• France's news in English
 

France and Germany drift over eurozone crisis

Published: 21 Sep 2012 17:34 GMT+02:00

German Chancellor Angela Merkel and French President Francois Hollande will have an opportunity to try to narrow those differences when they meet in the southwestern German town of Ludwigsburg on Saturday.

The occasion is to mark the 50th anniversary of a speech by French post-war president Charles De Gaulle to German youth.

Although the meeting is largely ceremonial, officials say that Merkel and Hollande will discuss the possible merger of the British defence group BAE and European aerospace giant EADS, as well as common banking supervision.

With the German-French partnership the engine of European integration, disagreements between Berlin and Paris bode ill for a coherent response to the crisis.

Differences on the key issue of common banking supervision spilled out into the open after a meeting last weekend of finance ministers in Nicosia.

Germany's Wolfgang Schaeuble said it became immediately clear during a feisty debate that the target-date for adoption of January 1st, 2013, was no longer attainable.

"January 1st, that will not be possible," Schaeuble said, adding that it was "not even worth having that discussion."

His French counterpart Pierre Moscovici retorted that "losing time by not moving fast is a mistake."

In order to break a dangerous link between bank and sovereign debt, EU leaders decided in June to allow the EU's new ESM bailout fund to recapitalise banks directly instead of passing the loans through governments and adding to their debt loads.

But EU leaders linked this to shift to a common banking supervisor, with the goal of having this in place by the beginning of 2013.

However Germany and France differ on what common banking supervision should entail, although they both agree on handing the job to the European Central Bank.

Berlin believes the common supervisor should handle, especially to begin with, only big banks whose failure could have an impact across the eurozone, with national regulators to continue to monitor smaller lenders.

Paris however wants to the ECB be responsible for all the roughly 6,000 banks in the eurozone.

Differences on other key issues, such as a bailout for Spain, have also become apparent.

While in public Hollande has recognised that Spain has the right to decide for itself whether and when to ask for help from the EU and European Central Bank, in private French officials do not mince their words.

"It would be better if Spain demands help, everyone knows that it needs it," a senior French official said recently on condition on anonymity.

While not mentioning Spain directly, Moscovici said earlier this month that the ECB's new programme to help struggling eurozone states by buying up their bonds on the secondary market should be used.

At the beginning of September the ECB unveiled its new bond-buying programme, but to unlock help from the central bank eurozone states must first ask for an EU bailout programme, which has conditions attached and entails outside supervision.

But the announcement itself of the ECB programme helped reduce tensions in the government bond markets, reducing Spain's borrowing costs to some degree.

Spanish officials have indicated they would prefer to continue the current course of deficit reduction and structural reforms in the hope that their borrowing costs come down enough to avoid resorting to a bailout.

This is a strategy the German government supports.

"A rescue programme, that's heavy artillery, with conditions and the intervention of the troika" of the bailout lenders the EU, IMF and ECB, said a German official.

"That is not a step to be taken lightly, it is for countries that can no longer finance themselves on the markets," added the official, noting "that is not the case today" for Spain as it successfully placed long-term debt on Thursday.

A bailout for Spain would be politically inconvenient for Merkel's coalition, which is divided on the issue on bankrolling rescues for countries which have failed to manage their finances, and would need to seek parliamentary approval.

Germany faces a similar problem on Greece, struggling through a fifth year of recession and have already slashed spending, wants more time to implement additional cutbacks needed unlock €31.5 billion ($41 billion) in bailout loans.

France was one of the first countries to indicate that it was receptive to a Greek request to spread out the cuts, but the Germans are reluctant to risk a refusal by lawmakers.

Germans want to see that any delay accorded Greece,  doesn't cost any additional money so it won't have to seek parliamentary approval, according to French officials.

However an IMF official said on Friday that any extension of the programme would require more funding and that it would be up the EU to find the cash.

German officials have repeatedly said that a resolution of the eurozone crisis will take time, but Hollande has called for decisions to be taken at an EU summit next month to help restore confidence and the prospects of growth.

Your comments about this article

Today's headlines
French roads set for 'Black Saturday' jams
Authorities are recommending people to delay their journeys until Sunday. Photo: Philippe Desmazes/ AFP

French roads set for 'Black Saturday' jams

Planning to head out to the countryside this weekend? Beware, the roads will be hit by millions of French motorists taking off for their August break. READ  

Striking French seamen block Calais port
Striking employees of the My Ferry Link company block the access to the port of Calais. Photo: AFP

Striking French seamen block Calais port

Hundreds of French sailors blocked the city of Calais Friday, using burning tyres to prevent access to the port in the midst of the peak holiday travel period. READ  

French court says 'non' to new cockfighting pits
France hopes to be able to stamp out cockfighting altogether eventually. Photo: Jean-Michel Andre/ AFP

French court says 'non' to new cockfighting pits

France's top court on Friday upheld a ban on new cockfighting pits, as the country seeks to stamp out the ancient bloodsport that continues in some regions despite being banned in most parts of the world. READ  

