Facing Bogymen of Populism and Nationalism, Conservatives Cower : Summit: At Munich, the once dynamic conservativism of the G-7, based on international economic cooperation, could begin to founder.

As the Group of Seven Economic Summit gets under way in Munich, there’s growing evidence that populism and nationalism are emerging as the West’s political, financial and diplomatic bogymen of the 1990s.

The Munich Summit itself seems almost preshrunk by the belief that the international cooperation of the 1980s is ending. The attending leaders of the major economic powers are almost all crippled by low poll ratings, shaky governments and weak party systems. Popular referendum devices, once considered a quirk of exotic California, are surging in Canada and Europe. Aging diplomats, congratulating themselves over U.S. disarmament negotiations with an unraveling Russia, don’t understand that restive voters have moved on to new combats. Even Ross Perot, the billionaire populist, sounds increasingly like a man fighting an intra-GOP civil war, without understanding the angers and hopes that have lifted him.

This is a great change from the mid-1980s, when the G-7 meetings gained prominence in the flood tide of economic conservatism that remade Western politics into an elite club for tax cuts, financial deregulation and boundaryless capitalism. Today, that pin-striped conservatism and elite governance are reeling from recession-plagued economics and speculative bubbles imploding from Toronto to Tokyo. Only now--as countertides build--is it becoming clear just how far-reaching, how provocative, it all was.

Japan had been conservative since the 1950s, and Italy had a conservative-tilted coalition government. But, suddenly, conservatives won in Britain (Margaret Thatcher) in 1979, the United States (Ronald Reagan) in 1980, Germany (Helmut Kohl) in 1982, Canada (Brian Mulroney) in 1984 and even France (the short-lived center-right takeover of the National Assembly) in 1987. The right reached critical mass, its leaders and ideas holding greater sway than at any time since World War I.

True, what would become the G-7 was dominated in the late ‘50s by elderly right-of-center politicians from the World War II era. But the conservatives of the 1980s, by contrast, were aggressive true believers, who made a capitalist revolution so powerful that its deregulation and tax-cut credos reshaped economics in socialist- and labor-run nations from Scandinavia to New Zealand.

Now, two powerful countertides are unmistakable. First, voters in most of the G-7 countries, especially Britain, Canada, the United States and Japan, have been disenchanted by recessions and speculative financial debacles--the economic hangovers from the financial permissiveness of the ‘80s. Second, the end of the Cold War, which eliminated the Soviet threat and weakened old conservative political bonds, freed up voters in the West and East for the politics of nationalism and ethnicity.

The economic provocations of rising populism, however, go far beyond angry unemployment lines and real-estate and bank collapses. The increased concentration of wealth, because the rich benefited so much in the 1980s, has become a political issue in Britain, the United States, France and Japan. Controversial tax policies are a problem as well. In Britain, the hated poll tax of 1989, where a cleaning woman paid the same local tax as a millionaire, ultimately forced Thatcher out. Conservatives in Japan and Canada, for their part, put through 3% and 7% consumption taxes, which caused the former to lose the 1989 parliamentary elections and the latter to sink in the polls. Upper-bracket tax biases have also hurt George Bush in the United States.

All this has undercut the mostly conservative G-7 national leaders who strutted in the boom and now flounder in the bust. However, if most of the leaders posturing in Munich are in deep trouble back home, the opposition is also bewildered, because parties and coalitions are weakening on left and right alike.

Bush, who has seen his job approval plummet into the 30s, could lose the next election--and he’s not alone. Mulroney, with a job approval rating below 20%, is a good bet to lose in 1993, and Canada’s political party system is falling apart. Chancellor Kohl, too, has seen his Christian Democrats lose virtually all of Germany’s lander (state) elections and, with his job rating in the 30s and his party behind in polls, Kohl’s center-right coalition is in danger. In Japan, where Prime Minister Kiichi Miyazawa has a weak, thirtysomething job approval, his conservative Liberal Democratic Party is unlikely to recapture Parliament’s upper house in late July elections.

As for France, March elections documented voter disgust with both the traditional right and the traditional left. In Italy, the party system has all but collapsed. British Prime Minister John Major, whose Conservative Party narrowly retained Parliament in April’s election, may just be the strongest conservative leader. Yet Major, too, faces problems in keeping his party united in the face of populist-nationalist pressures to disavow parts of 1992’s European unification.

Americans fascinated with Perot take note: Populism’s resurgence has many facets and goes far beyond the United States. North America, for example, has a transnational populist geography. If the Perot surge is strongest in the West, the same is true north of the border; the new populist Reform Party based in oil-rich Alberta--Canada’s Texas--has moved ahead of the governing but increasingly discredited Progressive Conservative Party in the polls. In France and Germany, populist forces on left and right--France’s leftist ecology parties and Jean Le Pen’s right-wing Front Nationale, as well as Germany’s Greens and far-right Republicans--have taken so many votes from established parties that governing or potential coalitions on left and right are in shrunken disarray.

A demand for plebiscites is part of the populist surge. Denmark and Ireland have already held referendums on Europe’s economic unification, France has one scheduled and anti-unification forces in Germany and Britain are stepping up demands for a vote. French-speaking Quebec plans an October referendum on whether to stay in Canada. Perot’s idea of holding electronic town halls and conducting national referendums isn’t that radical, though Perot seems to be losing some populist spark--to Democrat Bill Clinton--as his campaign sounds increasingly like a dissenting GOP faction.

Voter hostility toward out-of-touch capitals is also escalating on an international scale. Scottish and Welsh nationalists despise London and demand self-government. Northern Italy’s populist Lombard League is more contemptuous of Rome than U.S. populists are of Washington. Western Canada’s populists wouldn’t mind seeing Eastern Canada follow Quebec into another country. Tensions like these aren’t quaint; they play havoc with party coalitions and governance.

Then there are the other intensifying nationalist issues--trade and immigration. Free movement of migrants may be good for business, but it has become a hot issue from Germany and France to the United States. Anger over excessive immigration is the major appeal of Le Pen’s right-wing Front Nationale, and U.S. polls show a growing majority worried about too many immigrants. Economic nationalism is also growing. Americans fear Japan and increasingly wonder about free trade with Mexico, but most Americans, in turn, would be shocked to hear the attacks made on the United States in France, Japan and Canada.

No doubt the Munich Summit will yield the usual quotient of joint communiques and professed optimism. However, the framework for successful economic collaboration is shrinking. Most of the men meeting in Munich are out of step with the new dynamics of the 1990s. The Pandora’s Box of populism and nationalism is unlikely to be closed by the same political elite that opened it.