First stop for new French president Hollande: Germany

It is not unusual for the French president’s first foreign trip to take him to Berlin. When the conservative Nicolas Sarkozy was elected in 2007, he wasted no time, traveling to Germany to meet Chancellor Angela Merkel on the day of his inauguration. His successor, the socialist François Hollande, will do the same today, but the context of the meeting could hardly be more different.

Five years ago, Mr. Sarkozy called the German-Franco friendship “holy,” but this time Paris has sent frosty messages ahead of the new president.

“Merkel cannot be the sole decider of Europe‘s fate based on German interests,” Mr. Hollande’s spokesman Benoit Hamon said on France 3 television on May 13. “We did not vote for there to be a president of the European Union named Mrs. Merkel who decides on the fate of all others.”

These are uncharacteristically harsh words between Germany and France. They refer to Merkel’s insistence that austerity is the basis for solving the ongoing debt crisis in the eurozone — a course against which Europe, including France, is increasingly pushing back. Reacting to French demands to relax her position on saving money and put more emphasis on growth measures, Merkel told the German parliament last week that she had no intentions of changing tack.

“Growth through structural reforms is sensible, important and necessary. Growth on credit would just push us right back to the beginning of the crisis, and that is why we should not and will not do it,” she said.

Analysts believe that, in the end, she will have to give in on something. “I don’t think we are going to see anything like the Tennessee Valley Authority in Europe, but Hollande is not alone with his call for more growth,” says Thomas Klau, senior policy fellow at the European Council on Foreign Relations in Paris. “Other European governments are picking up this call. It won’t be a sea change, but it will be a rebalancing of policies.”

Such rebalancing may become necessary in domestic politics, too. Merkel’s Christian Democratic Union party was dealt a bitter defeat by the Social Democrats in May 13 regional elections in the populous state of North Rhine-Westphalia, just the latest in a series of state elections that went badly for the CDU. The setback does not translate into a rejection of her European course by the wider electorate, but it does mean she has to fend off stronger political opposition on the home front.

Despite that weakness, it seems unlikely that Hollande will be able to realize his plans to renegotiate the so-called fiscal compact, the treaty that was signed by 25 EU members in March that obliges member states to bring down public debt and present balanced budgets.

Instead, Merkel might offer some add-ons to the pact. One senior aide to the chancellor told Reuters on condition of anonymity that she was “willing to talk about intensified growth and employment strategies,” but only if they didn’t involve new public deficit spending. 

The chancellor’s stance got support from Bundesbank President Jens Weidmann, Germany’s most senior central banker.

“Jobs and growth are created by entrepreneurs, not by central banks,” he told Süddeutsche Zeitung. Hollande’s plans to include an obligation for growth promotion in the European Central Bank‘s statutes is “dangerous,”  Mr. Weidmann said.

On a personal level, the two leaders could eventually get along very well, according to analyst Mr. Klau. “They are both consensus builders, they both like to reflect and take time before they make decisions, and they are both good listeners. They are happy to stay out of the limelight, and they share a sense of humor and irony,” Klau says. “I would not be surprised if Angela Merkel, after a while, finds she is relieved to not have to deal with Nicolas any more, and rather calls Francois her new best friend in Europe.”

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