A perceived threat to the new EU order, which is set to help rescue Greece, Portugal and perhaps Spain and Italy, is based in part on the new governments put in place in those nations. These governments were designed to create austerity plans and follow them as a means to lower deficits and prepare to set terms for bailout funds. Now, the risk has moved to one of the architects of the new order — France. And the results of the national elections there could up-end the complex plans the region has put in place to stem the sovereign crisis.
Long-time president Nicolas Sarkozy almost certainly will lose his job to socialist candidate François Hollande. The New York Times reports that Hollande may set a new tax structure that increases the obligations of the rich. The paper also suggests that if Hollande increases national spending, France may be downgraded by one of more credit agencies.
Beyond those problems, Hollande could decide that France is in too deep, both financially and politically, in the bailout of Europe. His views may be close to Angela Merkel’s on the subject of how much weak nations should cut expenses, while Sarkozy’s are less so. Sarkozy always has shown at least a hint of concern that austerity without stimulus was not the proper solution to the region’s deepening financial crisis.
Hollande may be a better number two to Merkel in the power structure of Europe, at least as the Germans view it. This would mean there is no counterweight to her policies, which have become more set as she seeks a reelection of her own. The forces that believe austerity will drive Europe eventually into deep recession will be moved more to the margins. The drive toward even a small fund for stimulus for weak nations in the regions will end, perhaps completely.
Douglas A. McIntyre