On May 8, 2012, the Atlantic Council hosted an on-the-record members’ conference call with Gideon Rachman, chief foreign affairs columnist at the Financial Times, on the repercussions of the French and Greek elections, as voters in both countries delivered a stinging rebuke to political parties which called for continued austerity and fiscal retrenchment.
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François Hollande’s victory in France represents a dramatic political shift in the heart of Europe’s second-largest economy. Rachman pointed out that his focus on promoting growth through stimulus rather than continued austerity as the way out of the Eurozone crisis will significantly change the tenor of the debate throughout Europe. France’s new president must quickly define what his call for growth actually means– will he openly challenge Germany’s continued prescription of austerity, or will he work closely with Merkel to strike a deal that strengthens the Franco-German partnership?

Just as France ousted Nicolas Sarkozy, in Greece the electorate pushed back sharply against the two mainstream political parties which supported the IMF and EU-led fiscal adjustment program. Heightened political uncertainty in Athens calls into question the ability of Greece’s next government to meet the requirements for another tranche of bailout funds. If Greece fails to keep its promises will President Hollande side with Germany and the IMF, or with an increasingly imperiled Greece? After all, many of Greece’s new political leaders seem to be willing to simply leave the Euro altogether rather than face several more years of painful budget cuts. For the first time, many in Europe are openly speculating about the demise of the Eurozone, something Rachman called “the likeliest outcome.” Participants on the call engaged in a heated debate on the ultimate fate of the Eurozone, with the consensus being that the status quo is unsustainable, and changes are coming sooner rather than later.

Gideon Rachman has covered French presidential elections for over two decades. He has been chief foreign affairs columnist for the Financial Times since July 2006. Rachman joined the FT after a fifteen-year career at The Economist, which included spells as a foreign correspondent in Brussels, Washington, and Bangkok. He also edited The Economist’s business and Asia sections.

This conference call is part of a larger series of Corporate and Individual members’ programming, which seeks to provide members the opportunity to dialogue directly with experts and policymakers on the most relevant topics of the day.