Impatient Macron presses Merkel on eurozone reform

Impatient Macron presses Merkel on eurozone reform


Emmanuel Macron pressed Angela Merkel to reinvigorate plans to overhaul the eurozone on Friday, as concerns grow in Paris over Berlin’s commitment to meaningful reforms.

The French president conveyed his impatience over the slow progress of negotiations at a meeting with the German chancellor at the Elysée palace.

“Today an important chapter is opening up, during which we have a lot to do to outline a new perspective not only on the short term but also on the medium and long term,” Mr Macron said. “As you know, six months ago, I made some proposals, it is necessary that we work together to build this ambition, in particular on the eurozone.”

French officials said Mr Macron intended to use the encounter to test Ms Merkel’s ability to push through reforms after months of painful coalition talks with the Social Democrats following a lacklustre performance by her centre-right CDU party in elections in September.

Ms Merkel said she would do her best to satisfy her French counterpart. “I know you have waited a long time, but our coalition deal…is a response to France’s demands, France which has conducted domestic reforms and we want to find a path,” she said.

She added it was more important than ever for France and Germany to co-operate given the volatile geopolitical context, even if the two countries did not “always agree in the beginning”.

But she also said that eurozone reform was not the only priority, pointing to competitiveness, a commond EU asylum policy and better border protection as big issues.

Since his election last year, Mr Macron has Invested political capital on plans to boost EU military, economic, fiscal and trade policies.

He has achieved some success in defence and trade, and spurred a Franco-German initiative to tax US tech giants. But plans to strengthen monetary union through risk-sharing and building more firepower to stimulate eurozone growth were met with some resistance in Germany on the eve of elections. Now, with a grand coalition, or GroKo, in place in Berlin, Paris is growing impatient.

“Nothing could happen before GroKo. But on the German side, I think they’ve now understood they would have to give something,” a French diplomat said, raising the possibility of “a Franco-German crisis” if they did not.

“If what comes out of all this is just that we are going to wait before anything happens, it’s not going to be enough,” the aide said.

Meeting his newly appointed German counterpart Olaf Scholz on Friday, French finance minister Bruno Le Maire cited a line from the film Casablanca to salute “the beginning of a beautiful friendship”. But he admitted the two were out of sync on many “technical but far-reaching difficulties” on topics including fiscal convergence and banking union.

“Friendship is also about acknowledging divergences,” he told reporters after the meeting.

However, Mr Scholz made encouraging noises, saying that Europe had to co-operate more to face the challenge of rising Asian powers. “And that won’t succeed if we just stick with what we have now,” he said. “We need to integrate further”.

Ms Merkel has broadly welcomed Mr Macron’s reform proposals, insisting that her grand coalition would deliver a “new dawn for Europe” in close co-operation with France. She told ZDF TV this week that she was “very pleased” that France was playing such an active role on the European stage.

But her conservative bloc remains highly resistant to any ideas that smack of the mutualising — or pooling — of debts, which they say will leave German taxpayers on the hook for losses in debtor countries.

German officials have been openly sceptical of the French president’s idea of a eurozone budget and finance minister. They have also insisted that other European countries do more to clean up their banks before the eurozone proceeds with banking union, particularly a deposit guarantee scheme.

The most Germany has been willing to contemplate is a plan to transform the eurozone’s bailout fund into a European Monetary Fund. But Ms Merkel wants this to be under the control of national parliaments rather than EU institutions.



Source: ft.com

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