Editor’s Note: The following piece, exclusive to GPS, comes from Wikistrat, the world's first massively multiplayer online consultancy. It leverages a global network of subject-matter experts via a crowd-sourcing methodology to provide unique insights.
The countdown has begun for France’s first-round presidential election on Sunday, and while socialist challenger François Hollande is expected to beat center-right incumbent Nicolas Sarkozy, there’s a decent chance that a second run-off election will be required for Hollande to crack the 50 percent of the vote mark. Either way, we’re likely on the verge of a major political shift for one of Europe’s pillars – right after the wobbly Eurozone had hoped to close the door on its threatened dissolution.
We know what you’re thinking: socialists, lots of new government spending, the end of the “Merkozy” tight bond between France and Germany!
So what are we to make of this looming quake? How high will it register on the political Richter scale? Wikistrat asked its global community of experts to ponder this, and here are the 8 points they chose to highlight.
Après Hollande, le Keynesian déluge!
Hollande’s win won’t be the last for Europe’s recently moribund Socialist movement, which is being duly revived by all this German austerity in response to the Eurozone’s ongoing fiscal/sovereign debt crisis. True, it won’t be a genuine return of Keynesian economics, which is more about government spending to jump start consumption during a business-cycle downturn, but the vote will clearly indicate the French public’s rejection of Sarkozy’s standing firm with Germany’s Angela Merkel when it comes to those debt-ravenous PIIGS (Portugal, Italy, Ireland, Greece and Portugal). Bottom line: we’ll see a France – and by extension Eurozone – more focused on the cause of growth over debt reduction. Also expect more hostile regulation of financial markets.
La Buffet Norme on steroids!
Exhibit #1 along these lines will be a supersized version of President Barack Obama’s recently defeated “Buffet Rule” (so named for American billionaire Warren Buffet) that promised a high minimum tax on millionaires and above. The U.S. version promised a mere 30 percent levy, whereas the French Socialists are threatening something on the order of 75 percent! Their goal? Reverse Sarkozy’s move to raise the retirement age from 60 to 62 by getting all those French fat cats to pay for it. Having already lost its AAA rating, with public debt at 90 percent of GDP and public spending at more than half of GDP, the Socialists are doubling down on government in the country that invented big government.
Le nouveau visage of Euroskepticism
Traditionally, it’s been the European Right that has fought European integration, but the continent’s current “Iron Lady” (Germany’s Merkel) has recently stood tall as its pragmatic champion. Conversely, Europe’s socialists have typically supported the European ideal, but with austerity as the current pricetag, expect that to change with Hollande’s ascent. So say good-bye to Sarkozy’s hyperactivity (for example, his dream of a European Union-cum-Mediterranean Union), as Hollande’s just-say-non attitude marks France as the new poster child of Euroskepticism.
EZ come, EZ go
Hollande’s spend-heavy platform will exacerbate France’s economic problems, sending the country into a downward spiral and dealing a final blow to the Eurozone. By becoming the über-pig-among-PIIGS, Germany’s austerity pitch will go by the wayside and Eurozone defections will follow. The EZ’s resulting implosion will trigger the much-feared “double dip” across the global economy, and many global leaders will ultimately blame Paris for this “betrayal,” reducing France’s international standing to a new low point. Sacre duh!
The return of Gaullism = NATO’s death spiral
Sarkozy brought France back into NATO’s command fold, but Hollande has promised the swiftest possible withdrawal of French forces from Afghanistan. He has also resumed the normal, pre-Sarkozy rhetoric on strengthening the EU’s Common Security and Defense Policy – France’s alternative to NATO. Amidst Washington’s purposeful strategic “pivot” to East Asia, this will accelerate the decline of the already drifting European military alliance. History will record the Libyan intervention as NATO’s last-gasp operation.
Does Turkey get a leg up?
The Socialists have always been much more receptive to Turkey’s much-delayed accession into the EU, but in the every-nation-for-itself dynamic that Hollande’s free-spending ways may well trigger, it’s not all that clear there will be anything left for Ankara to join. What is clear is that a rudderless NATO would leave Turkey firmly in the driver’s seat in both war-torn Syria and the wider Arab Spring. That’s a new thing, but not necessarily a bad thing.
Meet the new boss. Same as the old boss.
Let’s remember that there’s the candidate for office and then there’s the man after he settles into that big old chair of power. Hollande can promise all the change he wants – just like candidate Obama did – only to find his options far more constrained once sworn into office. This is – at best – a center-right-to-center-left shift, and that might just be the best of both worlds: the marriage of a socialist agenda to forcefully conservative government machinery. It could be just what the EZ doctor ordered: just enough capitulation to France’s burgeoning populist anger to avoid a far more serious political meltdown. The French said it first a long time ago: plus ça change (the more things change), plus c'est la même chose (the more they stay the same).
Le comeback enfant?
Don’t count Sarkozy out. The first round of voting is an exercise in populist spleen-venting, while the second round is a far more serious affair – electing the President of the Republic. Compare Sunday’s vote to the just-concluded Republican primary race and you’ll get the picture. Sarkozy may look a whole lot more acceptable once it devolves into mano a mano slugfest. It’s a short interval between the two votes – just a mere two weeks! And both candidates will struggle to win over the small-but-crucial blocks that went to extremist candidates. Hollande is the Romney in this race, and boring “change agents” face an uphill tactical battle against charismatic incumbents. The undecided vote is still large as of today. Who knows how big it will be on 6 May?
That’s Wikistrat's “wisdom of the crowd” for this week. Now tell us how you see the election and its aftermath playing out.