The majority party usually loses votes during a recession. The recent European Parliament elections defy this trend as the center-right remained strong and the center-left lost 6% of their seats. This is especially strange considering the center-right is usually associated with laissez-faire capitalism. Here are some of the winners and losers across Europe:
United Kingdom
Winners: Conservative, UK Indepedence Party (anti-EU), British National Party (anti-immigrants)
Losers: Labour Party
France
Winners: UMP (Sarkozy), Green Party (doubled representation)
Losers: Socialists
Germany
Winners: CDU, FDP
Losers: SPD
Italy
Winners: Party of Freedom (or, as much of a winner as you can be after your 72 year-old leader (Berlusconi) is revealed to be having an affair with a teenage model)
Austria
Winners: Austria's Freedom Party (anit-immigrant)
Denmark
Winners: People's Party
Netherland
Winners: Freedom Party
Sweden
Winners: Pirate Party (pro-piracy)
Hungaria
Winners: Jobbik (anti-Roma)
Romania
Winners: Greater Romania Party (anti-minority)
As you can see, many of the winning parties have names that contain the word "freedom." Ironically, freedom in this case rarely signifies free markets (with the exception of the FDP) but anti-immigration. So, what is the cause for the rise in anti-immigration sentiment in Europe? And, more importantly, what does this mean going forward?
It's difficult to determine a single cause, but my guess is it is a reaction to globalization. In many ways, the 2008 financial crisis was a crisis of globalization. Global capital imbalances and financial innovation were key causes of the crisis. The subprime mess might have started in the US, but it would never have gotten as bad without the rest of the world. In the face of the devastation caused by the crisis, many Europeans now find themselves taking another look at how integrated they want to be with the rest of the world. The intellectual response to the financial crisis is to shun the laissez-faire, center-right policies that enabled it; however, the emotional response is to turn to nationalist parties like the Danish People's Party or the Austrian Freedom Party.
As for the future, I doubt nationalist sentiments will endure for long, but they might endure just long enough. I see three direct applications:
1. Threat to the EU. The EU is in a vulnerable position right now as Ireland, Poland, and the Czech Republic still need to ratify the Lisbon treaty and conservative parties are generally more euro-skeptic. This is especially true in the UK, where leader of the opposing conservative party David Cameron said he would hold a referendum on the Lisbon treaty. Therefore, timing is an issue. If Ireland fails to ratify the treaty before Gordon Brown is toppled, it could be very bad news for the EU considering the gains of euro-skeptics in the UK. Therefore, the people of Europe are losing faith in the EU right when it needs to hold together. How will the EU ever fix its banks if every country has a nationalist government?
2. Bad news for Turkey. Turkey desparately wants to join the EU, which is now almost impossible. This could also have ramifications for US-EU relations, as the US is dependent on Turkey and supports its EU bid.
3. Protectionism. The outcome of the elections is another example of rising nationalism, which is usually accompanied with protectionism. We have already seen numerous examples of protectionism in the last year, and as nationalism begins to permeate through officeholders we are likely to see more.
