By Dave Burridge, Economics Editor
This week has seen two very important elections held in France and Greece.
Important, not only for the respective countries but for Europe as a whole because the policies these new leaders are pursuing on EU debt are not those of their predecessors’.
France have voted in Socialist Francois Hollande as their new president after a run off with incumbent Nicolas Sarkozy.
Hollande won 52% of the vote to Sarkozy’s 48%. A fine margin some might say.
A key election promise of Mr Hollande was to re-negotiate the EU fiscal pact, agreed upon primarily with Germany.
The only problem is German Chancellor Angela Merkel has today stated that “we in Germany are of the opinion and so am I personally, that the fiscal pact is not negotiable.” A fairly strong statement to the contrary.
To add to the instability ahead, Greek election results leave the current ruling coalition without a strong enough majority to continue to rule.
Source: BBC news: http://www.bbc.co.uk/news/world-europe-17975370
New Democracy (ND) and Pasok currently rule and negotiated the recent high profile bailout deal with the so called troikia of the IMF, EU Central Bank and the EU. Together they have 32.4% of the vote. In the past they have secured figures as high as 77.4% in 2009 between them.
The second placed party Syriza oppose the bailout deal. New Democracy leader Antonis Samaras has been given three days to form a coalition government or the batton is passed to the leader of the Syriza party. If they too fail to form a coalition the batton is passed to the leader of Pasok and if they too fail a re-election is held in mid-June.
After talks between the leaders of ND and Syriza parties, both leaders have made it clear a deal is not currently on the cards. The re-run is beginning to look more and more likely.
This instability does not help the Greeks to meet the 11bn euro in austerity measures they need to find next month to keep in the terms of the bailout deal. If Greece fail to repay this, their ability to remain part of the EU would seem untenable as might continuing to service their mountain of debt.
Not so many months ago we were wondering if perhaps at last a light was visible at the end of the debt ridden tunnel but now it seems we are to be plunged into darkness once more.