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Can the French election destroy Europe?
The Economist certainly thinks so.
ETA: Sorry, no idea why the formatting is off.
The rather dangerous Monsieur Hollande
The Socialist who is likely to be the next French president would be bad for his country and Europe
IT IS half of the Franco-German motor that drives the European Union. It has been the swing country in the euro crisis, poised between a prudent north and spendthrift south, and between creditors and debtors. And it is big. If France were the next euro-zone country to get into trouble, the single currency?s very survival would be in doubt.That is why the likely victory of the Socialist candidate, Fran?ois Hollande, in France?s presidential election matters so much. In the first round on April 22nd Mr Hollande came only just ahead of the incumbent, Nicolas Sarkozy. Yet he should win the second round on May 6th, because he will hoover up all of the far-left vote that went to Jean-Luc M?lenchon and others and also win a sizeable chunk from the National Front?s Marine Le Pen and the centrist Fran?ois Bayrou.
Mr Sarkozy has a mountain to climb. Many French voters seem viscerally to dislike him. Neither Ms Le Pen (who, disturbingly, did well) nor Mr Bayrou (who, regrettably, did not) is likely to endorse him, as both will gain from his defeat. So, barring a shock, such as an implosion in next week?s televised debate, Mr Hollande can be confident of winning in May, and then of seeing his party triumph in June?s legislative election.
This newspaper endorsed Mr Sarkozy in 2007, when he bravely told French voters that they had no alternative but to change. He was unlucky to be hit by the global economic crisis a year later. He has also chalked up some achievements: softening the Socialists? 35-hour week, freeing universities, raising the retirement age. Yet Mr Sarkozy?s policies have proved as unpredictable and unreliable as the man himself. The protectionist, anti-immigrant and increasingly anti-European tone he has recently adopted may be meant for National Front voters, but he seems to believe too much of it. For all that, if we had a vote on May 6th, we would give it to Mr Sarkozy?but not on his merits, so much as to keep out Mr Hollande.
With a Socialist president, France would get one big thing right. Mr Hollande opposes the harsh German-enforced fiscal tightening which is strangling the euro zone?s chances of recovery. But he is doing this for the wrong reasons?and he looks likely to get so much else wrong that the prosperity of France (and the euro zone) would be at risk.
A Socialist from the left bank
Although you would never know it from the platforms the candidates campaigned on, France desperately needs reform. Public debt is high and rising, the government has not run a surplus in over 35 years, the banks are undercapitalised, unemployment is persistent and corrosive and, at 56% of GDP, the French state is the biggest of any euro country.
Mr Hollande?s programme seems a very poor answer to all this?especially given that France?s neighbours have been undergoing genuine reforms. He talks a lot about social justice, but barely at all about the need to create wealth. Although he pledges to cut the budget deficit, he plans to do so by raising taxes, not cutting spending. Mr Hollande has promised to hire 60,000 new teachers. By his own calculations, his proposals would splurge an extra ?20 billion over five years. The state would grow even bigger.
Optimists retort that compared with the French Socialist Party, Mr Hollande is a moderate who worked with both Fran?ois Mitterrand, the only previous French Socialist president in the Fifth Republic, and Jacques Delors, Mitterrand?s finance minister before he became president of the European Commission. He led the party during the 1997-2002 premiership of Lionel Jospin, who was often more reformist than the Gaullist president, Jacques Chirac. They dismiss as symbolic Mr Hollande?s flashy promises to impose a 75% top income-tax rate and to reverse Mr Sarkozy?s rise in the pension age from 60 to 62, arguing that the 75% would affect almost nobody and the pension rollback would benefit very few. They see a pragmatist who will be corralled into good behaviour by Germany and by investors worried about France?s creditworthiness.
If so, no one would be happier than this newspaper. But it seems very optimistic to presume that somehow, despite what he has said, despite even what he intends, Mr Hollande will end up doing the right thing. Mr Hollande evinces a deep anti-business attitude. He will also be hamstrung by his own unreformed Socialist Party and steered by an electorate that has not yet heard the case for reform, least of all from him. Nothing in the past few months, or in his long career as a party fixer, suggests that Mr Hollande is brave enough to rip up his manifesto and change France (see article). And France is in a much more fragile state than when Mitterand conducted his Socialist experiment in 1981-83. This time the response of the markets could be brutal?and hurt France?s neighbours too.
