IRELAND’S EFFORTS to build European support for a deal to ease its multibillion-euro bank debt received a boost from Paris yesterday when French president François Hollande called on EU leaders to act quickly on their pledge to break the link between sovereign and banking debt.
On the eve of an EU leaders’ summit in Brussels, Mr Hollande put himself firmly at odds with Germany by insisting that eurobonds would form part of the solution to the euro zone debt crisis and that any moves towards further political integration would have to wait until 2014. He reiterated France’s reservations about any new treaty – an idea Berlin has been pressing – and suggested that German chancellor Angela Merkel was too preoccupied with domestic politics in her handling of the crisis.
France has privately backed Ireland against a German-Dutch-Finnish attempt to limit the scope of a deal in June when EU leaders promised to cut the link between sovereign and bank debt.
Paris and Dublin say the agreement to allow the European Stability Mechanism (ESM) bailout fund to recapitalise banks should apply to legacy or historic debt, despite a recent claim by German finance minister Wolfgang Schäuble and his allies the fund should cover only future losses.
Referring to that deal, Mr Hollande was quoted by Le Monde yesterday as saying: “My position is simple. All of the European Council of June 28th, nothing but the European Council of June 28th, but implemented as soon as possible.”
In wide-ranging comments that underlined sharp policy differences between Paris and Berlin on the response to the debt crisis, Mr Hollande rejected the idea, broached by Germany, of tighter political integration through a new EU treaty. “If I remember correctly, we tried that formula in 2005 and it didn’t produce the results we were hoping for,” he said, referring to the ill-fated European constitution, which the French rejected in a referendum.
“Before launching into institutional mechanics, Europeans must know what they want to do together. The content is more important than the framework.”
Mr Hollande suggested any new political structures could wait until after the European Parliament elections in 2014 – a longer timeframe than envisaged by Germany. With Dr Merkel facing an election campaign next year, Mr Hollande said domestic political considerations should not get in the way of solving the crisis. The chancellor was “very sensitive to questions of internal politics and to the demands of her parliament. I understand that. All of us are. We all have our public opinion, our democratic debates. But our common responsibility is to put Europe’s interests first.”
The president was upbeat about the euro’s overall prospects, saying the end of the crisis was “very, very near”. But he challenged the notion Germany was the only state having to pay out to keep the currency intact. “We’re all taking part in this solidarity. The French, the Germans, just like all the Europeans in the ESM. Let’s stop thinking that there’s only one country who’s going to pay for the others. That’s false.
“However, I know the sensitivity of our German friends to the problem of supervision. Whoever pays should control, whoever pays should sanction. I agree. But budgetary union should be completed by a partial mutualisation of debts through eurobonds.”
