It appears the current phase of Europe’s debt crisis is entering its last hour. We’ll know soon, but it’s possible the weekend of May 5, 2012, will be remembered as a transformative moment in the history of Europe.
Once again, the nation at the center of it all is Germany.
Finally, there’s the run-off presidential election in France, which could have enormous impact on Germany and Europe. From the moment the debt crisis began in 2008, the responsibility of fixing it has rested primarily on the German-French axis. Truth be told, President Sarkozy’s main responsibility has been to embrace the solutions coming from Berlin, giving them added legitimacy in the eyes of Europe and the rest of the world.
If Socialist candidate Francois Hollande is elected, Germany loses its French toady.
That’s not all. When it comes to solving Europe’s debt woes, Hollande’s view is the antithesis of that of Angela Merkel and German public opinion. He’s already stated that he won’t support the fiscal pact as it currently exists. When it comes to Europe’s finances, he said last week, “It’s not for Germany to decide for the rest of Europe.” He also believes that instead of austerity, the solution to Europe’s debt woes is printing and spending more money. “So many people in Europe are waiting for our victory,” he said recently, “I don’t want a Europe of austerity, where nations are forced on their knees.”
Read between the lines of that statement. This man isn’t merely campaigning for leadership of France, he’s making a play for leadership of Europe. In another recent address, Hollande told supporters that “the people of Europe expect that we, the people of France, will provide Europe with another perspective, another direction, another orientation.”
They say Hollande lacks personality and charisma. Well, he makes up for it in audacity. He sincerely believes the rest of Europe wants him elected so France can replace Germany at the helm of Europe!
That’s never going to happen. France lacks both the financial health and political muscle to replace Germany as the arbiter of this crisis. Nevertheless, France’s dissension under Hollande could throw Europe into financial and political turmoil. Der Spiegel reported recently that “for France’s neighbors and the fight against the sovereign debt crisis in Europe,” Hollande’s election “will set everything back to square one.”
As you can see, Europe’s financial crisis isn’t even close to being over—though it is likely entering a new, more exciting, more dramatic, more sobering chapter!
It’s possible, likely even, that the convergence of these events—the widespread resistance to German-imposed austerity, the renaissance of nationalism, Spain’s imminent default, the collapse of the Dutch government, and the inconveniently timed national elections in Greece and France—will produce a moment of historic importance. As this unfolds, don’t take your eyes off the nation at the center of it all.
As Ambrose Evans-Pritchard wrote, “The epicenter of Europe’s political crisis may soon be Germany itself.”
We must watch for Germany’s response. It will have a colossal impact on Europe, and on the rest of the world.