Holding The Fiscal Treaty Hostage

Socialist candidate François Hollande (see picture) has begun to flesh out what his pledge to renegotiate the new European fiscal treaty on budgetary discipline would involve, if he wins the upcoming French presidential elections.

First, (and predictably, given that it is by far the most controversial point of the fiscal treaty, as we argued here and here), the leader of the French Socialists will seek to "clarify" the role of the European Court of Justice. In an interview in yesterday's Le Monde, Hollande said:

"In what framework would [the ECJ] intervene to verify the respect of budgetary discipline? What is the nature of the sanctions imposed on countries which don't respect [budgetary discipline]? These are all points that will have to be clarified."

Secondly, Hollande pledged to make the fiscal treaty less focused on austerity by introducing specific provisions aimed at boosting growth and employment in the EU. In particular, he mentioned,

"The possibility for the European Investment Bank to increase its lending capacity."

and,

"The possibility, within the framework of the EU budget, to use part of the structural funds to subsidise investment projects in weak growth countries."

Perhaps most interestingly, when reminded that twelve ratifications are needed in order for the fiscal treaty to enter into force, meaning that the agreement could potentially go ahead without France, he noted,

This treaty will be signed on 1 March, but I'm not sure that, in May [the second round of the French presidential election is scheduled for 6 May], more than one or two countries will have ratified it. Therefore, we will be able to renegotiate this treaty, signed but not yet ratified.

Hollande also said that he expected to get support from "countries such as Denmark or Italy, which are also seeking clarifications or additions [to the fiscal treaty]." However, he has no intention of putting the fiscal treaty to a referendum (bad memories from the French referendum on the EU Constitution perhaps?), because,

We won't hold a referendum on a treaty which doesn't mark a real rupture, unlike the Maastricht Treaty.

So, we might be looking at a pretty big showdown between Hollande and Angela Merkel. The German Chancellor isn't exactly helping either - saying that she is not planning to meet the French Socialist leader in the short term because "heads of state have more important things to sort out." Therefore, if Hollande - who according to opinion polls is heading for a victory - sticks to his electoral pledges once in power, France could effectively turn from a major supporter into a major obstacle for the new fiscal treaty.

As ever, the 26-versus-1 narrative is looking quite fluid...