News / Europe

Analysts Debate Whether Hollande Can Fix French Economy

Francois Hollande, April 17, 2012. Francois Hollande, April 17, 2012.
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Francois Hollande, April 17, 2012.
Francois Hollande, April 17, 2012.
World leaders on Monday congratulated Socialist Francois Hollande on his victory in France's presidential election that saw yet another European leader voted out of office amid an ongoing financial crisis.  But, European financial markets remain volatile, reflecting uncertainty about France's next leader and his economic prescriptions for the country.

As the victory celebrations wind down, France next president, Francois Hollande, faces many challenges.

Addressing thousands of supporters after defeating conservative President Nicolas Sarkozy on Sunday,  Hollande promised justice, equality and a better future for French youth.

Hollande says he wants to raise taxes on the rich and invest more in education, and that he wants Europe to promote growth and not austerity measures to turn around the financial crisis.

But many people question whether the 57-year-old socialist is up to the job.  Hollande has been in politics for years.  But he is an untested leader in troubled economic times.  France's national debt and unemployment are soaring.  And the country's economy is barely growing.

Political analyst Bruno Cautres:

"No one knows exactly the capacity of Francois Hollande to face huge economic problems, to handle the job to be the French president," said Cautres.

But Cautres says Hollande surprised many people during the presidential campaign by sounding increasingly presidential and capable of handling tough issues.

"Francois Hollande presented himself as a normal guy - the one who can calm down all of the anguish of the French population over the economic crisis, with this changing world which is making the French population so [fearful] that eventually we are going to lose the social protection, that we are going to lose the social security that we are very attached to," he said.

On the streets to Paris, Hollande supporters like 24-year-old student Luiza Taiati are overjoyed by their candidate's victory.

Taiati says French leftists have been waiting for 20 years for a Socialist Party president.  Under Sarkozy, she says there has been economic uncertainty, with people having a difficult time making ends meet.

But 33-year-old businessman Juan Pablo Vargas is worried about the future.

"I'm very preoccupied on France and on Europe, especially because we're not sure Germany will continue to finance everything, if Hollande changes all the finances of France," said Vargas. "I'm afraid [that France] might get isolated against Germany.  And if that happens, well, it can be a collapse of the European Union, which would not be good for anybody."

Hollande says he wants to alter a fiscal discipline agreement between 25 of the 27 European Union countries - including financial powerhouse Germany.  After his inauguration next week [May 15],  Hollande is expected to meet with Germany Chancellor Angela Merkel, who is a strong supporter of budget discipline.

Economist Tomasz Michalski of France's HEC business school says Hollande's call for growth is resonating in other European countries, as popular protests mount against economic austerity measures.

"Mr. Hollande is a very smart guy," said Michalski. "He's very precise in his language.  He doesn't want to renegotiate the fiscal compact; he wants to modify and complete it by a growth pact.  And this is where he and Mrs. Merkel can meet."

But Michalski says the Socialist leader is making big promises for France and Europe - promises he might not be able to keep at a time when economic growth forecasts are bleak.

"Mr. Hollande cannot spend himself out of a recession," he said. "He cannot spend more money; he cannot print more money.  The problem with his policies is that in the short run, he may be able to restore budget balance.  But I don't see how on Earth he's going to stimulate long-term growth for France."

In many ways, Michalski says,  Hollande's political fortunes will not depend on his policies, but on external events.  If the global economy recovers, France's president-elect might be able to deliver on his promises.  If not, Michalski says,  Hollande might meet the same political fate as outgoing President Nicolas Sarkozy.

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