France and Greece poised for crucial votes on Sunday
PARIS — France and Greece vote Sunday in elections that will be closely watched for the future of the European Union and the euro. The votes will once again highlight the emerging crux of the euro crisis: Will democratic politics offer a solution to the economic crisis or just make it worse?
Anxieties are rising again over the shared currency, and these elections are likely to be another blow to a German-designed austerity plan to cure the eurozone’s debt and banking crisis. If the French Socialist candidate, Francois Hollande, wins the presidency, as the polls suggest, he plans to challenge Germany, vowing to renegotiate an EU treaty mandating deficit and debt limits in order to add a new emphasis on economic growth.
“It’s not for Germany to decide for the rest of Europe,” Hollande said on the campaign trail. “If I am elected president, there will be a change in Europe’s construction. We’re not just any country: We can change the situation.”
He intends, he said in a fierce debate Wednesday night with President Nicolas Sarkozy, “to give a new direction to Europe.”
Hollande’s words may have a degree of campaign bravado, but he is riding a wave of political resistance to austerity that has brought down even the government in the Netherlands, one of the best-run economies in Europe and a close ally of Germany.
Given France’s importance, if Hollande wins he might end up leading a sort of “growth bloc,” which would challenge the German medicine, or at least try to dilute it.
With the eurozone relapsing into recession and unemployment at 10.9 percent, a record high, the head of the European Central Bank, Mario Draghi, has already called for a “growth pact” in parallel to the fiscal pact.
“There is a race between politics and economic adjustment,” said Jean Pisani-Ferry, director of Bruegel, a Brussels research institution. “We see incumbent governments replaced by others that carry on with painful adjustments. But how long does it take for both sides to be discredited in public opinion by the pain of adjustment?”
The German chancellor, Angela Merkel, struck by the Dutch collapse and stirrings of unease among the opposition Social Democrats, appears to be listening, anxious not to be isolated in Europe and looking to make a gesture toward Hollande, should he win. She is talking herself about new ways to produce growth, including increased lending by the European Investment Bank and using EU funds in a more targeted fashion.
“Growth” is easier to advocate than to produce, of course, and Germany remains opposed to sharp increases in public spending or higher targets for inflation.
Growth is already on the agenda of the EU summit meeting in June, so that would be an easy place to give Hollande an early victory, however symbolic.