Political Briefing #29/2017

18/04/2017

POLITICS & POLICY

The French electoral campaign makes the headlines all over Europe, as the first round of the Presidential elections is set for this week. On Monday, a group of people took the streets of northern Paris, in the banlieu of Saint-Denis, to protest against Marine Le Pen, the leader of the right-wing Front National (FN) party. According to Le Monde, protesters belonged mostly to radical leftist movements. Meanwhile, Le Pen released an interview to Le Figaro arguing that an exit from the Eurozone would boost the economic outlook of France. “The reintroduction of a national currency will foster the creation of millions of vacancies in the labour market and restore our freedom to act”, Le Pen said. The FN leader also discarded claims according to which an exit from the euro would trigger havoc in the financial markets. Last but not least, Le Pen pledged the calling of a referendum on France’s EU membership should she gain the presidency.

On the opposite side of the political spectrum, Jean Luc Mélenchon, the candidate of the leftist movement La France Insoumise, continues to consolidate his support. Recent polls confirmed that the leftist candidate has a chance to make the second round of the elections. However, many political analysts are accusing Mélenchon of practising populism “from the left”, putting the radical leader in the same basket as Le Pen. Mélenchon received backing, among others, from Chantal Mouffe, a leading Belgian political philosopher. Mouffe’s support to Mélenchon highlights an ideological connection between La France Insoumise and other European new leftist movements, in the first place Spain’s Podemos. Meanwhile, the President of the Movement of the Enterprises of France (MEDEF), Pierre Gattaz, criticised both Mélenchon and Le Pen for endorsing radical programmes that could endanger the French economy.

Centrist candidate Emmanuel Macron rounded on the German economy. The leader of the political movement, En Marche! pointed at the increasing imbalance within the Eurozone, and more specifically the staggering trade surplus of the German economy. Macron said that these imbalances do not represent an advantage for the European Union, or to Germany. Moreover, during the interview in question, the young leader said that he is neither on the left nor on the right. Macron called for France to eventually endorse structural reforms to gain back the trust of the German ally in Europe. However, asked whether France needs to embark on a reform path similar to the German Hartz IV reforms, Macron declined such prospects.

The sustainability of public finances, and the need for investments across Europe remain some of the main concerns of European politicians and international institutions. The International Monetary Fund (IMF) has recently released a new publication examining the links between sound fiscal policies and stable governments. The IMF argues that political stability plays a key role in granting countries a balanced financial outlook. Moreover, the International institution underlined that public debt increases at a faster pace when national executives do not hold a clear majority in parliamentary assemblies. More importantly, the report points at the weak effects of external constraints–such as the Maastricht Treaty ones–on the increase of public debt. Sanjeev Gupta, the co-author of the publication, claimed that “external rules work only if national institutions internalize and share the content of international agreements”.

Meanwhile, the Managing Director of the IMF, Christine Lagarde, released an interview on the German newspaper Die Welt, claiming that Germany needs to foster its level of investments in order to ease off the economic imbalances between the countries of Europe. The former French Minister of Finance also underlined that, according to the view of the IMF, a restructuring of the Greek debt is inevitable. Moreover, the US-based financial institution does not exclude dropping out of the bailout programme. Moreover, Lagarde touched upon the Eurobond debate, claiming that the Eurozone needs, sooner or later, to move into the direction of a sharing of financial risks and responsibilities. At the same time, Lagarde stressed that it is fundamental that the EU’s Stability and Growth Pact is enacted and respected by all Member States.