Hollande won’t have much time to learn on the job

May 7, 2012

The author is a Reuters Breakingviews columnist. The opinions expressed are his own

The French have chosen a socialist president without any experience of executive power and little taste or knowledge of international matters. When one considers where the certified “experienced” leaders have led Europe in the last three years, this shouldn’t be much of a worry. But if newly-elected François Hollande thinks he can plan for a few months of learning on the job, the situation in Greece is a pressing reminder that he should cut the training period short. 

Hollande campaigned on a programme of moderate reform and little pain, promising to raise taxes for any extra spending he advocates to reduce France’s growing inequalities. His apparent determination to ignore the French economy’s most pressing problem – its lack of competitiveness – is only balanced by the centrist, moderate views he harbours on most things. This has led some to hope that reason should ultimately guide him if and when a serious crisis strikes. 

The new French president’s first foreign trip as president-elect will be Germany to visit Angela Merkel. This shows at least that he has the right sense of priorities. The new French leader called during his campaign for more growth and less austerity. As long as he sticks to his promise of putting France’s finance back in order, this shouldn’t be much of a problem with Berlin. The German chancellor, politically weakened by her own electoral setbacks, should accommodate him. Her foreign minister is already talking about working on a growth pact with France – though what he means by that remains fuzzy. 

François Hollande has become the symbol of a new phase in the euro crisis created as governments start talking about the future – growth – instead of solely focusing on the past – when austerity was deemed as the only solution. But his leadership and political acumen will be tested before he sets out his detailed ideas for France. Hollande, as head of the second-largest euro zone lender country, will have to explain what if anything he suggests for Greece – and for other troubled euro members. How does he propose to boost growth in cash-strapped economies? And what does he suggest doing in the short run? That’s when he will discover that his new job is not just about the French.

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On the contrary. Hollande has been dealt a new hand. He has nothing to lose. In fact, he’s got all the cards: aces in the hole.

Greece is teetering on the edge of a catastrophe. Spain is staring into the abyss. Nearly all the other European countries, aside from Germany, aren’t faring much better.

There’s no way in the world Europe will get out of this situation major stimulus, be it from the inside or the outside. History is crystal clear on this.

Euro politicians and technocrats have been praying that the American consumer and economic engine would save them. That, however, is just not going to happen anytime soon.

Devalue the Euro and provide stimulus to the European economies. There is no other way forward.

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