Hollande has finger on pulse with talk of growth


ANALYSIS:While he champions his win as vital to Europe, the nitty-gritty of the presidential contender is rather less radical, writes RUADHAN Mac CORMAIC

LISTENING TO François Hollande give his final campaign speech on the magnificent Place du Capitole in Toulouse on Thursday evening, it was striking how often he portrayed his candidacy for the French presidency as a European cause.

“Our duty and my responsibility,” he declared, “is for victory on May 6th to be felt across Europe as a moment of hope, of confidence, of recovery.” The continent had been weakened; if he won, a new era would begin. “Everywhere, they are telling us: don’t let this chance go to waste.”

Hollande’s embrace of Europe is not in the least surprising given how the campaign has unfolded. When he and Nicolas Sarkozy began preparing their campaigns in January, the EU was considered Sarkozy’s trump card.

His leadership during the euro zone debt crisis, his shuttle diplomacy and a strong working relationship with German chancellor Angela Merkel were considered some of his strongest assets. In just four months, however, the tables have turned.

By promising to reorient European thinking by putting economic growth at the heart of recovery efforts – starting with renegotiation of the fiscal treaty that Sarkozy signed off on – Hollande has tapped into the public mood and managed to blunt one of his opponent’s strongest weapons.

His campaign has coincided with a shift in the wider European discussion about the balance between austerity and growth – and Hollande hasn’t been shy about claiming the credit. “Things are moving, and they will move further after the election,” he said after Merkel spoke last week of the need for action to spur growth.

If proof were needed of how Hollande’s strategy had wrong-footed Sarkozy, it came in mid-April, when the incumbent suddenly incorporated similar rhetoric about growth into his speeches and joined Hollande in calling for a more interventionist European Central Bank. Plans for joint campaign appearances with Merkel were shelved.

Whatever the outcome of tomorrow’s run-off, then, the election will have shifted the French stance on Europe. A re-elected Sarkozy, having come under intense pressure from his right and left flanks for making too many concessions to Merkel, would feel obliged to act on the criticism.

If he were to win a second term, there would still be a strong possibility that the left would take a majority in the French lower house in parliamentary elections next month, which would force Sarkozy into strained “cohabitation” with a socialist prime minister and government.

What would change under a President Hollande? On paper, the socialist candidate is looking for radical shifts in Europe’s response to the crisis. He insists he will renegotiate the fiscal treaty and refuse to ratify it until French concerns are addressed. He would press for the ECB to lend directly to states and for the introduction of jointly issued eurobonds – two ideas to which Germany is implacably opposed. Look a little deeper, however, and Hollande’s proposals are considerably more modest. If elected, he would send a memorandum to all European governments on Monday with four proposals to boost growth.

First, Hollande wants “project bonds” to fund infrastructure and jobs. This sounds very similar to an initiative tabled last year by European Commission president José Manuel Barroso, but on which agreement has proved elusive.

Second, he calls for a boost in funding for the European Investment Bank to help finance big projects. The UK is resisting this, but Germany has agreed in principle and an embryonic plan to inject capital and boost the bank’s lending capacity is under discussion.

Third, Hollande calls for like-minded states to introduce a financial transaction tax. Sarkozy has lobbied hard for this, but the British are opposed. If the UK opts out, so will Ireland, so as not to leave the Irish financial sector at a disadvantage against the City.

Fourth, Hollande would like to see EU structural funds being made more efficient by making it easier to release unused money. France and Germany have supported proposals to this effect, although no EU-wide agreement has yet been found.

In other words, the socialist’s proposals amount to injecting new impetus into four ongoing discussions. “All that for this?” said Alain Lamassoure, the French conservative president of the European Parliament’s budgetary commission, on hearing of the proposals. Moreover, Hollande says he agrees with all existing provisions in the fiscal treaty, including tight limits on budget deficits and public debts.

The problem for the Irish Government, however, is that Ireland’s referendum takes place on May 31st, just two weeks after the next president takes office in France, leaving little time to hammer out a deal if Hollande wins. Informal contacts have been taking place between Hollande’s camp and the authorities in Berlin, Frankfurt and Dublin, and despite Hollande’s public insistence on renegotiation, all signs suggest the ground is being prepared for a compromise.

Two of Hollande’s senior aides – policy director Michel Sapin and Europe adviser Catherine Trautmann – have indicated to The Irish Times that they may be open to a “growth pact” in the form of a protocol or a separate legal text, a fix that would leave the fiscal treaty as it stands.

Hollande has also quietly dropped his call for jointly issued eurobonds to mutualise the debt of euro zone states, an idea that was guaranteed to face stern resistance in Berlin.

“Mrs Merkel cannot want to keep the ECB’s statute as it is, block it from lending to states, oppose eurobonds and be reticent about a financial transaction tax,” Hollande said this week. “No. There is a time for negotiation. Everyone must put on the table what it expects to gain and what it will concede.”

Rhetoric such as this, not to mention Merkel’s public support for Sarkozy and her reported refusal to receive Hollande in Berlin during the campaign, has given rise to concern that Franco-German relations will become chronically strained if Hollande wins.

Those fears look unfounded. French presidents and German chancellors have a symbiotic relationship; Hollande says he sees Merkel as France’s most important partner and the chancellor’s spokesman said she would be happy to work with whoever the French elected. Temperamentally, Merkel and Hollande – both of them deliberate consensus-builders – are more alike than she and Sarkozy. And, as the French side points out, some of the strongest Franco-German relationships, such as Schmidt-Giscard or Kohl-Mitterrand, have straddled the left/right divide.

The major change in European politics if Hollande wins would most likely be stylistic. In his recent book, he explains he wants to do away with the idea of a Franco-German directorate imposing its views on everyone else – a pledge that should come as “very good news” for smaller states after five years of being talked down to by Sarkozy, says Trautmann.

For Ireland, a victory for Hollande would not guarantee the turning of a new page on every issue. The last time the French socialists were in government, they targeted Ireland’s low corporate tax rate every bit as enthusiastically as the right. But a change at the Élysée Palace would at least provide an opportunity to develop new relationships and deliver Ireland a potential ally on the growth agenda.

Ruadhán Mac Cormaic is Paris Correspondent