NEAL CONAN, HOST:
This is TALK OF THE NATION. I'm Neal Conan in Washington. The political alliance that guided Europe through one economic crisis after another unraveled yesterday, when voters in France rejected Nicolas Sarkozy for a second term as president, which leaves major questions for his now former partner, German Chancellor Angela Merkel.
Among the biggest, what appears to be disarray in Greece, where voters handed stinging defeats to the two parties that recommended the Sarkozy-Merkel prescription of financial discipline and ever-deeper spending cuts.
The victor in France was socialist Francois Hollande, but the far-right National Front scored impressive gains in the first round of the election. In Greece, a radical left alliance finished second. The results raise new questions about the stability of the Greek bailout, the future of the euro, even the idea of a Europe moving progressively toward political and financial union.
If you have family or business in Europe, what concerns you about this crisis? 800-989-8255. Email us, firstname.lastname@example.org. You can also join the conversation on our website. That's at npr.org. Click on TALK OF THE NATION.
Later in the program, gay marriage on The Opinion Page this week. Jonathan Caphart of the Washington Post argues it's time for the president to show his hand. But first we begin with New York Times Paris bureau chief, Steven Erlanger, who joins us from Paris, Steve, nice to have you back on the program.
STEVEN ERLANGER: Thank you.
CONAN: And as we look one day after the elections in Greece and there in France, what really has changed?
ERLANGER: Well, what you have is a kind of democratic revolt against cuts and austerity. You have it more sharply in Greece, where the political system appears to have broken down to some degree and which is scaring quite a lot of people. And in France, you have it in a much milder form. Nicolas Sarkozy was thrown out of office by a narrow margin partly because people don't like him more than his policies, but they were also very attracted to the socialist Francois Hollande's notion that you can get to save this French social model with more taxes on other people, rather than on yourselves, and fewer budget cuts.
So it's a different way, the French hope, of getting to the same place softer and gentler.
CONAN: The two countries at the top, two economic powers of the eurozone were France and especially Germany, but where does this now leave Angela Merkel?
ERLANGER: Well, it leaves her still quite important. She has big domestic problems. So she has to be careful. But Germany and France need to work together, and she will work with Hollande. She's already welcomed him. You know, she didn't like Nicolas Sarkozy very much. They kind of worked out a relationship. She's going to like Hollande more, and they will work out a compromise, simply because they have to.
I mean, you know, not so long ago, another right-wing German leader, Helmut Kohl, was working very well with another socialist French leader, Francois Mitterrand, and they, sort of, made it work. So everybody knows they're the heart of Europe. They may disagree on pace, they may disagree on tactics, but in the end, I think they will come to some kind of agreement. The stakes are too big for both countries, and they both know it.
CONAN: You spoke of disarray in Greece. The first effort after yesterday's parliamentary elections to form a coalition government has already failed. It's expected that the next two efforts will not be any more successful.
ERLANGER: Well, that's right, and I - this is why everybody's nervous because the two parties - one on the right and one on the left, who had both worked together on this bailout deal and the cuts that were involved - both suffered terrible, terrible defeats. There's an anti-deal, anti-austerity, anti-bailout majority in the Greek parliament, but they won't get on.
So I suspect you're going to have to have new elections again in Greece. We'll have to wait a few more days to find out. But there's a lot of anger there, and I do think again people will have to respond, in the rest of Europe, to some of this anger because there's a point at which democratic legitimacy is required for this kind of sacrifice that any nation makes, whatever its past sins.
And if that legitimacy isn't there, it can't be imposed upon a people.
CONAN: There's considerable anger in Spain, as well, and it's certainly building in Italy. This is not going to be confined to Greece.
ERLANGER: No not at all, and this is why the election of Hollande is so interesting in France. I mean, being a socialist, he obviously has to see himself in the vanguard of something, and he describes himself in the vanguard of an anti-right-wing, anti-austerity German-dominated Euro Zone. The fact is, you know, he's talking about growth, and everybody likes growth. And even the word austerity is a bit odd, because basically what austerity is are nations that have borrowed too much and whose systems aren't really working very well trying to get their houses into order.
That's a good thing, but in America, you know, the timeline is much farther out for the same process, and I think in Europe, they're simply going to have to cut these countries more slack. I mean, they're supposed to reach certain debt limits by certain dates, and it just may be more politic and sensible to extend the timeline a bit more, just so the pain doesn't come all at once.
