Written by Hilary Barnes
Keeping Europe’s monetary union, the Euro zone, from drifting onto the rocks under the pressure of each new crisis is not going to become any easier as a consequence of developments in the zone’s two key countries, Germany and France.
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In Germany, Chancellor Angela Merkel led her CDU-CSU conservative alliance to a triumph in Sunday’s elections to the Bundestag, but it was a Pyrrhic victory. Merkel lost her coalition partner of the past four years, the liberal Free Democrats, which failed to win any seats, while the CDU-CSU fell just five places short of the absolute majority that had seemed within reach.
She now has to try to fix up a coalition with either the Greens or the Social Democrats. She would probably prefer a deal with the Social Democrats, but they are reportedly not anxious to tie the knot. As junior partners in a grand coalition they would stand to get all the blame and none of the gain, as they found to their cost when they became coalition partners in Mrs Merkel’s first government from 2005 to 2009.
A deal with the Greens is possible, but it would be far from ideal. The Greens would probably prove to be awkward partners, leaving the government looking weaker and less secure than the Chancellor would like.
How this will play out on the European stage is difficult to predict, and it will take time before this becomes clearer; forming a new government may take many weeks.
An optimistic view, from the point of view of Germany’s Euro zone partners, might be that in her weakened position Mrs Merkel may be compelled to modify the rigidity of the German “ordo-liberal” insistance that other Euro zone member states, ignoring recession, must implement budget deficit reduction policies (“austerity” policy, in a word).
This policy has not been successful in reducing government debt-to-GDP ratios in the Spain, Italy, Greece, Portugal and Ireland, but has caused surging unemployment. In the worst case, Greece, the policy has generated an increase in the government debt to a level at which it is not sustainable, a fact which will be a the centre of the next Euro zone crisis later this autumn.
That crisis will be an early test for the new German government. It may be forced to concede that German taxpayers’ money will be needed to rescue Greece again and perhaps persuaded that, without some transfers of funds from strong to weak member states, the monetary union will not survive (though all speculation to that effect has so far been put to shame).
Missteps in France
Meanwhile, in France the popularity of the socialist president, François Hollande, sank to a new low, with only 23 % of respondents in a weekend opinion poll rating his performance as “satisfactory”. This his worst result since he took office in May last year. Only once in the history of the Fifth Republic has a president received a lower rating : François Mitterand’s rating fell to 22 % in 1991 and was followed by the defeat of Socialist Party government in the 1993 parliamentary election.
President Hollande is secure in office until 2017, but the electorate will have several opportunities next year to show what they think of him and his government in municipal and regional elections in the spring and the European Parliament elections in June. His Socialist Party fears the worst.
This does not place Hollande in a favourable position in coming months, when he will be trying to to persuade the European Commission to endorse his government’s deficit contraction policies. The commission does not think that France is doing enough to get its budget deficit under control, with the debt-to-GDP ratio expected (by the government) to soar to a new record of just over 95 % in 2014. The budget deficit this year once again to exceed level agreed with the commission.
The situation that faced the president when he took office was, it has to admitted, a very difficult one. The economy was in it second year of stagnation, unemployment , now nudging 11 %, was rising rapidly, and the European Commission was forcing the country to reduce the budget deficit, a combination that could only make unemployment worse.
If Hollande’s chances of becoming more rather than less popular on entering on his term of office were always slim, once he and his government got to work they became non-existent.
He chose to place the fiscal policy emphasis by big increases in taxes, especially on the rich (whom he confesses he does not like), on business and on the public at large. Tax-fatigue set in rapidly, and
Hollande announced a few weeks ago that there would now be a “tax pause”, with no further tax increases in 2014.
However, the public was swiftly disillusioned by the the government of Prime Minister Jean-Marc Ayrault, which was forced to find further increases in wage-sum social charges and other taxes. The tax pause, said Mr Ayrault, would first occur in 2015.
Unfortunately this kind of disagreement between the the president and ministers in the government has become a hallmark of this administration, with a new cock-up on one issue or another almost every week.
Law and order is the other policy that is of special concern to the general public. Manual Valls, minister of the interior, which is in control of the police force, is no less tough on crime than his
predecessors in right-wing governments (to the distress of many in his own party), but any hope that crime rates might fall with him in charge have been dashed. The statistics do not seem to be on his side, but whatever the statistics may say, some 84 % of the French believe that crime is on the increase, with the pace being set in the Mediterranean city of Marseilles, where there have been 15 drug-gang related murders this year.
To complicate matters, the ideas of Valls do not mesh with those of the minister of justice, the fiery radical Christiane Taubira, who is preparing a reform of the penal code by which virtually any one
convicted of a crime carrying a maximum sentence of less five years in gaol will be put on probation and will not be incarcerated, including repeat offenders.
One reason for thepolicy is is that Ms Taubira does not believe that prison sentences are much use as a deterrent, while, secondly, it would lead to a rapid reduction in the population of France’s seriously
One of France’s foremost psephologists, Dominique Reynie, confidently predicted in an interview in the Paris right-leaning newspaper Le Figaro on September 18 that Ms Taubira will provoke “the
disqualification of her camp in the 2017 presidential election” if the government and National Assembly finally approve her plans.
He sees the socialist candidate coming in third place in the first round vote, thus disqualified from the second round run off, which would between the candidates of the moderate right, represented by the Gaullist UMP, and the leader of the far-right, anti-immigrant Front National, Ms Marine LePen.
By the terms of the French constitution, the president is in control of foreign policy and defence policy. François Hollande scored points with France’s intervention in Mali earlier this year.
But he miscalculated when he took an early stand in favour of a punitive strike against the Syrian government for the chemical gas attack of August 21, and was then deserted by David Cameron and
President Obama. A large majority of the French fail to see how an armed intervention by France is likely to be of any help whatsoever.
The president took half an hour on prime time television earlier this month to justify his policy on Syria and other issues, but failed to make any impression on the public. It is not that he is a poor speaker, but as president his manner of speaking – often ambiguous, often failing to confront problems head on, and relying on an expressed belief that things will get better even if there is nothing or little to support his optimism – repeatedly leaves the public unconvinced.
“Ah, yes,” say articles in newspapers and weeklies that support the government, “but what if the president’s optimism turns out to be right?” It would certainly be a turn up for the book (favorable odds)!
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