Global Markets Impacted by French Elections As Candidates Pander to the Right

Socialist candidate Francois Hollande has won the first round of the presidential elections against the current leader Sarkozy. The second round will take place on May 10. The right-wing national front won almost 20 percent in the vote., a photo by Pan-African News Wire File Photos on Flickr.

April 27, 2012

France's Presidential Frontrunner Gives Markets the Jitters

Lisa Bryant | Paris

The eurozone's sovereign debt crisis has helped topple half a dozen European leaders. It looks like French President Nicolas Sarkozy may be next. Polls show Sarkozy's Socialist rival, Francois Hollande, winning France's May 6 runoff election. But the prospect of an Hollande presidency is making markets - and analysts - nervous.

It's been nearly 20 years since France had a Socialist president. That may change in just over a week. French polls all predict Socialist contender Francois Hollande will beat conservative President Nicolas Sarkozy in the second round of presidential elections on May 6.

In press conferences and interviews - like one on French radio Friday - Hollande outlines an economic strategy that includes more taxes for the rich and more spending to stimulate growth.

But Hollande says his first action would target the wider eurozone crisis that is now in its third year. Hollande says he will renegotiate a European Union fiscal treaty agreed to last year in order to promote economic growth.

The Socialist candidate is getting applause from his supporters - but not from markets, which briefly dipped after he won the first round of French elections last Sunday. Analysts like economics professor Tomasz Michalski, of the HEC business school in Paris, also see little reason to cheer.

"First of all, Hollande is going to increase very drastically taxes in France. In the short run the increase in taxes is going to lower the budget deficit," he said. "But in the long run it's not a good growth strategy…this is going to keep talent away. And France desperately needs new businesses, desperately needs entrepreneurs to keep the economy going."

Other experts agree. Britain's leading The Economist magazine is even more critical, calling Hollande's economic prescriptions "dangerous."

Analyst Philip Whyte, of the London-based Center for European Reform, says he understands why markets are jittery about an Hollande presidency.

"But of course, once he's in office, he will very quickly be confronted by some of the constraints of office and some of those constraints might be imposed by the bond markets," he said."

Hollande's growth prescription for Europe even got some support this week by European Central Bank Chief Mario Draghi, who called on governments to invest in jobs and growth along with spending cuts.

Jobs and economic growth are top concerns of French voters like 54-year-old Fatna Chouaikh. Chouaikh believes Hollande can turn things around. She says Hollande is competent, hard-working and has what it takes to bring France out of its economic doldrums.

Under current President Sarkozy, the economy shrank and unemployment soared to nearly 10 percent.

Most analysts agree that Sarkozy is not to blame for a global crisis that has sent many other economies tumbling as well. Whyte, of the Center for European Reform, credits Sarkozy for pushing through a few key reforms - like raising the retirement age - and for his initial leadership in the eurozone crisis.

But Whyte faults the French president for letting German Chancellor Angela Merkel dictate eurozone policies today. And overall, he gives Sarkozy's performance a mediocre review.

"The problem with Sarkozy is that he really doesn't have an economic vision," Whyte said. "He's a man of action. But he has no real coherence to much of what he does. If you look at his performance over five years as president, there's not been a terribly clear economic path he's forged."

Professor Michalski offers similar criticism.

"The measures that Sarkozy is proposing in this campaign do not form a coherent long-term program," he said. "Rather, they're small measures addressed to particular issues. So I'm very skeptical."

Ultimately, smaller parties may shape the economic policies of either an Hollande or a Sarkozy presidency. Hollande is counting on far-left and centrist voters to win the May 6 runoff. Sarkozy is courting those who voted for the far-right in the first round - and who are skeptical of the European Union and of taking economic orders from Brussels.

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France's Hollande nods to right on immigration, veils

Fri, Apr 27 2012

* Socialist Hollande says economic immigration must be limited

* Presidential frontrunner would uphold burqa ban

* Sarkozy defends immigration issue as central to all voters

By Alexandria Sage

PARIS, April 27 (Reuters) - Frontrunner Francois Hollande gave nods on Friday to far-right voters who could decide the outcome of France's presidential election, saying he would limit immigration and uphold a ban on women wearing Islamic veils in public.

Hollande, a Socialist, is on course to win a May 6 runoff against centre-right President Nicolas Sarkozy. Sarkozy's only hope for victory is to win over the record number of voters who picked the far-right National Front in Sunday's first round.

Sarkozy has swung hard to the right on immigration and Islam in the week since National Front leader Marine Le Pen won 17.9 percent of the first round vote. Hollande has been more reluctant to court National Front voters openly, but has said their anger should be heard.

"In a period of crisis, which we are experiencing, limiting economic immigration is necessary and essential," Hollande said on Friday.

A day earlier, Hollande had answered evasively when asked repeatedly on prime-time television whether he thought there were too many foreigners in France, as Sarkozy and Le Pen have both proclaimed in campaign speeches.

Clarifying his position after his evasions drew criticism, he told RTL radio on Friday that if elected, he would have parliament fix an annual quota for non-European Union foreigners coming to France to take up jobs.

