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Uncertainty over debt crisis grows after French election: scholar

2012/05/07 22:51:46

Taipei, May 5 (CNA) The victory of Socialist Party candidate Francois Hollande in France's presidential election has added uncertainty to the European debt crisis, a Taiwanese scholar said Monday.

During the election campaign, the country's first left-leaning president in 17 years called for the renegotiation of the European Union's fiscal pact espoused by Germany, which is likely to create tensions between the two countries, according to Liang Kuo-yuan, head of the Polaris Research Institute.

Liang explained that the European debt crisis has been held in check for the past six months by the fiscal accord, the European Financial Stability Facility and the European Stability Mechanism.

Markets are concerned about Hollande's reform plan, considering that it may affect the positive measures taken over the past few months to solve the debt crisis, he said.

Liu Meng-chun, director of the Center for Economic Forecasting under the Chung-hua Institution for Economic Research, suggested, however, that Hollande may take a more practical approach following his victory.

Liu said the president-elect was free to campaign for reform prior to the election but would likely have to take a more practical approach in negotiating with EU after taking over the presidency.

He contended that if Hollande followed through, for example, on his pledge to tax earnings of over 1 million euros per year at a 75 percent rate, the wealthy will transfer their assets overseas, which would not be considered positive for the domestic economy.

(By Lin Hui-chun and Nell Shen)