France, Italy: Living in Tumultuous Times

3 MINS READFeb 1, 2017 | 20:11 GMT

Two of Europe's most influential countries have run into some political trouble ahead of elections. In France, center-right presidential candidate Francois Fillon has been hit with new allegations that his wife and two of his children have been paid hundreds of thousands of euros for fake jobs. Fillon has denounced the claims as a campaign to destroy his candidacy in the lead-up to the presidential race in April, but he has also promised to withdraw his candidacy in the event of a formal indictment. Given the country's lengthy legal procedures, though, he is unlikely to be indicted before the election.

Fillon's immediate problem is not so much legal as it is political. Most opinion polls put him in second place for the first round of the presidential election, behind far-right National Front candidate Marine Le Pen. But a poll published on Feb. 1 ranked him in third place behind centrist candidate Emmanuel Macron. If the poll proves accurate, Fillon will not proceed to the runoff election. Most polls suggest that Le Pen will be defeated no matter who her opponent is in the election's second round. But Fillon's fate could change things.

If the Republican Party (whether represented by Fillon or a replacement candidate) fails to reach the second round of the race, millions of conservative votes will be up for grabs. Many of these voters share economic views with Macron instead of Le Pen. Macron, after all, has promised to liberalize the French economy and introduce reforms to make it more competitive, while Le Pen has promised to hold a referendum on France's eurozone membership and protect specific sectors of the French economy. Still, some conservative voters may be inclined to support Le Pen's migration and security proposals. A runoff election between Macron and Le Pen could be tighter than the polls predict.

To the south, Rome has its own problems. Italian lawmakers will start amending the country's electoral laws in late February, opening the door for early general elections later in the year. The leader of the ruling Democratic Party, former Prime Minister Matteo Renzi, wants to hold elections in June. He was defeated in a referendum on constitutional reforms in December and hopes to go to the polls when he thinks he can still win them. But the Democratic Party is divided: A small faction is mulling over the possibility of breaking away from the party and creating its own political movement. If it does, uncertainty about Italy's future will only grow.

Like Le Pen's National Front, two of Italy's three most popular parties — the Euroskeptic Five Star Movement and the right-wing Northern League — want to leave the eurozone. The Democratic Party is the only large party that still supports pro-EU policies, even if it occasionally criticizes Brussels. A split in the Democratic Party would hurt its performance in elections and could hand the Five Star Movement a victory. The Euroskeptic party would still have to reach an agreement with the Northern League to form a government, but by then international markets would already be panicking.

Should Euroskeptic parties seize power in France, Italy or both, the fate of the eurozone would be in jeopardy. Other EU members would have to start forming contingency plans. Germany's first reaction, for example, would be to try to appease the new governments. But the mere announcement of a referendum on eurozone membership in any state, not to mention in two of the bloc's most powerful nations, could be enough to trigger the currency area's eventual disintegration.

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