CONAN: Joining us here in the studio is Ivan Vejvoda, excuse me. He's the vice president of programs at the German Marshall Fund, and we appreciate you coming in today.
IVAN VEJVODA: Thank you.
CONAN: And is this, as Steve says, the stakes for the leaders of France and Germany are just too big, but we're talking about re-jiggering fundamental arrangements that were made - that imposed these bailouts, not just Greece but Portugal and Ireland, as well.
VEJVODA: No, I agree with Steve Erlanger. Both the French and the Germans, who are the backbone of the European project, historically, know that the stakes are very high. And just as Francois Mitterrand, when he came on a socialist ticket, moved slowly towards the center and much more moderate positions both on the economy but also on the politics of Europe, I expect that we will see Francois Hollande doing the same thing.
In fact, there's already talk of the Merkollande as opposed to the Merkozy couple, and of course there have been, over the past weeks, backstage meetings between German officials and the team of Francois Hollande to prepare these next steps.
CONAN: While Angela Merkel was campaigning for Nicolas Sarkozy.
VEJVODA: Well exactly, but that tells you that it's one thing to look at the electoral politics and the rhetorics of it and then the deeper, mainstream currents of what the European project is about. And I would like to add that in fact we talk very much about the financial and economic issues, but what's underpinning all this is really the survival of this post-war peace project that the European Union is.
And the European leaders are aware that if the euro somehow unravels, that actually threatens the European project itself, and that's actually the glue that's keeping this together, even though to us on the side, it looks as if it's in tethers.
CONAN: And Steven Erlanger, that's what in question in Greece as the next deadlines come up, when, in June, when the next tranche of money is supposed to be doled out.
ERLANGER: Well that's right, and I think the troika, which is the EU and the IMF and the European Central Bank, were about to make a visit to the new government. So, I mean, it does raise this question, finally, which is an important question, of whether the Greeks really will stay inside the euro; and whether, if they leave, which would be complicated, it would destroy the eurozone.
I don't think it would. I think it won't be easy. But it may be that simply the world is asking too much too fast of a Greek polity that isn't capable of handling this new responsibility. That would be a tragedy, but I don't think it needs to be the end of the European model, the euro or the European ideal.
CONAN: Ivan Vejvoda?
VEJVODA: Yes, I'd like to add that Angela Merkel, the German chancellor, is well aware of the need also for growth. In her first meeting, when Prime Minister of Italy Mario Monti visited Berlin, she mentioned the word growth several time, and Prime Minister mentioned that.
You have the Financial Times just the other day saying a pact for growth is vital for Europe. So Francois Hollande is not an outlier, I think there's going to be a meeting of minds here. Of course it will take time because the French do have parliamentary elections also in exactly a month's time.
CONAN: It's easy for Merkel to say growth is - her country is growing. That is certainly not the case in Britain. It's not the case in Spain. Both of them are in recession, and, well, Greece is plummeting.
VEJVODA: Well, that's exactly why she understands. When - back in July, the former Minister George Papandreou went for one of the European summits, there was talk of a European Marshall Plan for Greece. What I'm saying is there is awareness among the European leaders, wherever they may sit, that austerity will not be enough.
CONAN: And Steven Erlanger, is Angela Merkel going to be able to be flexible enough? As you say, she has domestic problems of her own. There's a widespread support for the European idea in Germany, much of it, though, amongst her opposition.
ERLANGER: Well, that's true, and they're very heartened by the victory of Francois Hollande. But it is worth saying that, you know, everybody is for growth. Growth is not easily mandated. It just takes longer. And already some of the ideas that Hollande has spoken about are fine with Angela Merkel. She's made this clear, which is more money for the European Investment Bank, even the idea of European collective bonds not for debt but to do infrastructure projects.
She's fine with a financial transaction tax that he's proposing. I think she'll still be fine with using European Union structural funds to promote growth itself. Where she's not going to bend is, you know, collectivizing European debt. That is not going to happen. And she's not going to let the European Central Bank turn into a euro-printing inflation machine because that would kill her at home.
But she also understands Germany cannot be isolated. Germany hates being isolated. Germany likes being with others. And while Germany is considered the dominant power now in Europe, it's very uncomfortable for the Germans themselves. So she's always looking for allies.
I think she was struck hardest when the Dutch government fell because the Dutch have been very close allies with the Germans on tight money and on this so-called austerity program. And when there was a democratic revolt, a bit of one, you know, in this ally, I think it struck her very, very hard.
