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Friday, January 31, 2014

Rien à voir ici? Hollande says treaty change is "not the priority" for France, but...

David Cameron and François Hollande have just held their joint press conference following the Anglo-French defence summit in Oxfordshire. Predictably, though, most of the questions focused instead on Cameron's EU renegotiation strategy and the prospects of it being achieved by changes to the EU treaties.

Here's what stood out for us:
  • Significantly, Cameron explicitly said that renegotiation of the UK's EU membership "will involve elements of treaty change". This is quite a rare admission, and is the most explicit he's been so far on the need to change the EU treaties. As The Times's Sam Coates flagged up, the Prime Minister has been categorical about EU treaty change once before, speaking of "the treaty change that I’ll be putting in place before the referendum", on the Andrew Marr Show earlier this year - although the question was specifically on EU migrants' access to benefits. 
  • The Prime Minister also reiterated that "the eurozone needs change...It needs greater co-ordination, it needs those elements that make a single currency succeed. That's why in recent years we've already seen treaty changes."
  • Hollande said that "France wants more coordination and integration in the eurozone", but treaty change "is not the priority" for the time being. Though this is what the headlines are likely to focus on, this is nothing new, nor surprising. It's been the French position for ages. However, Hollande didn't rule treaty change out. He said it wasn't "urgent" or "the priority". As we have argued from the beginning (see here, for instance), the timetable remains a weakness in Cameron's plan - not least because discussions on changing the EU treaties can drag on for years and the eurozone remains on an uncertain development path.
  • The French President also stressed that major treaty changes (he mentioned the Maastricht Treaty as an example) would have to be put to a referendum in France - while for smaller ones parliamentary approval would be enough.
A couple of points are worth making. It is no secret that one of the reasons France is wary of changing the EU treaties is that referenda are not exactly easy to win (think of the one on the EU Constitution in 2005, but also the one on the Maastricht Treaty, both of which split the country and the political establishment).

This is true assuming that the new Treaty gives the EU more powers. But this is not what Cameron is aiming for. So it is not entirely clear that any UK-led changes would necessarily have to be put to a vote in France.

That said, though, the common wisdom on this point is that an EU treaty change would be part of a 'grand bargain' to strengthen economic coordination in the eurozone - meaning that the UK's new relationship with the EU would be negotiated alongside greater central controls in the euro area. This type of treaty change could clearly trigger a referendum in France (and elsewhere).

The question remains open. With Germany likely to keep pushing for an EU treaty change to complete the overhaul of the eurozone structures, we still think Hollande may have to face the issue sooner rather than later - with the question being what deal Berlin can broker.

And yet again, that brings us back to Angela Merkel.

8 comments:

Anonymous said...

I am surprised that Hollande managed to keep his trousers on long enough to attend or even to come up with anything meaningful.

We don't want a renegotiation of anything as it will all go wrong again, whether in 1 year or ten.

Just give us our referendum.

SC

Rik said...

Seen from another angle in about half a year's time he has moved from: 'If the UK doesnot like it they should leave' to, 'there will be a huge delay'.

In this pace he will end up up as an even bigger reformisto than Cameron himself.

At the end of the day this is still the first round of a 12 round fight.
It all says very little. Only that he is no big reformer from the start and that he rather not have this problem added to the long list of problems he and the EU already have. But that was already a well known fact.

And as said he is moving a little bit. Probably wise, digging himself in will likely mean that his problems would increase, keep talking. Probably the next thing in this sub-sub-dossier making it clear to him that it is there to stay and likely he also doesnot fully grasp what the repurcussions for the EU/EZ and indirectly France will be of a Brexit.

With France that looks not too difficult. They are at the moment on top of the 'next to be executed' list. The last thing he wants is people and markets asking questions about the stability of especially the EZ.
Effectively Merky is holding his pants up at the moment. If German support goes, France is in the frontline to get the next kicking.
And he needs a stable EU/EZ and especially bond with Germany to communicate to the markets that the EZ set up is stable. After all the economic bloopers he and his team has made.
DFI has dropped 77% last year. And they are always the first to run away. Simply by the fact that their investments are not liquid.
Liquid investment markets still rely on being able to sell (aka find a greater fool or muppets wanted) in spite of the overpricing. Very worrying sign btw for our garlic munching friends. Not only for the jobs involved but even more for the fact how markets are evaluating France and a 77% drop makes that very clear.

Rik said...

Anyway contrary to popular believe imho Rutte is at this stage a bigger price than Hollande and for several reasons.

He is probably after the Jackpot Merkel the next most important ally for Cameron.

Rutte himself is pretty irrelevant he simply looks clearly a goner (just waiting to be shot). But if the present Dutch government would actively go for a reform agenda very unlikely a next cabinet will change that. Seen the polls in that country. You either have some Euro-sceptics of which most would have run on a reform agenda.

