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EDITORIAL: Election
results threaten the euro
The EU¡¦s fight against sovereign debt has entered a new stage. In France,
Francois Hollande defeated French President Nicolas Sarkozy in the presidential
election this weekend, and in Greece, the governing party was routed in the
parliamentary elections. As the political climate in Europe is changing, the
question is whether German Chancellor Angela Merkel will be able to remain a
pillar of strength able to hold the ground for the euro and the EU. Failure to
do so could result in a new and unpredictable situation in Europe.
The changes in France and Greece caused international stock markets to drop
across the board. The concerns are not about the relative strengths or
shortcomings of Sarkozy and Hollande, but rather about the prospects of a
solution to the EU sovereign debt crisis. Political commentators say this round
of elections has caused anxiety among Europeans, and international observers are
focusing on whether Hollande, following his criticism of Sarkozy¡¦s policies
during the campaign, will introduce major changes to the current policies that
are aimed at consolidating the European project. Since Germany and France have
been the driving force behind the finalization of the EU¡¦s agreement on fiscal
discipline, it will be difficult for Germany to save the situation if France
pulls out, and that could result in a difficult situation for both the euro and
the EU.
The French and Greek votes were an expression of voters¡¦ dislike of their
governments¡¦ austerity policies. After the onset of the sovereign debt crisis in
the EU, one European country after the other has had problems with shortages in
the national treasury and high debt levels. As these countries implemented
strict austerity policies, public welfare suffered, unemployment increased and
the economy took a dive, with labor strikes and national protests making an
economic recovery even more difficult. As governments are unable to tell the
public when the suffering will be over, a feeling of uncertainty and agitation
is spreading through society, and elections offer voters with an opportunity to
vent their anger.
The main reason French voters supported Hollande was that they wanted to express
their dissatisfaction with Sarkozy. Although voters supported the socialist
line, the fiscal situation is not very positive and increasing the tax load on
the wealthy will not necessarily be enough to improve the fiscal situation in
the short term. In addition, the government is also under different
international pressures, and neither Hollande or the new Greek government will
have enough room to implement all the changes they promised during their
campaigns. They have no access to any magic formulas that would immediately
eliminate public suffering and solve their problems. They may not be able to do
much more than implement minor policy changes, so it is not very surprising that
many people are worried over future reform prospects.
The skies over the EU are turning gray and the clouds are spreading over all
Europe. With the changes in France and Greece, the debt problem could take
another turn for the worse, and it might even spread across the entire globe.
Although Taiwan is far away from the EU, and although our budget problems are
not as bad, data from the Directorate-General of Budget, Accounting and
Statistics shows that total government debt reached NT$21.47 trillion (US$732.88
billion) last year, NT$93,000 per capita. That was an increase of NT$2.3
trillion last year alone. This is a serious warning signal.
President Ma Ying-jeou (°¨^¤E) might have already won a second term in office, but
low approval ratings, vociferous public complaints and high debt could easily
translate into loud public demands for him to step down.
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