François Hollande, the French president, has warned
for the first time that the Paris-Berlin motor driving Europe could
stall over deep differences on how to resolve the euro crisis,
insisting on a climbdown by Angela Merkel in her emphasis on austerity
and the surrender of national powers to tighten fiscal discipline.
Giving
the Guardian his first British newspaper interview since becoming
president in May, Hollande said there was light at the end of the
eurozone tunnel, but he also:
• suggested Merkel was too preoccupied with domestic politics in her response to the crisis
• demanded Berlin reverse its opposition to decisions taken by eurozone leaders in June
• called on the eurozone to act promptly to bring down the costs of borrowing for Spain and Italy
• insisted Greece be assured of staying in the eurozone
• gave short shrift to a German push for the creation of a federalised eurozone or political union
• and dismissed as unfounded the strong German criticisms of the recent moves on the crisis by the European Central Bank.
While
the Franco-German relationship was the driving and "accelerating" force
of the EU, Hollande said, "it can also be the brake if it's not in
step. Hence the need for Franco-German coherence."
Hollande's
remarks on the eve of a crucial EU summit in Brussels highlighted the
extent of the gulf between Paris and Berlin and the deep divisions
within the eurozone almost three years into Europe's worst ever crisis.
Solidarité
Interviewed by the Guardian and five other European newspapers
from France, Germany, Spain, Italy and Poland, Hollande also called for
monthly meetings of the national leaders of the 17 eurozone countries
to end the cycle of "so-called 'last-chance' summits", which he said in
the past had led only to "fleeting successes".
He
said domestic electoral considerations should not get in the way of
solving the euro-crisis. Merkel "is very sensitive to questions of
internal politics and to the demands of her parliament. I understand
that, and can respect that. But we all have our own public opinion. Our
common responsibility is to put Europe's interests first."
France's
first socialist president for 17 years also rejected the idea that
Germany was the only nation putting its hand in its pocket for everyone
else.
"We're all taking part in
this solidarity. The French, the Germans, just like all the Europeans
in the ESM [the eurozone's new rescue fund]. Let's stop thinking that
there's only one country who's going to pay for the others. That's
false. However, I know the sensitivity of our German friends to the
problem of supervision. Whoever pays should control, whoever pays should
sanction. I agree. But budgetary union should be completed by a partial
mutualisation of debts through eurobonds."
Hollande's
assertion of the need for the eurozone to pool some of its debt through
eurobonds challenged one of Merkel's red lines. She has repeatedly
refused to countenance the proposal and there is scant chance of her
shifting that position as she moves into an election year.
"We
are near, very near, to an end to the eurozone crisis," said Hollande.
But decisions taken at the last EU summit in June had to be implemented
"as fast as possible".
No Grexit
In
June, EU leaders delivered a breakthrough deal, agreeing to make the
European Central Bank the first supervisor of the eurozone's banks and
to use the bailout funds to shore up weak banks directly rather than by
lending the funds to governments. But Berlin is dragging its heels on
the deal and last month shattered the confidence of its partners by
walking away from the agreement.
Hollande insisted that the so-called "banking union" had to be finalised by the end of the year. He is demanding a German climbdown on the issue at the summit on Thursday and Friday.
Echoing
calls by the Spanish and Italian governments for German support to
bring down the costs of their borrowing in the bond markets, Hollande
said they should be able to finance themselves at "reasonable" rates,
and added it was unfair some eurozone countries were borrowing at 1%
and others at 7%.
The Greek
situation had to be dealt with "definitively" as "Greece has made so
much effort and it must now be assured of staying in the eurozone".
"In
the interests of all you can't inflict perpetual punishment on
countries that have already made considerable efforts," he said.
For
Hollande, the urgency of dealing with the crisis had to take priority
over longer-term German-led calls for eurozone federation and political
union. Only once immediate measures were taken could Europe look at
changing its way of decision-making and "deepening its union". He
suggested that political union – so dear to the Germans – would be on
the backburner until after the 2014 European parliament elections.
Crucially, he warned against the issue of political union being used as a distraction to dodge difficult choices.
"The
institutional issue is often evoked in order to avoid making choices.
It hasn't escaped my notice that those quickest to talk of political
union were often those the most reticent to take urgent decisions …"
Challenged
that he specifically meant the Germans, he said: "No, I'm not pointing
at anyone in particular." But he added: "Several times in the past, they
[Germany] had sincerely made proposals on political union. Those were
not picked up."
