Towards Russia with love: Austria’s political tilt

0:02The Economist

0:10Hello and welcome to The Intelligence from The Economist. I'm your host, Jason Palmer. Every weekday, we provide a fresh perspective on the events shaping your world.

0:24In a way, Jean-Marie Le Pen was ahead of his time. In the 1970s, France's far-right firebrand revived a strain of xenophobia that today is worryingly on trend again. Our Paris bureau chief reflects on his life at the center and then the fringes of politics. And Latin America lags behind much of the world when it comes to financial inclusion. People tend not to trust banks or see much benefit in using them. Our series, The World Ahead, finds that is changing more rapidly than it is elsewhere.

1:01First up, though.

1:10There's a story that just keeps playing out across Europe. At the ballot box, disillusioned citizens are increasingly turning toward parties of the hard and far and extreme right. Parties that were once seen as fringe players. In the Netherlands, it was Gert Wilders and his Party for Freedom. In France, Marine Le Pen and her national rally.

1:34The Alternative for Germany, or AFD Party, is steadily gaining support ahead of federal elections there next month. It is a certainty that we have no right to protect us. You might not have heard much yet about what's going on in neighboring Austria. But with some uncomfortable reminders of history, the hard right there is making its way towards leading the country. The president of Austria has asked Herbert Kickl, who's the leader of the hard right Freedom Party, to begin talks on forming a coalition government. This follows the failure of the centrist parties to try and construct their own coalition.

2:18Christopher Lockwood is our Europe editor. The FPO won the election. That happened at the end of September. And during the intervening time, the other parties tried to get together a new government that would keep the FPO out of power. But those talks fell apart at the weekend. And so the president has had no alternative but to ask the FPO to have a go at it. And so that is now happening. so help me out a bit chris place the fpo in the in the sort of political spectrum in austria the fpo the freedom party is a pretty hard right outfit they call for a fortress austria that means deportation of migrants that they say are not integrating an end to the processing of asylum claims.

3:04They won't accept any asylum seekers at all. And they are also pro-Russia and anti-Ukraine. Austria is not a member of NATO, but has been reasonably supportive of the efforts to protect Ukraine from Russia. But Herbert Kickle and the FPO say that sanctions against Russia should be dropped and the West should not be sending assistance to Ukraine. And the FPO, who's been a feature of Austrian politics since the 1980s, when it was first in government, actually founded immediately after the war by some former Nazis. They've never been at the top of government. They've served in three different governments as junior partner.

3:42But now, for the first time, they are likely to be ruling the country. And that's a very different thing. And how is it that the FBO has risen to the top here, has won that election? Well, many people in Austria feel that the established parties, the center-right and the centre-left have let them down. Incomes have stagnated. They worry about migration. Austria was hit badly by the cutting off of Russian gas. Austria's quite dependent on cheap gas from Russia or was in the past. Herbert Kickl has expressed his admiration for Viktor Orban. There's this great sort of liking for Putin and his rejection of the liberal world order.

4:23They're very tough on LGBT LGBT rights. One of the things that Kickle would like to do is have an amendment or a law that would say that there are only two sexes and no other sex could be recognised. He sometimes adopted tropes that some see as references to Hitler. So he's sometimes spoken of himself as a potential Volkskanzler, a people's chancellor. And that's upset a lot of people because that's a phrase that was used to describe Hitler. And of course, Kickle says, no, no, no, this is completely accidental, but it hasn't stopped him using the phrase. So, you know, there's dog whistles that go on.

5:00I think to call him a neo-Nazi would be extreme. There's no real evidence for that, but he's certainly not averse to playing with those tropes. And it's a story we've seen play out in lots of European countries, the sort of ousting of incumbents, of centrists, the rise of the right. But I suppose it's most relevant for neighboring Germany, which goes to the polls next month. Do you see any parallels there? So many people are concerned that this is a harbinger of the rise of the right in Germany, where the alternative for Germany, the AFD, is riding quite high in the polls. They're scoring around 20, 21 percent.

5:34That puts them in second place. They're quite far behind the Christian Democrats who are the leaders. But I think the parallel should not be overstated. There is a very strong firewall in place in Germany, whereby all the mainstream parties absolutely refuse to cooperate with the AFD. And I don't see that changing. The FBO has been in power, as I said, three times before to national level, and also in a whole string of state governments, not at the top, but as a junior partner in government. That has not happened in Germany, and there's no sign that it will happen in Germany. I think the Germans are much more wary of going in that direction than the Austrians are.

6:17Austria, in many ways, has failed to come to terms with Second World War in a way that Germany has been much more assiduous about doing. But thinking about a more temporally proximal war, though, there is still this rise of pro-Russia sentiment that seems to be spreading. Yes, it's quite extraordinary to me. You know, here is Russia posing an immediate and very severe threat to the security of Europe, not just by invading Ukraine, which propelled millions of migrants into Europe, but also cutting cables in the Baltic Sea, interfering in elections, backing hard right parties against established parties.

