Europe's fiscal treaty returns to haunt Hollande

ANALYSIS:IT WAS an electoral trump card for François Hollande just four months ago, so how can the EU fiscal treaty have become one of the chief sources of tension in the French president's fledging administration?

Hollande is under pressure to sack two Green Party members of his cabinet after the junior partner in his governing majority announced it would vote against the treaty in parliament next month. With a left-wing bloc in the president’s own Socialist Party also threatening to defy the leadership by abstaining in the vote, the pact has become one of the Élysée Palace’s biggest headaches.

The president could be forgiven for thinking he had done enough to avert such an early split on Europe. When he ran for election against Nicolas Sarkozy last spring, the treaty presented Hollande with a dilemma. There was little enthusiasm for the Sarkozy-era deal, which set tight limits on budget deficits and debt, among French socialists and the wider left. But by repudiating new rules on fiscal discipline he risked losing support from vital centrist voters, not to mention France’s European partners and investors.

His solution was to endorse everything the treaty contained – including the deficit limit – but to insist that he would ratify it only if European leaders agreed a complementary growth pact to spur economic activity and balance the German-driven focus on austerity.

The stratagem worked. Hollande managed to position himself as a leading voice for the growth agenda gaining ground in Europe at the time, while simultaneously casting Sarkozy as a cheerleader for Berlin’s unpopular ideas.

EU leaders duly agreed a growth pact in June, allowing Hollande to claim a personal victory in his first month in office. Further relief came in August, when France’s highest court declared that the treaty could be adopted without a referendum. The Élysée was keen to avoid a plebiscite: not only did opinion polls show it could be difficult to win, but the socialist leadership was haunted by the party’s acrimonious split over the ill-fated European constitution in 2005.

Now the fiscal treaty is back to torment the new government. It is still likely to pass through parliament next month with the support of a large majority of socialists and the mainstream right, but the Green Party’s open defiance of a cabinet decision casts doubts over the future of its two ministers and has dealt the government a humiliating setback.

Opposition figures have urged Hollande to sack the two Green ministers, Cécile Duflot (housing) and Pascal Canfin (development). In a strongly worded front-page editorial yesterday, Le Monde gave the president the same advice, arguing that the Greens’ stance was incompatible with a fundamental government policy and made their position untenable. “The ecologists ask to be treated as a coalition partner, but they behave like a small, irresponsible group,” the newspaper said.

The rejection of the treaty by the pro-European Green Party, which argues that the pact enshrines austerity in law, has also widened divisions in its own ranks. Veteran ecologist Daniel Cohn-Bendit called the move “irresponsible and incoherent” and suspended his membership of the party.

Other prominent figures have also criticised the move.

Prime minister Jean-Marc Ayrault says he expects the Green ministers to vote for the treaty and insists they will remain in government. But the party’s decision has left many socialists furious and has added to tensions between the two camps.

Earlier this month, industry minister Arnaud Montebourg, a socialist, sparked a public row with his Green colleagues when he suggested nuclear power was an energy of the future, appearing to put in doubt the government’s commitment to reducing France’s heavy reliance on nuclear. In a rebuke to her Green colleagues on Monday, the government spokeswoman urged the smaller party to “show some coherence and, frankly, solidarity”.

The domestic tensions over European policy could well have wider implications, chiefly by making the Élysée even more wary about embarking on any new revision of the EU treaties, as desired by Berlin.

“We don’t have the same view as Germany on this issue,” said European affairs minister Bernard Cazeneuve. And that was before the Greens reminded the French left that Europe hasn’t lost its capacity to divide.