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Monday, May 7, 2012

French Presidential Election 2012 Update


As expected, Socialist Francois Holland defeated the incumbent Nicholas Sarkozy, but by less a commanding margin.

Below are surveyed several different news sources with varying perspectives on the results, and what is likely to follow for France and the Eurozone.

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France 24

1. Hollande ousts Sarkozy in French presidential vote, by Joseph Bamat 

French socialist François Hollande won France’s presidential election on Sunday, with thousands of his supporters rallying across the country to celebrate the left’s return to the Elysée Palace after almost two decades out of office.

France’s Interior Ministry said the left-wing candidate claimed around 51.62% of the runoff vote to incumbent Nicolas Sarkozy’s 48.38%, with turnout at 81.34%.

On Sunday, Sarkozy became only the second French president to fail to claim a second mandate since Valéry Giscard d'Estaing was swept out of office in 1981.

According to a survey by Ipsos polling institute, half of Hollande’s voters said their first reason for voting for the left-wing candidate was to oust Sarkozy.

Sunday's election marked the end of a year-long campaign for Hollande, who won his party’s internal primaries in October of last year and came out on top in the first round of the poll on April 22.

Hollande has promised to add 60,000 new staff to the state education system, reduce the retirement age from 62 to 60 for some workers, and balance the country’s budget by the end of his five-year mandate.

2. Hollande's victory: The tortoise who beat the hare by Leela Jacinto

(Jacinto provides a brief c.v. of the new French President)

Der Spiegel

1. A New French President Predestined to Disappoint, by Mathieu von Rohr

During the campaign, Hollande very clearly positioned himself to the left. He pledged he would apply a 75 percent tax rate to any earnings over €1 million. He said he would also change France's retirement age from 62 back to 60. And he promised an end to European austerity policies -- positioning himself as the antithesis of Angela Merkel and telling his backers: "I don't want a Europe of austerity, where nations are forced to their knees."

Still, it is highly unlikely that Hollande will turn out to be a spendaholic socialist president. And he will bitterly disappoint many of his supporters as a result. Hollande will be the president of an economically ailing country. Public debt amounts to 90 percent of GDP, France hasn't had a balanced budget since 1974 and, at almost 57 percent, it has the highest ratio of government expenditures to gross national product of any of the 17 euro-zone countries. What's more, unemployment stands at roughly 10 percent, and there is an entire generation of children of migrants that has grown up in ghetto-like suburbs and hardly has any contact with the labor market. During the campaign season, these problems only played a secondary role. But, for the newly elected president, they will assume a central one.

The major question is whether Hollande can muster the power he will need to profoundly reform France. At the most basic level, he is a pragmatist and, speaking off the record, many of his colleagues have even described him as a "social democrat." He has also repeatedly pledged to usher in a balanced budget and will be measured according to how well he sticks to his word.

2. François Hollande Must Quickly Hit His Stride, by Mathieu von Rohr

...now a new era has started. And François Hollande will soon be Angela Merkel's most important partner in Europe. They are due to meet soon, maybe as soon as May 15, after Hollande's inauguration. The meeting will reveal how far apart the two really are in their political thinking, and how far they are prepared to go to push through their respective agendas. Just a few days later, the US will host the G-8 summit in Camp David, then the NATO summit in Chicago, where Hollande said he would announce that French combat troops would leave Afghanistan as soon as the end of this year. And the financial markets are sure to test the new president as well.

Hollande won't get a breather in domestic politics either. Campaigning for the parliamentary elections in June starts now. The Socialists must win a majority in order to secure a government majority, in which case Hollande will have to name his prime minister. Much depends on this election and on his choice. If he chooses party leader Martine Aubry, his opponent in the internal party primaries, he will be opting to veer to the left. If he picks parliamentary group leader Jean-Marc Ayrault, it might be a sign that he wants a more pragmatic government -- and it would be a gesture towards Germany, because Ayrault speaks German and has good links with the SPD.

Given such a packed schedule in his first 40 days as president, it is hardly surprising that François Hollande looked so serious on the evening of his victory. He faces a time of great tests and challenges. They will show what kind of a president he will turn out to be, and how far he can shift from his electoral promises. And whether he can live up to the office seized 31 years ago by François Mitterrand, who became not only a legend of the French Left, but a great French statesman as well.

The Telegraph (U.K)

France elections 2012: François Hollande victory sets EU on course for turmoil, by Henry Samuel and Bruno Waterfield

On Sunday night Mr Hollande had won 51.56 per cent of the vote compared to Mr Sarkozy’s 48.41 per cent with 90 per cent of the ballots counted.

Over 100,000 jubilant supporters gathered at Paris’s revolutionary Place de la Bastille, a pilgrimage site for the Left, chanting “François President”.

Many were too young to remember that it was here that a gigantic crowd gathered for the 1981 victory of the last Socialist president, François Mitterrand.

But even as the festivities got under way, officials close to both Mr Hollande and Mr Sarkozy were fearful of a market backlash against the Socialist’s plans to tax the wealthy and expand jobs in the state sector.

There are concerns that Mr Hollande will be unable to respect fiscal discipline targets while enacting a tax — and-spend programme that would see him create 60,000 more state education posts, partly revoke a pension reform and slap a 75 per cent tax on millionaire owners.

A senior Conservative source told The Daily Telegraph that fears France was about to reverse course would cause turmoil and uncertainty.

He said: “Clearly it’s going to focus a lot of market attention on the French public finances, which are nothing to write home about. I don’t think it is going to make life in the bond markets any easier next week.

“We haven’t chosen austerity because it’s fun. We have to do austerity, and so does France.

“He will have to be very careful about his public spending commitments and the lack of welfare reform.”


Washington Post, France’s Hollande aims anti-austerity message directly at Germany

In his victory speech Sunday evening, Hollande said large numbers of other Europeans beside France were eager for such relief from the austerity that has bogged down their economies and produced long unemployment lines.

“This is a strong message to the rest of Europe, which is falling into recession, that things can change,” declared Arnaud Montebourg, a leading Socialist figure and a likely senior official in Hollande’s government.

Merkel has suggested — although cautiously — that she would not be averse to an E.U. mechanism designed to stimulate growth. But reflecting German insistence on budgetary rigor, she has made it clear she would tolerate neither any kind of deficit funding nor Eurobonds to finance projects. Most of all, she has metronomically insisted, she will not hear of reopening the December treaty, which was negotiated in an all-night session after weeks of diplomacy by her and Sarkozy.

“We in Germany are of the opinion, as am I personally, that the budgetary pact is not negotiable,” she said at a news conference Monday in Berlin that was relayed by news services. “It was negotiated and signed by 25 countries.”

The search for economic growth, she and her aides have said, should begin with structural reforms to loosen the labor market, reduce taxes and make businesses more responsive to changing demands. Those are the types of reforms that were undertaken more than a decade ago in Germany, they explained, which contributed to making Germany’s economy the envy of other European countries today.

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