President Barack Obama addresses supporters in Columbus, Ohio, May 5 (Obama for America/Christopher Dilts)

Members of President Barack Obama’s party that are running for election in November seek to frame the upcoming vote as one about income and sexual equality. The economy is still foremost on voters’ minds but Democrats are hoping to change that.

After Vice President Joe Biden told NBC News’ Sunday morning talk show Meet the Press this weekend that he was “absolutely comfortable” with gay marriage, the president, too, voiced support for legalizing marriage for same sex couples.

No longer “evolving” on the issue, President Obama’s change of heart will likely endear him to young, first time voters who backed him overwhelmingly in 2008 but have since grown weary of his politics.

Among gay Americans, his support of marriage equality is unlikely produce a major shift. In 2004, after President George W. Bush endorsed a constitutional amendment to define marriage as one between a man and a woman, 23 percent of gay Americans voted Republican anyway. In the 2010 congressional elections, 31 percent did.

While 50 percent of the general population supports gay marriage, 70 percent of Americans under the age of thirty does. Two thirds of them voted for Obama in 2008.

The president’s election year conversion on the issue of marriage appears to be part of a concentrated effort to frame the upcoming vote as one between the progressive Barack Obama who tries to move the nation “forward” and intransigent Republicans who, on both economic and social issues, are “backward” in their opposition to his policies.

It’s not just on marriage that Republicans are supposed to be reactionary. Democrats accused conservative lawmakers of waging a “war on women” earlier this year because they did not want to force insurance companies to include birth control in their mandated coverage.

The fight over contraception was “illuminating,” the president told a group of women voters last month. “It was like being in a time machine.” He added, “The choice between going backward or moving forward has never been so clear.”

Obama is currently leading his likely Republican opponent Mitt Romney among woman 49 to 39 percent.

Besides marriage and gender equality, the president has described mounting income inequality as “the defining issue of our time.” Few Americans agree. In a recent Gallup poll, just 2 percent of respondents listed the gap between the rich and poor as their top economic concern. But there is a sense that opportunity is increasingly denied to the middle class while the wealthy are shielded by their Republican friends from higher taxes and regulations.

So Republicans, again, have it backward when they want to lower taxes on businesses and high income earners but privatize federal health support for seniors at the same time. As the president put it, they want “everybody left to fend for themselves and play by their own rules.”

The fact that Mitt Romney seems rather more like a character out of the popular drama series Mad Men, set in the 1960s, socially awkward and unsentimental when he talks about the economy, doesn’t help.

Voters overwhelmingly see joblessness and the ballooning national debt, areas in which the president has made markedly little progress, as the most important issues for the upcoming election. Democrats, who have resisted every Republican effort to rein in spending and not even introduced a budget in the Senate for all of Obama’s presidency, know that they cannot win on the economy. They have to change the conversation.

A majority of Americans is now on the left on most social issues, except abortion. Opposition to contraception coverage and gay marriage is concentrated in conservative states that are safely Republican. In critical swing states like Ohio, Pennsylvania and Florida, which will likely determine the outcome of November’s presidential election, voters lean Republican on economic issues but may well give Democrats a majority if they see the other party as backward indeed.

If Republicans fall for this trap and lose sight of their potentially winning argument—that they’ll fix the economy and get the government’s fiscal house in order—to revive the culture wars of the 1990s, this time, they will probably lose.

Prime Ministers Mark Rutte of the Netherlands and David Cameron of the United Kingdom attend a summit of European leaders in Brussels, October 26, 2011 (AFP/Eric Feferberg)

In 2010, a new right rose in Europe. Parties that were or had become economically conservative and socially liberal came to power despite the left blaming their free market ideology for the financial crisis. Now, the tides are turning.

Denmark’s christian democrats and liberals were ousted in September of last year after a decade in government and replaced by a left wing administration.

