outside imposition.

A quick look at Italy’s history helps explain what might seem to be a contradiction. Before becoming a unified nation, Italy had a long history of foreign domination. The country is not only one of the cradles of modern western civilization, it has also been the battle field for many outside forces trying to advance their plans for European domination. For centuries, Italy adapted to “foreigners” ruling their country. This is a legacy the Mediterranean country shares with Germany and some of the smaller European Union members, such as Belgium. It is not surprising that, since losing the Second World War, both Germany and Italy have been much more open to the idea of a unified, democratic Europe, and one in which sovereignty is shared rather than asserted. While German leaders, from Konrad Adenauer to Helmut Kohl, sought primarily to prevent their country from slipping back into a past history of aggression, for Italians, the European Union was seen as the bridge to the more modern and prosperous north of the continent.

Europe is still very much in the national interest of both Germany and Italy. The German Chancellor, Angela Merkel, has recently launched what amounts to a campaign for Europe to remind her party, the German population, the world, and particularly the financial markets, that a strong Europe is in the interest of all of us. In Italy, Mario Monti is starting to do the same. Even former Prime Minister Berlusconi has repeatedly stated that he will support the new government for the sake of Europe.

The current crisis is a test of the level of fundamental commitment to the European experiment − a force that has driven the integration of the continent for the past 60 years. The crisis has pushed a central question to the forefront of the public debate, one that goes well beyond the immediate task of reining in public spending and avoiding a severe economic recession.

Ultimately, Europeans have to decide whether they want their leaders to act as leaders, even if it means making some unpopular decisions in the short term, or whether they prefer to be involved in the decision making process at every juncture. The markets are waiting for an answer. So far they have received conflicting messages.

The current crisis has been a painful reminder of the fact that in past decades, with the long-term threat of the Soviet Union gone, citizens in the Western world have grown accustomed to more openly questioning what is in their national interest. Representative democracies have morphed into something much closer to direct democracies, driven by polls and permanent campaigning. Politicians are much more inclined to follow public mood swings that are amplified by the media, old and new.

For politicians used to the “old times” of the cold war, when priorities seemed to be clear, this can be a frustrating spectacle. Among others, World Bank President Robert Zoellick has repeatedly called on European politicians to take decisive and prompt action to deal with the euro crisis. Zoellick experienced German reunification first hand as an official in the George H.W. Bush administration. He clearly misses leaders with the stature of Helmut Kohl, capable of molding public mood as much as of taking it into account. He has pressed Merkel to act like her mentor.

Perhaps Merkel has taken his advice. Recently, she has moved from being cautious and hesitant, to adopting a much stronger and more decisive voice, with a more old fashioned style of leadership that Chancellor Kohl would undoubtedly approve of. At first, when Greek sovereign debt started its plunge and the government in Athens asked for money, Merkel procrastinated, as she was worried about the upcoming regional elections and a prevalent anti-Greek mood in Germany. Short-term political considerations clearly trumped European priorities. In fact, Merkel initially seemed so blinded by the public mood that any progress on the European front seemed to be out of the question. The markets, and public opinion worldwide, began to question Germany’s commitment to Europe and the Euro. As the mood amongst Germans began to shift, Merkel’s initial strategy backfired. She plunged in the very polls that she was trying so hard to follow. Ultimately, German voters signaled that they expected their leaders to make the hard decisions, and not just follow short-term mood swings. They signaled that they were much more open to changing their minds if their leadership made a compelling case for tackling the crisis. Merkel seems to have learned her lesson. She is calling for more Europe, not less. She has even managed to convince her reluctant coalition to give repeated boosts to the European Rescue Fund EFSF. Her party congress, held this week in Leipzig, cemented her leadership.

But how far and how quickly will Merkel move if the crisis turns even uglier? Her strategy of doing just enough just in time, while pushing her euro zone partners to do the heavy lifting at home, only works if market panic can be kept at bay. Merkel’s path out of the crisis is still a delicate balancing act. While many European partners are experiencing real pain, German taxpayers have only been on the hook in principle. They did not have to make any direct sacrifices − not yet, at least. However, the events of the last week seem to suggest that markets are determined to test how far Merkel’s commitment to Europe goes.

Ultimately, if the situation deteriorates further, the Chancellor could be forced to make decisions that the German public is still not prepared to stomach, such as recapitalizing the European Central bank and allowing it to truly act as a lender of last resort. Such a test could force Merkel to show if she really has the political will to do whatever it takes in order to save Europe. Her place in the history books would be secured, but at home, at least for some time, she would be deeply unpopular. Very soon, Merkel could be forced to make her choice.

The views expressed are those of the author(s) alone. They do not necessarily reflect the views of the American-German Institute.