6:57Russia is an extremely malign operator in Europe. And yet you see in a number of countries, Interestingly, not the frontline ones like Poland or the Baltic states, which are very anti-Russia. But in Central Europe, you see this rise of really quite pro-Russian parties. So Viktor Orban in Hungary, Robert Fisor in Slovakia, now potentially in Austria, potentially too in the Czech Republic. And it is a great concern because the more of these countries you have, the harder it becomes for the EU and indeed NATO to form tough policies to deal with Russia. We may see it becoming a lot more difficult to get sanctions on Russia extended as more and more countries join this bloc.

7:44It's been possible in the past to deal with the problem of Viktor Orban when he was just one small country. But the more countries that you have supporting him, the harder it will be to push him around, essentially. But then the question becomes, why do these countries support Russia? Well, it has to do with a backlash against migration, a backlash against modern liberal values with regard to LGBT rights, probably suspicion of America, suspicion of capitalism, often large-scale capitalism, global corporations. it's a very atavistic sort of attitude, which, of course, Vladimir Putin has made his own.

8:25And these little mini Putins, these Putin followers, as I think they are, are quite happy to take on a lot of these same views. But as for Austria itself, this is not a done deal. This is still a matter of coalition talks. How do you see things going from here? Well, one thing you can be reasonably sure of is that it will take some time. The last set of coalition talks dragged on for three months before they fell apart. These will be a little bit easier, perhaps, between the Freedom Party and the People's Party, the central right OVP, as it's called. It's only two parties rather than three. That makes it a little bit easier.

8:59But still, Herbert Kicker will want a lot of things that I think will be quite hard for the OVP to swallow. On the other hand, he will have all the leverage. There's no other coalition available. the only alternative would be fresh elections in which the polls say the People's Party would do badly and Herbert Kickle's Freedom Party would do even better than it did last time. So he will be in quite a strong position to set the agenda. Thanks as ever for your time, Chris. Thank you.

9:33It's clear that these days the political scales in Europe are shifting to the right, but it's not as if that sentiment is new. There's kind of always been a strain of traditionalist, anti-immigration, nationalist, even nativist thinking lurking in Europe's body politic. For decades, politicians have occasionally tapped into it, perhaps none more unabashedly than Jean-Marie Le Pen, who died yesterday.

10:13In his 19th century mansion, situated on a bluff overlooking Paris, Jean-Marie Le Pen kept in his cluttered office a collection of nautical memorabilia. Sophie Petter is the economist's Paris bureau chief. This included a huge pair of brass stand-mounted binoculars. And it's easy to imagine the far-right leader training his angry gaze at the city below. Overrun, he would rant, like the country by immigrants, Muslims, Jews, gay people and all the others that he judged undesirable. When I interviewed him in that office many years ago now, he warned of a migratory invasion that was on its way to threaten Western civilization, at least with German military occupation, he said.

11:08They went home afterwards, but the immigrant population has no intention of leaving, he said. When you overfill a bottle, it spills. Arguably more than any other post-war leader in Europe, during seven decades in public life, Jean-Marie Le Pen was responsible for reviving an extreme form of xenophobic politics, which today has become increasingly mainstream. Here's the social police behavior.

11:44Jean-Marie Le Pen was born in Brittany to a father who was a fisherman and who died when Le Pen was a teenager. He then studied law in Paris and served as a paratrooper in Indochina, which was a French territory in the 1950s. He was first elected to the National Assembly in 1956, which was under the Fourth Republic, so before even de Gaulle founded the modern French Republic, after falling in with the early populist movement which was led by somebody called Pierre Poujade. Jean-Marie Le Pen was a blustering figure with a broad frame and he fought in Algeria to keep it French, later conceding that while he was there he, quote, tortured because it had to be done.

12:33I would say that Jean-Marie's lasting influence on French politics, though, really dates from the 1970s, after he co-founded the National Front in 1972. In 1986, under François Mitterrand, who changed the electoral rules, Le Pen and his group of assorted extremists and nativists and colonial apologists, they secured 35 parliamentary seats. and that in a way was the beginning of what the French called the Le Penisation of French minds, meaning an increasingly blunt and accepted public discourse against immigration. Jean-Marie Le Pen himself went on to stand for the presidency five times and in 2002 he secured a place in the second round against Jacques Chirac to widespread shock and consternation.

13:31Excess marked everything Jean-Marie Le Pen did, whether he was blasting out Breton songs after dinner with friends in the family mansion or relishing the provocations that often landed him in court. He declared that he had never considered Pétain, that's Vichy France's collaborationist wartime leader, a traitor, and most notoriously that the gas chambers were a mere, quote, detail of the Second World War. For his daughter, Marine Le Pen, who was the youngest of three of his daughters, she took over the National Front in 2011 and was embarking on a project to transform it from a marginal pariah movement into a party ready to govern.

