Sarko Has Spoken

The day after French President Nicolas Sarkozy's keynote speech (available here) on the state of French economy and the future of the eurozone, those who (like us) were expecting a bit more details on what exactly France is planning to change in the EU Treaties have been disappointed. Sarkozy made some general remarks on his vision of the future of the eurozone, but then announced that the specific proposals for Treaty change would be finalised at a bilateral meeting with German Chancellor Angela Merkel on Monday.

So have all the divergences between Paris and Berlin (which we discussed here) magically disappeared? Not quite. Here are some interesting quotes from Sarkozy's speech,

• France and Germany have "their institutions, their political culture and their idea of nation. One [Germany's] is federal, the other one [France's] is unitary. One needs to understand this difference. One needs to respect it."

• "France and Germany have chosen convergence...This doesn't mean that one is trailing behind the other, or that both want to give up their identities so that they confuse with each other."

• "Europe needs more democracy...A more democratic Europe is a Europe where it is the [national] political leaders who decide."
  

• "Europe’s re-foundation is not a march towards more supra-nationality."
  

• "The crisis pushed heads of state and government to take on growing responsibilities, because, at the end of the day, they were the ones who had the democratic legitimacy that allowed them to decide."

• "European integration will go the inter-governmental way because Europe will have to make strategic choices, political choices."

As expected, a clear political message to Berlin and Brussels. France also has its red lines on Treaty change: more coordination of economic and budgetary policies among eurozone countries is welcome, but the important decisions must remain with national governments. The European Commission (or the ECJ) should not be given the power to enforce the rules on member states.

As we said, Sarkozy didn't go into too much detail on specific proposals to strengthen economic governance in the eurozone. However, he did give a couple of interesting indications about what he thinks should be done to sort out the crisis,

• "Every eurozone country must adopt a 'golden rule' enshrining the balanced budget target in its juridical order."

• "We need to decide to move without fear towards having more decisions taken by qualified majority" within the eurozone.

• "Let's examine our budgets jointly, let's establish quicker, tougher sanctions for those who don't live up to their commitments."

• "The ECB obviously has a decisive role to play. There is debate over what it is allowed to do under its statute. I don't want to weigh into that debate. The ECB is independent. It will stay independent. I'm convinced that...the ECB will act. It's up to the ECB to decide when and with what means."

Meanwhile, the reactions to the speech in the French press were mixed. Centre-right Le Figaro argues that Sarkozy has substantially done his bit in terms of commitments, and therefore "it’s now up to the [German] Chancellor to decide if she also wants to accept a compromise to save the euro, through the mutualisation of national debts." However, Arnaud Leparmentier, the Élysée correspondent for centre-left Le Monde, accuses the French President of "intellectual incoherence", noting that he "imagines a French veto in Europe, but considers that smaller countries must accept the majority principle."

Indeed, Sarkozy knows that if the plans are seen as an excessive abandonment of France's souveraineté, that would almost certainly be the last nail in the coffin for his chances of winning another mandate.