- A Francois Hollande election victory would seriously setback the efforts to defuse the European sovereign #debt crisis
- Greece is heading toward an even weaker more polarized government
- Europe may need to start bracing for a renewed intensification of the European sovereign #debt crisis
On May 6, all eyes will be focused on the second round of the French presidential election, which Socialist challenger Francois Hollande is likely to win. Equally important for Europe’s future is the Greek parliamentary election scheduled for the very same day. The Greek election could deliver a government with the slenderest of parliamentary majorities, making it difficult for Greece to honor its official debt obligations and to remain within the Eurozone.
A Francois Hollande election victory would constitute a serious setback for efforts to defuse the European sovereign debt crisis. A Hollande presidency would raise doubts about a united French-German front to address the crisis because Hollande is likely to press for more growth-oriented policies in Europe and for a less restrictive European Central Bank than Germany would be prepared to countenance. It would also raise doubts about the future direction of the French economy, in response to Hollande’s proposals to impose a 75 percent tax on the highest income brackets, to raise the minimum wage, and to reduce the retirement age.
The importance of the Greek election resides in its determination of whether Greece will have a sufficiently strong government to implement the stringent conditions of the recently agreed second IMF-EU bailout package. On the eve of the Greek election, the most recent electoral polls are far from encouraging. They show that the combined votes of the New Democratic Party and PASOK, the current ruling coalition government, would amount to only about 36 percent of the votes. Such an outcome would be less than half the combined votes that those two parties polled in elections only two years ago. It would also not be much more than the combined votes likely to be polled by Greece’s hard Left political parties.
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Desmond Lachman is a resident fellow at AEI.