Goodbye to Berlin
What about the rest of Europe? Here Mr Hollande?s refusal to countenance any form of spending cut has had one fortunate short-term consequence: he wisely wants to recast the euro zone?s ?fiscal compact? so that it not only constrains government deficits and public debt, but also promotes growth. This echoes a chorus of complaint against German-inspired austerity now rising across the continent, from Ireland and the Netherlands to Italy and Spain (see Charlemagne).
The trouble is that unlike, say, Italy?s Mario Monti, Mr Hollande?s objection to the compact is not just about such macroeconomic niceties as the pace of fiscal tightening. It is chiefly resistance to change and a determination to preserve the French social model at all costs. Mr Hollande is not suggesting slower fiscal adjustment to smooth the path of reform: he is proposing not to reform at all. No wonder Germany?s Angela Merkel said she would campaign against him.
Every German chancellor eventually learns to tame the president next door, and Mr Hollande would be a less mercurial partner than Mr Sarkozy. But his refusal to countenance structural reform of any sort would surely make it harder for him to persuade Mrs Merkel to tolerate more inflation or consider some form of debt mutualisation. Why should German voters accept unpalatable medicine when France?s won?t?
A rupture between France and Germany would come at a dangerous time. Until recently, voters in the euro zone seemed to have accepted the idea of austerity and reform. Technocratic prime ministers in Greece and Italy have been popular; voters in Spain, Portugal and Ireland have elected reforming governments. But nearly one in three French voters cast their first-round ballots for Ms Le Pen and Mr M?lenchon, running on anti-euro and anti-globalisation platforms. And now Geert Wilders, a far-right populist, has brought down the Dutch government over budget cuts. Although in principle the Dutch still favour austerity, in practice they have not yet been able to agree on how to do it (see article). And these revolts are now being echoed in Spain and Italy.
It is conceivable that President Hollande might tip the balance in favour of a little less austerity now. Equally, he may scare the Germans in the opposite direction. Either way one thing seems certain: a French president so hostile to change would undermine Europe?s willingness to pursue the painful reforms it must eventually embrace for the euro to survive. That makes him a rather dangerous man.
http://www.economist.com/node/21553446
Re: Can the French election destroy Europe?
I haven't read the article yet, but I had to say, the title totally made me think of this:
<a href="http://www.thenest.com/?utm_source=ticker&utm_medium=HTML&utm_campaign=tickers" title="Home D
Having not bothered to read an article with such a daft title, I think I am fully qulified to answer this question.
And the simple answer (and I know this will disappoint some Americans, because there's nothing more evil in the world than Europe) but the French election cannot destroy Europe.
Here is why:-
Europe is a group of land masses full of people. An election simply cannot destroy land masses, and also, it cant destroy people.
Plus, this is a French election, which no one but the French cares about.
Andplusalso the last time France destroyed anything was...ummm...errrr....when a wooden ship with cannons on it was the height of technology?
Lastly, France. Bwahahahahaha!
That is all. YWIA
If it were true that no one aside from France cares about the election you wouldn't have two of the biggest publications in England and Germany writing against the front runner and Merkel wouldn't be practically campaigning against him. The article is actually titled "The quite dangerous Monsieur Hollande". I took liberties with it to get people to read the article.
Also, France is the second largest Euro-zone economy. If Hollande lives up to his campaign promises it could topple the Euro.
Very interesting indeed. I'm sending this to one of my BFFs (how cute). She is currently living in Paris (and is extremely liberal--but still likes me!!)...I'll be interested to hear her take on this article, and to hear what her friends over there are thinking.
<a href="http://www.thenest.com/?utm_source=ticker&utm_medium=HTML&utm_campaign=tickers" title="Home D
DH is a financial advisor in Canada, and he's concerned about the French election. Their stock market is already quite unstable, and the election of Hollande could be quite dangerous economically.
Serious question - how feasible is it for a politician in France to keep their promises? If he wins does that automatically mean that his party has enough of a majority to be able to pass legislation?
If he were Obama and was facing the type of "we refuse to do anything he wants" stance in the legislature, I wouldn't really be so concerned.
If, however, he could actually do his reforms, then I do think it's worrying, but him as a specific threat still seems a bit overblown. The media has been predicting the collapse of the Euro and therefore Europe off and on for years. Even if this turns out to be the straw that broke the camel's back, I think that there are a lot of other factors that would have led to that result, not just him.
Another article I read said he is supposedly telling German and EU officials that he'll go along with fiscal discipline measures as long as they ease up a bit to promote growth. It also said that the Germans are counting on the fact that he'll get whacked by tanking markets if he steps out of line too much. But does someone like him care about that?
I can't believe we're looking at another season of crazy volatility because of this. I wish they would just decide on a course of action and stick with it.
le sigh.