KATHMANDU: Last week, the French election results created a new environment in the Euro Zone after socialist candidate Francois Hollande became the new French president. This power shift from Nicolas Sarkozy also means that Europeans are not happy with their leadership as this is the 11th European leader to lose power since the beginning of the European crisis in 2008.
With the fall of Sarkozy, there is speculation about a shift in position of France in Euro Zone. Here, the shift in the policy of France could be in the form of abandoning or modifying France’s support for austerity (higher taxes and lower expenses). This is the same measure which had made Sarkozy and Merkel alliance powerful enough in the Euro Zone to set various policies including that of austerity.
However, in the new situation, where the socialist are in power and since France is an ally of Germany, the same policy adopted by Sarkozy and Merkel may not last if the newly elected French president remains true to his socialist platform. The agenda of the
socialist party also does not incline towards pro-growth programmes, which Europe desperately needs at the moment. France’s socialist government could put more weight on the private sector, which could add difficulties to an already troubled Europe.
However, the situation in Greece is diverse where centre right democracy has received the highest vote but extreme leftist parties have also surprised everyone by increasing their strength. This political outcome shows that Greeks reject austerity measures imposed by the European Union (EU) and also want to somehow remain in the Euro Zone. The Greek economy is already struggling to meet the benchmarks enforced by EU austerity policy and extended delay with uncertainty on the political front could further worsen the scenario for Greece. This translates to greater difficulty for the Euro Zone in the near future.
Elections in the northern part of Germany also showed results against the ruling party, signifying how people have started to view Merkel.
These elections in France, Greece and Germany signal a dissatisfied public, who do not support policies and practices that have been adopted by the EU and the new mandate given to these new leaders could well change the political and economical face of the Euro Zone at the time when it is trying to come up with answers to the fiscal and economical woes.
(The author is the assistant manager of research and development at Mercantile Exchange Nepal. He can be contacted through firstname.lastname@example.org)