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Tuesday, May 22, 2012

How to upset three EU leaders in one day - by Francois Hollande

French President François Hollande made his debut on the international stage at the G8 and NATO summits in the US over the weekend. Perhaps a sign of the rocky ride ahead of him, he managed to upset at least three of his fellow leaders.

Germany: Hollande decided to officially add Eurobonds to his wishlist - turning him into the best friend of the British government. Speaking after the G8 summit, he said he will present a package of proposals at the informal meeting of EU leaders tomorrow, adding,
Within this package of proposals there will be Eurobonds, and I will not be alone in proposing them. I had confirmation on this at the G8.
The Germans immediately hit back. German Deputy Finance Minister Steffen Kampeter told German radio Deutschlandfunk,
I believe that prescription [i.e. Eurobonds] comes at the wrong time and carries the wrong side-effects.
Hollande has also expressed strong reservations about German Finance Minister Wolfgang Schaeuble taking over the chairmanship of the Eurogroup. Hollande is reportedly insisting that Schaeuble should resign from his post before taking on the new role (which doesn't make much sense, as the Eurogroup is supposed to be a forum for the finance ministers of eurozone countries).

Spain: Speaking to the press in Washington, Hollande said of Spanish banks,
It would most probably be desirable to have a recapitalisation, and it would most probably be necessary that this recapitalisation takes place through mechanisms of European solidarity.
This is the eurozone's worst-kept secret (as we argued here), but perhaps not the most prudent thing to say. Spanish Prime Minister Mariano Rajoy, who was not at the G8 but joined the NATO summit, swiftly fired back,
If he said that, it must be because Mr Hollande has information that we don't have. Therefore, I don’t think Mr Hollande said that because, logically, he doesn’t know how the Spanish banks are.
The two will have time to settle the issue when they meet in Paris tomorrow.

UK: As we've noted, David Cameron and Hollande have more in common than what one might think, but on some issues the two are still poles apart, for example an EU financial transaction tax which Hollande continues to push for. Before the bilateral meeting at the UK Ambassador's residence in Washington, Cameron told reporters,
On the financial transactions tax, I'm very clear, we are not going to get growth in Europe or Britain by introducing a new tax that would actually hit people as well as financial institutions. I don't think it is a sensible measure. I will not support it. 
Do these rows come down to lack of experience for the new Président or are they simply examples of classic French negotiation tactics? We're still not sure...


Anonymous said...

you could have added two more names to your list; rasmussen and and Obama. he was 15 minutes late for the NATO grande messe and missed their speeches.....

Rollo said...

Tactics is the wrong word: it presumes forethought. These are just stupidities, as we expecct from the European political class. And Cameron's embracing of Eurobonds only show how he misunderstands the meaning of bonds: if his word is his bond, it's worthless. A eurobond would invite a coupon suitable for the weakest guarantor.