Theirs had been a minority government, supported in parliament by the far right and nationalist Danish People’s Party which parted with other two right wing parties on entitlement and labor market reforms. By positioning itself as the champion of pensioners and the working class, the People’s Party appealed to a constituency which increasingly mistrusted the typically pro-European and pro-globalization conservatives and liberals.

In the Netherlands, a similar administration took office in September 2010. The liberal party had won the elections on a platform of economic repair and formed a minority cabinet with the christian democrats who had lost half of their seats, many of them to Geert Wilders’ Freedom Party, ideologically equivalent to the Danish People’s Party.

Wilders supported the conservative-liberal coalition in parliament until this weekend when he rejected additional austerity measures.

The government had initially planned only the barest possible of spending cuts but was forced to consider steeper reductions to bring the deficit under 3 percent of gross domestic product in 2013 per European treaty rules. Now, it may have lost the legitimacy and the majority to do so.

Prime Minister Petr Nečas’s center right government of the Czech Republic is also aiming to balance the budget by reining in health care and pension spending and raising taxes but it too could lose the support of one of its coalition partners, raising the possibility of parliamentary elections as early as June.

Like their Dutch counterparts, the Czech right wing parties never made the philosophical argument for smaller government. The left wing opposition, rallying with trade unions in the streets against “devastating” cuts and “asocial reforms,” is winning the public debate.

The godfather of Europe’s new right wing movement, David Cameron, remains fairly popular in the polls despite enacting policies that are similar to his beleaguered counterparts on the continent. His “detoxification” of the Conservative Party brand of one that cares only for the rich hasn’t stopped the Labour opposition from credibly arguing that his government doesn’t care for the little guy though. It is only because of Labour’s ineffectual leader Ed Miliband that the party hasn’t managed to mount a more convincing stand against British austerity.

Cameron’s position is far from enviable however. His lackluster austerity agenda has failed to wield significant results. The British economy remains in recession but the political and public resistance to further budget restraint is so high that it’s probably too late now for the coalition to change its tone and argue that it’s shrinking government for anything but pragmatic reasons.

Margaret Thatcher didn’t win three elections telling voters that she didn’t have a choice but to enact unpopular austerity measures. She convinced them that it was the right thing to do.

When times are tough, people will be inclined to vote for the party that seems to them capable of managing the nation’s finances. As soon as a crisis is averted, which many left wing parties seem to believe is the case, the political managers lose their appeal however. People don’t just care for policy. They crave for a politics of vision.

Austerity is not an ideology. It is a means to an end but when the end is left unsaid, who but a masochist would vote for it? The left, at least, has its appeal to “fairness.” Europe’s right hasn’t dared articulate an alternative vision for fear of appearing asocial and losing elections—and now it’s losing anyway.

North Korean leader Kim Jon-un watches a mass games performance in Pyongyang with Vice Marshal Ri Yong-ho by his side, October 9, 2010 (AP/Xinhu/Yao Dawei)

North Korea’s ruling Workers’ Party named Kim Jung-un its first secretary on Wednesday. The position replaces that of secretary general which, in good family tradition, the young ruler’s deceased father Kim Jong-il will hold “eternally.”

Kim’s grandfather and founder of the dynasty, Kim Il-sung, is remembered as the people’s republic “eternal president.”

In his new capacity, Kim Jong-un has become a member of the presidium of the Politburo, the executive branch of the North Korean Government. He already commands the armed forces and is assumed to wield far more power than the remaining four members of the body that nominally rules the country.

Jang Sung-taek, Kim’s uncle who is considered a power behind the throne, was simultaneously elevated to full membership of the Politburo. Jang occupies a number of key positions. As the director of the party’s Administration Department, he oversees the security services. After Kim Jong-il’s death, he appeared in uniform for the first time despite his lack of military experience. It was likely a sign of his further rise within North Korea’s bewildering government structure where state, party and army positions often overlap and intertwine.