So, I mean, Germany will move, too. There will be a symbolic move. Don't forget in 1997, there was a socialist Prime Minister Lionel Jospin who came into France, and in 1997, he was complaining about austerity, and there was something called a stability pact in the European Union. And lo and behold, it became a stability and growth pact, and it was an important symbolic victory for the new socialist prime minister. So my guess is that will be a sort of parallel for Francois Hollande.
CONAN: Perhaps an austerity stimulus pact. We're talking with Steven Erlanger of the New York Times. Stay with us this is TALK OF THE NATION from NPR News.
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CONAN: This is TALK OF THE NATION from NPR News. I'm Neal Conan. After frustrated voters opted for change and against austerity in Greece and France, we're talking about some of the many questions raised by the results of weekend elections there, about the stability of Greece, the future of the euro, and the EU itself.
If you have family or business in Europe, what concerns you about the crisis? 800-989-8255. Email email@example.com. You can join the conversation at our website as well. Go to npr.org, and click on TALK OF THE NATION.
Our guests are Steven Erlanger, Paris bureau chief of the New York Times; and Ivan Vejvoda, vice president of programs at the German Marshall Fund. And let's get Richard on the line. Richard's calling us from Cooper City in Florida.
RICHARD: Hey, Neal, love the show.
CONAN: Thank you.
RICHARD: I was just going to point out, I'm Franco-American, dual citizen, and I voted in the election. I voted for Sarkozy. I just - and so did most of my family. I just wanted to point out that the election was 51 percent to 49 percent. It's significant, but it doesn't seem to me this big sweeping mandate for reform. It looks a lot like half-and-half to me.
CONAN: Steven Erlanger, he's right, it was pretty close at the end.
ERLANGER: It was extremely close, and in fact if you add in the blank ballots, you could argue that Francois Hollande didn't even get a majority of all the votes cast. So it's a thinner majority than he would have liked. But you know, the fact is somebody wins and somebody loses, and he's now incarnated as president of France, and he has democratic legitimacy.
But he's going to have to be careful not to screw up his chances for the June legislative elections. It's true that it's not a massive majority. It's probably the tightest French election since 1974. But you know, two guys run and one guy wins and one guy loses, and it's a democracy, so that's where we are.
CONAN: You mentioned the blank ballots, those cast by, among others, we presume, Ms. Le Pen, the head of the National Front.
ERLANGER: Yes, that's right. She - it's actually in her interest that Sarkozy lost because she wants to divide the right and somehow reassemble it and run for the presidency five years from now in a stronger position. So she told her supporters to vote blank ballots, which is what she would do. But in fact I think the polls are saying roughly 55 percent of her voters voted for Sarkozy. He needed probably 65 percent of them if he was actually going to win.
But it's one of the reasons that he came so close.
CONAN: Richard, thanks very much for the call.
RICHARD: Thank you.
CONAN: Let's go next to - this is Raymond, Raymond with us from Wadesboro in North Carolina.
RAYMOND: Yes, sir, thank you. Neal, I appreciate your show. I listen to it whenever I can.
CONAN: Thank you.
RAYMOND: My comment is that the imposition of austerity measures in Europe by Germany brings to mind what happened after the Armistice in 1919, when Germany lost the First World War. Germany had very severe austerity measures placed upon it. It was - the reparations were steep. The money that was demanded as equivalent to debt was so much that it sapped the life out of the economy and brought in extreme bitterness by the German people.
This led to the rise of the Third Reich and of course World War II and all of its horrors. I'm not saying that there's any excuse for such things. I'm just saying that people - I'm hearing the same kind of rumblings today of the - the kind of rumblings, you know, that might indicate the start of something possibly horrible.
CONAN: Well, let me ask Ivan Vejvoda about that. There are concerns about the performance of the National Front in France, got 20 percent of the vote, the radical groups on the right and the left in Greece. The radical left coalition came in second, they're now trying to form a coalition that's - a coalition government, that's not likely to happen. But there was also a neo-Nazi party that will be in parliament now for the first time and celebrated with torchlights, parades, and Nazi salutes.
VEJVODA: That's exactly right, and that's where our listener is asking a very good question. I think that just to talk about Greece for a second, I think that Greek citizens are aware that this country has been spending beyond its means for many years, and in fact Greek standards of living over the past 20 years have grown.