Read my lips: no new treaty
Outlining
his recipe for tackling the crisis, Hollande called on Germany to help
rebalance the eurozone economy by cutting taxes and raising wages to
spur domestic demand and proposed policies sharply at variance with
Berlin in terms of timing and sequencing.
"Solidarity"
had to come first followed by deeper integration, he emphasised.
"Whenever we take a step towards solidarity, the union – which means the
respect of common rules around governance – should progress." He said
the banking union was a very important role. "That solidarity can't go
without democratic control. The banking union aimed at controlling
finance would be an important step in European integration."
The
German strategy, by contrast, is to insist on tighter, centralised
controls of budgets and fiscal policies and then to move towards a
pooling of liabilities for banks and debt once the new system is
operational and seen to be working.
Asked
whether in order for a more integrated political union it might be
necessary to draw up a new European treaty and put it to referendums,
Hollande shot back with a reference to the no vote on the European
constitution in France in 2005. "If I remember rightly, we tried that
formula in 2005 and it didn't produce the results we were hoping for.
Because before launching into institutional mechanics, Europeans must
know what they want to do together. The content is more important than
the framework," he said.
He
insisted France would "tirelessly" champion the growth agenda – "this
compromise between getting out of debt and growth" – without questioning
the need for budget discipline, which had been made "absolutely
necessary" by the sovereign debt crisis. "Today, recession is as big a
threat as deficits."
Brits on the backfoot
Hollande
said his approach was "a Europe that advances at varying speeds, with
different circles. We could call them 'avant garde', 'precursor states',
the 'core' – names don't matter, it's the idea that counts." This meant
strengthening the regular meetings of eurozone governments.
.
He said the leaders of other countries intending to join the single
currency could also take part in his proposed monthly summits of
eurozone national leaders, but on less than equal terms, as
"associates". But, in an implicit nod to David Cameron and other
non-euro zone countries not to interfere if they were standing outside,
he added: "Certain countries don't want to join [the eurozone]: that's
their choice. But why should they come telling us how the eurozone
should be run? It's a pretension I hear but that I don't think meets the
need for coherence."
Asked if
he would risk seeing Britain leave Europe, Hollande said: "I would like a
UK fully engaged in Europe, but I can't decide in place of the British.
I see that for the moment they want to be more in retreat. The British
are tied by the accords they have signed up to. They can't detach from
them. At least they have the merit of clarity. They aren't in the
eurozone or budgetary union. I don't intend to force them."
The
suggestion that Britain couldn't wriggle out of deals it had signed up
to could be seen in London as a signal that it would not be easy for the
UK to renegotiate binding European commitments in a way Cameron would
like to.
Asked what was the biggest threat to the
European Union, Hollande suggested it was "not being loved. Only being
seen at best as an austere cash dispenser or at worse as a reform
school."
In a message to
Germany that France would stand by the others, he said. "France is the
bridge between northern Europe and southern Europe. I refuse any
division. If Europe has been reunified, it's not for it to then fall
into egotism or 'each for one's own'. Our duty is to set common rules
around the principles of responsibility and solidarity. As a French
person, it's for me to ensure Europeans are conscious of belonging to
the same group."
Asked if he had said that to Angela Merkel, he said: "She knows it perfectly. That was the meaning of her trip to Athens".
He
said: "I'll do everything for Greece to stay in the euro and have the
resources it needs by the end of the year, without it having to be
necessary to inflict new conditions other than these already admitted by
the Samaras government." But Hollande said he also felt for the Spanish
and Portuguese people "who had paid dear for others' excesses".
"The
time has come to offer a perspective beyond austerity". He said Spain
must know the precise conditions for getting financing agreed in June.
There was no reason to make its burden heavier.
Asked
if the worst was over, Hollande said, "Yes, the worst – in the sense of
the fear of the eurozone breaking up - is over. But the best isn't
there yet. It's up to us to build it."
Interview
conducted by Sylvia Kauffmann (Le Monde), Angelique Chrisafis (The
Guardian) Berna Gonzalez Harbour (El Pais), Jaroslaw Kurski (Gazeta
Wyborcza), Alberto Mattioli (La Stampa) et Stefan Ulrich (Süddeutsche
Zeitung)
http://www.guardian.co.uk/world/2012/oct/17/francois-hollande-angela-merkel-austerity?newsfeed=true
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