(NEW YORK) MintPress — President Nicolas Sarkozy on Sunday became the first president in modern day France to lose the first round of his re-election campaign. The victor was the Socialist Party candidate, Francois Hollande, who won nearly 29 percent of the vote compared to the 27.1 percent that went to Sarkozy, head of the Union for a Popular Movement (UMP), France’s major right-wing political party. Ten candidates, spanning the political spectrum, took part.
The election came amid a European debt crisis that is threatening to stall global economic recovery, and Hollande has a far more populist approach to solving it.
Just one day later, Dutch Prime Minister Mark Rutte resigned after his 18-month-old conservative coalition government collapsed when it failed to reach a deal to cuts its budget deficit to a level agreed upon by European countries last year. The Labor Party and the Socialist Party say they won’t work to bring down the deficit if it means hurting the economy.
Socialist Party leader Emile Roemer said the package of cuts that Rutte drew up “would only have plunged our country further and deeper into crisis.”
With the impact of austerity measures being questioned, it appears 2012 could mark the return of the Left.
It’s the economy, stupid
As in the United States, the economy is at the top of the political agenda in France. For months, the most pressing issues have been unemployment and purchasing power.
“Even though some people would give Sarkozy high marks for doing the kinds of things that might have a positive long-term effect on the economy, like raising the retirement age to put the system on sounder fiscal footing, he hasn’t been successful in bringing jobs back,” said Michael Leruth, who teaches a course about the election at the College of William and Mary in Virginia.
Sarkozy and German Chancellor Angela Merkel have largely shaped the EU’s response to the European debt crisis, encouraging member countries to cut spending to get their finances in line.
“Hollande is in favor of more government action to stimulate the economy, stimulate spending, whereas Sarkozy wants to improve the climate for business by lowering some taxes, by talking about repealing the law establishing the 35-hour work week — a Socialist measure from the late ‘90s — to make it possible to work more,” explained Leruth. “It’s more of a private sector approach.”
Walking a tightrope
Economists are divided on which approach is likely to work best. In France, which like the U.S. recently had its AAA credit rating downgraded — debt is 90 percent of GDP — there are fears that Hollande’s policies could make things even worse.
“There’s some feeling that if Hollande is elected, the attack on the French sovereign debt could be quite serious,” said Homer Sutton, a French professor at Davidson College in North Carolina. Another credit downgrade would drive up borrowing costs for the government.
Others, though, say that boosting economic growth is the key to recovery. “An Hollande victory would shake things up, and offer at least a possibility of something better,” said Nobel Prize winner Paul Krugman in The New York Times.
That appears to be the view of U.S. Treasury Secretary Timothy Geithner, who is undoubtedly concerned that an economic disaster in Europe could drag down the global economy and threaten America’s shaky recovery. Geithner this week encouraged European policymakers to tackle the crisis more “creatively, flexibly, and aggressively.”
Let them eat cake
Aside from the practical problems that stem from high unemployment and slow growth, French voters are angry about rising inequality. Under Sarkozy, billions of euros have been redistributed through new policies that benefit large corporations and include tax breaks for the wealthy.
Many of Hollande’s proposed measures focus on making the richest segments of society pay more so that public services and investments can be maintained or increased.
As in the United States, where the Occupy Wall Street movement has swept cities across the country, with protesters calling for greater distribution of wealth and less corruption, the so-called 99% in France are fighting a battle over who has to fund the recovery.
Immigration, race and troop levels in Afghanistan are also prominent issues leading up to the elections in both countries.