Anyone who traveled to Greece in the '70s and then in recent years have seen the enormous difference, the enormous strides that Greece has made as a society and an economy. And so when you have a 30 percent average salary cut through these measures, people are, to put it mildly, disquieted. Jobs are lost, stores are shut down, and especially youth unemployment is dramatic.
In Spain, it's around 50 percent for under-24-year-olds. And then people really try to seek an answer, and the vote that they have, they cast it as they did in Greece in this very wide kind of pendulum from the extreme Nazi right to this extreme left in search of answers. They don't see a credible leader or a party that could offer it a solution, given the fact that these countries are so intertwined with the European economy, with the fact that billions are being showered on them to keep them afloat.
And the - I think we see that in many countries to different degrees. As Steve Erlanger said, in France it's much more moderate. By the way, there were elections also in my home country, Serbia, yesterday, which was a much more moderate response.
But the danger is actually that we slip into a kind of tailspin that Greece is in right now.
CONAN: Steven Erlanger, I wonder, do you see it in those - it is voters looking for something, or is voters saying throw the bums out?
ERLANGER: Well, there are two themes, it seems to me. One is anger. There's a lot of anger. But one is also nostalgia, and the two are not contradictory. People want the softer past and an easier time. This is tough times for Europe, and the eurozone is in recession, Greece is in freefall. A lot of pain is going on. Young people, as Ivan quite rightly said, have very vulnerable working lives.
The future looks dim, and so it's natural that you would get angry people like Occupy Wall Street in a sense on the far left and on the far right, and the far left and far right are not so different. They're both against Brussels and the European Union. They're against globalization. They're against, you know, Coca-colonization, as the French used to call it.
I mean, they're different probably on racial and immigration issues, but in their anger and disgust with the current economic system, they are very much the same, and in this period of anger, you know, you get extremism, and extremism can lead to violence.
So it is something people are very, very worried about. In France, people were very upset that Sarkozy tried to win by moving so far to the right. It seemed that he was almost legitimizing the far-right National Front because he really wanted their votes. And you know, once you kind of play this game, you begin to legitimate all kinds of code words that stand for divisions and cleavages.
So I share this concern. I mean, this isn't going to lead to, you know, World War II, but there is an alienation from politics and from the system which is very, very deep and I don't think will be cured soon.
CONAN: Let's go next to Bill, and Bill's on the line from Tucson.
BILL: Hey, good morning, everyone. I'm sorry to have to throw more gasoline on the fire, but there were two points I wanted to make about Europe's situation. The first is the demographic issue. The EU's population is expected to fall from 460 million to 380 million by 2100, which will cause extreme problems for the European social safety net.
For instance, Germany, I believe it's true, is now the oldest country in the world by average age. Second thing is this issue of national debt, which I was in the financial industry 30 years - very much frustrates me when I hear the reporting because any economist will tell you there are two kinds of national debt: explicit, which is what we normally call national debt, but then there's implicit, which are unfunded social programs, social liabilities.
If you look at implicit plus explicit, last time I saw the numbers, the U.S. is about at about 150 percent of GDP. Germany and France are each at about 250. Italy was 1,250. Belgium's 1,800. That never gets reported, but the fact is, when you combine demographics with this hidden bomb of implicit national debt, it is - it's a mathematical impossibility in the case of most European nations that they're going to continue their nanny state at anything like the level it's at right now. One final comment - when the U.S. bottoms out in terms of retirees per worker, we're going to bottom out at 2.1 per retiree. At that time, Germany will be .8 per retiree. That's my comment. I'll take - I'll listen off the air. Thank you.
CONAN: Bill, thanks very much. And, Ivan Vejvoda, the addition, as he put it, looks inexorable. And you have now a new president of France who's pledged to re-raise - to re-lower the retirement age back to 60.
VEJVODA: No, Bill is absolutely right to point out the demographic issue. In fact, strangely, France is probably the only country of the bigger Europeans that doesn't have a demographic issue. They have a rather positive demographics. Other countries, Greece included, have really dramatic old, aging populations. And so the whole implicit debt issue, or rather will there be retirement for those who are today 40 or 50 or even 30, is a really worrisome question, which somehow gets lost given the immediate economic concerns.
So I think that part of what we're seeing and the raising of the retirement age in all of these countries and the stripping away of what were the social benefits that came with the nanny state, which began, actually, in 1936 with the Popular Front in France, are something that really troubles families throughout the continent. And this definitely will have to be addressed. And Francois Hollande, I think, is just making a nod that there will be some feeble, quote-unquote, "effort" to actually alleviate some of those burdens.