Riviera trade group: 'Leave Saudis alone'
The beach is located just below the Saudi king’s Riviera villa in Vallauris. Photo: Valery Hache/ AFP

Riviera trade group: 'Leave Saudis alone'

After weeks of uproar over a decision to let the Saudi royals “privatise” a public beach on the French Riviera, a trade group has pleaded for locals to calm down and leave the Middle Eastern visitors alone. READ  

Reunion wreckage
Experts 'confident' plane debris is from MH370
The wreckage on the island of Réunion. Photo: BFM TV (screengrab)

Experts 'confident' plane debris is from MH370

Experts are "increasingly confident" that a piece of debris that washed up on the French island of Réunion comes from a Boeing 777, which would mean it is almost certainly from the MH370 flight that went missing last year. READ  

France and Russia 'reach deal' on ditched Mistrals
Photo: Frank Perry /AFP

France and Russia 'reach deal' on ditched Mistrals

After eight months of negotiations France and Russia have reached a deal on the amount Paris must pay Moscow in compensation for the non-delivery of two Mistral warships, a senior Russian official said Friday. READ  

Google defies France on 'right to be forgotten'
Google rejected a French bid for a global right to be forgotten. Photo: AFP

Google defies France on 'right to be forgotten'

Google on Thursday rejected a French demand to globally apply the so-called right to be forgotten, which requires the company to remove links to certain information about users if asked. READ  

Extra French police help curb Calais migrant flow
French gendarmes attempt to block a migrant after he entered the Eurotunnel site. Photo: AFP

Extra French police help curb Calais migrant flow

A newly enforced police unit in northern France blocked at least 200 people from reaching the Channel Tunnel on Thursday night, as the British government prepares for an emergency meeting on Friday to grapple with the crisis. READ  

Réunion's plane debris to be probed in France
Policeman and gendarmes with the piece of unidentified aircraft found in the coastal area of Saint-Andre de la Reunion. Photo: AFP

Réunion's plane debris to be probed in France

UPDATED: Plane wreckage that washed up on a tiny Indian Ocean island will be sent to France for investigation, as hopes mounted Thursday the mysterious object could unlock the riddle of missing flight MH370. READ  

Migrant dies in botched Eurotunnel crossing
Ten migrants have died at the Calais post in the past two months. Photo: AFP

Migrant dies in botched Eurotunnel crossing

French authorities said on Thursday that a migrant had died from head injuries suffered in a weekend attempt to cross the Channel into England, bringing the number of such deaths to ten since June. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
National
Réunion's plane debris to be probed in France
Ten things you didn't know about Gay Paris
France eyes boost to holiday leave rights
Business & Money
French dating sites 'not protecting client privacy'
Features
Learn more about the Bayonne festival - France's wildest party
Features
What's on in France: Ten things to do in August
Features
What to see and do at the Paris Plages this summer
Saudi royals 'bar' French policewomen from beach
Take a closer look at the 560,000-year-old tooth found in France
National
Swiss army pilfers French water to give to thirsty cows
National
'B**ch' and 'brainless': French shop slurs clients
Travel
French cops rebel over order to give kids sweets
National
New measures to stop migrant deaths in Calais
Travel
Here are some of the most ridiculous comments you'll read about France
Features
Life may be about to get easier for expats settling in France
National
Burning tyres and blocking roads is just the way the French do strikes
National
Muslim tourists visiting French Alps are reminded of burqa ban
Opinion
Slim and chic: Are French women fed up of the stereotypes?
French officials defend handing public beach over to Saudi royals
Society
French kiss: Should expats in France do 'la bise' among themselves?
National
Paris commuters and tourists face summer of travel trouble
This man learnt the entire French vocabulary in nine weeks, but why?
French speed cameras snare tens of thousands of British drivers
Gallery
What kind of expat in France are you: A lover or a loather?
Society
French tweeters reveal the trials and tribulations of #GrowingupFrench
Where to find the best (and worst) quality of life in France
National
Riviera rumpus as Saudi royals grab public beach all for themselves
What we know about France's foiled terror plot
Features
Here are ten places in Paris where you can escape the summer heat
National
Coup d'état fails in France after being snubbed by military
Are shoppers in northern France the most honest in the world?
French woman fined €90 for driving in flip-flops
Cyclists in Paris get the green light to jump red
'Adieu France': Angry mum's parting rant goes viral
Franco-German rift opens over Greece and it could take time to heal
The Megavalanche: The most spectacular cycling event in France
Ex-French PM's daughter creates a buzz by going topless for photo shoot
Could Parisians be bathing in the Seine by 2024?
Paris unveils new mobile app to help non-French speakers
France declares war on public transport sex pests
So where's the best place to live in France if you want to be happy?
Opinion
Paris: The City of Light, Romance, Style and the worst loos in Europe?
National
Eight ways living in France will change your lifestyle for good
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Germany

More news from Germany at thelocal.de

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

3,613
jobs available