"There will always be legal immigration. Can the number be reduced? That's the debate," Hollande said, noting Sarkozy had already reduced the government's annual target for economic migrants to 20,000 from 30,000.

"In my view, that's the kind of level that would apply in times of crisis. In any case, the numbers will be managed."

Hollande also said he would uphold and enforce a ban on face-covering veils worn by Muslim women, even though he abstained in a 2010 parliamentary vote when Sarkozy proposed it.

His comment seemed designed to counter attempts by Sarkozy to paint him as soft on radical Islam, notably by alleging that a Swiss Muslim scholar had endorsed Hollande for president. The scholar, Tariq Ramadan, has denied backing a candidate.

Sarkozy accused Hollande of skirting tough issues like immigration: "Ten days from the election we still don't know what would be the immigration policy for the next five years," Sarkozy said at a rally in Dijon eastern France.

The huge vote for Le Pen revealed frustration among voters over a relentless rise in unemployment. She proposes preferences for French nationals for jobs, welfare benefits and public housing, and penalties for firms that hire illegal immigrants.

Five years ago, Sarkozy successfully appealed to far-right voters in the second round to secure his first presidential term. But he faces a more difficult task this time around because of economic hardship.

HOLLANDE TREADING CAREFULLY

An election race dominated from the start by the economy has now boiled down to whether Sarkozy can lure enough of Le Pen's supporters to his side in the runoff to eat into Hollande's lead of between 6 and 10 percentage points in polls taken this week.

Both candidates hold political rallies at the weekend and will come face to face in their sole televised debate on May 2.

A Harris Interactive survey published on Friday found that 31 percent of Le Pen voters plan to abstain on May 6, while 48 percent would vote for Sarkozy and 21 percent would back Hollande. Most tallies suggest Sarkozy would need as much as 80 percent of Le Pen's vote to win the run-off.

If he loses again in the second round, Sarkozy will be the first president voted out of office in more than 30 years.

Piling more pressure on him, jobless claims rose for the 11th month running in March to hit their highest level since September 1999.

Foreign commentators have criticised the presidential contenders for focusing too heavily on secondary domestic issues and not addressing issues like labour market flexibility.

Financial markets are fretting anew about the risk that anaemic economic growth will derail deficit-cutting targets in the No. 2 euro zone economy, which has promised to bring down its budget shortfall to 3 percent of output in 2013.

Inside France, media debate remained centred on the new far-right pull of the election race. On Thursday Sarkozy proposed changing the law to protect police who shoot suspects from criminal charges.

Former prime minister Dominque de Villepin, a bitter foe of Sarkozy who failed to win the backing to run as an independent centre-rightist in the election, said the conservatives were going down a "path of no return". He said the hardline rhetoric was "a deadly poison that is threatening the right."

"Everything is happening as though there were only National Front voters in France, as if there were no other issues but halal meat and legal immigration," Villepin wrote in Le Monde.

REACHING OUT

Even before the first round, Sarkozy was hammering hard on the need to curb immigration and protect French producers from cheap competition. On Friday, he lashed back at suggestions that he was leaning too far to the right and insisted that Le Pen supporters had legitimate concerns that needed to be addressed.

"Mr. Sarkozy is not supposed to speak to the six and a half million French people (who voted for Le Pen)... But no one is going to stop me from speaking to all French people," he said.

Hollande hit back at a campaign rally in the city of Limoges, accusing Sarkozy of veering dangerously to the right.

"He says the right should not have taboos. However, it's not a question of taboos, but rather transgression."

The focus on Le Pen voters since Sunday has left Hollande with the dilemma of how to reach left-wing defectors to the National Front by voicing understanding of economic gloom while not taking any position that would offend his core support base.

A BVA poll released on Friday showed Hollande gaining 1.5 percentage points to 54.5 percent of voter intentions for the second round versus 45.5 percent for Sarkozy. A CSA poll showed a narrower lead with Hollande at 54 percent, down 2 points from last week, and Sarkozy at 46 percent.

The Harris Interactive survey found that of those voters who backed centrist Francois Bayrou in round one, 41 percent would back Hollande on May 6 and 36 percent would back Sarkozy.

Bayrou, who won 9.1 percent in the first round, has not yet endorsed either rival. Hollande and Sarkozy have written to him and Hollande said he saw common ground on education, social issues and public finances.

Hollande also stands to benefit from the backing of nearly all those who supported hard leftist Jean-Luc Melenchon, who won 11 percent in the first-round vote. Melenchon has refused to campaign with Hollande, however.


The Associated Press
April 27, 2012, 06:09AM

Jobless figures up as French election nears

France's bleak economic outlook has returned to the forefront of the country's presidential campaign after new figures showed the number of job seekers rose for the 11th consecutive month in March.

Francois Hollande -- the Socialist front-runner in the May 6 election -- was quick to seize on the new data from the Labor Ministry showing the number of job seekers rose 0.6 percent last month to 2.88 million.

In an interview on French radio RTL on Friday, Hollande called job creation "the key issue" of the campaign that pits him against President Nicolas Sarkozy.

Sarkozy has blamed France's stubbornly high unemployment on the financial crisis that has swept up Europe.