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The French Election That Could Blow Up The World

Billions of people who don’t know and don’t care that the French are having a presidential election this spring could get the shock of their lives.  A victory for Francois Hollande, challenging Nicolas Sarkozy for the presidency could bring the euro down and plunge the world back into recession.

And Hollande is not only ahead; the latest polls show his lead is increasing. Hugely: he now leads Sarkozy 58-42 when voters are asked how they would vote in a two-man second round.  (French presidential elections go in two rounds; if nobody gets a majority in round one, the two candidates with the most votes have a runoff.)

That’s a big lead, and at some point investors are likely to notice.

Under the Charles de Gaulle inspired constitution of the French Fifth Republic, the President of France has much more power than the US president and is the most powerful head of state in the EU. (In most of Europe, relatively powerless constitutional monarchs or presidents serve as heads of state while prime ministers and chancellors control the workings of government from a base in the legislature. France is the exception.)

Nicolas Sarkozy is up for re-election (French presidents can serve up to two five year terms, down from seven years in de Gaulle’s day) this spring; his leading opponent is Francois Hollande.  Nobody knows what Hollande will do once in office, but in the campaign he has been attacking Sarkozy’s policy of working closely with Germany to resolve the European debt crisis.

He wants France to head in pretty much the opposite direction. Hollande wants a new basic treaty to govern Franco-German relations and has attacked the Merkel-Sarkozy agreements on the euro. He is a far more anti-bank, anti-finance candidate than Sarkozy and wants a much more expansionary fiscal policy for the EU as a whole.

Hollande is probably lying about some of this; the US isn’t the only country where politicians will say anything to get the job and then do whatever it takes to keep it even if that means breaking their campaign pledges. But his election will throw a monkey wrench into Europe’s plans to cope with the euro crisis at a time when the world still wonders whether the Europeans can get their act together.

Chancellor Merkel’s decision to campaign for her colleague Sarkozy only raises the ante. Somewhat shockingly, she is not only campaigning for Sarko, she snubbed Hollande by refusing to meet with him before the election.

Merkel’s stance makes sense from an EU-federalist point of view. As the European countries grow closer, political parties need to transcend national frontiers. In the European parliament, parties from different countries form continental coalitions in proto-superparties at the European level and logically the unification of Europe requires this.  That a German conservative would support a French conservative against a French socialist is only logical — just as in the US a Republican governor from one state would support a political colleague against the Democratic incumbent governor of a neighboring state.

But since French nationalism and fear of growing German dominance in the EU is an important force in the political scene this year, the plan may backfire. Hollande is charging that in effect Sarkozy is Merkel’s poodle; the result could be the election of a French president on an anti-Teutonic, anti-austerity wave.

As the election gets closer, if Hollande continues to lead in the polls and continues to talk about changing directions for France, the uncertainty will grow — and in jittery financial markets, uncertainty is not a good thing.  Sarkozy will probably try to exploit this, warning that a vote for Hollande is a vote for financial crisis and depression, but all told this means more risk in a situation where calm, clarity and stability are what the world needs.

The French should vote for whomever they please; Via Meadia has a hard enough time finding candidates to endorse in US elections, much less telling the whole world how to vote. But the appearance of discord between the current leader of Germany and the future leader of France is not the best possible sign at a time when the world wants good news from the EU.

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  • Andrew Allison

    The eurozone house of cards will tumble, whether due to the inevitable Greek default or regime change in France. Better sooner than later. It’s not as if Merkozy has managed the crisis well. Their primary objective appears to be to socialize as much as possible of the losses on Greek debt. Lenders who made bad loans, or failed to insure repayment should pay the price.

  • OJFL

    I still do not understand why the French will elect a socialist instead of Sarkozy. What François Hollande proposes is doubling down on what has led to the European collapse. And still people will elect him. Go figure.

  • Fred

    The American public apparently has no monopoly on idiocy.

  • Kris

    Mais bien sur, France will solve the European economic crisis on its own. Screw Germany and the UK!

    Contra a widely-held opinion, the reason foreigners continue “trusting” the US economy is because of its relative virtues.

  • Jacksonian Libertarian

    58 to 42, wow it looks like Sarkozy is toast. It’s likely for the best, the EU and the Euro are both so badly flawed they need to fall, and the quicker the better.

  • Carlos

    You all say that so glibly, as if the collapse of the EU is welcome despite the terrible consequences of such an event.

