<em>Illustration: John Shakespeare</em>

Illustration: John Shakespeare

Even as the world's top finance officials built a new fortress Europe at the weekend, the people of France stormed it.

Governments and central banks from around the world have arranged the biggest financial fortress ever assembled by the international community.

To protect the European Union from attack by financial markets, they have constructed a two-part structure pledging $1.6 trillion - that's $1600 billion - in public money.

But even as they were finalising the details, the French electorate mounted an assault on the entire edifice.

The election that so punished the conservative French President, Nicolas Sarkozy, was a protest against the austerity deals at the centre of the newly renegotiated EU.

The people don't want to bend over to be birched by their own governments to pay for the failures of the Euro-American financial system.

"This is an election that will weigh on the future of Europe," said the man who emerged as the frontrunner for the presidency, the Socialists' Francois Hollande. "My final duty, and I know I'm being watched from beyond our borders, is to put Europe back on the path of growth and employment."

The French vote - and the coincidental collapse of the conservative Dutch government on the weekend - hollowed out the political will to enact the 25 EU governments' solemn sovereign pledges of rigorous financial discipline, sworn just last month.

Sure, the election was anti-Sarkozy - it makes him the first incumbent President who's failed to win the first round of a re-election in 50 years. His melodrama and "bling" have been so alienating that Hollande ran as a "Mr Normal". The two will now compete head-to-head in the second round on May 6.

And sure, it was anti-foreigner, with Sarkozy claiming there are too many immigrants in France and too many Muslims, and the far-right leader Marine Le Pen arguing jobs should be reserved for French nationals.

And yes, there was a lot of resentment against the rich, with Hollande proposing a 75 per cent tax on incomes of more than €1 million ($1.27 million), and a strand of anti-capitalism with the far-left communist-backed Jean-Luc Melenchon calling for a "citizens' revolution" to tear down the system.

But the larger meaning of the election was that it was anti-austerity. This was the strand running through the support for Hollande with 28.6 per cent, Le Pen with 18 per cent, Melenchon with 11.1 per cent and the Greens' Eva Joly with 2.3 per cent - a combined 60 per cent of votes cast. They all reject the fiscal austerity pact as one of their central policies. The pro-austerity Sarkozy won 27.1 per cent.

If Sarkozy loses, he will become the 11th leader of a eurozone nation to be thrown out since the European debt crisis took hold in 2009.

When the first of Europe's economic rescue packages was put together, for Greece in 2010, it was worth €110 billion, or about $140 billion. By the close of last weekend, the sums dedicated to the preservation of the eurozone had swollen to at least $1.6 trillion, more than a tenfold increase.

This includes €700 billion in the European rescue fund, plus an allocation from governments around the world of about $US700 billion ($678 billion) for the International Monetary Fund, including Australia's pledged $7 billion, for lending to governments in the event of an acute new crisis.

As a condition of all this money, the mainstay of Europe and its economic and financial powerhouse, Germany, has insisted on strict austerity measures.

The two most important leaders in imposing and negotiating these deals have been Germany's Chancellor, Angela Merkel, and her faithful sidekick, Sarkozy.

That's why Germany's Der Spiegel said last week that "for Merkel, this is an election like no other, and one that is even more important to her than many German state elections."

Even if this had held together, it was unlikely to be adequate to the task. "The key question is whether this new firepower is enough," Steve Barrow, head of G10 strategy at Standard Bank in London, told Reuters. If "things turn down again," he said, "the tricky issue of underfunding" is "bound to resurface''.

But it has not held together, economically or politically. The way the EU has been patched up, things are destined to turn down again. The IMF calculated last week that, just for Europe's banks to meet their new capital requirements, they could need to shrink their collective balance sheets by $2.5 trillion, or 7 per cent, by the end of next year.

In other words, just when a continent in recession needs new bank lending to help it grow, its banks will be retracting loans. This promises an ugly credit squeeze.

The election result in Paris shows, in the words of The Observer's Europe editor, Ian Traynor, "a backlash is gathering against Berlin's austerity medicine - in Spain, in Italy, in the International Monetary Fund, in the European Commission. A Hollande victory will reinforce this trend."

And in the Netherlands, too. In forcing the collapse of the Dutch government on the weekend by withdrawing his party's support, the far right's Geert Wilders said: "We don't want to make our retirees bleed for Brussels' diktats."

Hollande stresses growth over austerity. This is where the economics and the politics of Europe are heading, and Germany won't like it. Italy's technocratic Prime Minister, Mario Monti, has already pledged himself to the goal as he dilutes austerity laws: "Everything we are doing now is aimed towards helping growth," he said. "As for Germany, it understands that it can't remain an island of prosperity in the middle of an ocean of recession."

Really? Until now, Germany, with Sarkozy's help, has largely had its way. The resistance has begun.

Peter Hartcher is the international editor.

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