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New leaders unlikely to solve old problems facing EU

By Zhang Jian (People's Daily Overseas Edition)

16:10, May 16, 2012

Edited and Translated by People's Daily Online

French president-elect Francois Hollande formally took office on May 15, becoming the eighth newly elected leader in the eurozone in a year. The people of the member states of the European Union are generally dissatisfied with their current leaders, and hope that new leaders will improve the situation. However, old problems plaguing the E.U. are unlikely to ease or disappear just because some new leaders take office.

The first problem is the European sovereign debt crisis. Spain, the eurozone’s fourth largest economy, is facing a deteriorating situation, and Italian government bond yields are on the rise. Greece’s mainstream center-right and center-left parties, which support austerity measures, lost so many votes in the May 6 general election that a hung parliament was created. The country is now heading for a repeat election. Since the country’s anti-austerity parities hold a substantial lead in public support, Greece has become more likely to refuse to implement austerity measures agreed to with the E.U. This way, it may get no more bailout money, thus default on its debts, and finally be forced out of the eurozone, delivering a hard blow to the E.U. and even world economies.

The second problem is weak economic growth. Due to market pressures and Germany's insistence, E.U. countries have almost all made great efforts to implement fiscal austerity policies in recent years, but the negative effects of such policies are becoming increasingly visible, including sluggish consumption and investment. Several of the union’s member states such as Spain and Italy have fallen back into recession. 2012 will be the fifth straight year of recession for Greece, where unemployment frequently hit new records, causing serious social problems.

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