[Marxism] Change in Paris May Better Fit U.S. Economic Positions

Louis Proyect lnp3 at panix.com
Tue May 8 07:13:51 MDT 2012

NY Times May 7, 2012
Change in Paris May Better Fit U.S. Economic Positions

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 
its own.

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 
this winter.

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 
Mr. Hollande.

“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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