French presidential frontrunner Francois Hollande, of the
Socialist Party, could prompt major changes to the German-led
austerity model, which much of Europe is already rising up against.
French elections on Sunday will likely speed up changes to the
core European dynamics that have steered the eurozone's path through
the economic crisis, particularly if socialist Francois Hollande,
who is leading President Nicolas Sarkozy narrowly in the polls,
scores a victory.
Mr. Hollande seems certain to set in motion a change to the
strict German-led austerity measures that have so far allowed Berlin
to dictate steep spending cuts in national budgets, even as the
European debt crisis spilled over into a political crisis, with five
governments falling and streets filling with protesters.
Mr. Sarkozy has worked shoulder-to-shoulder with German
Chancellor Angela Merkel to bring the model of spending cuts and
balanced budgets into play. Only a few months ago, when European
Union members signed a "fiscal compact" setting the new economic
approach in stone, the austerity prescription looked ironclad.
But Hollande has campaigned on plans to incorporate elements of
growth into the austerity mandate, an idea bolstered by support from
Mario Draghi, head of the European Central Bank, who has suggested a
"growth compact" for Europe. Across Europe, even some adherents to
austerity are beginning to question it as a solution to the economic
crisis. So when Hollande promises a "new direction for Europe," as
he did in his only debate with Sarkozy on May 2, the promise may be
more than rhetorical, analysts say.
"We are entering a period where all cards are not yet on the
table, where various conflicting logics in Europe, economic and
social, are testing each other," says Karim Emile Bitar, senior
fellow at the Institute for International and Strategic Relations in
Paris. "We are approaching a fault line: How much austerity can
growth proponents accept, and vice versa?"
Hollande is part of a larger movement
A Hollande victory would not take place in vacuum. Anger and
frustration with austerity is rising across the continent, as seen
in marches in Prague and Madrid, pushback from some of the austerity
model's former strongest backers (like the prime minister of Spain),
the collapse of the ruling coalition in the Netherlands, dissent
among leading German politicians, and the general angst in Italy,
Greece, Ireland, and Portugal.
And of course, there is worry in France itself, which had its AAA
credit rating reduced in January and where unemployment hovers at
nearly 10 percent. (There is also a fear in France that there could
be a market backlash to a Hollande victory, which would bring in a
socialist government for the first time in 17 years.)
By challenging austerity, Hollande would likely position France
as a lever between the debt-ridden southern tier of Europe and the
prosperous German-led north, creating some "creative tension" with
Germany over basic direction, as Ulrike Guerot of the European
Council of Foreign Relations in Berlin puts it. …