By Jan-Willem Prügel. Originally published on 2012/05/09

Today the new president of France was sworn in. Who is the new president of France, and what will his rule mean for Europe.

The Agenda – International Politics and the Franco-German Axis

Less rosy seems the international field, where Hollande will soon have to demonstrate, if he can assert France’s interests among the global players. For once he plans to withdraw the French troops ahead of schedule from Afghanistan, thereby contradicting Sarkozy’s earlier promises. Granted, the total number of military personnel is only about 3,600, including 2,400 combat troops. However, the action’s symbolism will certainly be frowned upon by the U.S. administration.

Less predictable is the nature and impact of his intra-European policies. So far the tandem of Angela Merkel, the German chancellor, and Nicolas Sarkozy held the powers of Europe in check to follow a rigid dogma of austerity and harsh reductions of government spending. That helped to assuage some of the pain that the Euro crisis had ripped into the body of the currency union. Mr. Hollande, however, has repeatedly emphasized his wish to renegotiate the fiscal pact that was only recently signed by his predecessor. According to him, austerity is to be relinquished in favor of growth stimuli. He also announced to have the treaty amended in order to bestow a larger mandate upon the European Central Bank and have “project bonds” introduced to finance investment and infrastructure projects. The French president has already stressed his resolve to “block” the treaty if his wishes went unattended. To strengthen his credibility, he plans to balance France’s budget, as mentioned, by 2017. Merkel, however, has already responded that she is not willing to reconsider the current treaty as it has already been discussed in length and signed by 25 countries. The two governmental executives have yet to meet in person; however, their cooperation will be paramount to Europe’s future. Whether “Merkozy” can turn into “Merkollande” will show only eventually, but is not entirely improbable. After all, Franco-German partnerships of different political persuasion have also worked well in the past, even if they tended to be burdened with quarrels of strong egos at first.

Political uncertainties blow fiercely across Europe

Merkel however, will need a strong ally in Europe to help press the course of austerity further. Unfortunately for her, she is losing ground on two borders: For once internationally, where two important supporters, Nicolas Sarkozy and the Dutch Mark Rutte, who resigned last month as prime minister after an impasse on budget negotiations, are both no longer in office. Their successors have yet to display the same level of loyalty to their German partner. On the other hand, the Christian Democrats’ power is slowly crumbling within Germany. Only last weekend did a coalition led by the German Social Democratic Party (SPD) oust Merkel’s long-favored CDU in the state election of Schleswig-Holstein for the first time since 1950. That is the fourth federal state lost within two years.

With Mrs. Merkel’s influence questioned, the role of Mr. Hollande becomes all the more important for the proponents of the fiscal pact. Only if he and his administration respect the treaty, will countries such as Greece and Spain, whose people are already fed up with the austerity imposed upon them, follow suit. Especially Greece has shown a strong will to disregard the agreement. The latest national election yielded a frightening result and at the same time depicted the frustration of the Greek people with their political leaders: About a third of the votes went to extreme parties on both the left and the right, leaving the moderate and formerly reigning parties with immense difficulties to build a functioning administration. The negative attitude is not entirely without reason. Over 50 % of the Greek young are without a job. A left alliance called Syriza that received the second most votes is entirely against Greece repaying its debt. A Greek consolidation course as intended by “Merkozy” will, without a doubt, be very difficult to implement under these conditions.

The European debate has moved sharply away from austerity. Hollande’s victory was backed by the political mayhem in Greece, the collapse of the Dutch government and protests in Spain. The French vote has in turn unsettled the center-right governments across Europe, while their center-left adversaries could draw strength for their own purposes. Many interest groups, parties and governments within Europe, but also around the world, such as China and Venezuela, were delighted with the turnout of the French elections. Hollande has the support of Europeans, who no longer wish to have their living standards threatened by an austerity regime conducted by Berlin and Paris. He has become the leading voice against it. However, much of his soothing words were spoken during a political campaign. Whether the graduate from one of France’s elite business schools, who once applauded the market-friendly policies of the British Labour Party, is really that much of a Socialist, is still unclear. As of now he lets the world know that he intends to champion Mrs. Merkel’s dominance over the fiscal debate. However, 2013 is drawing near and with it the 50^th anniversary of the Franco-German “Élysée Treaty” that once commemorated the two nations’ mutual trust and cooperation. Maybe the two leaders will use this occasion to draft a solution that will both be in their own and Europe’s interest and steer the trade union back into safe waters.