Sunday, June 17, 2012

The Republican France turns completely on the left?

French voters are called today to choose their MPs in the National Assembly, the lower house of the Parliament. The final results will show at what extent the Socialist President Francois Hollande will be able to coordinate his economic and political policies with a majority of 577-seat legislative branch. According to the latest opinion polls and the results of the last week first round of the legislative election, such a configuration is most likely to occur.This will be the last step of challenging the decade-long domination of the conservatives of the former president Nicolas Sarkozy. Any candidate who won the support of more than 12.5 percent of registered voters in the first round advanced to Sunday's runoff, and many districts have three-way races. According to the latest electoral evaluations, it is expected that the Socialists will occupy 289 out of the 577 seats of the National Assembly.The electoral campaign focused mostly on local issues. Hollande, the first socialist president since Francois Mitterand left the power in 1995, won the presidential elections with a discourse criticizing president Sarkozy budget-tightening, a decision considered as presenting a high-risk of recession. Instead, the Socialists promise to reduce deficit. France, the second-biggest economy in the Eurozone, is expected to play an important role in the next discussions regarding the fate of the euro-zone and of the EU in general, alongside with Germany. On the other hand, Hollande’s position for a government-sponsored stimulus aimed to encourage economic growth was met with opposition from German Chancellor Angela Merkel. Hollande will also need to cope with the opposition within its own party whose representatives might have a very strong resistance against various EU packages aimed to help the Southern nations. Thus, the current president should include on his agenda the efforts for keeping the party united.
The final decision of the France voters is observed with attention by the financial analysts, ready to evaluate the immediate effects on the market. France already registered a high spending deficit. The main important steps to be taken shortly after the elections will be: the approval of a legislation aimed to raise taxes, measures to adjust budget spending and the ratification of an EU fiscal discipline pact.Some of the decisions that France supports immediately within the EU is an agreement before the end of 2012 on growth-boosting measures. According to local and international media reports, Paris agreed that a 120 billion euros financial help will be the result of short-term growth instruments – mainly bonds – reallocated EU structural funds and a fresh investment capital from the European Investment Bank. The 120 billion euros would be made up of some 55 billion euros of unused EU structural development funds, some 4.5 billion euros in project bonds for infrastructure projects and 60 billion euros in capital that could be raised by the EIB if it were given an extra 10 billion euros in financing. The French president also wants the euro zone's ESM permanent rescue fund to be given a banking license to allow it to borrow money from the European Central Bank to bolster its firepower. German Chancellor Angela Merkel strongly opposes creating euro bonds in the near term or having Germany underwrite debt or guarantee bank deposits in the euro zone.On the other hand, the current elections marked a new revival of the far right, represented by the anti-immigrant National Front who pledges for the abandon of the euro. Under the coordination of Jean-Marie Le Pen’s daughter, Marine Le Pen, the NF placed in the third position during the last presidential elections and on the same position during the first round of the legislative elections. Due to the current legislation, they are not expected to have more than three or four seats, but the FN will be present in the parliament for the first time since the mid-1980s.The final results are expected late Sunday night. Shortly after, Hollande is expected to leave for Mexico, for the G20 Summit.

No comments: