There were four main proposals on the agenda this Tuesday, at the Franco-German summit in Paris: The creation of an economic government for the Euro zone, the entry into the Constitution of the famous ‘règle d’or’ (‘golden rule’), the creation of a tax on financial transactions and a tax on societies shared by Paris and Berlin.
There were no miracles, just a few proposals. Angela Merkel’s spokesman had announced that nothing “spectacular” should be expected of the Franco-German summit, which took place this Tuesday at the Elysée. However, the French President and the German Chancellor advocated new budget conversion measures between the two European nations, with the aim of ending the European debt crisis. Four projects emerged from this meeting. First of all, Sarkozy announced the creation of a, “Proper economic government for the Euro zone, comprising of a Council of States and governments with biannual meetings and a President elected for two and a half years.” The name of the current European Council President, Herman Van Rompuy, was put forward for the first term of presidency. Secondly, Paris and Berlin advocated that the, “Seventeen members of the Euro zone should now write the ‘règle d’or’ into their constitutions. (This has already been done in Germany and is in the process of happening in France.) The purpose of this would be to ensure that the annual finance laws work towards the goal of a return to a balanced budget.” French PM François Fillon will make the “Necessary contact” with the various French political forces, to see if there could be a consensus regarding the adoption of the ‘règle d’or’ between now and 2012. At the same time, Nicolas Sarkozy made it clear that France would stick to its task of reducing public debt. “Next week the PM, along with the Finance Minister and the Budget Minister, will have the chance to announce a certain number of actions aimed at measuring the willingness of the French people to be involved in these engagements,” he declared, stressing that the Hexagon had a current increase in growth of 1.4% for 2011. Let’s remember that France’s objective is to bring its public deficit down to 3% by 2013.
Moreover, the two leaders have proposed the creation of a common tax on financial transactions. “The French and German Finance Ministers will bring a common proposition to the European authorities, to start in September,” Sarkozy reported. The two leaders have not specified the terms of the measure. Finally, for France and Germany, the idea of a tax on common societies will be examined in early 2012 to determine the level at which it would be set. The hope is that it would be put in place in 2013. Angela Merkel explained that Paris and Berlin intended to, “Set an example,” on this point. As expected, neither the creation of Euro bonds – to allow struggling nations to finance themselves at lowered rates – nor an increase of European funds for financial stability, have been brought to the table. According to the Chancellor, the first initiative would get rid of any incentive for budgetary discipline. Her French counterpart agreed with her on this point, believing that the Euro obligations would put the top rated countries in serious danger, and that they could only mark the, “End of an integration process.” The FESF, created in 2010 to come to the aid of Ireland and later Portugal, is endowed with 750 billion euros. It has an effective loan capacity of 440 billion euros, which has in fact been deemed insufficient by economists to save a country the size of Italy. In a press conference, Nicolas Sarkozy concluded that, “We want to make known our complete willingness to defend the Euro, and after all these issues we also want to see shared views and proposals between France and Germany.” While awaiting the reaction of the financial markets tomorrow morning, what appears to have come out of this meeting is this: the re-establishment of this powerful European duo, and its determination to work towards the harmonisation of the European economy. Moreover, the two leaders have said they are confident about the prospects of growth both in the Euro zone and globally.
The Socialist Party is unsatisfied
The Socialist Party reacted immediately at the conclusion of the summit. Their spokesperson, Benoît Hamon, decided that it was just, “A new swipe of the sword in the water,” disturbed most notably by fact that the issue of creation of the Euro bonds, an idea defended by the Socialists, was not the top priority during the discussions. Despite welcoming the basic idea behind the meeting, Martine Aubry regretted the lack of, “Short-term measures which could facilitate an immediate end to the crisis.” “I was expecting a proposal involving Euro bonds, as my party are suggesting with the aim of sharing out the debt. I also expected the doubling of European funds and the implementation of measures to restart growth. I don’t always understand financial market regulations… I don’t always understand growth and employment. So get on with it, and do something! Let’s get growth back on track!” In a letter addressed to Nicolas Sarkozy and Angela Merkel, Ségolène Royal had come up with her own “Five point plan” to try to “provide a more concrete version of the decision made on July 21st, for better governance of the Euro zone.” The five points are: “appointing a Franco-German Finance Minister; the creation of a proper economic government for the Euro zone; the prohibition of banks to speculate on public debt; a plan to boost companies’ economic activity; the convening of the French and German parliaments on the same day to put these measures in place.”
Source text written by M.D. See full French article here: http://www.parismatch.com/Actu-Match/Economie/Actu/Crise-de-la-dette-les-solutions-de-Sarkozy-et-Merkel-322955/
The French POV 