Another key player in Kim’s shadow is Vice Marshal Ri Yong-ho. Between 2003 and 2009, he commanded the defense forces around the capital of Pyongyang, a prestigious post that put him at the heart of the North Korean military apparatus. The next year, he was elevated to the presidium of the Politburo and named vice chairman of the Central Military Commission. He subsequently appeared in Kim Jong-il’s company on a number of public occasions, signaling his role as a shepherd of Kim Jong-un’s ascendancy.

Also a member of the Politburo’s presidium now is Choe Ryong-hae, recently promoted to the rank of vice marshal but really a party apparatchik.

Like Ri, Choe is considered one of the young Kim’s “guardians.” If Ri was supposed to shield him from a challenge from the generals, Choe’s role may be that of party power broker.

Kim now firmly sits atop both the army and party structures bit given the North’s penchant for secrecy, it is impossible to tell whether he actually controls them too.

That is not to say that Kim’s position is insecure. Far from it. Kim Il-sung’s heir gives a face to the regimize and legitimizes it in the eyes of ordinary Koreans who have been brought up believing in the almost mythical proportions of the Kim dynasty’s powers.

Whatever intrigue is occuring behind the scenes (if there is), the North Korean regime is internally stable and unlikely to collapse as the result of backstabbing, let alone a coup.

Threats emanate from abroad. China is increasingly irritated by its client state’s unpredictable and seemingly erratic behavior but there is order in the North’s chaos. It considers Japan and South Korea mere puppet states of the United States’ which would like to see the regime replaced by one that cares rather more for its own people. In playing up the threat of “imperialist” American intervention, Pyongyang intentionally tumbles from one crisis into another to justify spending an eyewatering share of its resources on military spending. “Military first” was Kim Jong-il’s dogma and there’s no reason to assume that will change now that his son is in power.

Premier Wen Jiabao of China addresses the National People's Congress in Beijing, March 5 (Rita Alvarez Tudela)

The normally private internal conflicts of the Chinese Communist Party spilled into the public sphere with the dramatic sacking of Chongqing party chief Bo Xilai on March 15. Subsequently, on the evening of March 19, rumors of a coup surfaced. Gunshots were reportedly heard on the edge of Zhongnanhai in central Beijing and military vehicles seen on Chang’an Avenue.

In addition to Bo’s ouster, exile websites report that Zhou Yongkang, a leading Politburo official and ally of his, had been neutralized by his rival, President Hu Jintao, who enjoys the support of the military.

Bo’s and possibly Zhou’s ouster expose a fierce struggle within the Communist Party over the 2012 succession of power in Beijing.

The dramatic sacking of Bo and neutralization of his allies marks a victory for the party’s liberal reformers and an official rebuke of Bo’s neo-Maoist “Chongqing Model.”

Premier Wen Jiabao and his allies saw Bo as a new Mao, a dictator who could threaten them and their families’ business interests.

Hu, Wen and their supporters employed a tried and true method for eliminating the upstart from Chongqing—corruption charges. Charges against Bo stem from the attempted defection of Wang Lijun, Bo’s recently demoted vice mayor and police chief, who fled to the American consulate in Chengdu, allegedly to seek asylum.

Later, while being questioned in Beijing, Wang reportedly provided authorities with incriminating material about Bo and his family.

Analysis

With seven of the nine positions on the Politburo Standing Committee about to be filled, for months Beijing has been engaged in an internal tussle over the choice of new members. The Chinese capital hasn’t experienced a power struggle like the one now underway since the bloody suppression of the democracy movement in Tiananmen Square in 1989. The current showdown threatens to jeopardize the carefully planned change in the party and national leadership.

The political drama surrounding the sacking of the princeling Bo Xilai exposes a deeper power struggle within China leading up to this year’s generational shift. The struggle itself indicates fissures within China’s leadership as well as its future direction.

The concept of a “united front” is fundamental to Chinese political culture. The idea that all internal disagreements should be suppressed and the party should present itself as having no internal dissent or differences of opinion is used to ensure that the party presents no weakness; its edicts cannot be publically challenged and individual leaders remain loyal to it.

