Instability in Europe is a worry for us all

The resignation of Italy’s Prime Minister Matteo Renzi following his thumping defeat in a referendum on constitutional reform has raised fresh concerns about an impending collapse of the European Union. Snap elections early next year now seem likely and there is a fear that populist parties with an anti-EU agenda will win power and hold a referendum on Italy’s membership of the euro zone, sparking another crisis.

But while the anti-establishment forces which led Britain to vote for Brexit and Americans to vote for Donald Trump were evident in the Italian vote, it is too early to declare Renzi’s defeat a disaster for the EU. The referendum turned on domestic issues. Some voters opposed Renzi’s plans to centralise power.

Others, no doubt, wished to register their anger at Italy’s glacial economic growth and high unemployment rate. Renzi’s unwise promise to resign if the vote went against him may have proved critical, galvanising his opponents. There was much more to this referendum than anti-EU sentiment. That said, the result will at least stall Renzi’s moves to rescue his country’s debt-ridden banks, put a block on much-needed reforms and create more uncertainty about the future of the euro zone.

Matteo Renzi’s free fall following referendum defeat mirrors his meteoric rise to power

The timing is not good. Europe is preparing for a series of crucial elections next year. France, Germany and the Netherlands will all go to the polls amid fears that populist candidates intent on breaking up the EU will secure power. Such an outcome appears unlikely. But then few predicted Brexit or the election of Donald Trump. The defeat of far-right candidate Norbert Hofer in Austria’s presidential election last weekend, however, provides some cause for relief.

The impact of instability in Europe will be felt around the world. China has invested heavily in Europe and the EU is its biggest trading partner.

Stability in Europe is in China’s interests, as it adapts to Trump’s presidency and advances the “One Belt, One Road” project. Cooperation between Beijing and the EU is essential. Europe faces great challenges. It is to be hoped it will rise to them and emerge from next year’s elections more stable and secure.