Changing of the Guard? Sarkozy/Hollande and Putin/Medvedev: Bad Policies and Their Consequences

The French presidential election between François Hollande and Nicolas Sarkozy had dramatic results, which were not only a return to power of the socialists but a strong voice of the people in France rejecting the failed policies of blind austerity. They said enough is enough!

This seems to be the rising voice of most of Europe. What is so strange is that it took this long for the people to see the stupidity of counterproductive austerity and a war on the poor and middle classes by the rich. Sarkozy, the son himself of an immigrant, campaigned against immigrants and sought, through appealing to the far right Le Pen backers, the low road to salvation. It did not work. What is interesting also is that the German finance minister, Wolfgang Schauble, called for wage increases for German workers. Was it an act of fear or an act of prudence?

Along with the fall of Sarkozy, the pro-austerity right government in The Netherlands was booted out, and anger grows in the troubled nations, like Greece, Ireland, Italy, Portugal, and Spain. Also of significance were the local election results in the non-euro currency Britain, which had pushed a right-wing austerity effort, and is now in a second recession and bound for failure. Europe may, at last, be rethinking its options and seeing a failed economic policy for what it is – an effort by the rich to thrive at the expense of the 99%. The question now is how long it will take Americans to come to the same conclusion with the Republicans in Congress forcing austerity blindly upon a hurting average citizen?

The challenges ahead remain formidable for Europe. The sad fact is that Germany has a veto over any changes in policies. But the other side is that France too has its own veto over future policies. Also, other nations can bar future actions within the euro zone and in the EU. The question is whether there is room for compromise on both sides. Key decisions are coming up not only on Greece debt but on rules for future limits on euro zone member nations’ debt, which would impose rigid rules leading to even further depressing economic and fiscal actions.

For America, there is also a need to reassess these changes and their implications for our policies and how, given the new landscape, we can best respond to these new forces and especially whether we have an opportunity to pick up where President Obama and former UK Prime Minister Brown hoped to go three or so years ago – a consensus towards global reflation rather than destructive deflation of the global economy.

Looking east: On May 7th, Vladimir Putin took office as the Russian president in Moscow. Demonstrations on Sunday led to violence as thousands protested his election. There is a mood of desire for change at least on the public space. The switch to a Putin/Medvedev “tandem” probably does not mean a fundamental change in Russian policies immediately, which were largely set by Putin even over the last five years. But the landscape of Russia has changed as more and more people are rising for a voice in their governance. The vision of the Arab Spring and the changes in Western Europe act as a beacon for hopes in Russia for a fairer system. But the desire for both a “strong leader” and continued strong forces of a narrow nationalism vying with desire for democratic reform is an old story in Russia which continues to play out with ever-increasing tension and uncertainty.

For both Western Europe and America, there is much anxiety over what will evolve from the new (old?) regime. The new ruler over the Russian Federation has difficulties and challenges ahead. These include a narrow economy based on oil and gas revenues, a failing social support infrastructure (including a health system that is a total disaster), continued centrifugal forces at the fringe of the Federation, an ever-growing awareness of the force of freedom and democracy, government corruption, and, not least, the continued backwardness of much of the country. But decisions must be made anew about long-term relations with the West, China, and on global issues like climate change, the global economic crisis, security (including solution to the missile defense initiative of the West and Russian participation or opposition), and continued support of the indefensible countries of Syria, Iran, and Sudan. But as this blog has noted, Russia and the U.S. have key mutual interests that need to be strengthened on both sides. (More on all of this on our RNS blog in the days ahead.)

We welcome your comments.

By Harry C. Blaney III.

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