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Friday, May 18, 2012

What do a British Conservative PM and a French Socialist President have in common?

Over on the Telegraph blog, we note:
David Cameron will have his first face-to-face meeting with newly elected French President Francois Hollande today, at a G8 summit in the US. There has been some fuss about Cameron and Hollande not getting along. Cameron snubbed Hollande during a visit to London. And, most importantly, one is a French Socialist, the other a British Conservative. They must be each other’s diametrical opposite, surely?
Well, judging from some of their remarks and actions over the last year, if one didn’t know any better one would think they actually have quite a bit in common:

Both are trying to cut deficits: Yes, despite all the anti-austerity rhetoric, Hollande is trying cut spending too (as we’ve noted, the difference between the economic plans of Hollande and the ousted Sarkozy was paper thin). As his new economy minister Pierre Moscovici put it, “Hollande has always said that we should tackle state debt and reduce deficits”. Hollande wants to achieve a ‘balanced budget’ by 2017, Cameron wants to eliminate the UK’s spending deficit by 2015, albeit both are likely to fail.

Both have threatened to veto an EU treaty: In December, Cameron vetoed an EU Treaty change to impose greater fiscal discipline in the Eurozone. Equally, Hollande has implicitly threatened to veto the free standing ‘fiscal treaty’ (itself a result of Cameron’s veto), unless a clause on various fiscal stimulus measures is added. The rationale in each case is of course different but both have clashed with Germany’s view of the solution to the crisis.

Both have called for the ECB to become the euro’s lender of last resort: Causing half the German population to choke on their morning pretzels, Cameron and Hollande have both called on the ECB to do far more to “share the burden” of the Eurozone crisis through monetary activism, which probably means the ECB buying hundreds of billions of government bonds (which Cameron has endorsed implicitly, Hollande explicitly).

Both have toyed with the idea of eurobonds: In the past, both have called for a discussion on the eurozone moving to full debt pooling via eurobonds. Cameron called for it again yesterday, while Hollande hasn’t mentioned the idea since August last year and seems to have backtracked somewhat (his ‘project bonds’ are something different).

Both leaders have cabinets with ministers who opposed the flagship Lisbon Treaty/European Constitution: Laurent Fabius, new Foreign Minister, campaigned successfully for a “no” vote to the European Constitution in in 2005, while his UK counterpart William Hague, and most of Cameron’s cabinet (Ken Clarke excepted) opposed both the European Constitution and its successor the Lisbon Treaty.

So what’s my point? Of course, there are a whole range of disagreements between the two leaders. But two observations: first, the ‘austerity vs. growth’ debate is fundamentally false – even the proclaimed anti-austerity champion realises that public spending needs to be cut (at least in theory), while everyone is in favour of ‘growth’. The debate is on how to get there. Secondly, the line between the alleged ‘Eurosceptic’ and the alleged ‘pro-European’ suddenly becomes awfully blurred (who’s who again?) as both, obviously to different degrees, have problems with the status quo in the EU/Eurozone.

Bends assumptions doesn’t it?

1 comment:

Rollo said...

Neither of them have a clue.