14:13So she split with her father, she evicted him from the party in a moment that was for her probably quite painful in some personal respects. And in 2018, she renamed it the National Rally. In the end, the pair were reconciled. I guess that family ties prevailed over political disagreements and ambitions. Jean-Marie Le Pen was always a provocateur who thrived on confrontation and outrage and never really sought power. His daughter, on the other hand, wants to run France.

14:48Jean-Marie Le Pen very much belonged to the toxic political fringes of French politics at a time when his discourse and his provocations were rejected outright by mainstream political parties and a majority of French and European public opinion. But he also laid the foundations for a movement that has purged itself of its most extreme elements and imagery and morphed into a form of increasingly accepted hard-right nationalism. In a recent poll of the 50 favourite French public figures, only two politicians featured. They were Marine Le Pen and Jordan Bardella, her right-hand man. Jean-Marie Le Pen inhabited the unfrequentable margins.

15:37Marine Le Pen has never looked closer to power. Vive la République! Vive la France!

16:10Something like 1.4 billion people don't have a bank account. They, and the economies that they skate around the edges of, are missing out. It's harder for them to securely save, or invest their money, or to get the benefits of a formal economy. Luckily, one region seems to be bucking that trend as 2025 starts. As part of our World Ahead series, I spoke with Sarah Burke. our bureau chief from Mexico, Central America, and the Caribbean, about the change going on on her patch. In 2021, 6 % more Latin Americans had a bank account than in 2014. That rate of increase is double the global increase over that same period of time.

16:54So in 2025, financial institutions are going to try to maintain that momentum. There's still a way to go, and they're going to do so by focusing on women, rural populations, and poorer people.

17:11So what's the bigger picture in terms of the unbanked in Latin America? So about a quarter of people living in Latin America do not have a bank account. And that's lower than in sub-Saharan Africa or Southeast Asia. It's higher than East Asia and the Pacific. There's huge disparities within the region. So just under half of Mexicans over the age of 15 have an account. and that's compared to three quarters across the region more generally. So what's going on here? Are there some sort of structural reasons why so few people have bank accounts? Latin America has these large informal sectors that incentivize people to stay away from any form of formal institution, whether it's the tax agency, banks, etc.

17:53They just work in cash. There's a distrust of banks as well and a lack of financial literacy, an idea that this is not something that will keep their money secure. And then to add to that, banks in Latin America have often charged horribly high fees for things that in other places you just wouldn't be charged for. But suddenly it's outpacing the global average for growth in the sector in terms of the bank. What's different now? COVID-19, the pandemic, was really a catalyst for this. You have people stuck at home and they have to make payments digitally. Some governments decided that they'd also use this to have policies that would also try and get people to bank with formal institutions.

18:33So for example, in Colombia and the Dominican Republic, to name two, they made cash transfers to people during the pandemic and they had to be done to bank accounts. So you had to open one if you wanted to receive that money. And then governments in Brazil and Mexico introduced their own digital payment systems. These had mixed successes, but they did something. And the private sector, I think that's really the place that's making the most difference. It's kind of leapt on this and is doing things to make banking easier for people. Such as? So you have a fintech market that's growing. You have these new banks, these neobanks that are really trying to fill the gap for people, do better marketing, advertising, lower fees, etc.

19:12And this is forcing those old school banks to try and adapt, you know, have new user friendly options too. All this is being helped by the rollout of open banking in the region. Open banking is a practice that makes it possible for financial institutions to share data, obviously with all the privacy and security limits that's needed. And Brazil really is a world leader in this open banking. So to give you one example, when I walk around Mexico City, I see endless adverts for Nubank, which is a Brazilian neobank founded in 2013 and then expanded to Mexico in 2020. and it already has 7.8 million users.

19:49And this is a population of 126 million people. So all this competition and offering is driving down costs and pushing innovation. So do you think that's it then? That is Latin America on a path to much more financial inclusion? Sure, but we can't be too positive about this. There are lots of obstacles and things that could slow this growth or have it hit a wall. Lots of people do open bank accounts, but then they don't use them. And having an account doesn't necessarily translate to having access to credit. So between 2014 and 2021, the uptake of credit cards and loans in Latin America grew more slowly than the global average, even though that was when the number of new bank accounts outstripped the global growth in bank accounts.

20:34What we really want to see is more financial inclusion, and just opening a bank account doesn't necessarily do that. What we still see is inequalities across Latin America that banking inclusion could make worse. So you still see a gender gap, for example, in access to financial services. Now that narrowed globally, but has widened in Latin America. You also have people who are poor or live in rural areas who are less likely to have financial services than wealthier people who live in urban areas. So financial inclusion isn't just about where you keep your money or having a bank account in your name.

21:09It's about how people save and invest and if they're able to get a loan to start a business. So expanding financial inclusion in 2025 could really make a difference to all sorts of the challenges in Latin America, such as slow growth and high poverty rates. But it needs a lot more effort to make that really, truly happen. Sarah, thanks very much for joining us. Thanks, Jason.

21:52That's all for this episode of The Intelligence. We'll see you back here tomorrow.

22:09Thank you.