Nationalist sentiment takes policy form in Europe

Falling social mood expresses itself as nationalism in Europe and it is taking policy form. For the past two years we've mainly seen increased fighting between the core European states, with countries such as Hungary implementing divergent policies. Now France and Germany are taking concrete steps (they claim temporarily) to rollback the European Union. The battle is over immigration and there's no open borders solution on the table. The two choices facing Europe are: shut the EU border to foreigners, or individual nations will shut their borders. Now we will see how much the left-wing eurocrats love their EU: will they accede to popular will on policy, or sink themselves?

A Vote of No Confidence in Europe

Germany and France are serious this time. During next week's meeting of European Union interior ministers, the two countries plan to start a discussion about reintroducing national border controls within the Schengen zone. According to the German daily Süddeutsche Zeitung, German Interior Minister Hans-Peter Friedrich and his French counterpart, Claude Guéant, have formulated a letter to their colleagues in which they call for governments to once again be allowed to control their borders as "an ultima ratio" -- that is, measure of last resort -- "and for a limited period of time." They reportedly go on to recommend 30-days for the period.

Of course, using catchphrases like "ultima ratio" and "limited period of time" is supposed to make such policies sound reasonable and proportionate. After all, the reasoning goes, it's just a few occasional border controls for up to 30 days. What's the big deal, right?
But the proposal is far from harmless and would throw Europe back decades. Since 1995, the citizens of Schengen-zone countries have gotten used to freely traveling within Continental Europe. Next to the euro common currency, free movement is probably the strongest symbol of European unity. Indeed, for many people, it's what makes this abstract idea tangible in the first place.

This is the intersection between feelings of nationalism and a pan-European identity, as well as domestic versus pan-European politics. From a socionomic perspective, all choices concur with social mood: Europeans are less welcoming of foreigners. Using the falling stock markets in Europe as a proxy for social mood, in addition to EU border states such as Greece, Spain and Italy being in financial distress, odds favor this becoming policy.

Taking it one step further, the border policies become a conduit to express further nationalist sentiment because it becomes a focal point of social mood. This policy sets all against all, and the next set of policies that will come under review? Economic.

In France, Old Protectionist Idea Reawakened

The Socialist Party has embraced a form of European trade protectionism in its manifesto, a shift from its previous endorsement of globalization as a win-win proposition for French workers.

The shift matters both because the Socialists and their Green allies have a good chance of unseating the center-right president, Nicolas Sarkozy, in the election next year, and because France has a way of setting the political agenda in Europe.

Here we have a similar template. The issue isn't whether there is trade protectionism, it is whether France or the EU will implement it.

Free trade has little political constituency in France. While the seafaring British and Dutch have long been free traders, the French have a protectionist tradition reaching back at least to the 17th-century mercantilist Jean-Baptiste Colbert, Louis XIV’s finance minister.

More recently, Maurice Allais, the Nobel economics laureate, published diatribes against free trade with emerging economies until his death last year, warning that it would cause mass unemployment and depression in Europe.

Another contrarian intellectual, the demographer Emmanuel Todd, is campaigning for European protectionism and an exit from the euro, saying the loss of jobs would otherwise tear French society apart.

This isn't a question of if, but when. Social mood favors a rollback of current free trade policies because like many other policies, they reached peak excess during the 1990s run-up to peak social mood.

Dutch prime minister says government austerity talks collapse

The ruling Dutch minority government was on the brink of collapse Saturday after anti-EU lawmaker Geert Wilders torpedoed seven weeks of austerity talks, saying he would not cave in to budget demands from “dictators in Brussels.”

New national elections that will be a referendum on the Netherlands’ relationship with Europe and its ailing single currency are now all-but-certain.

...Once considered one of Europe’s strongest economies, the Netherlands is suffering from high levels of personal debt, mostly mortgage related.

Netherlands has the will and a solid reason to take an anti-EU and anti-euro position. Since there are no snap elections, there's time for Wilders to benefit from falling social mood and win a victory that could shock Europe.


H/T: Mish Shedlock.