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Sarkozy, Austerity Rejected by French Voters

May 7, 2012 at 12:00 AM EDT

JEFFREY BROWN: Two more European governments are gone, swept away by a wave of anti-austerity sentiment. The outcome of Sunday’s elections raised the prospect today of major policy shifts on debt and economic recovery.

A beaming Francois Hollande, the French president-elect, waved to reporters this morning from Socialist Party headquarters in Paris, having promised a new direction for France and Europe. The man he unseated, President Nicolas Sarkozy, had joined the German-led drive to implement fiscal austerity throughout the indebted nations of the European Union. But Hollande’s win directly challenged that effort as he made clear in his victory speech last night.

FRANCOIS HOLLANDE, French president-elect (through translator): Finally, austerity could no longer be a fate. You are much more than a people who want change. You are already a part of a movement that is rising across all of Europe and maybe the world.

JEFFREY BROWN: German Chancellor Angela Merkel had taken the unusual step of publicly endorsing Sarkozy. But she congratulated Hollande today.

ANGELA MERKEL, German chancellor (through translator): I can say that Francois Hollande will be welcomed by me with open arms here in Germany. And we will conduct intensive discussions because Franco-German cooperation is essential for Europe. And as we all want success for Europe, this cooperation will begin very quickly.

JEFFREY BROWN: To that end, Hollande will visit Berlin shortly after his May 15 swearing-in. He said he wants changes in a European Union treaty that limits national debt to allow for economic stimulus measures, but Merkel today maintained her determination to enforce belt-tightening.

ANGELA MERKEL (through translator): We in Germany and I personally believe the fiscal pact is not up for negotiation.

JEFFREY BROWN: One of the principal targets of that fiscal pact is Greece, where voters yesterday sent an enraged message against austerity, repudiating the approach of the government of Prime Minister Lucas Papademos.

LUCAS PAPADEMOS, Greek Prime Minister (through translator): The Greek people made their choice. I believe that it is of great importance to maintain the stability, the confidence and the solidarity to conclude the effort to rectify the economy.

JEFFREY BROWN: Greece has received bailouts from the E.U. and the International Monetary Fund. Their double-digit unemployment, tax increases and sweeping public spending cuts have now brought the country to political chaos.

Yesterday, Greek voters gave no party enough seats in parliament to form a government and carry out the cuts demanded under the bailout deals.

Conservative leader Antonis Samaras, whose party won the most seats, backs the austerity measures, but he said today he is unable to form a coalition and the stalemate means Greece could face another election next month. The election turmoil swept through the Greek financial markets today, where key stocks fell 7 percent.

Correspondent John Psaropoulos has been watching the situation in Athens.

JOHN PSAROPOULOS, freelance reporter: The message to the Conservatives and Socialists who lost more than half their popular support relative to two years ago was that they are no longer trusted to run public finances or to save the country from its current predicament.

It was also a turn to fringe parties and more extreme parties. And, therefore, people are looking for more radical solutions than simply borrowing more money in order to solve Greece’s problems, which include making the country more competitive, making the economy more dynamic.

JEFFREY BROWN: The upheavals in Greece and France are just the latest to cross Europe. Romanian lawmakers approved a left-leaning prime minister today, the third change in that position this year. The Dutch government fell several weeks ago. And since February 2011, Spain, Italy, Portugal, Denmark, Finland and Ireland all have new governments.

Moreover, British Prime Minister David Cameron’s Conservatives lost local elections on Thursday, as voters blamed austerity for renewed recession. And even German Chancellor Merkel’s Christian Democrats lost in the northern state of Schleswig-Holstein.