Europe, year zero

2022 restarts the clock

“The events of tonight are a turning point in the history of Europe,” said Emmanuel Macron as Russia’s full-scale invasion of Ukraine began on 24 February 2022. “They will have lasting, profound consequences on our lives and on the geopolitics of our continent”. Obviously, I agree. This shared conviction is precisely why I launched Twenty-Four Two four months later and awarded a grateful French president pride of place on my About page.

It’s easy (and usually wise) to be cynical about European politicians’ courage and attention span. Over the past quarter-century, a string of Lucy van Pelts – Angela Merkel, Nicolas Sarkozy, Matteo Renzi, and the UK’s three 1997-2016 prime ministers to name but a few – have shown signs of readiness to take truly hard decisions only to whip away the metaphorical football.

They could then because they had somewhere to retreat to. But not this time. Russia’s blatant transgression and energy blackmail, Ukraine’s unexpected resistance, and US readiness to fund and arm a proxy war against Moscow removed political discretion. “For the EU’s two great powers, the invasion was kryptonite to their diplomatic cultures and strategy,” I wrote in August about Germany and France. “Berlin’s bipartisan pacifism and Wandel durch Handel (change through trade) doctrine are now history. Macron will stick to the script that the EU should wean itself off the US security guarantee but all the events of February to June did was persuade Russia’s near-neighbours of its absolute necessity”.

In normal times, Berlin and Paris would have imposed a Minsk III agreement on the Ukrainians but that’s no longer an option in Kyiv, in the EU/NATO border states (except Hungary), nor – crucially – in Washington. Add to that the happy coincidence that the Greens – bizarrely now Germany’s most hawkish party – had taken charge of foreign and energy-transition policy two weeks before the invasion, and Franco-German business as usual is over. The Germans may be sluggish to implement their rhetoric but rollback isn’t an option.  

Another stroke of luck is the abrupt Brexit-imposed end to the long-running antagonism between London and Paris over whether to prioritise “widening” the EU to new member states or “deepening” the union through greater policy coordination. Freed from the constant suspicion that the UK was advocating expansion to weaken the union but politically unable to refuse the promise of future membership to Ukraine, Moldova and Georgia, the French had to come up with a proposal for a credible waiting room. With nothing more than a nameplate (the European Political Community) and a regular summit, the EPC is that rare and treasured thing: a blank sheet of paper. Yes, it could stay that way but, more likely, draftsmen will use it to design an outer circle that binds non-EU countries – applicants and non-applicants alike – into a broad democratic and liberal alliance. It is the road back to Europe for the UK and Switzerland.

Anyway, this is next year’s business. On this last day of 2022, I’d like to hand out some EurOscars.

European of the year

No competition. This one has to go to Vladimir Vladimirovich Putin, Russia’s president (or fake prime minister) since the last century. With a single decision, he has forced Europe to stop playing games. Decades of German economic and diplomatic strategy have been upended. Even if the war ends tomorrow, Europe will never again allow itself to depend on one source of critical energy supply. He has contained Franco-German dominance, catalysed the creation of an eastern and northern borderland alliance, and made Ukraine a European nation with the continent’s essential military. He has tainted his apologists in France, Italy, Germany, the UK and the US and handed political incentives to his enemies in these countries to carry out reforms that hurt them in the short term but cripple Russia in the medium term. The only gift he has left to give is the collapse of his regime.  

Self-immolation of the year

It would be wrong to hand this award to Liz Truss, who served as British prime minister from 6 September until 25 October, or her chancellor Kwasi Kwarteng. The parallel collapses of the Conservative Party and the Brexit dream were a team effort.

The Truss-Kwarteng “administration” was just an unexpectedly hilarious punchline to half a decade of misrule that began with Theresa May’s Rubicon-crossing speech in January 2017, in which she pledged to leave the European Economic Area (EEA). With this reckless decision and the inability and unwillingness of the opposition to reverse it, any hope of a popular Brexit was destroyed. The referendum was only won by 52/48% and on an incoherent non-metropolitan red/nativist ticket led by metropolitan libertarians. The Forty-Eighters were never going to have the patience to wait for an imaginary Brexit growth dividend, especially since this would require deregulation and public-spending cuts.

Instead of presiding over Brexit’s slow bleeding out, Truss administered a double tap to the revolution and its cadre. With no discernible benefits, Brexit is now associated in the public mind with home lockdowns, airport queues, public-sector strikes, high inflation, rising mortgage bills, and falling house prices. YouGov’s regular Brexit right-or-wrong question polled on 20-21 December found Wrong leading among working-class voters for the first time and with double-digit advantages in the north, midlands and Wales. England’s Interregnum stretched from 1649-1660. An equivalent absence from the EEA would take us to January 2031. That sounds about right to me.

Slowburn of the year

Macron’s re-election – the first of any president in 20 years – was only eight months ago but it feels like an age. Once Marine Le Pen became his run-off companion, he was never going to lose and this turned the second round into a non-event briefly enlivened by the inevitable rogue poll.

His return to office and the legislative election that deprived his La République En Marche (now mercifully renamed Renaissance) postponed an inevitable realignment of French politics. Events since the summer have brought this tantalisingly closer. Les Républicains (LR), the party refounded by Sarkozy as the movement of establishment conservativism, has just elected right-winger Éric Ciotti as its new leader. Of all possible leadership candidates, it is Ciotti who would make it possible for the whole right – including the electorate that voted for Le Pen or Éric Zemmour in April – to unite around a common candidate in 2027. At the same time, Sarkozy is moving closer to Macron and providing a permission structure for the old right to join the old centre-right in a new post-Macron movement.

Forecasters of the year

The disaster that didn’t strike Europe this year was the so-called “red wave” that would drive the US Democrats into minority status in both houses of Congress and turn Joe Biden into the proverbial lame-duck president. The plus side of this outcome is that the Ukrainians have at least two more years of support from Washington. The downside is that it will encourage Biden to run again in 2024 and increase the chances of a Zelenskysceptical Republican victory.

For those of us in the political prediction business, the failure of forecasters (and therefore of betting markets) in the Congressional midterms was a brutal lesson in the dangers of herding. The day before the election, I listened to a podcast interview with Simon Rosenberg of the New Democrat Network. He was adamant that there was no evidence of a “red wave” and claimed that early-voting data suggested Democrats would outperform expectations. At the time, I thought he was dreaming. Today, he wins the EurOscar.

At the other end of the spectrum, it’s been a credibility-sapping year for Philip Lane, the chief economist at the European Central Bank. Forecasting the headline inflation rate in the wake of a once-in-a-century pandemic and through a war between commodity superpowers hasn’t been easy. But, anticipating how much of that seeps into and stays in core inflation (stripped of its most volatile prices) is expected to be easier. The ECB began the year expecting core inflation excluding energy, food and changes to indirect taxes to average 1.9% in 2022 and 1.7% in 2023. In March, these forecasts were revised to 2.5% and 1.8%, in June to 3.3% and 2.8%, in September to 3.8% and 3.4%, and ended the year at 3.9% and 4.2% - double where they started. For some of Lane’s colleagues, this would be more forgivable if all forecasts had been just as off and if no one on the governing council had been warning of upside risk to the baseline assumptions.