The recent removal of rising star Bo Xilai and subsequent rumors of a coup mark a significant departure from the party’s normally disciplined control of the narrative and its most significant public conflict in decades.

While the party is now in damage control mode and attempting to present unity in public, the affair exposes divergent ideological and economic interests among cliques within the Chinese Communist Party which could threaten the smooth transfer of power planned for November of this year.

Wikistrat Bottom Lines

Nicholas Clement, Joel Ferris, Chris Janiec and Steve Keller contributed to this analysis.

Tiananmen Square in Beijing, China, February 15, 2005 (Peter Morgan)

The ambitions of a rising China on its way to global dominance could look very different in the year 2030. If the country fails to diversify its economy and the ruling Communist Party remains reluctant to challenge vested interests, it not only loses legitimacy but could be seen as an obstacle to further economic development.

This prospect of a Chinese Communist Party on its last legs is offered by E. Andrew Eccleston, a contributing analyst for the geostrategic consultancy firm Wikistrat. It ran a “China hits the Great Wall” simulation through March in which researchers from all over the world explored the potential and likely ramifications of a slowdown in Chinese growth.

Eccleston recognizes that China’s ruling party derives much of its legitimacy from high economic growth rates. He writes, “The social contract that the CCP had offered its citizens was economic freedom and rapid economic growth in exchange for the CCP’s unquestioned political monopoly.”

That contract is now under pressure as China’s burgeoning middle class begins to assert itself politically. It will be all the more so if the economy slows down while hundreds of millions of Chinese remain in poverty.

The catalyst could be a “rebalancing” of the world economy which forces China to decrease its dependence on exports to the West and enables foreign companies to boost their sales in China.

The United States are particularly adamant that such a rebalancing should occur. They complain that China’s currency is undervalued which poses an unfair advantage to Chinese exporters over their American competitors.

“The concept of rebalancing,” projects Eccleston, “was based on the idea that China could simultaneously withstand an increase in the value of its currency while climbing the production ladder of the global supply chain. This thinking,” he adds, “greatly overestimated the strength of China’s economy and institutions.”

The transition from an economy based on cheap exports to an economy based on services and higher end manufacturing was too big a change for the CCP to manage.

China’s response would likely have come in the form of increased protectionism—which exacerbated corruption in state owned enterprises and reversed the trend toward privatizations—possibly backed by military threats against low wage competitors in East Asia. Forced by greater powers to retreat from such showdowns, the Communist Party could have only lost face.

Rather than embracing reform and extending party membership to businessmen and other bourgeois interests, Beijing’s mandarins “chose to circle the wagons and protect the interests of the existing leadership.”

Local party chiefs and mayors of China’s sprawling coastal cities could pose another challenge to the system as they win popular support by “running” against Beijing. Crackdowns from the central government would only enhance their popularity so the party grants them autonomy and privileges instead.

“This trend toward localized rule swept through the country, further reducing the CCP’s ability to govern nationally. Local politics,” Eccleston predicts, “soon became the most dynamic parts of Chinese society.”

This development caused the CCP to become even more insular as it experienced brain drain to the more dynamic polities of the coast and local government.

As a result, when confronted with popular protests against corruption, pollution or failed economic and infrastructure policies—”there are Tiananmens everywhere”—the party fails to respond to them positively and sends in the troops instead. “This is the final delegitmizing factor for the party and rather than scare the people into submission, protests explode everywhere.”

This time, “there is no figure equivalent in stature to Deng Xiaoping to plot a course of action and reconcile feuding elements within government and disagreements over how to respond to the protests.”

Or is there? In another scenario, Wikistrat senior analyst Robert Jordan Prescott suggests that “Nixon opens China, again.” Only a shrewd leader who is respected by both the party establishment and ideological purists, he believes, can proceeding with selective liberalization and safeguard China’s economic future.

“When China hits the great wall,” writes Prescott, this Nixonesque figure “is the one who saves the party and country from complete stasis.”

If China’s future hinges on the emergency of a single, powerful leader, that is only testament though to the institutional weaknesses which Eccleston exposed.

