Though it’s an obvious cliché (and one that has already been used here in a related story last autumn), winning the Elysée may have been the easy part for French president-elect François Hollande. Given the severity of the economic problems facing France and its euro-zone partners—and the hopes of French voters and contrasting fears of global financial markets—the real work for the newly elected Hollande now awaits. His biggest task: convincing expectant observers everywhere that his leftist mix of tax-and-spend policies to blunt the pain of debt-cutting austerity will be responsible and moderate—and just the thing needed to lift France’s stalling economy. He might consider asking U.S. President Barack Obama whether that’s a job he wants to take on, after all.
Hollande is expected to take over from Sarkozy sometime before May 15. According to his aides, one of his first moves will be to visit German Chancellor Angela Merkel. In doing so, Hollande will seek to stress his determination to renegotiate the European Union’s debt-fighting fiscal pact to add growth stimulus measures to it. He’ll also reassure her he’s not the wild-eyed, spend-happy leftist that critics claim he is. This gesture to re-establish the importance of the Franco-German partnership in Europe is also meant for another audience: international financial markets, which were down upon opening on Monday, but driven mostly by worries about the Greek elections rather than a Hollande victory analysts say most investors had taken as a given.
In other words, Hollande will seek to show critics and austerity militants that he can reconcile his promises of growth and targeted social spending with the priority of balancing France’s budget. And that the same must apply for the rest of the euro zone.
“François Hollande’s position that stimulating economic growth is required for Europe to work its way out of the crisis has become the European consensus—even if Germany is proving very slow to move from its austerity-only rigidity,” says a Hollande adviser who preferred not to be named until Hollande’s team had officially assumed office. “Compromise on the fiscal pact is not only possible, but compulsory. Far from that risking debilitating conflict in Franco-German relations, it marks an entirely new direction for Europe as a whole in its struggle to surmount the debt crisis.”
Critics, of course, denounce that as wishful thinking. They say Hollande’s claims to increase state revenues through higher taxes—mainly on wealthier people—to offset targeted spending will merely lead France down the same path that landed Greece and Spain in trouble (a rather specious argument, given the vastly different origins of those countries’ financial woes). As a result, analysts will be watching to see what Hollande moves on first among promises that include hiring 60,000 new teachers, creating 150,000 government-funded posts, lowering the retirement age back to 60 for some workers, and temporarily freezing escalating gasoline prices.
Hollande’s main objective is to prolong what could be a very short honeymoon with a demanding French public, yet still convince the markets there’s a sensible method to what detractors call his madness of spending to fuel growth. Mindfulness to investors is no little detail with France set to sell $15.6 billions in new bonds on May 17.
Another major dilemma lies in Hollande’s selection of a new government as he awaits legislative elections in June. There, too, the signals Hollande sends out may define his margin of maneuvering afterwards. The leading candidate for Prime Minister is Socialist Party leader Martine Aubry, an orthodox leftist famous (or notorious, depending on whom you ask) for authoring France’s 35-hour work week. Going with Aubry—the favorite among likely choices in opinion polls—will be interpreted by voters and markets as a move to the left.
The second favorite option in polls is Hollande’s campaign spokesman, Manuel Valls, a 49 year-old member of the party’s rightist flank, whose designation as Prime Minister would anger progressives. Meanwhile, despite holding elected positions, Valls has never served in a national post—a lack of experience Hollande also suffers. The other favorite is Socialist parliamentary leader and moderate leftist Jean-Marc Ayrault. Yet like several similarly competent but wonkish contenders, Ayrault isn’t the best-known or sexiest figure around—another Hollande weakness the new President wouldn’t want mirrored in his head of government.
Whether due to ideological, policy or popularity reasons, Hollande’s choice will inevitably provoke contrasting reactions among the leftist, centrist and even occasional conservative voters who backed his presidential run. Plus, he can’t forget rightist opponents. With the Elysée lost and the unpopular Sarkozy out of the picture, conservatives will be appealing to voters to let the right retain its parliamentary majority. That, they say, will allow the right to form a hostile “cohabitation” government by opposing Hollande’s leftist plans with conservative policies and preventing France from being entirely ruled by the left.
“Today, the new President, the Senate, most regions, a very large number of departments, (and) many big cities are (controlled by) the left,” conservative Ecology Minister and Sarkozy campaign spokeswoman Nathalie Kosciusko-Morizet said on Europe 1 radio Monday. “It would be unprecedented in France for all power to be concentrated under one party… I dream of a re-balancing during legislative elections.”
Dreams of reduced austerity pain and renewed growth and contrasting nightmares of increased spending pushing debt loads beyond all hope loom large in the minds of voters, politicians and markets everywhere in Europe now. This is one reason why the moves Hollande makes in the coming days and weeks are likely to shape his entire five-year presidency.