Euro crisis main hurdle for Hollande

Updated: 2012-05-07 11:08

By Li Xiang in Paris, Zhao Shengnan in Beijing and Shi Yingying in Shanghai (China Daily)

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The newly elected French president Francois Hollande is facing a major challenge in tackling the euro zone crisis, but the Socialist victory is unlikely to derail efforts to balance the region's public finances, experts said on Monday.

The 57-year-old Socialist candidate Hollande defeated the incumbent president Nicolas Sarkozy by 51.8 percent to 48.2 percent on Sunday, becoming the country's first Socialist to win the presidential election in almost 20 years.

Euro crisis main hurdle for Hollande

French people celebrate the victory of their newly elected president Francois Hollande at the Place de la Bastille. The Socialist victory will bring changes to the country's handling of its diplomatic and military affairs. Wang Dong / for China Daily

While the Socialist victory will bring changes to the country's handling of its diplomatic and military affairs, the most prominent challenge for Hollande is negotiating with Germany over a growth pact on the region's new fiscal treaty, experts said.

"Hollande will try to create a new French-German consensus in terms of boosting growth in the European Union," Francois Heisbourg, a senior advisor with the French think tank, Foundation for Strategic Research, told China Daily.

"France is unlikely to challenge Germany, but Hollande has made it clear that France is not going to ratify the fiscal treaty if there is no growth element in it," he said. "The question is whether Merkel will be politically able and personally willing to work toward such consensus."

Meanwhile, campaign watchers said that a new Socialist French presidency may add uncertainties to Sino-French relations, but Hollande is likely to adopt a pragmatic approach toward China.

"He is unlikely to clash with China on ideological issues, but rather he is going to be pragmatic, as he is a smart politician and he knows clearly what role China plays in international affairs," Tian Ling, a member with French National Council for Diversity, said.

Similar to his right-wing opposition party, Hollande will also seek to foster smooth trade and investment relations with China after he takes office.

"But it takes time for Hollande and his team to get to know more about China and Chinese policymakers, so there is still a question mark around his policies toward China," Tian said.

On Sunday night, supporters of Hollande, holding roses and national flags, flooded the Place de la Bastille in Paris to celebrate their leader's victory.

"Hollande is going to put up salaries and raise taxes on the big bosses, which I think is going to benefit most ordinary people in France," Hehue Azancot, a voter in Paris told China Daily.

Hollande campaigned on his promises to stimulate growth, raise taxes on businesses and the wealthy and restrain spending. He also vowed to balance the country's budget by 2017.

But some voters are concerned about the country's deteriorating fiscal situation, as France has been stripped off its triple-A credit rating.

In his victory speech, Hollande vowed to lift the country out of the economic crisis and to persuade other European leaders to demand measures for "growth, jobs and prosperity".

"I'm sure in a lot of European countries there is relief, hope at last that austerity is no longer inevitable," he said.

Hollande is scheduled to take office on May 15 and his supporters are hoping the Left also wins in the parliamentary election next month.

Analysts said that "anti-incumbent" sentiment has swept Europe, making Sarkozy the 11th euro zone leader to be ousted from office since the beginning of the sovereign debt crisis in Europe. He is also the first right-wing French president in 30 years who failed to be re-elected.

The election outcome will affect its debt crisis, how long French troops stay in Afghanistan and how France exercises its military and diplomatic muscle around the world.

"The next president will never neglect France's ties with its strategic cooperative partner, especially when China's emerging economy may serve as a cooperation and growth engine for it," said Zhang Jinling, a researcher at the Chinese Academy of Social Sciences.

Opinion polls and electioneering were banned in the final 32 hours before polling stations opened on Sunday morning, but Hollande began the day as a firm favorite despite signs that Sarkozy was closing the gap.

When the French went to the polls on Sunday for their second and final round of voting for a president, they may also have tilted the balance of power in Europe in the midst of the European Union's worst crisis, the British newspaper The Observer said.

Under Sarkozy, fears of low economic growth, rising joblessness and the 25-nation EU austerity pact have worked in favor of the Socialists.

"France needs some changes, and that's why I'm willing to give Francois Hollande a chance, even if my family and I used to support Sarkozy," said Nicolas Carre, who runs a French restaurant in Beijing.

Hollande has campaigned as a critic of austerity policies associated with German Chancellor Angela Merkel and Sarkozy, which he said choked growth.

Hollande has said he plans to meet Merkel as soon as he is sworn in.

While that trip would be mostly a symbolic exercise to show Franco-German relations were intact, it would also allow him quickly to impress his pro-growth ideas on his German counterpart, said Pierre Moscovici, Hollande's campaign manager.

Due to the gloomy economy and complexities working with the various political parties in France, it's difficult for any new leader to immediately propose efficient policies to boost growth and employment, Xing Hua, a French studies expert told Chinese media.

"We are seeing real punishment of those governments that were saddled with handling the economic and financial crisis. And France is no exception," said Jorge Crespo, a professor of political science and public administration at Complutense University in Madrid.

"The unemployment rate was only about 6 to 7 percent when Sarkozy was first elected as the president in 2007, but it's now 10 percent - five years after becoming the president of France Sarkozy seemed didn't put too much effort into it," said Jean-Marc Nolant, a 37-year-old sommelier at a five-star hotel in Shanghai.

"But I didn't see Hollande's potential to become a president either," Nolant added.

Hollande's plan of raising taxes has already driven some Frenchmen, especially the wealthy, to more fiscally friendly climes, including London, Geneva and Brussels.

At LVMH, the luxury products group, there has been talk about moving the headquarters to London, on the grounds that Hollande's new tax rate will make it harder to lure top-level managers to the luxury capital, The Sunday Times reported.

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AP, Reuters and AFP contributed to this story.