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Poland’s slowing economy: Set the eagle free

The Economist: Europe — Thu, 17 May 2012 15:05:40 +0000

POLAND’S new national stadium is a symbol of optimism. The firm that built it is as German as it is Polish. Germany’s football team is also a symbol: two of its best players are as Polish as they are German. In economics, Poles and Germans get along as never before. Germany benefits from low production costs on its doorstep. Poland gains from German demand and investment. It boasts the fastest growth in the EU: this year, GDP should rise by at least 2.7%.

Yet even in Poland growth is slowing. The euro crisis has hit exports, two-thirds of which go to the euro zone. A weakening euro does not help. Poland’s unemployment seems high at 10% but that is still near a five-year low. In April the purchasing managers’ index fell. Yet Poles continue to spend freely. Inflation was 4% in April, above the central bank upper limit of 3.5%. In response, the central bank has raised its benchmark interest rate to 4.75%, having held it at 4.5% for ten months. Foreign investors remain keen. Poland (like the Czech Republic) pays less for ten-year government bonds than Italy and Spain (see chart). Jacek Rostowski, the finance minister,...

Poland’s slowing economy: Set the eagle free

Charlemagne: Angela’s new partner

The Economist: Europe — Thu, 17 May 2012 15:05:40 +0000

THE Merkozy era is over. So how to label the partnership of Angela Merkel and François Hollande? Merging first names to make Frangela is too familiar for leaders who barely know each other. Homer is too American (or worse, Greek). Merkollande sounds too close to Merkozy. That leaves just the shortened Merde, which at least sums up the state of the euro.In fact, the Merkozy duo was unique in having a nickname. It was coined at the height of the euro crisis last year to mock a duumvirate that had become exclusive, dictatorial and sometimes comical in the way a weakened Mr Sarkozy pretended to be the equal of the powerful German chancellor. Mr Hollande wants a different sort of partnership. He flew to Berlin after his inauguration in Paris to emphasise the importance and continuity of Franco-German relations. Unlike Mr Sarkozy, who would pretend to be in perfect agreement with Mrs Merkel, Mr Hollande was not shy about saying he did not see the world the same way.In the coming weeks the two sides will discuss how to reconcile the fiscal compact, the Merkel-inspired treaty to enforce budget discipline, with Mr...

Charlemagne: Angela’s new partner

Ireland’s referendum: The ayes have it?

The Economist: Europe — Thu, 17 May 2012 15:05:40 +0000

ENDA KENNY, Ireland’s prime minister, has already lost one referendum on constitutional change. He is now trying to avoid a second loss, in a referendum on the European fiscal compact on May 31st. Fears that the Irish might use the chance to vote against Mr Kenny’s increasingly unpopular coalition have so far proved unfounded. The Yes campaign has been boosted by strong support from the Fianna Fail party, in opposition and with a new leader, Micheal Martin. Mr Martin has worked hard to sell the merits of the compact. The latest polls show a two-to-one majority in favour, after undecideds (16%) are excluded.Yet it would be a mistake to take a Yes vote for granted. The Irish are as angry about the European Union/IMF austerity plans as everyone else. The view that Irish taxpayers have paid too high a price to rescue failed banks and bondholders is widespread. And the arrival of François Hollande in France, with his stated hopes of modifying the fiscal compact, plus the rising likelihood of a Greek exit from the euro, are creating new uncertainties.Irish voters have been asked to approve no fewer than nine EU treaties in the past 40 years. They have twice said no, before changing their minds at a second attempt. This time there is no Irish veto, and Mr Kenny insists there will be no second vote: the treaty will take effect when 12 of the 17 euro-zone members ratify it. And only...

Ireland’s referendum: The ayes have it?

The French president: The waterproof Mr Hollande

The Economist: Europe — Thu, 17 May 2012 15:05:40 +0000

Après Sarkozy, le déluge

FIRST he got soaked in heavy rain when parading in an open-topped car. Then his plane was struck by lightning just after take-off, forcing him to return to Paris and get another. François Hollande, who was sworn in on May 15th, promised a “normal” presidency, but his first few hours turned out anything but. Yet Mr Hollande seemed unperturbed, focusing instead on setting the tone for what he billed as a presidency of “dignity but simplicity”.With a slow presidential walk and a solemn look modelled on the Fifth Republic’s only previous Socialist president, François Mitterrand, Mr Hollande climbed up the Elysée steps, briefly waved goodbye to his predecessor, Nicolas Sarkozy, and promised the French “calm, reconciliation and unity”. Before heading off to summits in America, the leader who has never held ministerial office chose his prime minister, Jean-Marc Ayrault, dropped in (late) on Berlin for his first meeting with Angela Merkel, the German chancellor, and formed his first government.In Mr Ayrault, the 62-year-old leader of the Socialist parliamentary group...

The French president: The waterproof Mr Hollande

German politics: Rebuffed on the Rhine

The Economist: Europe — Thu, 17 May 2012 15:05:40 +0000

Merkel under fire

ANGELA MERKEL does not indulge in melodrama. So when the German chancellor speaks of a “bitter day” and a “painful defeat”, the bitterness and pain are real. On May 13th her Christian Democratic Union (CDU) had its worst-ever election in Germany’s most populous state, North Rhine-Westphalia (NRW). The Social Democratic Party (SPD) and the Greens won, and hope to again in next year’s federal election, ousting Mrs Merkel.Some saw the NRW result as another revolt against Mrs Merkel’s policy of austerity. The SPD’s leaders have launched a growth programme conceived “in close accord” with France’s new president, François Hollande. The policies of Mrs Merkel and Nicolas Sarkozy, the defeated French president, have “failed across the board,” said Sigmar Gabriel, the SPD chairman.In fact, the NRW vote had little to do with Europe or (despite nine campaign appearances) with Mrs Merkel. Her SPD predecessor, Gerhard Schröder, called early federal elections (and lost) after losing in NRW in 2005. Mrs Merkel has no such plans. She is Germany’s most popular politician and hopes for...

German politics: Rebuffed on the Rhine

The euro-zone economy: North and south

The Economist: Europe — Thu, 17 May 2012 10:17:40 +0000

STRICKEN by fears of a looming Greek exit, the euro zone has at least dodged a double-dip recession. Yet GDP stagnated in the first quarter, after a fall late last year. And that uninspiring outcome, which leaves output unchanged on a year ago, owed much to an unexpectedly strong German economy. The hope is that Germany, which produces over a quarter of euro-zone output, can pull along the rest. But the worry is that the latest bout of euro sickness may sap confidence even in Germany, aborting a broader recovery.

The GDP figures for the first quarter laid bare a widening divide between north and south (see chart). Although the Netherlands fell and France stagnated, Germany (whose economy had contracted by 0.2% in late 2011) bounced back with growth of 0.5%, an annualised rate of 2.1%. By contrast, Italy and Spain, the third- and fourth-biggest economies, ran up declines of a shocking 0.8% and 0.3%, respectively. The latest European Commission forecasts suggest that a German recovery will eventually drag the euro zone out of trouble. They show German GDP in 2012 growing by 0.7%. Euro-zone output will still fall by 0.3...

The euro-zone economy: North and south

Greece’s political crisis: Fiddling while Athens burns

The Economist: Europe — Thu, 17 May 2012 09:32:38 +0000

PITY Karolos Papoulias, the 82-year-old president who has been trying to persuade Greece’s fractious political leaders to form a national-unity government after the election on May 6th failed to produce a clear winner. Mr Papoulias, a soft-spoken former foreign minister, struggled for nine days, handing out and receiving several mandates and even making a three-day effort of his own before giving up.Success would have given Greece a breathing-space, if only a short one, to pursue urgent reforms, such as recapitalising its banks and getting on with privatisation. That might have helped it to rebuild its shattered credibility with both its European Union partners and financial markets. Instead, another election will be held, on June 17th. A caretaker government under Panagiotis Pikrammenos, Greece’s most senior judge, will run the country in the interim. Lucas Papademos, a former European central banker who led a coalition government for six months, overseeing a €206 billion sovereign-debt restructuring, was not asked to stay on.The transcripts of Mr Papoulias’s final three meetings, made public at the request of...

Greece’s political crisis: Fiddling while Athens burns

Italy’s local elections: Battered all over

The Economist: Europe — Thu, 10 May 2012 15:06:15 +0000

ITALIANS are exasperated. They are cross with politicians, parties, austerity, technocrats who seem out of touch and with a new tax on property that is all but incomprehensible. So when voters in 1,000 municipalities were given the chance to show their discontent on May 6th-7th, they grabbed it.Shaking the political establishment, the clearest winners were protest parties, above all the Movimento 5 Stelle (5-Star Movement), founded by Beppe Grillo, a comedian, satirist and tireless blogger. Italians also showed their irritation by staying at home: the turnout was seven points down on equivalent elections five years ago.The clearest losers were Silvio Berlusconi’s People of Freedom party and the xenophobic Northern League. Both parties are handicapped by leadership concerns and scandals. A criminal trial in Milan has aired scurrilous allegations about Mr Berlusconi’s private life and a financial scandal has cast shadows over the Northern League.In the 26 provincial capitals where elections were held, the People of Freedom’s vote crashed from 37.6% in the 2008 general election to a miserable 11.6%. The Northern League collapsed from 6.4% to 2.7%. Mr Grillo gloated of the right’s misfortune: “Nothing remains. They are liquefying in this political diarrhoea.” Yet the centre-left Democratic Party also lost ground, slumping from 33.9% in 2008’s election to 16.4%.Even so, with its...

Italy’s local elections: Battered all over

Serbia’s elections: Third-party success

The Economist: Europe — Thu, 10 May 2012 15:06:15 +0000

Dacic, a man who would be prime minister

ON THE national stage there was one clear winner in Serbia’s many elections on May 6th. Ivica Dacic, the interior minister in the current government, crowed that, although he did not know who would become the next president, he knew who would be prime minister. Mr Dacic, who was a spokesman for Slobodan Milosevic during the 1990s, is a politician who has resurrected himself.Although voters have made Mr Dacic quite likely to become prime minister, nothing is certain. Serbia held simultaneous local, parliamentary and presidential elections. In the presidential poll Boris Tadic, leader of the Democratic Party (DS) and outgoing president, took 26.7%. His main rival, Tomislav Nikolic, leader of the centre-right Progressive Party (SNS), took 25.5%. A run-off will be held on May 20th.Mr Tadic may well win, but he needs Mr Dacic’s backing. In the parliamentary election Mr Nikolic’s SNS and its allies emerged as the biggest block, with 73 seats; Mr Tadic’s DS and its partners took 68 seats; and Mr Dacic’s Socialist (SPS)-led group got 45. Since a “grand...

Serbia’s elections: Third-party success

Vladimir Putin: Back in the Kremlin

The Economist: Europe — Thu, 10 May 2012 15:06:15 +0000

ON MAY 7th, the day of Vladimir Putin’s inauguration for a third term as Russian president, the centre of Moscow was marked by a sense of overwhelming emptiness. The police had cleared the streets of people—supporters and protesters alike—allowing Mr Putin’s motorcade to glide eerily across the capital and through the gates of the Kremlin.Only the day before, the city had looked very different. An anti-Putin march of as many as 20,000 people turned chaotic and violent. The turnout was surprising; a smaller crowd was expected, since protesters had lost momentum after March’s presidential election. Many writers and television personalities who had joined earlier demonstrations were absent: they felt mass protest had become obsolete and that to keep demanding clean elections was ineffective. “They don’t like to write the same text twice,” said Dmitry Oreshkin, a political analyst who spoke at earlier rallies. “But politics is different—you have to repeat the same text many times over.”So the march was led by Sergei Uldaltsov, a 35-year-old far-left activist steeped in the politics of street action. Thanks either to...

Vladimir Putin: Back in the Kremlin