Former German chancellor Helmut Kohl helped former French president Francois Mitterrand when he was trying to win a referendum on the Maastricht treaty in 1992. French President Nicolas Sarkozy supported Angela Merkel when she sought re-election as German chancellor in 2009. So it is normal, Merkel says, that she should back Sarkozy's re-election as French president.
"We belong to the same political family," Merkel said in a recent joint interview with her French ally. "He supported me and it is natural that I support him in his campaign."
In fact, it is not natural at all. To begin with, she declared her support for Sarkozy even before he had formally announced his candidacy. It is also not clear if her overt support will do Sarkozy any good. In any case, her action seems rash given that Sarkozy is so far behind in the polls. Why risk souring ties with a likely president Francois Hollande before he has even begun?
The answer underlines Merkel's suspicions of the Socialist. Hollande has allowed his supporters to indulge in anti-German rhetoric. Worse, he says he wants to renegotiate the European Union's fiscal compact, a hard-won treaty on budgetary discipline. It will be signed at a summit next month, but Sarkozy will not be able to ratify it before the election. That gives Hollande a chance to show he can do better.
The Süddeutsche Zeitung, a German daily, says that "the largest living danger to Merkel's fiscal pact bears the name Hollande". The treaty is the cornerstone of Merkel's stability union. When she herself runs for re-election next year, she wants to tell voters that, having staked hundreds of billions of euros to bail out weaker euro countries, such a thing will never be allowed to happen again. The euro crisis is changing the rules of European politics. Proprieties among sovereign countries come second to the imperative of survival. Eurozone members have learnt that they have a direct interest in each others' economic policies, so have accepted closer monitoring by Brussels and their peers.
Hollande's calm and consensual manner could be a better fit for Merkel's temperament than Sarkozy's impetuousness. In the Socialist Party, Hollande is a centrist and a pro-European. Although the Socialists opposed Sarkozy's plan to adopt a balanced-budget amendment in the constitution, Hollande promises to pass a golden rule of his own (as an ordinary law). So why all the angst about him as the man in the Elysee? With the crisis still raging, Germany worries about renewed profligacy. Might Hollande appoint an unreconstructed leftist as finance minister? For all his talk of fiscal responsibility, he still wants to tax and spend more at a time when most are cutting back. His promise partly to undo Sarkozy's rise in the pension age runs against the tide of European reforms. His call to reopen the fiscal pact looks like a licence for fiscal sin.
Tricky ratification
Hollande says he does not seek a ‘full rewrite'. He does not want to remove the fiscal constraints (though he wants clarification), but only to put greater emphasis on growth and solidarity. He cites the precedent of Lionel Jospin, who demanded a renegotiation of the fiscal pact's unlamented predecessor, the stability and growth pact, when he became France's Socialist prime minister in 1997. That Jospin did not get very far suggests that Hollande may be satisfied with a fig-leaf — perhaps a repackaging of the many official EU policies on growth. But if Hollande pushed for joint Eurobonds, he would run into solid German opposition. And even if he didn't, Merkel would resent delay in a tricky ratification. As for solidarity, adoption of the fiscal compact is her condition for granting new bailouts under the permanent Eurozone rescue fund coming into effect this year.
Sarkozy accuses Hollande of a lack of statesmanship. Less stridently, Merkel says the same: she notes that she opposed opening EU accession talks with Turkey, but did not try to stop them when she came to office.
On the face of it, Hollande should have some allies. Many European leaders are tired of Sarkozy's rudeness, and think Merkel's drive for austerity is misguided. Belgium and Denmark have centre-left prime ministers. The EU bureaucracy favours Eurobonds and southerners want more solidarity. Indeed, a president Hollande could team up with the leaders of Spain and Italy to form a block that pushes for more growth, less austerity and Eurobonds against Merkel and the northerners.
Yet few outsiders are rushing to cheer Hollande. Though many resent the ‘Merkozy' duo, they worry about Franco-German paralysis even more. It is not what Hollande says, but what Merkel does, that will decide the fate of the euro. Giving Merkel her treaty may persuade her to relax a bit. Nobody can be sure how France under a novice Hollande would behave. Despite some growth in the past year, one big rating agency has removed France's AAA badge and another is threatening to do so.
Until recently few imagined that France could be upbraided over its economic policy, let alone threatened with sanctions. But the mood is changing. Even before Eurocrats can say "excessive deficit", any laxness by France would be punished by higher borrowing costs. Hollande is running not just against Sarkozy and Merkel, but against the markets as well.
