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Monday, September 19, 2011

Changing mood?

Once upon a time, the so-called 'Franco-German axis' was seen as the single currency's indestructible bulwark. And if one stopped at the passionate statements made by German Chancellor Angela Merkel and French President Nicolas Sarkozy over the past few days, one might think that nothing has changed, and France and Germany are still capable of doing 'whatever it takes' to keep the euro afloat.

However, the big question is for how long the change of mood among both countries' populations can be ignored by the respective governments. The case of Germany has been abundantly documented on this blog (see here, here, and here) - with Merkel's ruling coalition incurring an embarrassing series of electoral defeats, polls showing rising opposition to multi-billion euro bailouts and even the first-ever protest taking place outside the ECB's headquarters in Frankfurt.

But it looks like the attitude towards the eurozone crisis is now changing in France as well. Leaving aside Front National leader Marine Le Pen's calls to "let the euro die its natural death", a growing number of people seem to be realising that their government may actually be throwing money into a bottomless pit in its effort to save Greece from an inevitable default.

This is true for both academics and public alike. In today's Le Figaro, French Professor Édouard Tétreau pulls no punches when he stresses the need to "drop Greece in order to save Europe," arguing,
"We know that, unless Greece becomes Orthodox - with its finances - or is put under tutelage, the money lent and given to this country will never be paid back...France has already voted two bailout plans for Greece in two years, coming with a cost of more than €30 billion – the equivalent of what is raised from income taxes in France in seven months. Who would agree, in our country, to work seven months to subsidise the lifestyle of people who are unable to pay their own taxes? By subsidising this organised robbery, we are not doing Greece, or Europe, a favour." *
Strong words indeed, but it's even more interesting to see that the French haven't exactly reacted well to their parliament's ratification of the second Greek bailout. In fact, an opinion poll conducted by France's Institute of Public Opinion (IFOP) shows that 30% of respondents are "completely" (tout à fait) hostile to France's decision to contribute €15 billion to the second Greek bailout, with a further 38% describing themselves as "rather" (plutôt) hostile - making up an impressive 68% 'anti-second Greek bailout' front. Of the remaining 32%, only a tiny 5% "completely" agree with their government's choice. One must not forget that France was forced to adopt a €12 billion austerity package for 2011-2012 last month.

It's too premature to say to what extent this gradual change of public mood could erode the Franco-German axis from within. In addition, both the French Socialists and the German Social-Democrats seem on course to win the next general elections, and both of them are far more pro-EU integration than the current governments. (How increasingly sceptic publics and potentially more pro-integration governments will mix is also an interesting question.)

However, given the current pace of events (the French will vote next year, and the Germans in 2013) public hostility towards euro bailouts might have grown so great that not even the most fervent euro-federalists can ignore the writing on the wall.

* Tétreau's op-ed carries the headline, "Greece: The barrel of the Danaids" - which will certainly delight fans of ancient Greek mythology. In fact, the Danaids were condemned by Zeus to fill in with water an ever-draining barrel whose bottom had been pierced on purpose...


Peripatetic Scribe said...

"Doing all it takes" is mere 'mouth-music' aimed (I suppose) at other EZ leaders BUT without thought for their respective populations. Angela Merkel has now received a severe warning and I'm pretty certain that M. Sarkozy will receive the same. The Franco/German axis was fine when things were going well; comes the crunch, comes the (eventual) rift.

Rollo said...

The French are not throwing their money into a bottomless pit. They do not have any money. They are borrowing money and throwing that into the bottomless pit. Their national debt is accumulating. The yield on their bonds is going up. It will not belong before they join the PIGIS.

miguel said...

I believe, and have so for months, before all this cacophony of conflicting declarations,tah Greeceshould exit in an "orderly" fashion the Eurozone, for its own benefit, because they never will be able to comply with the unrealistic requests from IMF, EU, BCE,and for the Eurozone's benefit,to stop the endless loss of money which could be better employed to recapitalize banks.The medium, long-term solution is to reorganize the Eurozone into"2 Speed" countres'areas, please see my blog " macrovolatility.com", if you are interested in reading about this"proposal"