FRENCH PRESIDENT Nicolas Sarkozy is expected to set out his vision for a reshaped euro zone when he delivers a speech on the crisis tonight.
Intensive talks between France and Germany were continuing yesterday as they prepared joint proposals for further economic integration and strict budgetary rules within the single currency area.
They intend to circulate the proposals to fellow EU states before a Brussels summit on December 9th. But Mr Sarkozy is expected to define France’s position in Toulon this evening.
Significant differences remain between Paris and Berlin. The French want the European Central Bank to play a bigger role in calming the crisis by becoming a lender of last resort. Germany opposes this and is also resistant to France’s desire for jointly issued euro bonds.
Mr Sarkozy and German chancellor Angela Merkel spoke by phone on Tuesday and the French president is due to discuss the crisis with British prime minister David Cameron in Paris tomorrow.
Amid intensive talks at official level, the French side indicated that differences remain on key issues, including how states that breach budget limits should be punished. Paris, insisting that national sovereignty over budgets should not be compromised, is wary of giving the European Commission more power or allowing the European Court of Justice take action against states that break the rules.
France believes it has given ground on the principle of closer budgetary integration. But in exchange it wants German concessions on euro zone “solidarity” in the form of euro bonds, heavier ECB involvement or more firepower for the EFSF bailout fund.
“We’re putting forward a balanced position . . . so that the European institutions are more efficient in protecting the euro zone,” a spokeswoman said.
France’s negotiating leverage is constrained by the pressure on its triple-A credit rating and signs of investor unease over its public finances. Mr Sarkozy also faced trouble on another front when the opposition Socialist Party accused him of handing French sovereignty to unelected bureaucrats and financiers.
Socialist François Hollande, who will challenge Mr Sarkozy for the presidency next spring, said he would not tolerate handing over control of national budgets.
“I will never accept that, in the name of control of national budgets or co-ordinating budget policies, the European Court of Justice could be the judge of a sovereign state’s spending and receipts,” he said.
Domestic critics say Mr Sarkozy has ceded too much to Dr Merkel in his push for the ECB to come to the rescue of euro zone states.
Prominent socialist Arnaud Montebourg said Dr Merkel was destroying the euro. “The moment has come to confront Germany and defend our values,” he said.