The European market collapse this past week has not just wiped out stockholders' investments -- it's helping to further stamp out the last remnants of center-left parties across the continent. But while Europe's conservatives may be enjoying this unipolar moment, their confused approach to the continent's economic woes could be sowing the seeds of their own demise.
The European Union is already blanketed in the proverbial red of the center-right. It dominates governments in 22 of the 27 EU member states. From Rome to Riga, from Bratislava to Berlin, conservative hegemony has imposed itself across the continent. The eurozone's three largest economies, those of Germany, France, and Italy, and the two largest EU member states outside the eurozone, Britain and Poland, are all governed by the right.
The latest episode in the dismal saga of Europe's center-left began on July 30, when Spanish Prime Minister José Luis Rodríguez Zapatero announced that early elections would be held in November. The vote will mark the end of Europe's longest-serving Socialist government. Although the Socialists' prospects had been improving, the conservative Spanish People's Party, under the leadership of Mariano Rajoy, is now expected to sweep to victory. With 21 percent unemployment, anemic 1.3 percent annual growth, and interest rates on its 10-year bonds at more than 6 percent (and rising), Spain is ripe for political change.
With that, Europe's last major center-left government will disappear. Daniel Hannan, a Tory member of the European Parliament, gleefully calculated that a Rajoy win would mean the center-right governs 96 percent of EU citizenry.
The scene at the leading EU institutions in Brussels is no different. The emergency European Council meeting on July 21 to agree on the terms for a second Greek bailout and more flexible crisis-management mechanisms resembled a conservative junta. The main players at the table -- German Chancellor Angela Merkel and her seasoned finance minister, Wolfgang Schäuble; French President Nicolas Sarkozy; International Monetary Fund Managing Director Christine Lagarde; Jean-Claude Juncker, chairman of the Eurogroup of finance ministers; and the denizens of the Eurocracy, European Commission President José Manuel Barroso, European Council President Herman Van Rompuy, and European Parliament President Jerzy Buzek -- all hail from the same political family.
But astonishingly, conservative dominance has not translated into any significant changes to Europe's social contract. As bond markets have made painfully clear, the veneer of hegemony has not led to decisive, political action during the crisis. Despite control over EU political decision-making, Europe's conservatives have been unable to shepherd through a consistent vision of a post-crisis European Union. "Muddling" has become the European catchword of the summer of 2011.
Germany tried to convince its eurozone partners to adopt its idea of a "debt brake," for example, as part of a new EU competitiveness pact in February. The "brake," a quasi-balanced budget amendment written into the German Constitution in 2009, limits the annual public deficit to 0.35 percent of GDP. Berlin, however, failed to convince member states of the proposal, and it was nixed in negotiations.
This failure is par for the course. Europe's conservative leadership has been stuck on the most salient issues that dictate the future of eurozone governance -- wage indexation, private-sector participation in sovereign bailouts, raising retirement ages, the introduction of eurobonds, and the ability of the European Financial Stability Facility to purchase sovereign bonds on the secondary market and recapitalize banks.