Europe's unification process since the early 1950s has been defined by its American defense umbrella and a resurgent Germany setting the dynamics to the continent's economy — and much more.
Those European activists pejoratively branded as populists, nationalists and xenophobes (which, for short, I will perhaps implausibly call Euro-skeptics) know, and some of them openly admit, that nothing has changed. Their hostility to the European Union is just a raw struggle for power, without any credible designs to re-establish prosperous, fully independent and entirely sovereign nation states.
The Euro-skeptics' appeal is mainly based on protest votes of an electorate disappointed with the political, economic and social mismanagement of governing elites.
It is, therefore, a safe bet that Euro-skeptics will get no mandate in the EU's parliamentary elections later this month to deconstruct a 70-year old work-in-progress on the European project by making the European Commission (the EU's executive authority) an empty shell drained of the massive sovereignty transfers implemented so far.
Protest vote is not enough
That, of course, does not mean that the inept, hostile and divisive talk of some front-runners to head the new European Commission won't damage the continent's unity by offering votes to Euro-skeptics riding the wave of an ever-present European clannishness and undying historical enmities.
But that won't take the Euro-skeptics too far, provided that the pretenders to the EU's top executive positions show some wisdom and devotion to the promise of European peace and prosperity.
That promise is hard to destroy. Right-wing populists in France and The Netherlands tried and repeatedly lost big in national elections. Italians and Hungarians are relative newcomers to the Euro-skeptic enterprise, and their programs are narrowly focused on anti-immigration policies and a refusal to accept Germany's overbearing political, economic and social diktats.
So, yes, the house of Europe looks divided, but it is stronger than most people believe. Its main strength comes from the Euro-skeptics' limited possibility for economic mischief.
They only have the fiscal policy to play with because the monetary policy is in the hands of the European Central Bank. But the examples of Italy and France show that the presumed scope for discretionary fiscal policies is a mirage.
Indeed, Italy's Euro-skeptic government was forced to walk back its proposed higher public spending and tax cuts at the time when fiscal restraint was needed to keep down excessive public debt and budget deficits. Creditors, including the ECB, voted with their feet, the cost of state financing went up, followed by widening debts and deficits. The result was a public outcry, insults of incompetence and a humble retreat to what creditors wanted.
France is now offering another example of the same experience. Trying to quell the ongoing social unrest and to shore up the profoundly shaken government authority with higher wages, lower taxes and other welfare spending, President Emmanuel Macron has blown a big hole in his already over-stretched public finances. His government is still trying to figure out how to pay for all of that. Everybody knows that there will be offsetting spending cuts under the guise of economic and social reforms, but that will be swept under the rug until the elections are over later this month.
Germany won't help
Those two examples show that Euro-skeptics will have to deal with difficult domestic issues before taking the hammer to the thick, decades-old layers of the EU's bureaucratic and institutional ramparts. The chaos and hardships caused by German open-door immigration policies and procyclical fiscal austerity has exacerbated problems of political, social and cultural cohesion in many EU countries in an environment of weak economic growth, high unemployment, and limited means to deal with poverty and social exclusion.
That is a huge challenge. On top of that, over the last two years the EU countries have granted protection to more than 800,000 asylum seekers and resettled refugees.
The danger now is that Euro-skeptics will target Germany as the main EU problem. That would force even moderate governments to turn on Germany as a country stifling the European growth while taking last year 155.6 billion euro of purchasing power from the rest of the EU in the form of merchandise trade surpluses. That was a whopping 68.3% of Germany's total net exports.
In spite of that, Germany refuses to prop up its stagnant economy and help the rest of the EU to revive growth of jobs and incomes. Worse, Berlin is announcing that it will continue its tight fiscal policy — with overflowing government coffers and a 1.7% of GDP budget surplus recorded in 2018.
One can see the chief Euro-skeptics — France's Marine Le Pen and Italy's Matteo Salvini — having a field day with that, while Greece and Poland want a piece of German riches for allegedly being short-changed during Germany's war reparation payments.
In the midst of all that, there is one thing Euro-skeptics cannot change: Washington is underwriting their security. The Euro-skeptics know they cannot have a similar degree of protection as largely irrelevant nation states detached from a powerful European economic block and the trans-Atlantic military alliance.
Investment thoughts
A protest vote against the political, economic and social mismanagement of Europe's governing elites is a mainstay of Euro-skeptic constituencies who know that letting off steam is no substitute for credible solutions to their jobs and incomes.
Euro-skeptics, therefore, will get no mandate in forthcoming parliamentary elections to eviscerate the European Commission and deconstruct the European project of economic and political union.
The trans-Atlantic military alliance and the dominant weight of the German economy will continue to play the key role in the EU's security and in what remains of its welfare state.
Attacks on Germany's refusal to conduct a more balanced economic policy are almost certain to get stronger. As always, Germany — nearly one-third of the monetary union — will continue to deflect calls for a "locomotive" economy. That is a problem for the euro area demand management. The long-suffering French and Italians could also finally decide to confront Germany's excessive and destabilizing mercantilist policies.
Investors, however, should have no doubt that the euro area monetary policy will continue to provide ample support to the economy and the euro-denominated asset markets.
Commentary by Michael Ivanovitch, an independent analyst focusing on world economy, geopolitics and investment strategy. He served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York, and taught economics at Columbia Business School.