The Euro Crisis Is Turning France and Germany Into Frenemies
The happy partnership between Germany and France on the European debt crisis turned unmistakably sour this morning.
.The happy partnership between Germany and France on the European debt crisis turned unmistakably sour this morning. On Thursday, France, Italy and Spain ganged up on German Chancellor Angela Merkel to oppose her austerity-centered approach but today Merkel is firing back, taking direct shots at France. The days of a peaceable euro zone alliance between the two economic powerhouses is on the rocks.
The trouble started Thursday when French President Francois Hollande and Italian Premier Mario Monti held bilateral talks on the euro crisis. The two agreed to pro-growth strategy in sharp contrast to Merkel's preferred medicine of budget cuts and debt reduction. "Growth is the first thing, the second is stability," said Hollande. Monti echoed Hollande's sentiment saying Europe's response "has not been enough to protect the euro from market turbulence." As the AP's Colleen Barry and Frances D'Emilio reported, "The two men also discussed launching eurobonds, jointly issued bonds that would spread debt risk that both support." The trouble is Germany vehemently opposes jointly-issued eurobonds and has stated that repeatedly.
Regardless, Hollande twisted the knife a little further. As Reuters' Pierre Briancon notes, Hollande publicly invited Merkel's opposition, the Social Democrats, for a meeting at the Elysée, a move that would infuriate any politician. He also enlisted Spain to bolster his negotiating power against Merkel. "He is clearly aiming at some kind of alliance with Italy’s Mario Monti, whom he is visiting on Thursday in Rome, and is on the same page as Spain’s Mariano Rajoy," he writes. "The aim is to get Germany to agree to what it has always refused: immediately launch reforms that would imply financial backing from Berlin." As Briancon notes, the confrontational moves mark a stark contrast from the "conciliatory mode" in which Hollande began his relationship with Merkel at the start of his presidency.
Now Merkel is fighting back in an address today, Reuters reports. "Merkel, possibly irritated by Hollande's meeting with German centre-left opposition leaders earlier this week on euro zone policy, took what looked like a swipe at his expansive policy ideas such as a new decree partially lowering the pension age, which was part of his election campaign," the news agency reported. "Describing her own country as Europe's 'stabilising anchor and growth engine', the centre-right chancellor told German business leaders that Europe should talk about the growing gap between the bloc's two biggest economies and traditional allies."
Going further, the AP's Geir Moulson reports that Merkel doubled down on her opposition to quick fixes endorsed by the other countries. "I will say there, and I say it here too: Germany will not be convinced by all the quick solutions like eurobonds, stability funds, European deposit insurance funds," she said. "You can only resolve a crisis of confidence if you tackle things at the roots." Now the days when Merkel and former French President Nicolas Sarkozy worked together in lockstep to manage the crisis appear more distant than ever. But hey, if it makes Merkel feel better, Rupert Murdoch has her support:
