(MENAFN - Arab News) May 7 saw voters in both Greece and France vote out the incumbents in a sign of mounting discontent with seemingly endless fiscal consolidation. Europeans are increasingly fed up with the seemingly endless calls for austerity that are calling into question their assumptions and expectations about the future.
The frustration is made all the greater by the piecemeal crisis management that has sought to address the crisis one step/summit at a time, leaving the potential end game shrouded in uncertainty.
The latest election results highlight the political constraints economic decision-making has to operate under.
The success of the European crisis management to date has relied heavily on the ability of the EU leadership to gain the support of the traditionally dominant political parties for the current policy of fiscal consolidation.
But the Greek election highlights the limitations of this approach: in the absence of established alternatives, the mood risks swinging against the mainstream altogether.
This has triggered a response on the part of establishment. Especially Franois Hollande's election shows that the leading parties either adjust to the prevailing realities or risk losing their clout. Problematically, the process is not identical across the Euro-zone as some countries have been far more successful than others in adhering to the convergence criteria.
For instance, in Germany, the mood appears to have shifter rather decisively against Greece.
The potential for growing divergence will remain: Ireland will have a referendum on the EU's Fiscal Compact on 31 May.
France will have parliamentary elections on 10 June.
Whatever the political moodswings, their relevance is limited by the economic context.
Stimulus represents a genuine choice only when the necessary financial means to finance it exist.
This is not really the case in any of the troubled economies of the euro zone.
While the expectations are American-style quantitative easing are mounting, such steps in Europe have been complicated by the statutory limitations on the ECB's mandate. Nonetheless, the bank has engaged in selective government bond purchases and long-term lending to banks. It can, moreover, still reduce its interest rate from the current 1 percent.
The ECB has in the past stepped to the plate when the circumstances have called it but it can only be part of the solution. In the famous words of Austrian economist Ludwig von Mises, "If it were really possible to substitute credit expansion (cheap money) for the accumulation of capital goods by saving, there would not be any poverty in the world."
The political consensus - and bond markets helped along by ECB interventions - in Europe may well tolerate of a somewhat slower pace of fiscal consolidation but there is no alternative to continued belt tightening.
The situation is most acute for Greece where the next decision on external assistance in due in June.
A failure to the previous commitment would likely cause at least the IMF to cease the payments.
This could ultimately trigger a Greek exit from the Euro-zone, an option that is discussed increasingly openly across Europe.
Whether the result of this would be preferable the consequences of the planned austerity measures is far from clear.
Moreover, should the possibility of a near-term Greek exit increase in probability, it would inevitably trigger renewed speculation about contagion.
The European Commission has repeatedly tried to convince the markets that Greece is a special case but Spanish and Italian bonds are increasingly being bought only by (ECB-backed) local banks in a sign of minimal market confidence.
Even as Europe now likely faces another slew of crisis summits and a clear change in the rhetoric, concrete pro-growth steps may not go much beyond increased SME lending by the European Investment Bank and dedicated project bonds backed by the Union as whole.
It is far from certain this will suffice to persuade both the bond markets and the increasingly skeptical public at a time when the economic fundamentals in much of the union are still deteriorating. If it does not, the austerity fatigue will have raised a number of important questions about the future of the Euro-zone as we know it.
Jarmo T. Kotilaine is chief economist at National Commercial Bank, Saudi Arabia