    • Walter Russell Mead

      @Carlos: If you’ve been following the coverage here regularly, you’d know that we don’t want to see Europe fail and are greatly concerned about the possible fallout in Europe and beyond.

  • Corlyss

    I pray for Hollande to succeed Szarko. Europe needs to come to its senses and leave behind this fatuous fraudulent construct, the EU, and stop trying to become something it never can,i.e., a united states of Europe. They have nothing in common with how the US started out. Technology will not allow Europe the necessary period of isolation from critical events in which to form such an entity. What they have produced is a dangerous fiction, an anti-democratic model of tyranny by bloated bureaucracies whose only purpose is to expand their fiefdoms and thereby justify their own existence.

  • Aaron

    It sounds like this “Socialist” might stand up to the loonies at the European Central Bank and speak up for accepted, mainstream economic theory, like “don’t cut everybody’s budget in the middle of a recession.” Somebody needs to tell the Germans not to be such…

    well, you know.

  • dearieme

    “Europe” can’t fail, being but a bit of geography. If you mean the EU, say the EU. Personally, I’d love to see the EU fail, since it’s a bloody awful structure and effectively unreformable. Better to start again.

  • Tom Richards

    Carlos, I think what you are missing is that most of us who take the position you describe believe that the collapse of the EU is inevitable. We know that the consequences will be deeply unpleasant; we simply think that the longer they are put off the more unpleasant they will be.

  • Jim.

    @Tom Richards —

    Exactly, the EU’s collapse is inevitable.

    The only alternative — the effective indenturing of the productive peoples of the continent — is too great an injustice to tolerate.

  • Kris

    Aaron@9: “accepted, mainstream economic theory, like ‘don’t cut everybody’s budget in the middle of a recession.'”

    This might carry more weight if it hadn’t long morphed into: “Don’t cut budgets, ever.” As predicted by us paranoid killjoys.

  • Robert

    Why do so many people here think failure is inevitable? My personal view is that marginal economies like that of Greece will be forced out of the euro-zone, as they have little to back up the promise of austerity-now-for-future-prosperity, including a lack of will to do anything about either.
    The European Union grew largely out of a desire to ensure there wasn’t another devastating European war, so those in the cloistered world of US politicking shouldn’t make bold but unfounded assertions that the USA had a common interest in its own founding, while the EU did not. In fact, the idea of a united Europe stems from the 1814 Congress of Vienna, whose outcomes worked reasonably well for 100 years, but which was held ironically at the time the British were giving the fledging USA a military drubbing.

  • Paul

    Don’t worry too much. By the time Hollande receives a slap from Merkel, things will be back to normal.

  • JCP Brown

    I’m going to make a case for voting for Hollande. My main concern is not the best candidate in an absolute sense, but rather choosing the best one of the available options at the present juncture: a between the lesser of two evils. France is undergoing something similar to what you mention as the reform of the Blue social model. It has to go from point A to point B, so to speak.

    I identify myself as a “liberal” in the French sense (ie, a free market liberal) and I’m gunning to vote for Romney for US prez, so I should be favorable to Sarkozy, but I’m not. He was good at yanking France from its lethargy under the roi fainéant Jacques Chirac, but he doesn’t fit the profile of what France needs presently. In C-suit terms, he’s good at shaking things like a start-up whiz kid but not handling the ship of state in rocky waters. Regardless of how market-friendly his platform may be (see national champion remark below), there is no point B with him – he’s all over the board, and is too erratic in his style. He loves drama: I want cool-headedness. I think things are gonna get ugly soon again, and I don’t want to have a nervous pugilist at the helm.
    Plus, the RPR/UMP has been in the Palais Elysée since 1995: they’re out of ideas & out of touch with the 21st century economy. I fear that Sarkozy & co. are still in the 20th century mode of top-down industrial planning looking to defend French national champions. Being out of power could allow them to see things more lucidly.
    Hollande has two things going for him: 1) his voters & minions are beholden to the State and its redistributionist apparatus which is the main “thing” that has to be reformed; 2) the Socialists have been experimenting on the local/regional level with what works in private sector/public sector partnerships since the 2004 regional elections (they won all but one region). Thus as for point #1-the Technocrat-in-Chief Hollande is in a better position to get the army of redistributionist bureaucrats (ie, l’Etat) on board to make l’Etat more responsive & operational in the current economic context. He alludes to that when calling for “clarté” concerning his platform. Point #2 is sort of self-explanatory: the Socialists are attuned to local-level needs and seem to even be less top-down technocrats than their right-wing UMP rivals (but I could be wrong).

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