One man may be able to bring together warring factions within the party and bridge the diverging interests between party and business and cities and hinterland but for such an accomplishment to last, the party itself must open up and channel the aspirations of the whole of China. Else, it could be on its last legs in less than two decades from now.

The former committee secretary of the Communist Party of China in Chongqing, Bo Xilai

Steady as she goes. That’s the mantra of China’s ruling party. Premier Wen Jiabao knows that his country has to change its leftist ways if it is to enter the brave new world of global preeminence but old school socialists are pulling him back in, refusing to admit that China is prospering in spite rather than because of its hybrid system of central planning and free enterprise.

The natural outcome is an endless quest for compromise and consensus which especially defines the Communist Party leadership at the top.

China’s leaders must be bland and cautious lest they upset vested interests—including highly influential real estate developers, provincial barons and the captains of China’s state owned industries—or ideological zealots, many of whom barely, if at all, remember the atrocities of Mao’s “reforms” and revolutions.

One such an ideologue is Bo Xilai, the Communist Party chief in Chongqing who was sidelined this week as a result of his revivalist tendencies.

Bo was popular because he worked to curb corruption in his province but China is not a democracy in the traditional sense. The masses do not have a vote in the leadership transition that is happening this year and next. Bo did not fit the bill of colorless technocrat that is expected of one who aspires to a position in the Politburo.

His resignation appears to be part of a political crackdown. Maoist websites have been shut down. A left wing television host was fired. A public park in Chongqing, where people used to gather to sing patriotic anthems and wave red flags (Bo encouraged them to) was closed.

The measures follow Premier Wen’s warning last week that without political change, China could revisit the cruelties of the Cultural Revolution, Mao’s 1966-1976 purge of intellectuals.

Bizarrely, Newsweek columnist Niall Ferguson explains Bo’s ouster as a revival of the Cultural Revolution for the single reason that a dissident was “purged.”

Ideologically, his removal from power signifies the very opposite. There is no appetite for a return to Maoism in today’s China, at least not among the country’s elite. If there is a nostalgia for Mao’s times, however benign and superficial it may be, Beijing may not tolerate it anymore. The next generation of leadership will be as bureaucratic as the present. China soldiers on.

Prime Minister Recep Tayyip Erdoğan addresses parliament in Ankara, March 6, 2012 (Reuters)

While changes began in the foreign policy domain right from the onset of Prime Minister Recep Tayyip Erdoğan’s government, it was only in his second term and after the nomination of Ahmet Davutoğlu that Turkey’s foreign policy acquired a more “independent” flavor. Until now, Davutoğlu has been lauded for his “zero problem neighborhood” vision but as things stand today, there seems to be little merit for that praise.

Foreign affairs is one of those portfolios with peculiar pros and cons: there can be plenty of popularity gains for a foreign minister, who gets to socialize with international leaders and opinion makers, but there is also the inherent uncertainty of securing results as diplomacy depends on at least two interlocutors and the government he belongs to is but one of them.

That said, it is one thing for a particular diplomatic initiative to founder into political oblivion, it is another altogether to turn a would be close ally into a soon to be mortal enemy as was the case recently in Turkish-Syrian relations.

No one expected diplomats or politicians to predict the Arab spring but when dealing with an authoritarian regime, a crackdown on a potential uprising is a policy option implied in any dictator’s job description. Yet Turkey backtracked in its relations with Damascus.

Before Syria though there was Libya, where Turkey had also attempted to improve relations.

Here Ankara secured several profitable contracts for Turkish companies and Turkish diplomats hoped Libya would become—through the brother leader’s petrodollar sponsored political and charity ties below the Sahara—Turkey’s gateway to Africa.

Erdoğan, the humanitarian who now lectures Bashar al-Assad and Benjamin Netanyahu on human rights, had little compunction in accepting in 2010 the “Muammar Gaddafi Human Rights Award”—which he refused to return even after the Libyan revolt.

