[Marxism] Change in Paris May Better Fit U.S. Economic Positions
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Tue May 8 07:13:51 MDT 2012
NY Times May 7, 2012
Change in Paris May Better Fit U.S. Economic Positions
By ANNIE LOWREY
WASHINGTON — With the victory of the Socialist candidate, François
Hollande, in the French presidential election, the White House has
lost one of its closest allies on the Continent, but perhaps
gained one with economic policy beliefs more closely aligned with
Mr. Hollande is virtually unknown in Washington, and his policy
positions on both domestic and international affairs remain only
lightly sketched out. That is in stark contrast to the departing
president, Nicolas Sarkozy, whose frequent discussions with and
ardent defense of the White House earned him the nickname “Sarko
the American” back home.
But in the past few months, Mr. Sarkozy has parted from the White
House in his support of the German-led austerity project in the
debt-soaked euro zone, a project that the White House objects to
on the grounds that cutting budgets too soon will lead to sluggish
growth and high unemployment across Europe without satisfying the
demands of skittish bond investors.
Mr. Hollande, in contrast, ran on a promise of rebalancing Europe
away from austerity and toward growth, and his narrow victory is
seen in Washington as a public rejection of governments imposing
strict cuts on battered economies.
“Austerity need not be Europe’s fate,” Mr. Hollande said shortly
after his victory. To that end, he has said he plans to
renegotiate the fiscal pact Europe struck this winter to allow for
more budgetary breathing room for countries that can still borrow
money to support themselves at reasonable rates on the debt
markets. He also supports measures to support growth by, for
instance, bolstering infrastructure spending.
The Obama administration had pushed for such pro-growth policy
changes even as Mr. Sarkozy joined Chancellor Angela Merkel of
Germany in calling for deep spending cuts.
“If every time economic growth disappoints, governments are forced
to cut spending or raise taxes immediately to make up for the
impact of weaker growth on deficits, this would risk a
self-reinforcing negative spiral of growth-killing austerity,”
Treasury Secretary Timothy F. Geithner told a Congressional
committee in March, comments echoed since then in his statements
at many international forums.
“The administration hopes, in broad terms, that this election will
change the conversation,” said Edwin M. Truman, a senior fellow at
the Peter G. Peterson Institute for International Economics. “In
principle, you’d be saying, ‘Don’t tighten your belt!’ to the
countries with the scope to do so,” Mr. Truman said.
Mr. Hollande seems “naturally more palatable to the
administration,” said Justin Vaïsse, the director of research for
the Center on the United States and Europe at the Brookings
Institution. The administration seems to reason that “Europe
probably has a better chance of avoiding a breakup or another
renewed sovereign debt crisis by focusing on growth, rather than
just sticking to austerity,” he said.
A senior administration official, speaking on the condition of
anonymity to avoid disturbing diplomatic relations, said that the
Obama administration looked forward to working with Mr. Hollande,
and that it did not believe that making changes to the fiscal
compact would spook markets or threaten the validity of the
overall agreement, which helped bring down sovereign debt yields
Mr. Truman noted that Mr. Hollande would be “adding some
supportive material to make the compact more growth-friendly,”
rather than starting from scratch.
The official said that the White House did not know the details of
how the French president-elect hoped to change the compact, but
that many options were on the table, including delaying some
austerity measures, bolstering the Continent’s methods for
recapitalizing its banks and evening out imbalances between
countries with big deficits and those with surpluses.
Observers said that though Mr. Hollande was likely to hew closer
to the Obama administration on economic issues, he would almost
certainly move further away from it on foreign and military policy.
Mr. Sarkozy had led a significant rapprochement between the French
and American governments on foreign affairs, joining Washington in
promoting harsh new penalties for Iran and playing a leading role
in gathering an international coalition to topple the Libyan
dictator, Col. Muammar el-Qaddafi, among other actions.
In a briefing Monday, a State Department spokesman, Mark C. Toner,
acknowledged the administration’s closeness to Mr. Sarkozy, and
said he hoped that the bilateral relationship would deepen with
“We’re going to have an opportunity to sit down at the highest
levels, the president with President-elect Hollande, to discuss
all these issues,” he said. “I’m not going to prejudge in any way
how those discussions might go.”
Mr. Hollande has a reputation as conciliatory and
consensus-driven, and Obama administration officials stressed that
they expected a close ally in his government.
In an interview with the Web magazine Slate.fr, Mr. Hollande — who
noted that he speaks English — praised the Obama administration’s
foreign policy and said that the countries had a “convergence” on
economic issues. In the past, he has expressed skepticism about
some United States positions on military issues.
President Obama called Mr. Hollande after his victory and invited
him to meet with him in Washington in advance of international
meetings there and in Chicago this month.
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