German media responds to ‘Super Sunday’

Following Sunday's elections in which French and Greek voters were able to have their say on their governments’ handling of the eurozone crisis, which as we’ve covered in our daily press summary, was unequivocally negative. Given the position that Germany will adopt will be the single most important factor in determining the future of the eurozone, we thought it would be worth taking a closer look at the reaction in the German press to the weekend’s results.

Starting off with Bild, Germany (and Europe’s most widely-read paper), the paper’s Greece correspondent Paul Ronzheimer argues that:

 “In a democracy, each voter has the right to decide freely. And no one wants to deny the Greeks this right. But a free choice can have consequences… About two-thirds of Greeks want to stay in the eurozone. But at the same time, they chose to vote for radical parties that reject all that is required for this membership: savings and reforms. Germany and the EU desperately need a Plan B: How can the eurozone best continue on without Greece?”

Moving onto FAZ, we have economics editor Holger Steltzner, a well established austerity hawk arguing in a piece entitled “Merkel fights alone” that:

“How do you deal with a country that firstly swindled access to the euro, then plunged the EU into an existential crisis, and then cast two-thirds of votes for radical parties that deny austerity?” 

 On Hollande, Steltzner is slightly more restrained, if still pessimistic:

“Merkel takes the debt brake seriously, Hollande does not want to submit to any rule to curb the deficit. When Merkel speaks of growth, she means structural reforms to loosen restraints on the labour or manufacturing markets. About the beneficial effects of competition (the fruits of which the German economy is currently reaping) Hollande speaks barely a word.” 

This gloomy take is also shared by the Die Welt’s foreign affairs editor Clemens Wergin who argues the election results are triumph of denial over reality, and the embodiment of “old Europe”:

“Greek and French voters have rebelled against what they perceive as German savings and reform diktats. This is however unfair when measured against the significant risks and liabilities which Germany has taken on in order to save the EU’s problem countries from bankruptcy. Likewise Germany’s fiscal capacity is significantly overestimated by those who think that Berlin should commit even more money towards Europe-wide stimulus programmes.”

Wergin continues by saying:

“While Italian PM Mario Monti is trying to implement real reforms and in the longer term adopt German-style austerity politics, it seems Hollande does not realise the enormous need for reforms that the eurozone’s problem countries are procrastinating over… Europe could cope with an irresponsible Greece committing suicide in the eurozone. Some would even welcome it. However a France that loses the confidence of financial markets would be the worst case scenario for the euro - and for Europe.”

However others strike a slightly more optimistic tone, with Die Zeit’s Gerd Appenzeller arguing that:

“In Greece, as in France, the desire is now for more growth in lieu of cuts, regardless of where the credit comes from… Francois Hollande will, nevertheless, be committed to European integration and Franco-German strength, like all other French presidents before him. In spite of this, he is not likely to make concessions with the fiscal compact and austerity plans. Indeed, Greece poses even more of a problem with its intentions to discontinue further cuts which would mean that it could be imminently bankrupt. This would ultimately endanger Greece more than the rest of Europe.” 

 Meanwhile, Handelsbaltt’s EU correspondent Ruth Berschens argues that:

“If the second largest EU state were to veer from the path of savings and reform, then the monetary union would come into its heaviest existential crisis yet. However, it does not appear that Hollande would so lightly put the euro, the most important legacy of his political mentor François Mitterrand, at risk.”

All in all then the Germans are not hitting the panic button just yet, although arguably many are clearly worried that Merkel risks becoming politically "isolated", a concept we think is far too simplistic in the context of European politics (see here and here for examples). However, it is certain that following the French and Greek results, the road ahead for the eurozone rescue is looking more bumpy than only a few days ago.

Europe awaits the next French President

Sunday will be a big day in EU politics: both the Greeks and the French go to the polls.