Confronted with Libya’s uprising, Turkey’s diplomacy failed to react, resigning itself to merely observing Western powers—from whom it had sought equidistance—breed a rebellion that would destroy the regime Turkey had so patiently cultivated

What could Ankara say? That Turkey had economic interests it wished to safeguard? Surely not as Turkey was then an adamant proponent of human rights after chastising Israel for its treatment of Palestinians in the wake of the Gaza flotilla incident. It couldn’t possibly now adopt a pragmatic speech favoring a dictator who referred to his own people as “rats.”

There was also the attempt at multilateral diplomacy in the United Nations Security Council earlier last year, where Turkey teamed up with Brazil to promote an alternate compromise between Iran and the West concerning the former’s nuclear program.

This too failed and Turkey, whose diplomats were rumored to be seeking to include Ankara in a potential Security Council permanent members expansion, was humiliated on the international stage. Both Iran and the West hardened their respective positions and ignored Turkey.

The very Iran that Davutoğlu and Erdoğan had wooed, by remaining largely silent during the Green movement’s protests against the ayatollahs, by promoting bilateral trade while the West embargoed and by engaging Islamist movements such as Hamas, rewarded Turkey’s “friendship” by supporting Syria’s crackdown, in defiance of the Turkish Government’s appeals for reform, and by promoting in Iraq a government headed by the Shī’ah Nouri Al-Maliki against Ankara’s preferred Sunni candidate Ayad Allawi.

Maliki is another problem as Iraq has been publicly supportive of Assad and was even touted to mediate between Syria and the West. Iraq, a country until recently half occupied by American troops and Iranian agents; a country just barely rebuilding its economic infrastructure, is now apparently more influential in the Middle East than Turkey.

Still, the Middle East is a tough neighborhood and surely Ankara’s goodwill would have paid off in less tumultuous surroundings. If it did though, it was not in Europe in spite of the fact that Davutoğlu has travelled extensively and worked tirelessly to bring to fruition his new foreign policy vision.

Apart from the all but suspended—courtesy of France and Germany—accession bid to the European Union, Ahmet Davutoğlu enacted a “football diplomacy” with Armenia to mend ties and ease tensions, visited Greece offering to delay Turkey’s pursuit of Greek debt as a good faith gesture and developed links with the Russian defense and energy industries.

Of course what was gained with Russia was disparaged when Turkey decided to hold military exercises with China outside of the Shanghai Cooperation Organization’s purview, sidelining Moscow, and more recently by seeking to isolate Syria against Russia’s wishes.

Relations with Armenia have gone nowhere largely because of the same old obstacles which had prevented it before—the unwillingness to recognize the Armenian genocide and Turkey’s preference for its fellow Turkic Azeris in any conflict over Nagorno-Karabakh.

Finally, Greece has shown its appreciation for Turkish openings by continuing to support Greek Cyprus in its political and energetic disputes with Turkey and by moving quickly to sign mutual defense guarantees with Israel following the Israeli-Turkish rift.

Bad blood between Tel Aviv and Ankara is also not entirely one sided in blame. The Israeli commandos did lose their cool on board the Mavi Marmara but Erdoğan milked the media outrage over the flotilla deaths as much as he could and moved quickly to identify Israel as a “regional threat”—hardly the actions of an ally and far from the proper reaction to what was always described as a “diplomatic incident.”

One should, on the other hand, not assign the onus for strained American-Turkish relations to the AKP Government. The United States Congress’ recognition of the Armenian genocide and the Bush Administration’s failure to curb the activities of Kurdish militants in Iraqi Kurdistan were what caused the strain. But if anyone deserves credit for repairing them, that someone is President Barack Obama, who made Turkey a personal priority, not Prime Minister Erdoğan.

When confronted by such principles as national interest and balance of power being applied by its interlocutors, Turkey’s “zero problem neighborhood” doctrine has been found wanting. Time now for some reflection on the part of Ankara’s leadership and those who made its case.

