By Adrian Croft (Reuters)
The global financial crisis has brought nationalisation, regulation and state intervention back into vogue in Europe but the turn to the left may not last long.
European governments are pouring hundreds of billions of dollars into bank rescues and economic stimulus plans to try to prevent the crisis becoming a deep depression.
Governments in France and Italy, suspicious of free-wheeling "Anglo-Saxon" capitalism, seem happy to play a more active role in the economy to combat problems widely blamed on capitalist excess. Germany's government has also shifted to the left.
Others, such as Britain, are more likely to resume business as usual when the crisis eases, even though the merits of the world financial system are being questioned and world leaders will seek solutions at a summit in Washington on Saturday.
"People are looking to politics and the state to bail out the failures of economics and the market," said John Monks, general secretary of the European Trade Union Confederation.
"Events have taken us some steps to the left, (but) obviously there are a lot of people just trying to get back to business as usual as quickly as they can," he said.
Sometimes reluctantly, governments are resorting to policies that smack more of managed economies than the liberalism that has held sway in Europe since the days of former British Prime Minister Margaret Thatcher and U.S. President Ronald Reagan.
Deregulation has become a dirty word, and bankers earning big bonuses and oil companies raking in huge profits have become whipping boys for politicians and the media.
Many voters blame speculation and lax lending practices by banks for precipitating the crisis.
Nationalisation, out of favour with European governments for years, is back in fashion, with governments being forced to rescue banks reeling from the credit crunch.
OPPORTUNITY FOR THE LEFT
John McDonnell, a left-wing British Labour legislator, said people were asking "how did we get into this situation and questioning the system that has allowed it to happen."
"There are opportunities for the left to explain how the economic system works at present, how unfair it is and what the alternatives are," he said.
But McDonnell, like others on the left, doubts how deep the changes go and suspect that, once the immediate crisis is over, it will be back to business as usual.
"My worry is, exactly what's happening in banking at the moment, we intervene with state money, restore the financial institutions to some form of stability and profitability … and within three years they are speculating again," he said.
As finance minister for a decade, Brown championed light-touch regulation in London, a global financial centre. He now wants curbs on extravagant bonuses for bankers and is calling for an end to the "age of irresponsibility".
His government has nationalised two banks and is set to take large stakes in three others.
Simon Tilford, chief economist at the Centre for European Reform think tank based in London, said: "Some governments are actually quite keen to exploit the precedent that has been set to re-establish a more … interventionist industrial policy, or economic policy more generally."
France and Italy were among European governments that sought a more activist role in the economy, he said. But he said both of these governments were centre-right, and the shift in European politics may be more populist than towards the left.
EU CONCERNS
He said there the precedent set by bank nationalisations could make it harder for governments to resist calls to support other sectors and a more interventionist industrial policy would be bad for Europe's economic performance.
There is growing concern in Brussels that European Union states' determination to rescue banks could undermine EU rules aimed at preventing unfair government support for industry.
EU Competition Commissioner Neelie Kroes said last month Europe would "descend into chaos" if it suspended competition rules and has warned against a subsidy race.
Antonio Missiroli, director of studies at the European Policy Centre think tank in Brussels, said the crisis could lead to better cross-border regulation.
"On the industrial side, I think there could be a temporary loosening of certain rules, especially in the European Union, but very temporary," he said, referring to rules such as those limiting state aid.
In Germany, ruled by a coalition of Chancellor Angela Merkel's centre-right CDU/CSU and the centre-left SPD, the crisis has reinforced a shift to the left that was apparent before the credit crunch hit.
SPD members of government, notably Finance Minister Peer Steinbrueck, have launched attacks on Anglo-Saxon capitalism.
Centre-right French President Nicolas Sarkozy has shored up the financial system with hundreds of billions of euros of state money and has announced subsidies to protect jobs and support small businesses.
There is little to suggest support for left-wing parties is rising because of the crisis although the popularity of Olivier Besancenot, a French Trotskyist, has risen in opinion polls. His plans for a new "Anti-Capitalist Party" are well advanced.
Italian Prime Minister Silvio Berlusconi's centre-right government continues to push a right-wing social agenda.
But Berlusconi governments have never been over-enthusiastic about the free market and Economy Minister Giulio Tremonti is a vocal critic of globalisation and the free market ethos.