Or it would be a all EU-friendly parties combined with a very small majority and attacked from all sides. Hardly the climate to change policies in a very unpopular direction. They will simply have to continue. Like the present government parties there have basically been forced to move. Timmermans was hardly pro-reform at election time late 2012 and now is.

Anyway if the Dutch get a little more active than now they are an ideal ally for Cameron. Especially the combination of huge popular platform for EU reforms, represented in parliament (unlike Germany) and EuroZone guarantor makes a fight with the Dutch a very risky affair. They can pull the plug out of the Euro plus it is their population that will ultimately decide on that and they are as unpredictable as most women.
Basically the UK 2.0 but now in the very sick EuroZone.

France will never be a true supporter of reform. They can hardly sell even minor reforms, badly needed on top of that, at home. Might change when there is a real possibility of a Presidente de la republique actuelle LePen but we are still far way from that. The Dutch are very close.
French might also move when EU related issues become top of the (popular)agenda. Keep the eyes open.
The French are the ones that will move if things become inevitable.

An important country, overall a much more powerful EU member than Holland, but for this purpose not really suited as a early days ally.
More one that needs to be prepared to move when the things start rolling.
And as said imho they will. The last thing they can use at the moment and nearly certain the next couple of years is serious questions about the stability of the EU and especially EZ. And markets are seeing these two as more or less as synonymes at the moment. Probably more than should be. But nevertheless if important countries are looking to run away from the EU they also can run away from the Euro. And the mere existence of the EZ itself will become an issue. Existence in the way that basically now Germany guarantees the stability at the end of the day. If Germany moves the EZ stability is a goner. The ECB without implicit German backing is also not a credible guarantor. ECB's 'all that it takes' is simply only credible as long is there is German backing.
German with some assistance of a few smaller ones of which Holland is by far the biggest (important one). Anyway if one of those start to walk there always will be sincere problems as with that German guarantees become become weak and as said without these guarantees there is no EZ in its present form.
And France has simply in the whole crisis moved from being a credible backer of the Euro, to some sort of intermediate (no backer and no liability like eg Spain) and is now rapidly moving into becoming a liability itself. They simply need German and with that Northern backing of the EZ to be a credible and creditworthy debtor to markets.

Jesper said...

There were some difficulties in getting the EU constitutional treaty approved; the rebranding to the Lisbon treaty did help & bypassed the requirement that the general public had to have their say.

The difficulties with those two treaties can be the result of:
1. Electorate just saying no for no good reason
or
2. The electorate had reasons to say no

If it is reason number one, then there'll be difficulties with any new treaty. That would include any new treaty that would centralise even more power away from the electorate. Since we can see a slow and not very public power-grab it seems that the powers that be believe that reason number 1 is the main reason.

Suppose that the difficulties is actually due to reason number 2. That would mean that the electorate isn't unreasonable and probably would approve a new treaty as long as their concerns are addressed.

The French electorate rejected the constitutional treaty. I'd say that there is a good chance that they'd approve a new treaty if the new treaty removed some of what they rejected but still got through the Lisbon treaty.

Hollande is in an interesting position. Should he:
-Re-evaluate the Lisbon treaty and see if there is anything he wouldn't mind being returned to Paris from Brussels
or
-should he go the anti-intellectual route (similar to the flat-earthers) and refuse to even consider the possibility that Brussels have too much power.

Nowadays it seems like that the easiest way to deter a weak politician from doing something is to accuse him/her of being a populist. I'd guess that if Hollande was to even hint at he might look into the treaties then his advisors would tell him that he might be seen as a populist etc.

Not sure how this will play out, maybe he can see some benefits for France in getting a new treaty. What is certain is that to find benefits for France in a new treaty then he'd have to investigate the possibility that a new treaty could benefit France.

Rik said...

On Hollande

A konan (a Japanese thingy).

Ippy is taking a along walk along the coast.
When he is on top of a high cliff he slips and falls down. Half way he can stop his fall by grapping the branches of a bush that is growing there.
Relieved that he could save his skin he starts to look at ways to get out of there.
Going down is easier than going up so he first looks at ways to make the full descent. However when looking down at the sea under him he sees a huge and hungry shark (the Jaws3 kind).
Nevermind he thinks better a climb up than becoming lunch.
So now he looks up, but what is that on top of the cliff? He sees the head of an even more hungry tiger.
His arms and hands are however getting tired of holding on to the branch.
So the million dollar question is: what to do?

That basically is Hollande.
-First of all influenced by Japanese culture, like Ippy in the Konan. Watching Japanese porn on a daily basis does that to people.
-But second he has either to face his own people in a referendum or face creating a lot of international political and market problems that likely will be very negative for his country (while he is still busy ruining its economy, so clearly has other priorities as well. He wants to do that properly as a man on a mission).

