WASHINGTON—The political consequences for the European Union of bailing out Greece, Ireland and very likely Portugal are disturbingly clear: a rise of populist sentiment around the continent cunningly exploited by nationalist parties once considered on the fringe.

True Finns, a party led by a 48-year-old firebrand leader named Timo Soini, captured almost one in five votes in Finland’s recent general election. Given the nature of a political system that makes coalitions unavoidable, the result has placed True Finns in a strong position to be a part of the new government. Although the economic crisis and, to a lesser extent, immigration partially explain this success, Soini made a point in the last few weeks of the campaign of putting much greater emphasis on the bailouts of Greece and Ireland and what he saw as the imminent rescue of Portugal.

In France, the far-right National Front, now led by Marine Le Pen, has surpassed President Nicolas Sarkozy and his center-right party in the national polls, and did well in the recent regional elections. The transfer of wealth from one part of Europe to another has been central to Le Pen’s message, overshadowing immigration, the traditional punching bag. In the Netherlands, Geert Wilders, a nationalist leader who has propped up the minority government, is voicing populist sentiments regarding the bailouts too. Although no such leader or party has yet exploited the social frustration in Germany, that country’s key role in rescuing southern Europe has led to an electoral revolt against Chancellor Angela Merkel, who lost a major state election in Baden-Wurttemberg. It is not inconceivable that a populist movement will emerge—or that elements of the mainstream parties, including Merkel’s Christian-Democrats, will adopt an anti-EU position.

Things get worse. The rescue packages have simply gained some time for European decision-makers. Portugal’s proposed $115 billion package, as was the case with the Greek and Irish bailouts, is designed to let the recipient breathe while reforms are implemented and an economic recovery makes it possible to outgrow the heavy debt. But there is no meaningful economic growth and the debt burden in all three countries is projected to increase. Eventually the bailed-out countries will need to go back to the markets to borrow more.

There was a better alternative. That would be, as Chancellor Merkel timidly suggested at the beginning of the eurozone crisis, to go ahead with that most exquisite of euphemisms, debt “restructuring.” In plain English: to let people who took irresponsible risks lose part of the debt they continue to hold. Yes, this would have hurt some banks in northern and central Europe that hold bonds from southern Europe. But what was the point of rescuing those countries if in the end southern Europe is inexorably headed for debt “restructuring” anyway?

The political price has been the strengthening of populist extremism. This social and political current has been a feature of the EU for a while, rising and falling according to the level of social resentment at whoever happened to be a convenient scapegoat. But there may come a time in which the persistence of the causes, real or imagined, of this social anger take the nationalist phenomenon to a new level. The cause for anger is more real than it has been in recent years. It is better to confront it now. I don’t see how Europe continues to postpone purging itself of its excesses without incubating further resentment.

Those who virulently pressured Germany and others into subsidizing southern Europe and to some extent other troubled economies when they expressed early misgivings failed to see that the fundamental cause of the eurozone problem was always the fact that the euro was treated not as a currency but as a political instrument for binding together very different economies under an inflexible mechanism. The rescue policy is one more turn of that impossible screw.

Extremists rise in civilized nations when the madness of things makes their outbursts sound reasonable. On the eve of the Finnish election, Timo Soini said: “Every time a country was rescued, the European authorities promised public opinion that there would be no more bailouts . . . the Nordic people are tired of paying for the southerners’ parties.” He sounded reasonable. And very scary.


CORRECTION—In a recent column, I stated that, according to a recent survey, 52 percent of Peruvians would back a military regime. The correct figure is (an equally troubling) 42 percent.