Prime Minister David Cameron and President Barack Obama observe an official arrival ceremony on the South Lawn of the White House in Washington DC, March 14 (AP/Charles Dharapak)

Western powers should “do more” to “help the opposition” in Syria said British prime minister David Cameron, even if there isn’t an international mandate for intervention.

The European leader described himself as a “conservative liberal” in an interview with Newsweek that was published while Cameron was in the United States for a three day visit.

He said to struggle with the tension between the two ideologies when it comes to foreign policy.

You get the instincts of a conservative—skeptical and worried about grand plans to remake the world—but liberal in that you want to see the spread of democracy and rights and freedoms that we enjoy here.

Cameron cited NATO’s 1999 intervention in Kosovo as an example of a situation in which the “responsibility to protect” and imperative “to save lives, to stop slaughter” trump the need for a United Nations resolution.

I’ve always thought it odd the argument that because there’s a Russian veto, suddenly all the other moral arguments are washed away. I don’t believe that.

With France, Cameron’s Great Britain was the driving force behind the intervention in Libya last year which was sanctioned by the Security Council.

China and Russia are reluctant to vote for a similar adventure in Syria because, as they see it, NATO air power didn’t just protect civilians in Libya but actively helped topple the regime of Colonel Muammar Gaddafi.

In Libya, Western powers had little reason to want to see Gaddafi gone. He was hardly a threat. In Syria, by contrast, they have a clear interest in removing President Bashar al-Assad from office. He is Iran’s only Arab ally—a country that finances terrorism and is enriching uranium, possibly for the purpose of developing nuclear weapons.

An intervention then would be “to act in a way that is both morally right but also in your own national interest,” as Cameron put it.

German Chancellor Merkel and Luxembourg's Prime Minister Jean-Claude Juncker during a European summit in Brussels, December 17, 2010 (Reuters/Francois Lenoir)

Germany’s approach to the euro crisis stems from deeply entrenched neoclassical economic views. The fundamentals of these views will not change and must be taken into consideration when negotiating with Germany, for example by making the case for pan-European investment programs instead of outright atttacking austerity as a concept.

Contrary to popular belief, Germany’s reaction to the euro crisis—its strict focus on price stability and austerity—is not a result of historical experiences with hyperinflation, a selfish intent to maintain a surplus at the expense of others, or an intent to punish southern European deadbeats.

Rather, the German approach stems from an entrenched belief in price stability coupled with budgetary discipline as the only road to prosperity. German economic orthodoxy holds that a European coordination of taxes, labor laws, retirement age, etc. is unnecessary. If everyone “does their homework” prosperity will naturally result. Hence the emphasis on fiscal discipline.

The European Council on Foreign Relations in a policy brief (PDF) recommends that member states accept these concepts when dealing with Germany. Instead of attacking austerity as such, they should demand pan-European investments, Europe level taxation and more time to implement austerity measures. The basic German position will remain the same regardless of government, even if a center left coalition may be more open to Eurobonds.

Analysis

Traditionally social democratic dominated Europe is shifting toward a more liberal (in the European sense) path.

Any solution to the euro crisis is unthinkable without German support. The economic reality of tomorrow’s Europe will thus have a distinctly German flavor. The German penchant for a strict seperation of fiscal and monetary policy, coupled with debt brakes hardwired into national law, has an obvious right wing/left wing element to it, which could affect the trajectory of European societies for years to come.

The dominance over the past fifty years of Europe’s social democratic parties is arguably waning. This can be seen in both the acceptance of Germany’s economic concepts and in the fact that center right governments now rule in most European capitals.

One variable in this scenario is, when the sense of urgency has passed, will the still strongly entrenched left wing continue its acquiescence of the German line?

A counter reaction to the current trend could be fuelled from both the left and the right. For example, by right wing nationalistic anti-German, pro-sovereignty sentiments and by left wing sentiments of Germany (and the European Union by association) favoring big business.

Wikistrat Bottom Lines

Graham O’Brien and Miguel Nunes Silva contributed to this analysis.