It will undoubtedly support the Commission’s proposal to give France another two years to reduce its deficit below 3% of GDP. Senior German officials have even told Libération to cross their fingers so that the head of state can quickly recover the French economy and debt consolidation. Because unlike Spain, France is too big a piece to be helped by its European partners. In Berlin, it is estimated that it will have to get out of its difficult economic situation alone and by its own strength, otherwise it will lead to the bottom of the euro area as a whole.
For Berlin, the Germanophobia which develops in the opinion of the countries in difficulty is only a temporary evil: it is certain that it will be forgotten as soon as growth returns. Do we have fun speeches of a part of the left and the right French on the protectionism or the return to the nation-state: that will weigh a country of 67 or 83 million inhabitants in a world populated of 7.5 billions of human beings?
For them, the sacrifices that the current generation will have to make, such as working older or five hours more a week, are necessary for “our children to have a future”. But we reject the word “austerity” that did not exist until two years ago in the German vocabulary, where we speak of “fiscal consolidation”. The policy misunderstanding would come from the “easy” path chosen by countries in difficulty, who preferred to raise taxes on the risk of killing growth rather than liberalizing the economy or cutting public spending. Berlin denounces in particular increases in a VAT, the most unfair tax for the poorest.
On the other side of the Rhine, it is hoped that France can quickly regain its rank in Europe. Because Germany has neither the means nor the intention to hold alone the bar of the euro ship. She denies any desire to lead the Union: for her, it is a collective adventure and that is why she did everything to save the euro, accepting a financial solidarity she had always rejected. For example, by supporting the announcement last July by the European Central Bank to buy the public debt of the countries under attack without limits, which instantly calmed the markets. Incidentally, several German officials welcome the study of the Pew Research Center which shows that the Germans are ready for more financial solidarity (much more than the French), which opens up room for maneuver.
Berlin believes that we must take advantage of the current calm to prepare the future of the euro area. On the banking union, the two banks of the Rhine are almost in agreement on the next steps and should announce it in June: harmonization of the mechanisms of resolution of banking crises, authorization of direct recapitalization of banks by the European stability mechanism, creation of a European banking crisis resolution authority.
But on this last point, Francois Hollande refuses, for fear of his majority, a modification of the European treaties that the Chancellor considers legally necessary. It even wants it to be as wide as possible in order to democratize the functioning of the eurozone, a sine qua condition for citizens to accept reforms. In Berlin, we have across our throats the failures of the Cypriot crisis, where no one dared to publicly assume the first bailout taxing all bank deposits. “We have little time to say where we want to go,” warns Berlin. Will Holland dare to assume the choice of Europe?