Edition: U.S. / Global

Europe

Change in Paris May Better Fit U.S. Economic Positions

WASHINGTON — With the victory of the Socialist candidate, François Hollande, in the French presidential election, the White House has lost one of its closest allies on the Continent, but perhaps gained one with economic policy beliefs more closely aligned with its own.

Pool photo by Francois Mori

Outgoing French President Nicolas Sarkozy, right, with newly-elected president François Hollande signing the Livre d'Or at a ceremony at the Arc de Triomphe on Tuesday.

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Mr. Hollande is virtually unknown in Washington, and his policy positions on both domestic and international affairs remain only lightly sketched out. That is in stark contrast to the departing president, Nicolas Sarkozy, whose frequent discussions with and ardent defense of the White House earned him the nickname “Sarko the American” back home.

But in the past few months, Mr. Sarkozy has parted from the White House in his support of the German-led austerity project in the debt-soaked euro zone, a project that the White House objects to on the grounds that cutting budgets too soon will lead to sluggish growth and high unemployment across Europe without satisfying the demands of skittish bond investors.

Mr. Hollande, in contrast, ran on a promise of rebalancing Europe away from austerity and toward growth, and his narrow victory is seen in Washington as a public rejection of governments imposing strict cuts on battered economies.

“Austerity need not be Europe’s fate,” Mr. Hollande said shortly after his victory. To that end, he has said he plans to renegotiate the fiscal pact Europe struck this winter to allow for more budgetary breathing room for countries that can still borrow money to support themselves at reasonable rates on the debt markets. He also supports measures to support growth by, for instance, bolstering infrastructure spending.

The Obama administration had pushed for such pro-growth policy changes even as Mr. Sarkozy joined Chancellor Angela Merkel of Germany in calling for deep spending cuts.

“If every time economic growth disappoints, governments are forced to cut spending or raise taxes immediately to make up for the impact of weaker growth on deficits, this would risk a self-reinforcing negative spiral of growth-killing austerity,” Treasury Secretary Timothy F. Geithner told a Congressional committee in March, comments echoed since then in his statements at many international forums.

“The administration hopes, in broad terms, that this election will change the conversation,” said Edwin M. Truman, a senior fellow at the Peter G. Peterson Institute for International Economics. “In principle, you’d be saying, ‘Don’t tighten your belt!’ to the countries with the scope to do so,” Mr. Truman said.

Mr. Hollande seems “naturally more palatable to the administration,” said Justin Vaïsse, the director of research for the Center on the United States and Europe at the Brookings Institution. The administration seems to reason that “Europe probably has a better chance of avoiding a breakup or another renewed sovereign debt crisis by focusing on growth, rather than just sticking to austerity,” he said.

A senior administration official, speaking on the condition of anonymity to avoid disturbing diplomatic relations, said that the Obama administration looked forward to working with Mr. Hollande, and that it did not believe that making changes to the fiscal compact would spook markets or threaten the validity of the overall agreement, which helped bring down sovereign debt yields this winter.

Mr. Truman noted that Mr. Hollande would be “adding some supportive material to make the compact more growth-friendly,” rather than starting from scratch.

The official said that the White House did not know the details of how the French president-elect hoped to change the compact, but that many options were on the table, including delaying some austerity measures, bolstering the Continent’s methods for recapitalizing its banks and evening out imbalances between countries with big deficits and those with surpluses.

Observers said that though Mr. Hollande was likely to hew closer to the Obama administration on economic issues, he would almost certainly move further away from it on foreign and military policy.

Mr. Sarkozy had led a significant rapprochement between the French and American governments on foreign affairs, joining Washington in promoting harsh new penalties for Iran and playing a leading role in gathering an international coalition to topple the Libyan dictator, Col. Muammar el-Qaddafi, among other actions.

In a briefing Monday, a State Department spokesman, Mark C. Toner, acknowledged the administration’s closeness to Mr. Sarkozy, and said he hoped that the bilateral relationship would deepen with Mr. Hollande.

“We’re going to have an opportunity to sit down at the highest levels, the president with President-elect Hollande, to discuss all these issues,” he said. “I’m not going to prejudge in any way how those discussions might go.”

Mr. Hollande has a reputation as conciliatory and consensus-driven, and Obama administration officials stressed that they expected a close ally in his government.

In an interview with the Web magazine Slate.fr, Mr. Hollande — who noted that he speaks English — praised the Obama administration’s foreign policy and said that the countries had a “convergence” on economic issues. In the past, he has expressed skepticism about some United States positions on military issues.

President Obama called Mr. Hollande after his victory and invited him to meet with him in Washington in advance of international meetings there and in Chicago this month.