Recent Elections Tell a Surprising Tale

WSJ

The European People's Party accounts for 14 of the 27 heads of government who make up the European Council. And it is about to get a 15th.

Unless you're familiar with the politics of the European Parliament, the significance of this development may not be immediately apparent. And don't feel embarrassed if you're not aware of how the more than 700 members of the European parliament break down in terms of party lines—very few Europeans know much about the parliament's makeup.

But what this signifies is slightly counterintuitive, and more than a little encouraging if you invest in European government bonds or run a business. It may even be encouraging if you do neither.

Because in the wake of the biggest financial crisis since World War II, a crisis that has its roots in irresponsible banking, amplified by the free movement of capital and light-touch regulation, Europeans haven't flocked to left-leaning or socialist politicians pledging to reverse the market liberalization and financialization of the past two decades.

Indeed, in almost every contest that has taken place since the financial crisis, the parties of the center-right have triumphed. And they are about to do so again in a country where irresponsible banking and almost nonexistent regulation have destroyed a once-thriving economy.

Barring some last-minute gaffe of unimaginable severity, Irish voters will Friday choose to replace a center-right government with a different center-right government.

Fianna Fáil appears set for a heavy defeat as voters take their revenge on a party that presided over and encouraged a huge property bubble, and then spent tens of billions of euros bailing out the banks that had financed it.

Irish voters might have been forgiven for lurching to the left, voting for the mildly left-of-center Labour Party or the very left-of-center Sinn Fein.

But weekend polls suggest they have decided not to, instead giving their backing to Fine Gael, a right-of-center party that belongs to the European People's Party.

Enda Kenny, Fine Gael's leader, will almost certainly become the 15th EPP member to sit on the European Council, the grouping of heads of state and government that makes the European Union's big decisions.

Not so long ago, it seemed the left would be the big gainers in the Irish elections, which might have had implications for future contests across Europe. After all, the Irish elections are the first to be held in a country that has been forced to launch an austerity program, and they won't be the last.

Instead, Fine Gael has surged in the opinion polls, and now appears on the verge of an achievement that would have been unthinkable a few years ago—forming a government by itself. This hasn't happened in Ireland since 1977, and Fine Gael hasn't managed it in a history that goes back to 1933.

With taxes rising, pay and jobs being cut, welfare benefits slashed and emigration once again the result of economic failure, you might conclude that if the Left can't win in Ireland, they can't win anywhere.

But before jumping to that conclusion, a word of caution. What Irish voters are chiefly interested in doing is punishing Fianna Fáil, which has dominated politics since it first formed a government in 1932. And the best way of punishing Fianna Fáil is to give its longtime rival the unexpected and probably undeserved boon of governing by itself, without having to come to terms with Labour, its usual partner in coalition.

So when Mr. Kenny travels to Helsinki for a March 4 meeting of EPP leaders, he will either already be prime minister, or days away from taking the job. And he will join most of the big beasts of European politics—German Chancellor Angela Merkel, French President Nicolas Sarkozy and Italian Prime Minister Silvio Berlusconi.

The March 4 meeting was convened to agree a common approach to a March 11 summit of leaders from the 17 members of the euro zone at which they will attempt to make some progress toward reaching a "grand bargain" that both improves and makes permanent the currency area's mechanisms for dealing with fiscal crises, and sets in train economic reforms designed to prevent another crisis.

The EPP leaders can't themselves seal an agreement and simply present it to the few remaining socialist leaders in the euro zone or in the European Council, but they can come pretty close.

What does this say about the way Europeans view the current crisis? Clearly, they don't really blame capitalism or the financial markets, though there is undoubtedly a lot of resentment toward banks and bankers.

Their rejection of left-wing options at various elections since the crisis started, and most likely in Ireland, suggests they have been persuaded that it is the socialist past and the public sector that are at the root of Europe's fiscal woes.

Europeans may rage at bankers, but they don't vote for parties that are likely to target them. Instead, they vote for parties that are likely to target welfare programs and public-sector jobs.

That may not last for long, and the lurch to the left may yet come, particularly among a generation of young Europeans that is struggling and will struggle to find jobs.

But for now, capitalists can probably sleep fairly sound at night. Fine Gael isn't the kind of political party that reschedules government debt unless there really is no alternative—if anything, it is more likely to honor the debt at the cost of impoverishing the people.