The Far-Right’s Rise in Europe Could Scramble Geopolitics

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France’s President Emmanuel Macron shocked the world and sent tremors through global stock markets last week with his decision to call a snap election. The move was prompted by a stronger-than-expected showing by Marine Le Pen’s far-right National Rally party in European Union elections. Now, EU politicians are worried about the potential of another Brexit-style crisis that could plunge the continent’s second-largest economy into gridlock.

On today’s podcast, host David Gura speaks to Bloomberg Opinion columnist Lionel Laurent about what’s behind the strength of the far-right not just in France, but across the EU — and what this rightward shift means for relations between Europe and the US in a pivotal election year.

Further Listening: To find out what the rise of the far-right means for the left in Europe, check out the latest episode of the Bloomberg series Voternomics, “How the Left Lost Its Way in Europe” on Apple Podcasts, Spotify or wherever you get your podcasts.

Here is a lightly edited transcript of the conversation:

Archival Emmanuel Macron (in French): There is a fever that has taken hold in recent years of public and parliamentary debate in our country.

David Gura: French President Emmanuel Macron, a confident establishment leader is under siege from a populist right movement he calls a shocking “disorder” in the country.

Archival Emmanuel Macron (in French): A disorder that I know worries you, sometimes shocks you, and to which I do not intend to give in.

Gura: And just last week, he scheduled a surprise vote to settle domestic problems. A decision he called serious and heavy.

Archival Emmanuel Macron (in French): This decision is serious, heavy, but it is an act of confidence.

Gura: Macron’s unexpected move to dissolve the country’s parliament and call snap elections is giving European officials flashbacks to Brexit.

Archival David Cameron: We are approaching one of the biggest decisions this country will face in our lifetimes. Whether to remain in a reformed European Union - or to leave.

Gura: You might remember that vote was triggered by former UK Prime Minister David Cameron, who called for – and lost! – a referendum on membership in the European Union, back in 2016.

Archival David Cameron: Three years ago I committed to the British people that I would renegotiate our position in the European Union and hold an in-out referendum. Now I am delivering on that commitment. You will decide. And whatever your decision, I will do my best to deliver it.

Gura: Now, some are wondering if Macron has made the same mistake.

Lionel Laurent: There is now, a whole vision of a kind of Brexit-style crisis that will plunge France into a kind of gridlock, and take a long while to sort out.

Gura: Lionel Laurent is a Paris-based columnist for Bloomberg Opinion. He’s been following the past week’s tumult in France, and across Europe.

Laurent: So, really, everybody was expecting 2027, the next presidential election to be the big next timeline but what happened was European elections came in between

Gura: This was supposed to be a relatively boring election for members of the EU Parliament. But the result wasn’t boring. Marine Le Pen’s right-wing National Rally party got more than 30 percent of the vote, and gained 12 seats. And that led Macron to call for a snap election.

Laurent: And since then, it's been absolute chaos. We had the incredible sight of the head of the center-right party announcing an alliance with the far right, with Marine Le Pen.

Archival Éric Ciotti (in French): We need an alliance...

Laurent: Only for his own rank and file, to turn up at his office and demand he leave and be physically turfed out of the party while he barricaded himself behind the door and refused to come out.

Archival Aurélien Pradié (in French): Well I don’t know, maybe we’ll call Jordan Bardella to get him out of his office.

Gura: And France wasn’t the only country to be rocked by the results. In Germany, the far right also made shocking gains. The Alternative for Germany Party, also known as the AfD, won 16% of the vote – more than German Chancellor Olaf Scholz’s Social Democrats.

Gura: I’m David Gura, and today on The Big Take: why Europe is shifting to the right, and what that means for everything – from the war in Ukraine, to the US presidential election.

Gura: It seems astonishing, given all that’s happened in recent days, but it was just a few weeks ago that Bloomberg Editor-in-Chief John Micklethwait sat down with French President Emmanuel Macron. And during that conversation, Macron touted all he’d done to transform France’s economy since he was first elected in 2017.

Emmanuel Macron: We delivered a lot of reform since the very beginning, 2017: tax cuts; flat tax on capital gains, we decreased from 33.3 to 25% corporate taxes. With inflation, war in Ukraine, we passed reform and on pension scheme and unemployment, uh, mechanisms. I don't see a lot of countries around us having done so. So

John Micklethwait: You don't just want to be compared to Europe. Do you?

Macron: No, no, no. My point is, my point is just to say we delivered, we do deliver, and we will deliver.

Gura: Now, that economic success story is in danger of being overshadowed by Macron’s political gamble. I asked Bloomberg Opinion columnist Lionel Laurent just what had changed.