Ahead of the French elections, we've published a briefing looking at the possible impact of the election results on Europe. In particular, we note that,

"No matter who wins, France could well become a more difficult and assertive EU partner, though both candidates are likely to struggle to deliver on their various promises to take on Europe, such as re-negotiating the fiscal treaty and tougher border controls. The Franco-German axis will continue, but a Hollande victory in particular will mean a more unpredictable relationship and therefore potentially more uncertainty on the markets. Clearly, under Hollande, Germany will find it far more difficult to push its vision of a eurozone based on strong budget discipline.”

Do check out the full briefing here, and a brief summary here.

Apart from the obvious impact on the Franco-German axis, another thing is worth flagging up. Have a look at the graph below.

The graph illustrates that, beyond the rhetoric, the budget plans of the two candidates do not differ radically with respect to the impact on France’s debt reduction and budget outlook. The graph looks at how much the two candidates’ plans are meant to reduce French debt by – compared to the IMF projections and an adverse scenario estimated by Open Europe. Virtually, the only difference between the two is Hollande’s decision to delay a balanced budget by one year, and his more optimistic growth assumptions. It is not clear why Hollande’s growth expectations are more optimistic, given that the only difference is a slight delay in austerity – something which in turn casts serious doubt as to whether Hollande can actually deliver what he has promised. The IMF predictions highlight that both plans may be slightly optimistic but not impossible. Despite concerns over Hollande’s economic policy and its impact on the euro, if he manages to achieve roughly the debt reduction he sets out in his plan, it would clearly be a positive thing for both France and the euro.

However, as the adverse scenario highlights, any slippages (particularly with regard to the primary surplus) could bring France’s debt sustainability into question and also lead French borrowing cost to increase markedly. This would in turn shake confidence in the entire eurozone – not least since any French downgrade will also effectively reduce the lending capacity of the eurozone’s bailout funds (the EFSF and the ESM). Such slippages could be caused and/or exacerbated by any another crisis in Spain, to which France would be heavily exposed...

Guess who?

Here's a game for you. Guess who said the following: 

11 March (part one)

"We can't leave the management of migratory flows only to the technocrats and the courts. We need a common discipline for border controls. It must be possible to sanction, suspend or expel from [the EU's border-free area] a non-compliant country."

11 March (part two)

"Only firms which produce in Europe will benefit from Europe's public money."

23 April

"[We] don't want a 'colander Europe' anymore. This is the message I've heard. A Europe that doesn't control migratory flows is finished."

27 April

“I propose that, if we have not obtained reciprocity with our biggest [trade] partners at the European level within one year, we apply the following rule unilaterally: We will reserve all our public markets.”

29 April

"Europe has let the nation state weaken too much. Nowadays, the countries that believe in national spirit are the countries that make gains...Without borders, there's no nation, no state, no republic, no civilisation."

Pretty tough stuff. So who is it? Someone from the UK Independence Party? An activist form the (True) Finns? An MEP from Lega Nord? A eurosceptic socialist?

All wrong. It's Nicolas Sarkozy (in his efforts to fish in Le Pen waters).

But no one would dare call him 'anti-European' of course...

How real is Hollande's veto threat?

As has been widely reported, Francois Hollande - the socialist contender for the French Presidency - gave a major speech yesterday. Unsurprisingly, there were a few points thrown in that won't go down particularly well in Berlin or Frankfurt. Perhaps most interestingly, in reply to a journalist’s question on the EU fiscal treaty, Hollande answered,

“Ireland is about to have a referendum on the treaty, we are not sure what the result will be. We are all aware that Ireland is capable of saying no. So there will be some form of renegotiation. Will the treaty be modified? I hope so. Will another treaty be drafted? That’s part of negotiation. But the treaty in its current state will not be ratified by France”.

 So Hollande's veto-threat still stands. He also reiterated,

"[I am] not in favour of a constitutional golden rule. I’ve been saying it for months. So there will not be any changes to the French Constitution on this issue. However, if I am the next President, and the Parliament is in favour of this, there will be an organic law which will enable our budget to be rebalanced by 2017." 

In addition he tried to claim that the calls from ECB President Mario Draghi for a "growth pact" were in support of his own policy:

“The President of the ECB …has just said that the fiscal compact should be complemented by a growth pact. He even added that it would be useful to go back and prioritise education, research and big infrastructure. The ECB president will be useful to support growth through an interest rate policy. But he also adds support to… my announcement”

This is hardly how the matter was viewed in Berlin, where, in a veiled criticism of Hollande, Merkel said that "We need growth in the form of sustainable initiatives, not simply economic stimulus programmes that just increase government debt." This morning, Hollande also acknowledged on France Info that he didn't share the same "conception of growth" as Draghi, noting, "he calls for greater competitiveness, liberalisation and privatisation".

Yesterday, Hollande also laid out the content of his growth clause:

“The day after the second round, I will address a memorandum to all the European leaders and their governments on the renegotiation of the treaty. The letter will include four points. First, the creation of Eurobonds, not to mutualise debt, but to finance industrial infrastructure projects the size of which will be determined by the states. The second point will be to further liberalise the European Investment Bank’s financing opportunities, to enable a certain number of big projects already known to the bank to be financed. The third point will be the creation of a financial transactions tax, which will be determined by the states, and which will be set at a level to enable Europe to finance further development projects. Finally the fourth point will be to mobilise all the European structure fund leftovers, which are currently not being used, to finance States’ projects and help businesses." 

Of these four points, the creation of "eurobonds", which seems to build on the Commission's idea of 'project bonds' is by far the most interesting. The FTT proposal appears to be a rehash of Sarkozy's idea. It currently remains unclear whether Hollande would introduce it unilaterally, as Sarkozy is, when he encounters inevitable opposition from some EU member states. Nor is it clear at what rate he would set the tax, and which sectors he would target. Sarkozy's own version has been watered down since he made his pledge in December. Hollande's proposal for the use of unspent structural funds is hardly groundbreaking or exciting policy making. Nor does it necessarily help EU growth, as we have shown before.

The question now is whether Hollande will make agreement on these four policies a prerequisite for French ratification of the fiscal treaty. Of these four policies, eurobonds or 'project bonds' are supported by the Commission but could be difficult to get through national capitals, the FTT just won't happen at the EU-level while the two others are insufficiently interesting to warrant the renegotiation of a treaty (use of structural funds and EIB financing).  Our guess is that Hollande knows that his pledge to renegotiate the treaty comes at too great a political cost, and that he will settle for some mild language on these four areas in return for ratifying it.

Regardless, what France and Europe need now is to reassure the markets, and proceed with long-term reforms, rather than stillborn policies or palliatives to pre-existing problems.

German Media Looks For Meaning in French Presidential Election Result

The first round of the French presidential elections took place yesterday. As expected, the contest for the keys to the Elysée will  be between Socialist candidate François Hollande and Nicolas Sarkozy in the final run-off on 6 May (when, incidentally, the Greek elections are also taking place).

The key question now is what decision the almost 45% of French voters who didn't vote for Hollande or Sarkozy yesterday will make in two weeks' time. We will look at the significance of the result for the future of France, the eurozone and the EU as a whole in a separate post. For the moment, allow us to deploy our various language skills to round up how the media across Europe have responded to the results of the first round.

For all manner of reasons, particularly the future handling of the eurozone crisis, the reaction from Germany is particularly interesting. A leader in FAZ argues,

“[France] reveals a scary political landscape…A third of voters have voted for candidates with a completely alien view of the world, but who have in common one thing: explicitly nationalist, anti-European beliefs.”

Benjamin Reuter, Paris correspondent for German economic weekly Wirtschaftswoche, notes,

“The core concern should be that none of the candidates have discussed the hard reforms the country is facing...If France slides further into the direction of the abyss, the future of the euro will also be in danger - with or without Le Pen.”

