PM warns of euro collapse if France rejects treaty

Wed, Oct 3, 2012, 01:00

FRANCE’S PRIME minister has warned that a French rejection of the EU fiscal treaty would cause a political crisis and the collapse of the euro.

Seeking to rally left-wing support for the pact amid signs of growing opposition, Jean-Marc Ayrault acknowledged colleagues’ “doubts” but insisted the treaty would not impinge on France’s budgetary sovereignty.

The pact has revealed clear divisions in French president François Hollande’s ruling majority, with the pro-European Green Party and a number of deputies in his own Socialist Party saying they will vote against it.

Opponents argue that by committing France to tight limits on public deficits and debts, the pact would enshrine austerity in French law. On the eve of the debate in parliament, thousands of protesters took to the streets of Paris on Sunday in the first major public display of anger towards Mr Hollande since his election in May.

“The consequence of a negative vote in our country would be, as you well know, a political crisis and the collapse of monetary union,” Mr Ayrault said as he opened the debate in the national assembly yesterday.

He acknowledged some deputies’ concerns but stressed that the treaty would not require France to insert a budget-balancing “golden rule” into its constitution.

“The treaty itself includes no constraints on the level of public spending,” he said. “It imposes no additional constraints on its distribution. It does not in any way dictate the method to be used to balance the public accounts. Budgetary sovereignty will remain in parliament.”

With the right-wing UMP overwhelmingly backing the treaty negotiated earlier this year by former president Nicolas Sarkozy, the government is expected to carry the vote comfortably later this month. However, Mr Hollande’s party hopes to avoid the embarrassment of relying on the right’s support to approve the deal.

The Green Party’s open defiance of a cabinet decision has cast doubts over the future of its two ministers and has led to public recriminations in the smaller party’s senior ranks. Veteran ecologist Daniel Cohn-Bendit called the move “irresponsible and incoherent” and suspended his membership of the party.

France’s constitutional court ruled in August that the treaty did not require a change to the constitution, allowing Mr Hollande to avoid a referendum and a bicameral parliament vote that would have required cross-party support.

Recent polls show that a solid majority of French voters would approve the fiscal treaty if it was put to a referendum, however. In a BVA poll on Monday, 64 per cent of respondents said they would approve the pact, with support lower among those who voted for Mr Hollande (54 per cent) and higher among Mr Sarkozy’s voters (75 per cent).

The debate over the treaty comes at a sensitive time for the new government. Last week, it unveiled €20 billion in tax increases and a further €10 billion in spending cuts in the country’s toughest budget in 30 years.