French Election To Determine Future of 'Merkozy' Alliance

France on April 22 holds the first round of voting in a presidential election that could see Socialist Party candidate Francois Hollande take the lead over incumbent Nicolas Sarkozy.

Hollande, who cuts a bland public figure and Sarkozy, the impulsive incumbent, are the top contenders out of 10 candidates. Neither is expected to get 50 percent of the vote needed to win outright. But polls suggest Hollande would win a second-round runoff against Sarkozy on May 6.

Political and financial analysts say a victory for Hollande would have implications beyond France because it would bring an end to the so-called "Merkozy" alliance between Sarkozy and German Chancellor Angela Merkel that has guided European policy in recent years.

And potential discord over policy between Europe's two largest economies could have a significant impact on the stability of the euro currency at a fragile time for the continent.

A key difference between Hollande and Merkel is how they believe the European Central Bank should operate. Hollande wants new rules that would make it a lender of last resort to debt-burdened eurozone governments. In fact, that had been a traditional French policy goal for the European Central Bank since the 1990s. But Sarkozy has backed down from those ambitions as Europe's debt crisis has unfolded, bringing his position more in line with that of Merkel's.

Instead, Merkel and Sarkozy have tried to push through harsh austerity measures that would lead to a new European Union treaty -- including automatic penalties for eurozone countries with a deficit of more than 3 percent of their GDP, the criteria stipulated in the 1992 Maastricht treaty upon which the single European currency was founded.

Radio Free Europe