An opinion piece in Deutsche Mittelstands Nachrichten sees yesterday's results as a “painful defeat” for Merkel’s vision of Europe, going on to note,

“The brutal rejection of the euro by the French, with 20% of the vote for [far-right leader Marine] Le Pen, can be described as an earthquake, whose tremors will above all else be felt in Brussels.”

A similar line is taken by Marco Zatterin - Brussels correspondent for Italian daily La Stampa. On his blog, he argues that Hollande is not, and should not, be seen as a threat in Brussels, but stresses,

“The pitfall is elsewhere. It's in the 20% of Le Pen-ists confirming that one in five voters in Europe are tempted by euroscepticism. This is a reality that the EU must stop underestimating.”

In Greek daily To Vima, columnist Giorgos Malouhos notes, perhaps hopefully, that Sarkozy began to lose popular support since he chose to “faithfully” support Germany's austerity-focused vision of the future of the eurozone, and argues,

“Sarkozy's defeat is not just his own: It's also the defeat of German policy.”

Spanish business daily Expansión is already looking at the final showdown. It argues,

“The victory of one or another candidate would also change the scenario in Spain. Hollande’s victory – and a Europe with ‘Merkhollande’ – would allow Spain to take it easier on its deficit reduction targets. On the contrary, five more years with Nicolas Sarkozy at the Elysée – and ‘Merkozy’ in Europe – would mean further tightening the rope around Spain’s neck.”

Johan van Overtveldt, Editor in Chief of Belgian magazine Knack, writes,

“Hollande's victory doesn't promise much good, neither for France nor for the euro...If Hollande pushes through his policy intentions, there will be guaranteed panic.”

Van Overtveldt draws an interesting comparison between Hollande and France's former Socialist President François Mitterrand, noting that, in the early 1980s, the latter “conducted a policy based on higher social charges, more taxes, limiting free entreprise, more government employment and nationalisation of various companies. This policy quickly resulted in a social-economic and financial catastrophe.”

But what about the French papers?

In French business daily Les Echos, Editorialist Jean-François Pécresse sees the glass half full, as he argues,

“Almost two-thirds of the electorate have voted for some form of economic realism, either on the right or on the left. The French are now offered these and no other options. The first one, championed by Nicolas Sarkozy, advocates a tested policy of quick deficit reduction via public spending cuts and support for competitiveness. The second one, embodied by François Hollande, contents itself with a slower path, which privileges taxes, especially on enterprises, and safeguards our old habituation to the welfare state. One [option] has yet to convince the French, the other one has yet to convince the markets.”

In La Tribune, François Roche sees Sarkozy moving further to the right on the road to the second round, as he argues,

“By dint of ploughing Front National’s land, Nicolas Sarkozy has made Marine Le Pen the big winner of the first round of the presidential election. He is now in a trap: if he wants to win the election, the only thing he can do is to try and attract people who voted for Front National in the first round…His only chance is to present himself as the champion of Front National’s own values.”

While the Le Pen phenomenon has understandably gained a large share of the column inches across Europe, it is perhaps some of the German media's reaction to the results that is the most revealing and significant in terms of the future. A Merkozy divorce would undoubtedly make things interesting and the fact that such a large share of the French electorate is clearly dissatisfied with the major parties has certainly caught the eye in Berlin - where many could begin to fear that France may not have the stomach to stay the course with Merkel's eurozone rescue strategy.

The battle for the heart and soul of the ECB continues

*Update 15:30* - It seems after a quiet morning, the predictable fightback has begun in the battle over the ECB, and its a double whammy. First of all, although not addressing the French election campaign specifically, Bundesbank president Jens Wiedmann has entered the fray, ruling out any ECB participation (large-scale bond buying) in an eventual Spanish rescue, arguing that:

"We shouldn't always ring the doomsday bell when long term interest rate of a country temporarily exceeds 6%"

Secondly, Focus magazine reports that tomorrow's FAZ will carry a joint article from a number of major economic institutions criticising the eurozone crisis management strategy and warning that the ECB's independence is at risk.

