Few years will be as decisive for the future of Europe as 2017. A series of pivotal elections across the continent—including votes in France, Germany and Italy, three of the six founding countries of predecessor EU treaties—will test the European democracy and integration project against a rising wave of populism, strongly fuelled by continuing economic hardship, unprecedented immigration and the continuous threat of terrorism.
Populism on the rise
Populism is not new to Europe but rising living standards, the memory of the horrors of World War II and a strong political will to avoid instability had relegated such movements to the fringes. After the financial crisis of 2009, however, many have started questioning the credibility of the current political and economic system, blaming it for benefiting only a minority of people at the top at the expenses of an eroding middle class. For the first time in decades, parties such as the National Front (FN, Front National) in France, the comedian-led Five-Star Movement (M5S, Movimento Cinque Stelle) in Italy, the Alternative for Germany (AfD, Alternative für Deutschland) in Germany and the Party for Freedom (Partij voor de Vrijheid) in the Netherlands stand a real chance to win or gain substantial support in each national parliament.
Although these parties differ on the extent to which they promote nationalist, xenophobic and isolationist theses, they all agree on one thing: their mission to radically renegotiate their relationships to the EU as promptly as possible. Rather than seeing the European project as the mechanism that has brought peace, democracy and prosperity for more than sixty years to a continent that had been regularly ravaged by wars and crises, they accuse it of being responsible for most of the evils haunting the continent today. Their views have already stricken a terrible blow to the EU with Brexit, but the United Kingdom had never been a committed supporter of the European project, joining it later and seeing it more as a trade agreement than a path to political integration. Losing any of the founding countries, however, would be a mortal blow, discrediting the entire project and potentially triggering a long series of defections.
There are many reasons why such a scenario would be undesirable. Politically, a fractured Europe would cause great instability across the world, reviving old internal tensions and emboldening the many authoritarian regimes at its door, such as Russia and Turkey. Moreover, the reduced coordination among European countries would condemn the continent to an inexorable decline of its influence across the world, at a time where growing countries such as China and India are rising to the role of world superpowers.
Yet, if political decline could take decades, the impact on the economy and businesses could be much faster. The four “Fundamental Freedoms of Movement” – of goods, persons, services and capital – have been one of the Union’s greatest achievements and have underpinned the success of many European companies. This openness has empowered firms to access a market of 500m people and stretch their supply chains seamlessly across the continent. Investments, meanwhile, have flown from capital-rich areas to poorer ones, providing much-needed infrastructure to entire countries and helping millions out of poverty, particularly in Eastern Europe. While the European Union has expanded, cross-border investment has provided further and much-needed infrastructure to entire countries as incomes generally increased, particularly in Eastern Europe. And although there have been some problems with EU-level economic policy-making, as witnessed in the Eurozone sovereign debt crisis, the solution to these problems is better EU-led oversight. People have been able to move freely across the region, providing labour and skills where they are needed and economic opportunities for many people, particularly the young. Not all is perfect, however, and many have criticized the EU’s for failing to promote political reforms as forcefully as economic ones: cronyism, corruption and weak national institutions are still rampant in many EU countries, preventing much of the economic development from reaching the broader population. Nevertheless, the benefits of membership are far-reaching, as evidenced by the striking difference in economic and political development which correlate with EU membership and non-membership in Eastern Europe. But the rise of populism now threatens all of these achievements.
Ah, the good old days
Another trait that Europe’s populist parties share is a strong mistrust of globalisation, international trade and finance. Very much akin to the forces that brought Trump to victory, many Europeans long for the return to a mythical past, where society was fairer and government closer to its citizens. Yet, the similarities between the U.S. and Europe end here.
Firstly, for all his anti-Wall Street campaign rhetoric, Trump is fundamentally a businessperson and, indeed, he has assembled what is probably the most pro-business cabinet in America’s history. Secondly, despite all the discontent, the U.S. population continues to believe in broad free market capitalism: the debate hence is centred on nuances and reforms, rather than on its fundamental principles. Finally, U.S. democratic institutions have weathered centuries of instability, making them, in many ways, very resilient to changing public opinions and discontent.
Europe is different. Populist parties show very limited understanding of business and take pride in being complete outsiders, such as Beppe Grillo, the Italian comedian turned leader of the M5S. Principles, such as free market capitalism and even democracy, are newer to Europe: until the late 80’s, many governments were either fully communist or always at risk of becoming so. Finally, European institutions are not nearly as resilient as the US: just consider how the UK, with a single referendum is now choosing to leave the Union, throwing the entire continent into instability and disarray. Something similar would be unimaginable in the US. If the US can survive a bad electoral cycle, Europe might not be so lucky.
What about us?
Europe has historically been an interesting destination for MBA graduates, offering exciting opportunities in a region renowned for its diversity, cultural riches and lifestyle. Our predecessors have flocked to cities such as London and Paris, which have greatly benefited from the European Union by becoming real regional hubs for multinational headquarters, financial institutions and ambitious entrepreneurs.
Yet, in a more fragmented and weakened Europe, career opportunities for business professionals would be fewer and potentially less interesting compared to other regions of the world. As businesses scale back their pan-European presence, bowing to political pressure and flagging cross-border interactions, internationally minded professionals would be in less demand. Companies would cut cross-border investments and supply chains, jettisoning the continent’s prosperity, global competitiveness and attractiveness to international investors. Governments would reintroduce visa restrictions, something that is likely to happen in a post-Brexit UK, making it harder for multinationals to recruit the best and brightest professionals across the entire region, hence further reducing the career opportunities for many of us.
Although no one can predict with certainty the result of the elections, particularly after the unexpected results both in the UK and the US, the uncertainty around the future of the region is already taking its toll. After a better-than-expected start of 2016, growth in Europe has slowed down. Since the real economy is composed of actual data as much expectations, this cannot be good news.
Time to act
Can we, as HBS students, do something about this? Actually, we can.
First, engage with your fellow European friends on the topic of the election through whatever channels you can, especially social media. Talk about it, discuss it, and if you see them leaning towards populist ideas, try to understand their concerns and offer them alternative solutions.
Second, notify fake news on social media. Xenophobia, nationalism and bigotry are spreading faster than ever through fake news. Facebook now offers the option to report them, but it is up to us to make the system work.
Finally, act and get involved. John F. Kennedy, a notable Harvard alumnus, once said, “Ask not what your country can do for you – ask what you can do for your country”. At a time when the democratic process feels remote and confusing, it is up to us to rise to our role of citizens and actively shape the world and the Europe we want to live in.
On March 3rd and 4th, the European Club will host the 2017 European Conference at Harvard, where more than 30 speakers from the public and private sectors across the world will discuss the future of Europe, its challenges and potential solutions. Come and join in the discussion: Europe needs you.
Roberto C. Morfino (HBS ’18) worked for five years as a consultant for many private and public sector organizations across Europe and Africa before starting his MBA. An engineer by education, he is passionate about technology and its impact on business and public policy, and in about how it can facilitate the democratic process. Originally from Nice and with French-Italian nationality, he has then developed a real passion for internationality and multiculturalism, having lived in Turin, Berkeley, Geneva, London and Boston. He is a co-chair of the 2017 European Conference at Harvard and an active member of the HBS European Club.