December 1, 2016 / 9:00 AM / a year ago

Europe's long weekend presents a triple threat

LONDON (Reuters Breakingviews) - Europe is in for a tense long weekend. In the space of 48 hours starting on Sunday, Italy’s premier will face a make-or-break referendum, Austria could elect a far-right president, and Greek debt talks will reach a head. All three events have the power to revive the centrifugal forces that could send Europe spinning out of control.

The fortunes of Italy and Austria are both in the hands of voters. Recent polls suggest Italian Prime Minister Matteo Renzi’s proposal to cut the powers of the country’s Senate is likely to fail. Austria’s presidential election on the same day is a re-run of the May vote that the far-right Freedom Party candidate, Norbert Hofer, lost by just 31,000 votes.

Then there’s Greece. Finance ministers from the euro zone will gather on Monday to review how the country has performed against a set of exacting reform targets. Creditors are at loggerheads over demands that Greece deliver a sustained budget surplus of 3.5 percent of GDP, before interest payments. The International Monetary Fund and the Greek government think this is unrealistic. German Finance Minister Wolfgang Schaeuble, among others, disagrees.

Monday’s meeting is not definitive: ministers can meet again in a couple of weeks. Italy is a bigger worry, because referendums are decisive. If Renzi loses, he will at best be an ineffectual leader, and at worst forced to resign. The country’s fragile banking system needs capital which private investors are unlikely to supply in a political vacuum. The likely beneficiary would be the anti-establishment and eurosceptic 5-Star Movement.

Austria’s vote is more symbolic, but no less serious. While the president has a ceremonial role, Hofer would be the first far-right head of state in western Europe since World War Two. A victory wouldn’t necessarily translate into greater support for other far-right contenders such as France’s Marine Le Pen and the Netherlands’ Geert Wilders, both of whom face the electorate next year. But it would confirm that European values are failing to capture hearts and minds.

Greece has been a peripheral problem for the EU but it remains a source of instability. Italy and Austria are much closer to the core. If events go against the establishment, Europe will be three steps closer to a crisis.

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