---------

If any German happened to be tuning into French radio station RMC this morning, we're sure they must have choked on their semmel - at least if they have any cash stashed away. This is what French President Nicolas Sarkozy had to say about the role of the ECB:

"What is the good value of the euro against the [US] dollar? If the euro rises too much, our exporters can’t sell anymore. They lose money because they’re not competitive, but also because the value of the euro is too high. This is a discussion that we need to have with the President of the ECB.”

He made similar remarks over the weekend, but the explicit call for an ongoing dialogue between governments and the ECB over the strength of the euro goes against everything Germany believes in.

In other words, the battle for the heart and soul of the ECB - which we have looked at extensively - rages on. On the dramatic side, a leader La Tribune argues that the “Merkozy” couple committed suicide on Sunday, after Sarkozy suggested revising the role of the ECB:

“In calling for a revision of the role of the ECB …Sarkozy has declared war on Germany for domestic political reasons”.

Yes, it's all part of election politics, but still, this tension at the heart of the Franco-German alliance won't go away as the eurozone continues to grapple with how, precisely, the euro should be backstopped. As a reminder of the battles ahead, yesterday we learnt that the according to Unicredit, the perceived inflation in Germany is now at 3.7%, compared official 2.1% figure.

Meanwhile, on the topic of the ECB promoting inflation 'growth', over on the Telegraph blog, we argue that:

"Economically, ECB-induced inflation would not present a long-term solution to the eurozone’s ills by any means. Although the initial effect would be make adjustment in the struggling countries easier, the eurozone would remain split into at least two parts running at very different speeds. What happens after the initial boost in demand, as the transfer is, per definition, time limited? Sure, there’s a chance that struggling eurozone countries use the time bought effectively to really reform their economies. However, on current evidence, a more likely outcome is some reform, but that the imbalances remain. Would the ECB then continue to spray money on the Continent to keep the party going?

In addition, such massive ECB intervention also sets the scene for further boom and busts in Europe, which again threatens confidence in the system. Fears of a housing bubble are already doing the rounds in Germany. In reality, maintaining a 4% – 5% target could actually turn out to be substantially more difficult than a 2% one, as people would naturally expect inflation to increase even further (managing inflation expectations is an absolutely vital task of central banks). Even if a higher average level of eurozone inflation were achievable the level needed in Germany to balance this out would likely be too high to be economically acceptable. Furthermore, the transition would be incredibly tricky as people’s expectations take time to adjust to the new "normal", possibly increasing volatility or even feeding through to wage pressure (and other second round inflationary effects).

Politically, such a change is very unlikely as long as the ghost of Weimar looms large over Germany. But if ever the Bundesbank is outvoted, beware what you wish for. If the perception is that the ECB is really turning into a “bad bank” that actively pursues inflation, that would be one of the few scenarios under which German support for the entire euro project really could evaporate."

Full piece here.

Is Sarkozy's tough talk on EU open borders hot air?

EU relations have become a pretty substantial source of contention in the French Presidential race. Socialist candidate Francois Hollande has been calling for a renegotiation of the fiscal treaty, recently signed by EU leaders, since January. Nicolas Sarkozy accused Hollande of playing politics with a sensitive treaty, as the renegotiation, he argued, amounted to rewriting the treaty in favour of the French Left, rather than taking into account the national interests of France. Meanwhile, EU leaders have waded into the debate, publicly endorsing Sarkozy in a move to protect the treaty from a further round of negotiations.

In a sudden turn of events, Sarkozy has replicated Hollande’s tactics, calling for a withdrawal from the Schengen treaty on open borders, if no serious reforms are undertaken. This follows complaints issued by six Schengen states, which have claimed that Greece's porous borders allow people to pass into Europe, legally or otherwise, unchecked. The Austrian Interior Minister compared Greece’s border policy to an “open barn door”.

Sarkozy argued that the reform of the agreement is “the only way to avoid the implosion of Europe” and added that

"It's urgent because we cannot accept being subjected to the shortcomings of Europe's external borders...But if I note within the next 12 months that no serious progress has been made in this direction, then France will suspend its participation in the Schengen accords until these negotiations are completed."