Gura: So, the last time we spoke was about a month ago. It was right before our Editor-in-chief sat down with French President Emmanuel Macron, and in that interview, It all seemed pretty rosy. What has happened in the last month?

Laurent: So, I would liken it to, if you’re playing a board game and you’re losing, and instead of playing it through to the end, you flip the table, and flip the board, and see what happens. He’s decided that, instead of waiting until 2027 for the presidential election, instead of fighting the long, difficult fight to win voters back, he’s decided just to simply accelerate the whole process. And if the French vote against him, let’s say, if he loses the election, then there will be two years of chaos and gridlock that will somehow hurt Le Pen’s chances of becoming president. Or, he wins, in which case he can say, “I did the ultimate gamble, and I won.”

Gura: It doesn’t seem like so far investors have appreciated that gamble. Last week, there was a sharp selloff that saw the value of French stocks fall by more than a quarter trillion dollars. That’s led Paris to lose its spot as Europe’s biggest equity market to London – less than two years after winning that title.

Laurent: I think the risks that markets are waking up to now isn't that it's a choice between Macron and Le Pen. It's that, actually, the choice for the French, when it comes to voting, will be between a bloc that includes the far right and a bloc that includes the far left.

Gura: French voters are set to head to the polls on June 30, and there’ll be a second round of voting on July 7. According to the latest polling, Le Pen’s “National Rally” party is in first place – on track to win nearly a third of the vote, and Macron’s party trails National Rally and the left-wing “New Popular Front.” Either of those two blocs would, potentially, want to roll back the suite of economic reforms Macron has pushed through since he’s been in power – and it certainly would jeopardize other policy priorities, including pension reform.

Gura: Lionel, how much of a surprise was this for you, somebody who follows European politics closely, that you had the success that these parties had in this recent European election?

Laurent: I think with the European election, it was pretty predictable. I think with France, you still have trouble explaining what's going on. Even someone who's living right up in those pressed up against the window, who's seen Le Pen progress and progress and progress and progress, it is still very hard to explain what's going on. There are so many slices to this, right? There is a, a sort of disconnect, let's say, in France between Paris and the rest of the country.

Gura: That disconnect helps explain the success of the far right, according to Lionel. It seems that in France, like in the United States, no matter how positive the economic data may be, the economic vibes are bad.

Laurent: If you look at how well off people are, I mean, France, think about France's social model. Think about the money thrown at the French during COVID. Think about during the inflation shock, France was doing everything it could to basically protect consumers from price increases. It still doesn't seem to have worked. It doesn't seem to have sunk in. People still feel like they are worse off and they won't change. It's almost like the entire system is set up to have the French end up disgusted and fed up with, with the people in power.

Gura: Even still, Lionel says there’s no single explanation.

Laurent: I still struggle to really explain simply why Le Pen is where she is in terms of the numbers.

Gura: This campaign ahead of the snap election is set to last for just a few weeks.

Laurent: So we have a campaign that is very short.

Gura: Compressed, yes.

Laurent: It is very compressed. And so what that fundamentally means, and this is also part of the gamble, is that there really isn't going to be much time to really clarify and get into policy. And that's been the kind of strength and the potential weakness of, of a politician like Marine Le Pen. No one knows what she stands for. It is almost content free. So the idea was to simply say, well let's see what happens. Meanwhile, of course, financial markets are taking fright that that might cause a different reaction. But for now, the tactic really has been try and find alliances, stay firm and see what happens.

Gura: Coming up after the break: the reasons Europe is shifting rightward — and what that could mean for centrists not just on the continent, but around the world.

Gura: The results of last week’s EU elections didn’t just see more of France’s seats go to far-right politicians. Far-right parties in Italy, the Netherlands, and Spain also saw notable gains. And then there were those Germany results, which saw the worst showing ever for German Chancellor Olaf Scholz’s Social Democrats. But unlike Macron, Scholz dismissed demands to call a snap election. Bloomberg Opinion columnist Lionel Laurent says that didn’t mean the electoral outcome there was any less shocking.

Laurent: For Germany to have a far right party scoring well, even if it's not top, for me it's just kind of incredible. I really didn't think we'd be in this situation, but we are. And also to have this party, still have rough edges – still say things like, “Oh, well, maybe not everybody who wore an SS uniform was all that bad. Maybe we should deport certain people from the country.” This is all kind of nuts.

Now, I do not think anybody would rate the current German coalition highly. They did very poorly in, in the election, but they're probably, you know, thinking, well, why would we do a snap election? Because we’d get wiped out. So that's a bit of logic coming there.

