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Mr Normal in Paris, Protest Vote in Athens

Published on , , Sofia

Francois Hollande entered the campaign for president of France as the nondescript reserve candidate and came out as a winner. Somewhere along the way the media named him Mr Normal and this was perhaps the biggest trump card of the party functionary Hollande, who never held public office nor has even an ounce of personal charisma. But Frenchmen, as all Europeans, are tired of the crisis and want normality, which Francois Hollande undoubtedly embodies.

The big question, which everyone is excited about now, is how the arrival of a socialist in the Elysée Palace will affect the European policy of France. In his first speech as election winner Hollande announced that he would say to his European partners and first and foremost to Germany that austerity should be complemented by growth enhancing measures. This message, however, is not news to anyone in the EU – yet in the beginning of the year there was an informal European Council summit devoted to growth and employment and there will be another one in the end of May, as if specifically planned for Francois Hollande's European debut.

Before that, of course, he is to meet German Chancellor Angela Merkel. Many commented that Hollande's ideas to renegotiate the fiscal pact would create, if not a rupture at least tension between Paris and Berlin. Mr Hollande, however, no longer talks about renegotiation but about upgrading the rules on budget discipline by adding measures for growth. The need for a new 'European Growth Pact’ has already been proclaimed by Angela Merkel, ECB President Mario Draghi and the European Commission. Francois Hollande does not seem to question the need of controlling debts and deficits - on the contrary, while enumerating the priorities in his first speech as a winner he put this even before the preservation of the French social model.

The position of Francois Hollande in many ways resembles that of Italy's Prime Minister Mario Monti, so he would be a good addition to the Merkel – Monti – Hollande triangle. In this sense, we can expect the demonised Merkozy duo to be replaced by the ‘Mermollande’ trio without causing serious disturbances in the European Union. Rather, such a combination would inspire a great deal of confidence in both the markets and the citizens, who obviously need a healthy dose of balance between strict austerity measures with meaningful investments in growth and employment.

And if the outcome of French elections brings some relief to the Europeans, the opposite message is coming from Greece, once again over the past two years. As expected, the two major parties New Democracy and PASOK suffered heavy losses because of their signatures under the second bailout programme. The first-placed New Democracy party failed to win even 20 percent of the vote (actually, it received less than 19%), and the Socialists collapsed to a third parliamentary force with the shameful 13% (compared to 44% in 2009). The Coalition of the Radical Left climbed to the second place with nearly 17% of the vote. The new formation Independent Greeks is also entering Parliament with 10% percent of the vote. It was created by the former New Democracy member Panos Kammenos, who was expelled from the New Democracy parliamentary group after voting against Lucas Papademos's government. The main campaign message of the party was precisely against the loan agreement with the EU and IMF. The Communist Party (8.5%), the Democratic Left (6%) and for the first time the extreme nationalists from Golden Dawn (7%) will also have deputy seats.

The explanation of these results was, quite expectedly, that this was a protest vote of the Greek people against the cruel measures imposed from outside and without their consent. The question is what will the result be from this ‘punishing vote’, and whether ultimately the Greek citizens will punish themselves. The parties have just a few days (until May 17th) to form a governing coalition. If they fail, new elections will follow, but the uncertainty is the biggest enemy of Greece at the moment.

New Democracy leader Antonis Samaras called for the formation of a national salvation government, comprised of pro-EU parties, with two main goals – Greece to remain in the euro area and the economic policies of the rescue programme to be renegotiated. Radical Left Coalition leader Alexis Tsipras in turn is willing to form a left-wing government aiming to renounce the “loan contract of subjugation” and the memorandum of understanding, but he wants the country to remain in the eurozone.

There is a minimal chance the rescue programme to be renegotiated, especially in terms of budget cuts, given how difficult it has been to achieve it and to receive written guarantees by the two major parties that they would fulfil the agreement after the elections. And if the program is not implemented, there will be no further tranche of the loan. What comes next is a default, euro exit and long-term pain for the Greek citizens. And if two years ago this was an unacceptable risk for the euro area, it has long been calculated from the markets and now the losses for the common currency will not be as dramatic, as for Greece itself.

Meanwhile the markets are all agog for Greece to fail and have already invented a word to name the Greek exit of the euro area, The Financial Times reported, "Grexit".

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