Having seen off the Front Nationale, Francois Hollande must now establish a European popular front.
In 1936 the Jewish socialist academic Leon Blum was sworn in as Prime Minister of France. The consummate outsider, Blum’s government lasted a matter of months before it collapsed, consigning the idea of the Popular Front to failure. Easy though it is to minimise the impact of Blum’s short tenure, its achievements and basic programme (the four day week, two weeks holiday and wage increases) were the point at which the French decided they had ‘left off’ nine years later when desperate to erase the memory of Vichy.
Similarly, though the Fourth Republic is rightly considered to have been chaotic and fatally flawed, it was from out of this milieu that Jean Monnet emerged with the idea of a European Community. Starting with coal and steel tariffs to refocus domestic production, this supranational project might be said to have taken off.
The newly-mandated Socialist President, Francois Hollande, comes to office derided as a small player at a time of great instability. The EU has fixed only the most temporary of sticking plasters over the spiralling cost of borrowing for Greece; although there is a clear estimate for the haircut bondholders will have to take, the government’s target for deficit reduction looks fanciful. Now, with the collapse of PASOK, the political will to maintain that course appears to have evaporated. The disease of high unemployment and unmanageable bond rates appears to be spreading to the more substantial economy of Spain, although there is some comfort in that Italy is under control (at least, until the technocrat Mario Monti is forced to face the voters).
Contrary to the assertions of many oppositionists in Europe, German has not forced austerity on these countries, but it has not been prepared to gamble with its own creditworthiness (despite running a significant deficit of its own). This is why Polish foreign minister Radek Sikorski went to Berlin to plead the case for German activism.
Nicholas Sarkozy has been an important part of the Eurozone’s response to the fiscal crisis; flying to China to plead for investment in a central bailout fund and providing political cover for the German Chancellor, Angela Merkel, but he has not driven the process or won any obvious battles. This in turn forced him to make a last-ditch promise to reform the European Central Bank and allowing Hollande to appropriate the populist political bandwagon that is the Eurobond (i.e. a centrally issued bond, giving all EU countries the ability to borrow at the same rate).
Hollande enters from stage right (like Clement Attlee at Yalta) promising fundamental change but offering a slightly different emphasis. Growth and austerity have been by-words during the crisis for supply and demand side reforms; initially, the crisis was considered to be one of competitiveness, but is fast becoming a problem of demand as businesses and consumers hold back from expanding.
The Accession countries (twelve mainly Central and Eastern European countries have joined in the past decade) have mostly been disciplined in their spending and have just accepted a smaller fiscal transfer in the form of the Cohesion programme. Meanwhile, Hungary’s economy (closely linked with Austria’s) continues to be a basket case and its new constitution and media law are testing the ability of the EU to enforce its basic conditions of membership (it is worth noting that the Fiscal Pact that Hollande has objected to is merely an affirmation of the Euro’s original premise).
Drawing meaning from Europe at this moment of crisis is a task worthy of the French Presidency, yet it is not entirely clear that Hollande has considered the many factors at play. While I suspect that he may be more compatible with Merkel than many have suggested (the German Chancellor is more personable than she is given credit for, but she is also in a corner), Europe is currently a tangle of meanings.
In order to regain the initiative, Europe needs to stimulate demand while convincing outsiders of its fiscal discipline. Moreover, it needs to decide what the point of its fiscal transfers is to be – protecting old industries, bringing new members up to a certain level of wealth or subsidising the purchase of goods made in Germany or Central Europe. All of these are valid at one level or another, but are not necessarily tailored to make the maximum economic impact. Deepening the common market and thereby averaging out the price of energy might be a start.
The irony of today is that fear of Hollande demanding that Europe abandons its efforts to pay its debts that the value of the Euro has fallen considerably. This competitive boost has been just what has been argued Greece needs (although more dramatically). Thus, out of the spectre that Hollande appears to represent to some might come the breathing space to achieve what he hopes.