Gura: Part of the difference in tactics between Scholz and Macron has to do with how each leader came to power.

Laurent: I mean, Macron's whole legacy was originated by a gamble, right? To come out of the left and create a new party and make France a three-party system, which, which just hadn't been for years. So, I think definitely maybe there's a difference in political culture, difference in political calculation. But also I think simply that it is true that Le Pen is a much more immediate threat than the AfD is in Germany. But maybe it's a question of time.

Gura: Marine Le Pen says she wouldn’t call for Macron to step down, if her party wins the snap election, and the 28-year-old Jordan Bardella becomes prime minister. But as Lionel says, it’s still pretty hard to say just what her party’s policy priorities would be, and how the National Rally would govern. Another far-right leader who’s floated as perhaps a model is Giorgia Meloni, the current prime minister of Italy. In those EU Parliament elections, her party won almost 30 percent of the vote.

Laurent: She's seen as someone who's focusing a lot on conservative and Catholic values. Whether you agree with it or not. But she picks her battles. She does not go to the financial markets, she does not go to Brussels and say, “I'm willing to revolt against all of your rules and if the market doesn't like it, they can sell my bonds and turn against me.” So, the optimistic view from some people, which I don't entirely share, is the idea that Le Pen — her empty vesselness — is an advantage because quickly, she will realize she cannot do any of these things. And the idea is that, basically, she'll come into power, somehow, markets will mold her. The deep state will mold her. CEOs will mold her, and she'll become an acceptable face. But we don't know.

Gura: But even if markets do offer some checks against policies — let us not forget the disastrously short tenure of former UK Prime Minister Liz Truss — there’s this sense that no matter what, what used to seem radical across Europe has now become mainstream. That overall, the rise of the far right has led many countries – from France, to Germany, to Spain – to adopt policies that once seemed confined to the fringes.

Laurent: Clearly there is something in the current state of democracy where there is a hunger for more authority, more executive power, more better, faster, closer to voters, less technocratic, more identity based. More hawkish against immigration and more economically, let's say, protectionist.

Gura: I asked Lionel why all of this is coming to a head now.

Laurent: Well, we've gone through a pretty major crisis. We went through COVID. Where we realized that actually not only are we vulnerable to this kind of pandemic, but also governments are able to go to very great lengths to control pandemics and then control the economy. It's huge. And then with the war in Ukraine, we had an inflation shock, an energy shock, which people find unbearable, even though you could argue it's worth the sacrifice and it was well managed. Clearly, people feel vulnerable, and I think that that has changed everyone's outlook on the way the European model works.

Gura: And of course, it’s not just in Europe, where we’ve seen a shift to the right.

Gura: What do you think the lesson of all of this is for those of us who are watching this unfold in the US? Here we are in the middle of a campaign, presidential election just a few months away. How would you counsel us to interpret what we're seeing in France and Germany and maybe on the continent more broadly?

Laurent: Well, firstly, there are global similarities. I think Trump and Brexit were the kind of beginnings of what we're seeing today. I do think the economy has something to play. I think people have been quick to assume that it can't be economically related because countries that are prosperous are still having a kind of a rebellious moment. But I would say, in Europe, especially, we have gone down a road of a certain type of fiscal policy, a certain type of monetary policy, that is basically built around export competitiveness, keeping wages down low, managing the cost – the cost of labor inside, so you can export goods around the world. Today, I think, in Europe, we're seeing that model completely has become bankrupt. Now, the hope – and this is where the US should come in, the hope is that the US can help Europe, right? Can kind of guide it down a more independent path. A path that is not just a kind of giant protectorate that just is there to trade with, and that's it. So, regarding transatlantic relations, I hope the US can be a positive example of that. influence, but I do feel that in the European world, the economic model has had a lot to answer for.

Gura: After those European elections, EU Commission President Ursula von der Leyen addressed the gains made by far-right political parties across Europe.

Archival Ursula von der Leyen: The center is holding. But it is also true that the extremes on the left and on the right have gained support. And this is why the result comes with great responsibility for the parties in the center.

Gura: Is that wishful thinking? How much strain is it under?

Laurent: I think, for someone like von der Leyen, I think there is the, let's say it is, faith and belief that the center, right? Can tame and control the extremes. So this, I think this is the kind of confidence from someone like von der Leyen, and who knows, it might hold. But we have a lot of examples that show that it might not hold.

Archival Emmanuel Macron (in French): In the end it is choosing to write history rather than to endure it, it is now, “Long live the Republic. Long live France.”

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