RAY SUAREZ: For more on the French election and the wider reaction against economic austerity programs in Europe, we turn to Justin Vaisse, a senior fellow at the Center on the U.S. and Europe at the Brookings Institution.
Well, a lot of big headlines out of this vote. The incumbent comes in second, a huge turnout, and candidates of the far right and left do very well. What's going on?
JUSTIN VAISSE, Brookings Institution: They did indeed.
The election was a surprise, in that the forecasted participation was -- was very low. And it turned out that the French voted by more than 80 percent, which is not a historic high, but which is very high. And, yes, they're not really many surprises in the results. They look like -- more or less like the polls predicted them.
However, the National Front, with almost 18 percent of the vote, is also at a very high point historically.
RAY SUAREZ: Candidates to the left of Hollande and to the right of Sarkozy got almost -- well, just a little more than one out of every four votes cast. Who has the riskiest road in trying to get those voters over to their side, Hollande or Sarkozy?
JUSTIN VAISSE: It's obviously Sarkozy.
Sarkozy has an uphill battle because he got 27 percent of the vote, and so now he needs to gather votes from other candidates. The problem is that the reservoirs he can tap into are the extreme right on the one hand, but they are -- only about half of the extreme right voters have announced that they would vote for him.
And then on the other hand, the center where Francois Bayrou, the centrist candidate, got about 9 percent of the vote, but here only about a third of Francois Bayrou's voters say they would vote for President Sarkozy. And so not only these are small reservoirs of votes, but Sarkozy must straddle the ideological divide between the extreme right and the center and he must choose between one or the other, and he probably will not be able to get both. And so it is for him a very difficult task ahead.
RAY SUAREZ: A two-round presidential race sets up some fascinating dynamics for an American. What is usually the pattern? Do the people whose candidates didn't make the second round stay home, or do they finally come home to another candidate?
JUSTIN VAISSE: No, they actually generally come home. And you don't see a very big drop in participation in the second round.
You know, the saying in France is that in the first round you vote for your friends, you vote for your heart, and in the second round you vote against your enemy. That is to, say what motivates to you go to vote is to eliminate the candidate that you really do not want to see as a president.
RAY SUAREZ: Now, when the news began to come out that the Socialists had come in first in the French balloting, first, futures and then the actual markets themselves in France and in other forces in Europe began to decline. Why is that?
JUSTIN VAISSE: There is some apprehension about the possibility that the renegotiation of the European treaty that has been agreed upon in the last few months, especially following the lead of Angela Merkel, the German chancellor, and Nicolas Sarkozy, the French president, would be renegotiated.
Francois Hollande, the Socialist candidate, has announced that he would renegotiate it. And so this has had some people worried. I think they worry wrongly, but that has been the perception of some in the market. The other worry would be that Francois Hollande wouldn't hold the deficit and the debt to levels that would be compatible with recovery of the Eurozone, even though the candidate himself has pledged to respect all the European disciplines that have been agreed collectively.
RAY SUAREZ: But is there a growing sense in Europe that austerity is not having its intended effect, that consumer demand has to drive a recovery at least to some extent, and maybe Hollande's plan has more to offer than Sarkozy's?
JUSTIN VAISSE: That's exactly true.
What happened was that in December, when Francois Hollande said that he would renegotiate the Fiscal Compact Treaty, that famous European treaty has now to be ratified by the European countries, that sent shockwaves. But since then, the outlook for European growth has been very, very bad.
And so more and more people, including in the market, among the observers, but also in Spain and in Italy, are calling for a rebalancing of the treaty towards growth. And so what Hollande has said is that he would renegotiate the treaty not to get rid of the new disciplines, the fiscal disciplines that the treaty includes, but in order to add sort of protocol on growth on the stimulus in order to, you know, basically avoid having Europe die a virtuous death.
RAY SUAREZ: The parliamentary majority for the prime minister in the Netherlands crumbled over just that question, whether more austerity could be passed for the coming fiscal year. Tell us more about that.
JUSTIN VAISSE: It's really a Pan-European issue. And even the Netherlands, who really had been reliably in the so-called virtuous category with a very good credit rating, et cetera, have shown that even for them it's difficult to impose austerity without having some kind of at least short-term or midterm prospect of growth.
And that's what led to the demise of the government, with Geert Wilders, the extreme-right leader, being part of the government and pulling away from the tough and painful measures that respecting the deficit objective would entail.
And so, yes, whether you look at Spain, at Italy, at the Netherlands, at France, you see the political repercussion. And that's why the optimistic take on a possible Francois Hollande victory on May 6, which is by no mean assured, but which seems likely, would be that, because he has pledged to renegotiate the treaty with Angela Merkel and because he has the support of the SPD, the German socialists, who are needed to ratify the treaty anyway, that there could be a new renegotiation or a new consensus on rebalancing austerity and discipline, fiscal discipline measures with growth.
RAY SUAREZ: Justin Vaisse from the Brookings Institution, thanks a lot.
JUSTIN VAISSE: Thanks very much.