CONAN: Let's go next to - this is Mark. And Mark's on the line from Miami.
MARK: Hi. Thank you for taking my call. Bill couldn't set up my - your previous caller, Bill, couldn't have set up my question and concern better if I had called him ahead of time. He said that they couldn't continue this nanny state in the path that they're going. My concern is that they will be able to continue it because we still can't audit the Fed. And my fear is that they will - the Fed will once again bail them out semi-secretly with - using the value of everybody's savings accounts and dollars. That's my concern. And I would love to hear your comments on that.
CONAN: Steven Erlanger, is Europe going to be looking to Washington and specifically the Fed for succor?
ERLANGER: No. I mean, this is not my concern. Washington has made it very clear, even through the IMF, it is not going to pay a lot to help out a rich continent like Europe, which is rich enough to solve its own problems. So that worries me less.
MARK: Well, not the last...
ERLANGER: I'm a little bit, you know, a little bit less hysterical about the demographic problem. The biggest problem, in part, in most of these European systems - and Europeans are willing to pay higher taxes than Americans are in order to have these kinds of benefits.
CONAN: Much higher taxes.
ERLANGER: Yeah. Is that - it's a pay-as-you-go system in France. In other words, it's not like America where you're building up your Social Security. Current workers pay for retiring workers. So whenever you get a big bulge in retiring workers, it becomes much harder for the people who are working to pay for the system. And when you're in recession or when you're not growing or when unemployment is high, it becomes even harder. So, you know, this is a big concern.
I think your caller is quite right. And Sarkozy was not very bold in dealing with it, and even the French, as Ivan says, they are having babies, but they're not creating jobs quite as fast as everyone would like. So there's a confrontation with reality coming. There's no question. But it doesn't have to be a cataclysm.
CONAN: Thanks, Mark, very much for the call. You're listening to TALK OF THE NATION from NPR News. And let me reintroduce our guests. You just heard Steven Erlanger, Paris bureau chief for the New York Times, and with us here in the studio, Ivan Vejvoda - I'll get it right. He's the vice president of programs at the German Marshall Fund. And as we sit, the demographic bomb and the more short-term crises that are bound to come up as Athens struggles to resolve its political dispute, we could be seeing another election in Greece within a month if they cannot arrive at a new government.
In the meantime, important decisions have to be made about whether they're going to pick up the next segment of the bailout package. Can austerity be backed down enough to reassure voters in Greece within that timeframe, Ivan?
VEJVODA: It doesn't seem so. I mean, Greece is so dependent on keeping afloat from these billions that are being given by the IMF, by the European Union, by the countries - member states of the European Union. And I think everything - every effort will be made to keep the current mainstream going forward. That's why people were actually warning that to have an election in such a short span was not a terribly good idea, although the issue of democratic legitimacy that Steve raised is very important, but it would maybe have been in hindsight better to have had former Prime Minister Lucas Papademos, the technocrat, banker, continue to give a sense of stability going forward.
And so we'll really have to wait for the next couple of days to see where they're going. But I think one issue to link to the demographics issue is one that has appeared in the French electoral campaign, and that's the issue of immigration and migrant workers. These countries, given the demographic situation, will need workers coming from abroad - high-skilled, low-skilled labor. And that, of course, in a situation of economic downturn, produces these attitudes of repelling immigrants.
In fact, the right-wing party in Holland that brought down the government there - Geert Wilders - is one such party. A lot of people in France and other countries are asking, you know do we need, quote-unquote, "foreigners" to take our jobs, as the colloquialism goes.
CONAN: All right. We're going to have to be facing a - Steven Erlanger, we just have a few seconds left. But we hit these crises that raise fundamental questions, and we get solutions that paper them over without addressing fundamental issues.
ERLANGER: That's the grand democratic way.
CONAN: We will have some more papered-over solutions then coming up shortly. Steven Erlanger, thank you very much again for your time.
ERLANGER: Thank you.
CONAN: Steven Erlanger, Paris bureau chief for The New York Times. And Ivan Vejvoda - I think I got it right that time - vice president of programs at the German Marshall Fund, we appreciate your joining us here in the studio.
VEJVODA: Thank you for bringing me in. Transcript provided by NPR, Copyright NPR.