By Geoff Atchison, Transatlantic Community Analyst
Stepping into office May 15th as the first Socialist president of France in 17 years, François Hollande marks a strong departure from the center-right policies of his predecessor, Nicolas Sarkozy, and intends to focus on leading the country towards economic growth and a balanced budget. Having served in his new position only three weeks, Hollande has already made his international debut at the recent NATO and G8 Summits as well as the informal eurozone meeting among European leaders. Beating out Sarkozy in the run-off elections with 51.6% of the vote, Hollande’s victory represents a distinct shift in popular French attitudes and an overwhelming concern for the eurozone crisis and its possible consequences. While critics continue to cast their initial reviews, Hollande’s performance so far has illustrated a desire to reshape French domestic policy and to take active leadership in charting a new direction for European economic affairs.
At home, plans to reinvigorate the French economy and balance the government budget sit at the center of President Hollande’s agenda. In order to reduce the national debt, Hollande intends to raise taxes for the wealthiest portion of the population, implementing a 75% annual income tax for those earning more than €1 million. Moreover, Hollande and his cabinet have slashed their own salaries by 30% to help achieve the President’s electoral promise of reducing the government deficit from around 4.5% to 3% of GDP. Struggling against high public debt and nonexistent GDP growth rates inherited from the previous administration, Hollande must also confront the country’s recent credit downgrade from “AAA” to “AA+”.
Amid these economic challenges, President Hollande also intends to carry out a number of social and energy reforms. Standing out as a top priority, Hollande and his recently appointed Prime Minister Jean-Marc Ayrault advocate the immediate repeal of the current pension law enacted under Sarkozy. While the former French president raised retirement to age 62, Hollande and Ayrault wish to return the law to age 60, allowing individuals to receive their pension after working 41 years. Although this reform will mark a symbolic and important achievement for Hollande in French social policy, the change is expected to come at a cost of nearly €1 billion. In addition to pension reform, Hollande and his new administration have vowed to reduce the country’s unemployment rate, currently at 10% and growing, as well as minimize dependence on nuclear energy and implement a three-month freeze on gasoline prices.
Moreover, President Hollande has offered a bold approach to international affairs, touting a more independent stance towards NATO while promoting strong French leadership in European politics. At the recent NATO summit in Chicago, Hollande declared that he would withdraw French troops from Afghanistan by the end of the 2012, one year ahead of the timetable drawn up by the alliance. Hollande’s decision to remove French troops from Afghanistan signals growing intervention fatigue among European partners in what has been a more than decade-long conflict in the country. France’s withdrawal from Afghanistan not only suggests a reduced French role in NATO, but also calls into question the strength and primacy of the organization as a leading global security force. Critics fear that mounting disinterest and selective involvement in NATO missions by France and other members may ultimately lead to a weakened NATO alliance in the future.
Meanwhile, as the eurozone debt crisis continues to ravage Greece and other parts of the continent, Hollande has emerged as a key player in ongoing efforts to resolve the financial emergency. As member states debate the possibility of another bailout or even a Greek exit from the eurozone, the rising feud between President Hollande and German Chancellor Angela Merkel over divergent solutions has created a deep fissure across Europe. While Merkel continues to push for increased austerity measures in Greece, Hollande advocates for the creation of Eurobonds to jointly hold the debt of Greece and other failing countries and encourage collective burden-sharing. Gaining support from leaders in Spain, Italy, Belgium and Luxembourg, Hollande further championed his position at an informal eurozone summit on May 23rd. While Germany, along with Austria, Finland and the Netherlands, have demanded that Greece implement stricter financial accountability measures, Hollande’s blatant rejection of her proposal and focus instead on revitalized growth measures marks a noticeably unfavorable shift in Franco-German relations. With Merkel and former President Sarkozy almost always in lockstep on political and economic issues, the heated rivalry which has emerged between Hollande and the German leader threatens to reshape the traditionally cooperative relationship between the countries and sever the continent into two camps under opposing leadership.
As the country’s new head of state, François Hollande represents a pronounced change in French political attitudes as he looks to steer the country towards an improved social policy, fiscal sustainability, and economic growth. Working to cultivate economic stability across the region and at home, France may reduce its engagement in NATO and other international security and defense missions under Hollande. Cooperating multilaterally with the U.S. and EU, Hollande will continue to display active leadership in resolving the eurozone crisis and will further promote increased financial and economic integration. The rift between Hollande and Merkel could widen as the two leaders continue to argue over the appropriate mix of austerity and growth measures, leading to a fractured Franco-German axis and a severely divided Europe. With Hollande at the helm, France hopes to become Europe’s role model for economic and social policy as the continent attempts to weather a treacherous sea of financial instability.