As Greece awaits bailout, southern Europe seethes

The mood is growing surly in the south of Europe as austerity measures take hold. With unemployment at 20 percent in some countries – and youth unemployment as high as 50 percent – warnings are growing sharper about a troubling rise of populist feeling.

The current chaos in Greece presents a vivid example.

Ahead of a key March deadline, the Greek government agreed – after much political agonizing and protesters' torching of dozens of buildings throughout Athens – to a number of cuts demanded by the European Union and International Monetary Fund in exchange for a bailout necessary to remain solvent. Minimum wages and public jobs will be cut. More taxes will be raised and collected. Greece will cede a substantial amount of economic sovereignty to international lenders.

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Many Greeks are aware they hold a lion's share of the blame for their predicament. But the effect of ongoing screw-tightening by Germany, the growing admission throughout Europe that Greece is poised to default, and the Greeks' inability to see a way out of the crisis has deepened discontent and humiliation.

In the days leading up to the Feb. 13 government approval of the latest rounds of cuts, Greeks in the streets accused their leaders of betrayal for acceding to international lenders' demands. They compared the government to the military dictatorship that ruled the country until the mid-1970s.

Isn't Greece simply paying the price of reform – one that Spain, Portugal, Ireland, and Italy all have to pay, to some degree?

Perhaps. But austerity may have consequences that aren't easily seen on the accounting books: How much austerity can a democratic government impose before it loses the trust of citizens needed to make reforms?

Mario Monti, Italy's new, widely respected leader, issued a blunt warning last month to German Chancellor Angela Merkel, who has led Europe's austerity march. Without growth and greater European solidarity, public anger in Italy could cause it "to flee into the arms of populists," Mr. Monti cautioned.

Populism in Europe is a slippery term with a bad history. In the "prosperity Europe" of the past 50 years, angry populism was a memory from the 1930s or a spasm of antiforeigner hatred – skinheads, neo-Nazis, anti-elite, and anti-Europe hate groups, basically.

But in "austerity Europe" populism has a new and more powerful economic dimension: the unemployed, sitting on the street with no sense of future.

Southern Europe's democratic tradition is relatively new. Besides Greece, Spain and Portugal were also run by dictators until the 1970s.

When the Italian and Greek governments fell last autumn, technocrats were appointed to take over, rather than new leaders being elected. There is no guarantee that the next elections will bring to power those seeking the sunny uplands of democracy, rather than demagogues.

Austerity has brought a dramatic and abrupt shift to Europe's political scene. In Greece, reports suggest a shattering of the political center, new interest in the far right and left, continuing anti-immigrant sentiment, and growing support for more authoritarian politicians.

Romania's former prime minister, Emil Boc, stepped down last month amid mounting street protests against austerity.

In Hungary, run by the Soviets until 1989, strongman President Viktor Orbán has shown a willingness to change his nation's constitution and control the media to stay in power – with the backing of a growing far right.

Nor is populist feeling restricted to the more peripheral countries. In France, the far-right Marine Le Pen has been turning heads ahead of the April 22 presidential election. She looks askance at the euro, would take a protectionist approach to trade, abhors globalization and immigration, and says France is decaying.

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"Our country is in the process of underdevelopment, of Third Worldization," she argues. Ms. Le Pen now scores 20 percent in the polls and is scaring the pants off President Nicolas Sarkozy's reelection team. Surveys last month found more than 30 percent of French see her ideas favorably.

"With an austerity policy, my best prediction is zero growth for years," says Jean-Paul Fitoussi of Sciences Po in Paris. "What would change that is a rising populism," he says, which could bring political disarray, which would make things even worse. "Already, 33 percent of French agree with Le Pen about globalization and the euro. It's a definite wild card."

It may be too early for the direst predictions. No armies of brown shirts or Bolsheviks are appearing on Europe's streets just yet. Some fear and anger was dampened after the European Central Bank quietly loaned $639 billion to banks in December 2011.

But the underlying direction of Europe is not toward the robust growth and idealistic integration that characterized the Continent in the postwar era.

Rather, the current period is witnessing the disappearance of the narratives of the past decades. Talk of shared values is giving way to talk of national interests and competition. The grand narratives that brought solidarity – the cold war, the "End of History," the "Clash of Civilizations," the "Return of History" – are over. The lack of a shared project at a time of austerity is causing fragmentation, the rise of populist sentiments, and the sapping of trust.

The Italian social thinker Raffaele Simone argues in a recent work, "The Sweet Monster," that Europe is preoccupied with the surface attractions of celebrity culture and new technology, and it merely seeks to sustain its comfort levels. Such a condition, in which older narratives of justice and human rights are ignored, is a seedbed for extremism and anger he says, whether against immigrants or elites.

London-based Adam Posen of the Peter­son Institute for International Economics argued at Chatham House last month that Western economies were not on the brink, comparing them to a post-Gilded Age period of the late 20th century, what he calls "the Old Normal," and thinks a "backlash" against inequity is still a decade away.

Still, he was concerned about the speed of global changes and said the prescription of austerity may have unintended consequences. Speaking of the Irish bailout last year and Monti's warning to Ms. Merkel, Mr. Posen said, "It is mind-boggling to watch the Irish be asked to eat their children, as Jonathan Swift suggested.... It is entirely right and justified for my friend Mario Monti to stand up and say, 'If we're going to do this much austerity, you better ... give us something or there is going to be a horrible backlash.'"

The issue boils down to trust, says Felix Roth of the Center for European Policy Studies in Brussels. Trust is often indefinable, but crucial for democracy, and without it, he says, "What we worry about is that people will find their own solutions via populist leaders and say we don't [care] anymore."

Mr. Roth has worked out measurable "trust" quotients for Europe. In 2010, less than one-quarter of the populations of Spain, Ireland, and Greece trusted their parliaments, and "approximately 70 percent do not trust it anymore," he wrote in "The Eurozone Crisis and Its Effects on Citizens' Trust in National Parliaments."

Spain went from a "plus 23" trust quotient in 2008 on Roth's scale to "minus 50" in the past year. Italy's levels of trust in its institutions today is at a "minus 70," which he calls "serious."

"The opposition of citizens is growing far too strong, and we aren't talking about the Assad regime and Syria," Roth told the Monitor. "These are European states. Austerity has limits, but I'm not sure economists have put this in their models.

"To get reforms to work you need trust, which isn't there," he says. "So they won't get implemented, and that's what you have been seeing in Greece."