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Friday, 21 August 2026dailybeirut.com
World
The escalating Trump-Iran crisis is rapidly morphing from an economic shock into a deep political crisis for Europe. Rising energy prices and slowing growth are battering fragile European governments, fueling public anger over soaring costs for food, transport, and housing. This economic strain is eroding trust in national governments and EU institutions, creating fertile ground for populist and far-right movements. European officials fear a shift toward isolationist policies as key elections loom, particularly in France, where far-right parties could capitalize on the turmoil. With stagflation looming and limited tools to respond, the crisis threatens to destabilize mainstream politics across the continent, opening the door to a new era of political uncertainty.
The escalating confrontation between US President Donald Trump and Iran is heading beyond being merely an economic shock, gradually transforming into a deep political crisis within Europe, amid rising energy prices and slowing economic growth — placing European governments before mounting challenges with limited tools available to deal with the repercussions.
In Brussels, concerns are growing that this crisis could destabilize the mainstream political current within the European Union, especially with increasing economic pressure on governments already suffering from fragile financial situations; a development that could open the door to the rise of populist and far-right currents in several European countries.
Economic pressures fueling popular anger
The continuous rises in energy prices are having direct effects on living costs, including food, transport, and housing — placing intense pressure on low- and middle-income households, according to Politico.
As this pressure widens, popular discontent increases and trust in both national governments and European institutions erodes.
European officials warn that this situation could reinforce a shift toward isolationist and protectionist policies, at a time when several governments face decisive electoral tests — most notably in France, where far-right parties could exploit this climate to achieve significant political gains.
Economic crisis turning into stagflation
The economic crisis in Europe is worsening as the closure of the Strait of Hormuz continues and oil prices rise above $100 a barrel — placing the European economy before a "stagflation" scenario, where weak growth coincides with rising inflation rates.
Estimates indicate that this crisis is no longer temporary but is set to leave long-term effects on the European economy — prompting major countries such as Germany and Italy to lower their growth forecasts for the current year, amid expectations of broader revisions to economic estimates in the coming period.
European divisions and limits of financial response
Faced with the crisis, EU member states are looking for ways to mitigate the repercussions without causing the debt crisis to worsen, especially given ongoing financial burdens resulting from the COVID-19 pandemic and the previous energy crisis.
The proposals on the table include measures such as cutting energy taxes, providing targeted support for the most affected households, and investing in energy infrastructure — but these measures clash with a difficult financial reality, as many European countries no longer have wide room for spending.
The crisis has also revived traditional disagreements within the Union between northern countries calling for fiscal restraint and southern countries demanding more financial support, at a time when additional challenges loom with the approaching start of repayment of the EU's joint debt from 2028.
In the final analysis, Europe appears before a complex test, where economic pressures intertwine with political challenges — threatening to reshape the political and economic landscape of the continent in the coming period.