For good measure, Sarkozy also called for a "Buy European Act", under which European governments would be obliged to prefer European goods in their purchases, arguing, “that way companies which produce in Europe will benefit from European state money”.

Unsurprisingly, Hollande's camp was quick to fire back, with Pierre Moscovici, Hollande’s campaign manager, pointing out sarcastically that

"Conservative leaders [read: Merkel], who have been so quick to unite to defend the president, will appreciate his threat to pull unilaterally out of the Schengen zone at the same time that he calls for the signature of the austerity treaty in the name of European cohesion."

Electoral mud-slinging aside, is Sarkozy genuinely going for an overhaul of the Schengen Treaty and a fresh slew of trade measures to protect European firms? It's doubtful.

A mechanism to temporarily re-introduce internal border controls already exists within Schengen, bit its precise meaning is vague and limited to “a serious threat to public policy or internal security.” In addition, the European Commission has proposed a clearer, beefed up procedure, currently subject to negotiations between member states. So in theory, it's possible to 'suspend' Schengen (i.e. introduce border controls). This was a discussion that flared up last year in Denmark (which did actually re-introduce some additional controls) and in a border row between France and Italy. But in practice, this would be hugely complicated, as the mechanism only allows a country to keep the checks in place for 30 days, which must be justified on grounds of "internal security." If Sarkozy did in fact go down that road, he would have an almighty political row with EU partners on his hands, akin to De Gaulle's "empty chair" episode.

A more likely outcome - in the event that Sarkozy does get re-elected - is some minor reform, such as boosting the budget of Frontex (the EU's border agency), more money to Greece and other border states and perhaps clearer rules on member states' ability to take action (as per the Commission's proposal minus, we suspect, the strong role the Commission sees for itself), which will then allow Sarkozy to claim a political victory. As ever, EU politics is a great avenue for politicians to promise all kinds of stuff, only to let it get lost in the often tedious details of EU law/politics.

On his second 'ultimatum' to Brussels, Sarkozy has actually promised different versions of 'Buy European' rules for some time. In 2007, he floated the idea of "European champions" to be promoted over global competitors. As ever, it's unclear exactly what a "Buy European" act would involve, how it would be agreed, and how it would fit with existing WTO and EU state aid laws.

Today, EU Internal Market and Services Commissioner Michel Barnier said that the Commission was working on a proposal to introduce "non-protectionist" measures to favour European enterprises in the allocation of public sector contracts. The measures will allow member states to block non-EU businesses from bidding for public sector contracts if their country of origin does not have open public procurement markets. This is the case in China, for example. This will please Sarkozy, who called for "reciprocity" in commercial negotations between the EU and other states. British permanent representative in Brussels Aled Williams voiced fears that the new regulation could give rise to "tit-for-tat" responses from other countries, fuelling a trade war.

Sarkozy’s pledges were vague and perhaps disingenuous - this is an election campaign after all - but they are significant because they could represent part of a wider shift towards a more assertive French European policy (or perhaps a reaction to recent German leadership). Tellingly, Hollande's campaign manager accused Sarkozy of giving the impression of someone who “is not a French president…but almost a Conservative British Prime Minister.”

When Sarkozy introduced a Financial Transaction Tax earlier this year, he showed he was willing to flout EU opinion, and, in his view at least, lead the way. This time, Sarkozy has gone one step further, and, in rhetoric at least, suggested that he is willing to actually violate EU law to unilaterally impose his own border and government purchase policy. Other EU leaders have so far ignored his speech yesterday, but it will be interesting to see how they decide to react.

One this is clear, viewed from capitals around Europe, the French Presidential campaign just got a whole lot more interesting.

Open Europe has today published a new report looking at the impact of EU free movement and external immigration policies on the UK. We argue that, while free movement comes with benefits, reform is needed to avoid losing all public confidence in the concept - much of which applies beyond the UK.

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...