A difficult choice. From his pov he probably now sees it as a certain referendum problem vs a possible Brexit. So very likely he will first see if and how UK referenda materialise.
But when it does (as it very likley will) the question will come back to hunt him again.

When it is that far. Imho he will go for EU reform (and try to avoid Brexit). Simply for the reason that (I donot actually know Frech law in this respect) very likely he can avoid a local referendum when powers are returned to France. Even better seen the polls there that is a very popular thing in Garlicia.

Freedom Lover said...

Filtering out from the statements attributed to the French president last Wednesday on Mr Cameron's EU renegotiation ambitions is an intriguing comment. This is repeated in many newspapers and other reports, to the effect that Mr Hollande has said he is "not prepared to accelerate a treaty change to suit Cameron's timetable".

One cannot know whether this was sloppy reporting by the original agency, Gallic arrogance or just the usual does of official ignorance, but one has to observe that neither Mr Hollande, any more than Mr Cameron, is capable of manipulating a treaty change timetable.

Since the Lisbon Treaty, it has been set down that the ordinary revision procedure requires both a convention and an Inter-Governmental Council (IGC). And it is also a matter of historical record that the procedure can hardly take less than 30 months.

Given also that it cannot start until a new European Parliament and Commission is in place, with a lead-in time for the arrangements to be made and position papers to be drawn up, the clock can't start ticking until the spring of 2015, at the very earliest.

This pushes just the signing of a new treaty into late 2017 or early 2018, and the window for a "yes-no" referendum well into mid or late 2018 – perhaps even later. Furthermore, since all 28 EU member states must agree to any treaty changes, any one can delay or even block the procedures at the final hurdle, so the timetable set out so far assumes a trouble-free passage. And that hardly seems likely.

One thus gets increasingly weary at the seeming inability of both media and politicians to recognise that a treaty timetable has its own tempo, which cannot be speeded up. The idle assertions that a 2017 referendum is possible is just that – idle & ill-informed.

It is time everyone woke up to this reality, and started to work on the basis of what can actually happen, rather than what individual politicians think, or more likely pretend for political advantage reasons, might happen EU referendum-wise by late 2017. Or more likely - but even then, it's a very big "if" - by mid or late 2018!

Rollo said...

Two different philosophies UK Free Trade World Wide, and, at least in theory, small government . France protectionism within closed borders, with the big state. We have nothing in common; and, as France sinks down the slope made slippery by enormous government spending and high taxes, we have nothing to gain by entwining ourselves with France.

Rik said...

@Jesper
If Hollande is clever he will become a frontrunner for reform.
But in the French way: get powers back.

One of the very few points that his potential electorate will like and that are achievable (or at least he can make a good impression with and counter LePen).
His economic policies have simply failed miserably.
People in the West nowhere like a wars which he probably hoped would distract attention. Basically the only area where he has a good idea how things will play out. Better than the AnglSaxons. But people simply donot care (while it is rather successful and short term with minimal own casuakties (as good as it gets). People seem to want their politicians to get things at home in order and not try to play the international statesman (they are pretty unconvincing in that role anyway).

But like losing your religion (and in fact it is very similar) things need time it is a process not a one moment thing. Seen from that angle it is going much faster than I expected. Probably because it is a sort of perfect storm at the moment. Everything is turning against the EU (probably because the set up sucks I would say and they donot react to clear signs). And it looks only to get worse. EZ crisis not solved, lower structural growth anyway (it is the economy stupid) and totally mishandling PR with largely completely unappealing people and in that process simply showing they havenot got a clue.
Anyway the longer they wait the bigger their problems will get.

Also for Hollande for him not only at European level but also mainly national. He roughly has the approvalrate of the plague at the moment (trend South).
He will have to do something.

On Lisbon trickery.
It will imho come to hunt them for 2 reasons.
They overplayed their card re public platform. left them in an unsustainable position. It was never in no way there that this could be done in a sustainable way. And with the times turning against them it only will get worse.
Furthermore very unlikely that the public will be fooled again. That trick has been used and is not longer an option. Same in the Uk btw (empty promises are unlikley to work).

To answer your question.
Hollande should go for reform and for 2 main reasons:
-His people will like it (as said it is one of the few areas on which he can realistically score at home nd he ned that desperately);
- It looks unavoidable anyway. With in several countries now effectively the voter deciding things in this respect. This has gotten simply way too volatile and unpredictable. If it starts to move by its own (say a PM Wilders or Presidente LePen) it is hard to see how it can be brought under control again.
And if the EZ or EU gets under existential pressure he is on top of the list of likely victums.
But like with Mr Ed in the UK, he will need some time to find that out.