Germany’s foreign minister reports “astonishment and agitation.” The French president protests indignantly about unsolicited “outside advice.” Even Secretary of State John Kerry sees behavior that is “inappropriate.” President-elect Donald Trump’s weekend interview, in which he casually predicted the breakup of the European Union, has certainly attracted attention.
But despite the consternation, there is some truth in Trump’s message. The EU, he observed, is dominated by Germany. “People, countries want their own identity,” he said.
The most obvious vindication of Trump’s warning comes from Britain, whose prime minister, Theresa May, has just laid out her plans for a hard break with the European Union. May could have interpreted June’s Brexit referendum differently, seeking the “Norway model” of continued membership in the EU’s Single Market even while withdrawing from the EU’s political structures. But, to paraphrase Trump, the prime minister evidently believes that Britain must have its own identity.
She is determined to curb E.U. migration, even though migrants contribute positively to the economy; she wants out of the European Court of Justice, even though that court has upheld British commercial interests in the past. Combined, these two positions rule out continued Single Market membership. The EU is losing its second-biggest economic power.
Britain has always been a semi-attached member of the European Union, so the malaise at the heart of continental Europe is even stronger evidence that Trump is on to something. Ironically, all the pressures that are commonly wheeled out to explain Trump’s election are far more evident on the other side of the Atlantic: sluggish growth, poor prospects for workers, a backlash against migrants, disaffection with elite governance.
Americans may feel that their recovery since the financial crisis has been anemic. But, adjusted for inflation, the U.S. economy has actually grown by a cumulative 12 percent since 2008. In contrast, the 28 countries in the European Union managed combined growth of just 4 percent. And in the subset consisting of the eurozone minus Germany, output actually fell. Even though the strong dollar may help Europe this year, most of the Mediterranean periphery has suffered a lost decade.
Naturally, this horrible performance has taken an enormous human toll. The unemployment rate in the euro area stands at 9.8 percent, more than double the U.S. rate. Unemployment among Europe’s youth is even more appalling: In Greece, Spain, France, Croatia, Italy, Cyprus and Portugal, more than 1 in 4 workers under 25 are jobless. America’s ability to put its economic house in order after 2008 shows that there was nothing foreordained about this. Europe has suffered an optional catastrophe. It has a lost generation to match its lost decade.
The decisions that delivered this destruction were made overwhelmingly in Germany, just as Trump seems to suspect.
Angela Merkel, the country’s sober, deliberate and altogether un-Trumpian chancellor, systematically slow-walked measures that could have accelerated Europe’s recovery. Budget stimulus, bank recapitalizations and, at least early on, monetary policy were sluggish because of German resistance. At some points in this process, Merkel was protecting German taxpayers, which is both reasonable and yet at the same time supportive of Trump’s view that national interests beat euro cohesion.
At other points Merkel has been protecting nothing more vital than Germans’ phobia of even modest public borrowing and inflation - and never mind the plight of Mediterranean youth.
Merkel’s cautious leadership of Europe has sown the seeds of a populist backlash. This has been a surprisingly long time coming: For several years after the onset in 2010 of the euro crisis, austerity and mass unemployment did remarkably little to turn voters against establishment leaders. But a recent Italian poll suggests that, if an election were held today, the anti-globalization and anti-euro Five Star Movement would take as many votes as the leading establishment party.
In France, polls have the anti-EU Marine Le Pen as the joint front-runner in this spring’s presidential election. In Merkel’s Germany, support for the anti-migrant AfD party has jumped from about 5 percent in 2013 to 16 percent now.
If you take Trump literally, his recent comments on Europe were exaggerated and confused. Populists may be on the rise, but we are a long way from a crackup of the European Union; and to denigrate Merkel for opening her country to “illegals,” when what she did was welcome refugees, many of whom were fleeing a war fueled by U.S. vacillation, is infuriating and obtuse.
But if you take Trump seriously rather than literally - to borrow the wonderful distinction made by Salena Zito in the Atlantic - then it has to be admitted that the president-elect has a point here. Europe is in deep trouble. It is time for its leaders to recognize that incremental policies are failing the continent’s people.
Sebastian Mallaby is a Washington Post contributor and Paul A. Volcker senior fellow for international economics at the Council on Foreign Relations. He is author of “The Man Who Knew: The Life and Times of Alan Greenspan.”