A sure sign that things have changed since the collapse of the Dutch government and Hollande's victory in France is Mario Draghi's statement that "we have a budget pact ... now what we need is a growth pact." Even more surprising is Angela Merkel's assent! But is this "growth" in the sense that the word was added to the title of the old "Stability and Growth Pact," that is, as window-dressing? Or is it a real commitment to doing something--namely, putting German money on the line--to stimulate flagging European economies?
One hopes for the latter but strongly suspects the former. The austerians will not capitulate this easily, but we may infer that they are indeed alarmed by the clear rise of nationalist sentiment across Europe and recognize that some modification of their strategy is necessary. In the short run, this will reinforce Hollande in his debate against Sarkozy: "You see," he can say, "I was right along. Now the others recognize it. Why are you lagging behind?" But on May 7 he will need a more far-seeing strategy if he is not to be outplayed.