Wednesday

25th May 2022

Analysis

Hollande's limited eurozone vision

  • Hollande wants a more integrated eurozone. (Photo: consilium.europa.eu)

With his proposals for a more integrated eurozone, French president Francois Hollande seems to offer a vision that goes beyond to the Greek crisis and how to solve it. But he did not announce any detailed initiative nor a timetable.

First in his traditional Bastille Day TV interview and then in an op-ed in the Journal du Dimanche newspaper to celebrate the 90th birthday of former EU Commission chief Jacques Delors, Hollande said the eurozone needs a specific budget as well as its own government and parliament.

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  • A vanguard or hard core euro club would be in France's geopolitical interest, but it would cut Germany from Europe's East (Photo: Consillium)

In his op-ed, he also called for a eurozone vanguard.

He did not specify which countries should form this vanguard, but his prime minister Manuel Valls later mentioned "France, Germany, Italy and the founding countries" of the EU - Belgium, Luxembourg and Netherlands.

"Sharing a currency is much more than wanting convergence. It is a choice 19 countries made because it was their interest," Hollande wrote in his Journal du Dimanche op-ed.

In a typical conclusion, he added: "France is ready, because as Jacques Delors showed us, she is always greater when she initiates Europe."

Image

For Hollande, these proposals are a way to use the European timing to polish his statesman image and improve his popularity at home, a few days after a euro summit where he was instrumental in brokering a Greek deal.

The Journal du Dimanche headline was: "The Mister + of Europe".

"Hollande appeared as the chief fireman of Europe. Without his involvement, however late, the outcome of the euro summit would have been different," Yves Bertoncini, the director of the Paris-based Institut Jacques Delors, told EUobserver.

"Now the eurozone, and the Europe as a whole, needs architects. And Hollande now puts on the hat of the architect," Bertoncini said.

The proposals are also a manner to occupy a new space in Europe after the summit, without appearing to overtly compete with the German chancellor Angela Merkel.

After the euro summit, "Hollande abstained from any triumphalism, even if it was the first time he stood up to Merkel," Stefan Seidendorf, deputy director of the Franco-German Institute in Ludwigsburg, told EUobserver.

In doing so while advancing his ideas, "Hollande has done well because he saw that [at the summit] Germany has left the centre of gravity," Seidendorf said. The agreement with Greece "has German colours but is was imposed by France".

Hollande's proposals are not completely new and some of them have already been endorsed by Merkel.

Governance

In a common declaration in May 2013, Hollande and Merkel proposed to improve the governance of the eurozone, with regular euro summits, a full time Eurogroup president and "specific structures within the European Parliament for the eurozone". They also proposed a "specific eurozone fund" to foster competitiveness and growth.

In May 2015, in a common contribution sent to the European Commission, France and Germany reiterated their proposal for regular euro summits and "specific structures" within the European parliament.

But they only spoke of exploring "the possibility of strengthening the Eurogroup president" and dropped the idea of a eurozone fund.

Hollande now goes a little further, but the idea of a eurozone parliament was also defended in 2014 by Germany's finance minister Wolfgang Schaeuble.

One idea Germany has never shared with France is a eurozone budget.

For when it comes to Franco-German views of eurozone integration, both have their red lines.

"The problem for Germany is sharing the risks," which would be the case with a eurozone budget, Bertoncini said, while for France "the problem is sharing sovereignty".

If Hollande wants to push his eurozone agenda further, he will have to clarify his position.

"Is France ready for a supranational control with a social and tax harmonisation that would not be on a French basis?," Bertoncini asked.

Even the proposal for a eurozone parliament could be detrimental for France, who has lost much of its influence in the EU Parliament in recent years, Bertoncini observed.

Another problem for France is its credibility and power to rally allies behind its ideas.

Since Francois Hollande failed to curb Merkel's "austerity" at the start if his mandate in 2012, he has been known to say little in EU summits, at least until last week's euro summit.

France is also rather weak economically and still under an excessive deficit procedure.

"It is not easy to want to restructure [the eurozone] when you are not clear with the current rules," Yves Bertoncini said.

For these reasons and because Europe's history is made of Franco-German initiatives, Francois Hollande will probably have to share his architect's hat with Angela Merkel if he wants to make his proposals a reality.

Initiative

But Merkel has not reacted yet, probably because "a lot of things are going on inside the German government. It is less coherent than it may appear," Stefan Seidendorf, of the Franco-German Institute, said.

German media reported differences between Merkel and Schaeuble and tensions have arisen between Merkel's christian-democrats and their social-democrat coalition partners.

However, "the situation is favourable for a Franco-German initiative," Seidendorf said.

"Merkel and Hollande embodies different positions. They could set out a kind of European grand coalition compromise, something Merkel and Sarkozy could not do."

"In the history of European crisis, there are many moments of hesitations when Germany and France were apart," Seidendorf noted.

"We tend to forget the work done ahead of big decisions," and Merkel and Hollande should re-establish the tradition of the Franco-German letter before every EU summit, Seidendorf said.

"It would force them to agree and convey their position to other countries."

Apart from a eurozone budget, Merkel would also probably object to the idea of a eurozone vanguard.

"She has another vision, she is close to Eastern Europe countries" Seidendorf pointed out.

"A vanguard or hard core would be in France's geopolitical interest, but it would cut Germany from Europe's East," and that is why she would not support the proposal, he said.

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