Subscribe free to our newsletters via your
. Earth Science News .

Walker's World: It's France, not Greece
by Martin Walker
Paris (UPI) Jun 18, 2012

disclaimer: image is for illustration purposes only

The messy and confused result of Sunday's election in Greece is probably not going to change anything soon for the fate of the euro but France's less closely watched parliamentary election just might do so.

In Greece, almost all the main parties went into the election with the same policy: to stay in the euro but to renegotiate the terms of Europe's support. The Greeks want more time to pay and more and better-targeted aid from Europe to restore at least some prospect of growth while they try to soften the savage spending cuts and austerity regime Europe demands.

The conservative New Democrat party won the most votes, with 30 percent, and should be able to form a stable coalition majority with the PASOK socialists. But their mandate will be weak. The upstart leftist Sipras party won 27 percent, which means that the new government will face a powerful opposition outside Parliament, with more than half of young Greeks out of work.

The real question is going to be Europe's readiness to loosen the screws on Greece, at a time when Greece shows only limited evidence of helping itself. The Greek government promised to raise $38 billion through privatizing state holdings. So far not a cent has been raised and there has been little improvement in Greece's notoriously leaky system of tax collection.

Moreover, Greece represents just a tiny fraction of Europe's economy, less than 3 percent.

France, however, is the second economy in Europe after Germany and the fifth-largest in the world. France's economy is pivotal, far more important than those of Spain or Italy.

Last month France threw out the center-right President Nicolas Sarkozy and elected the center-left Socialist Francois Hollande. Sunday France went to voting stations again in the second round of its parliamentary elections to decide whether Hollande's party would be able to govern with a parliamentary majority drawn solely from its own ranks or whether it would have to depend on Communist and other far-left votes.

This matters because a government dependent on far-left and Green support would be fighting the recession with one hand tied behind its back. It would make it tougher to cut back on public spending or to rein in pensions and healthcare costs or to restructure the overmanned French public sector.

The French state accounts for more than 55 percent of gross domestic product and just short of 25 percent of the workforce. The British state, by contrast spends 44 percent of GDP and provides 18 percent of employment. Government in the United States spends 37 percent of GDP and employs 15 percent of the workforce.

The Socialists won a clear victory and can now govern without the left. But one of Hollande's key campaign promises was to undo the retirement reforms of his predecessor and reduce the retirement age to 60 for people who had worked since the age of 18. He also promised massive new job creation programs, including 60,000 new school teachers, without saying how this would be funded.

As a result, Germany is worried. German Chancellor Angela Merkel made an unusual and waspish public critique of France in a speech Friday in which she stressed that her country was "the pole of stability and the engine of growth in Europe." Her meaning was clear; France plays in the second division.

"Europe should discuss the different growth levels between France and Germany," she said.

She then compared unit labor costs in the two countries, noting that "in the year 2000, Germany was doing worse or roughly the same as France on several levels but the differences have grown very sharply, something else that we should discuss in Europe."

Merkel is right. Since the year 2000, German unit labor costs have been held steady and even in some years decreased, thanks to the labor market and welfare and retirement reforms passed by her predecessor, Gerhard Schroeder. By contrast, France's unit labor costs have risen 23 percent.

Her Finance minister, Wolfgang Schauble, made a separate attack on the French decision to cut the retirement age and aides pointed out that it wouldn't be easy to persuade German voters, who retire at 67, to show much solidarity for French ones who retire at 60.

And now Hollande has sent to his colleagues in the European Union an 11-page paper calling for $150 billion in immediate stimulus spending, half from the European Investment Bank and almost all the rest from the European Union's structural funds. But he also wants jointly financed eurobonds to finance at least $7 billion, to establish a precedent that would undercut Germany's stout resistance to any eurobond system.

A crisis seems to be coming in Franco-German relations at a difficult time for Europe.

As it became clear Sunday evening that Hollande's Socialists had won a clear victory, the real focus of French politics shifted from Paris to Brussels and Berlin. Hollande has won a battle in France; now he faces in Europe a far more difficult political campaign against Germany's insistence on economic orthodoxy.

And the more that France and Germany dispute economic strategy, the weaker this divided Europe will be and the more difficult to save the euro.


Related Links
The Economy

Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks DiggDigg RedditReddit GoogleGoogle

Memory Foam Mattress Review
Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

UN environment haggle runs into problems ahead of summit
Rio De Janeiro (AFP) June 18, 2012
Negotiations on a UN blueprint to fix Earth's damaged environment, eradicate poverty and promote green jobs hit snags on Monday two days ahead of a global summit. Brazil wants to seal a deal swiftly to ensure that a three-day gathering, aimed at reviving the momentum of the 1992 Earth Summit, is not wrecked by squabbles. But delegates attending the UN Conference on Sustainable Developmen ... read more

Experts discuss better nuclear disaster communication

Afghan quake rescue operation declared over

Japan to develop drones to monitor radiation

Study predicts imminent irreversible planetary collapse

Russians design blockbuster video games in Siberia woods

SciTechTalk: Apple WWDC summary

Curved special glass panels for better protection of civilian and military vehicles

Grand Finish For X-37B

Indian 'sadhus' protest dam projects on holy Ganges

NGOs urge RIO+20 to back new treaty on oceans protection

New research leads to sensors that detect contaminants in water

CEOs urge RIO+20 leaders to make water security top priority

Divide the Antarctic to protect native species, propose experts

Arctic getting greener

North-East Passage soon free from ice again

NASA Discovers Unprecedented Blooms of Ocean Plant Life

Hong Kong wine auction fetches $2.2 million

Rapidly cooling eggs can double shelf life, decrease risk of illness

Word Food Program chief in Rio for UN summit

Unlikely alliances bringing back dead rivers, barren landscapes, and farm yields

Hurricane Carlotta kills 2 in Mexico

Floating dock from Japan carries potential invasive species

Quake-hit Afghan village could become mass grave

Undersea volcano gave off signals before eruption in 2011

Lions on the loose in Kenyan capital's urban jungle

US expanding secret spy bases in Africa: report

UN trade body says Africa must embrace sustainable economy

Madagascan community sets example of saving environment

Expanding waistlines threaten the planet: researchers

More people, more environmental stress

How infectious disease may have shaped human origins

Homo heidelbergensis was only slightly taller than the Neanderthal

The content herein, unless otherwise known to be public domain, are Copyright 1995-2014 - Space Media Network. AFP, UPI and IANS news wire stories are copyright Agence France-Presse, United Press International and Indo-Asia News Service. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement