The Next Crisis Victory

PARIS/BERLIN | | frankreich

PARIS/BERLIN (Own report) - The French parliament's passage of the EU's Fiscal Pact has sealed the defeat of French President François Hollande in Paris' power struggle with Berlin. Hollande won last May's elections also due to his announcement that he would oppose the German austerity dictate, which his predecessor, Nicolas Sarkozy had proven unable to prevent. With the anticipated parliamentary decision in favor of the Fiscal Pact, he will have been defeated once and for all. Berlin's proposed symbolic concessions, to assuage France's continued resistance to the German austerity dictate, are just as unsuccessful. The beginning of mass protests and serious frictions are weakening the French coalition government. To eventually catch up again to Germany's clout, in the aftermath of the defeat in the struggle against Berlin's austerity dictate, Paris is embarking on France's "reindustrialization." In Berlin, one hears that there "is nothing left" of a German-French balance of power.

The Fiscal Pact

Today, France's National Assembly will vote on the EU Fiscal Pact. It is expected that the pact, obligating signatory states to a strict austerity policy à la German model and thereby restricting their fiscal sovereignty, will pass. Left-wing parliamentarians of the governing Socialist Party (PS) and from the government coalition Green party (Europe Ecologie - Les Verts) have announced they will not vote in favor of the document - making a government majority uncertain. However, there is enough support to insure the adoption of the Fiscal Pact from the opposition UMP. The Senate is expected to approve the Pact and the accompanying laws on Wednesday. France will therefore comply with the German demand to implement the Pact.

Model Germany

The approval of the Fiscal Pact at EU Summits in December 2011 and March 2012 had already sealed President Sarkozy's defeat in the struggle over the EU's crisis policy. For a long time, Sarkozy had strongly opposed the German austerity dictate [1] - to no avail. Berlin had been able to impose its austerity policy practically unrestricted.[2] The conservatives in the French establishment finally felt obliged to initiate their own austerity measures along the lines of the German model ("Hartz IV") to strengthen their country's economy vis à vis the overpowering German industry. Sarkozy's UMP party's program for the presidential elections 2012 was formulated under the guidance of the Konrad-Adenauer Foundation (CDU) and the "German Model" was openly discussed. (german-foreign-policy.com reported.[3]) Submission to Berlin's austerity policy had contributed to Sarkozy's defeat by the current President Hollande, who distinguished himself, in the election campaign, as a staunch opponent of the German austerity dictate.

Placebos for the People

German experts had not expected Hollande's conspicuous opposition toward Berlin's policy to be successful. "Hollande will not carry out any of his electoral promises," the German economist Rudolf Hickel remarked shortly after Hollande's election.[4] However, his image should not be too flagrantly tarnished, according to voices in the German capital. The French are very "sensitive" to "German dominance." Boasting openly, could drive the French left to the barricades.[5] One should rather concede the EU "Stability and Growth Pact" to the French president, to salvage "his credibility in France." The "Stability and Growth Pact," in fact, has been passed. It contains already existing projects and redeployed financial means from other EU budgets, but, in the current conflict over the Fiscal Pact, Hollande is praising it to be a victory in the power struggle against Berlin. The German Council on Foreign Relations (DGAP) considers the "Stability and Growth Pact," along with other, "primarily symbolic" measures - such as increasing the minimum wage and the partial reintroduction of retirement at 60 - to be "populist concessions to the electorate." "They should (...) regain their confidence in politics." In France, "where pompous appearances (...) are often the norm, the significance of such gestures should not be underestimated."[6]

In the Palais Beauharnais

Efforts to assuage persisting French resistance with symbolic concessions, such as the "Stability and Growth Pact" are doomed to failure, due to the parliament's passage of the Fiscal Pact, which seals Hollande's defeat in Paris' power struggle with Berlin. Approx. 80,000 came out in Paris, September 30, in the first mass protest demonstrations against the German austerity dictate. Numerous parliamentarians of the government coalition parties want to refuse to vote in favor of the Fiscal Pact today. It has been noted that President Hollande's "popularity ratings" has "severely declined" and that he has, "with surprising speed, also lost his status as the left's indisputable leader."[7] The French left is disintegrating "into irreconcilable blocks," with one resolutely persisting in its refusal of the austerity dictate. A few days ago, the German press had related that, in spite of the bitter conflict around the Fiscal Pact in parliament, Prime Minister Jean-Marc Ayrault could "at least find empathy in the Palais Beauharnais, the residence of the German Ambassador in Paris."[8] He was consoled "for the tensions in his own camp, at the reception commemorating German Unification with a mountain of praise for the German-French friendship." France's parliamentarians, on the other hand, are still finding the treaty "hard to accept."

France's Reindustrialization

To catch up and again match Germany's political clout, Paris is now embarking on a "reindustrialization" of the country. Already last year, experts were pointing out that Germany's predominating position in the EU was due to its industrial strength. The Federal Republic of Germany disposes of more than three times as many export companies as France and, for example, exports six times more to China, thanks to the passage of the "Hartz IV" reforms enacted under Chancellor Gerhard Schröder (SPD). Correspondingly, France's share of global commerce has dropped from six percent in 1998 to four percent. Whereas only eleven to twelve percent of France's employees are working in industry, in Germany it is 20 percent.[9] France must "reindustrialize," announced Patrick Artus, research director of the Natixis Investment Bank, back in November 2011. Hollandes government has completely adopted this demand for "reindustrialization" as its own. This is one of Industry Minister, Arnaud Montebourg's key tasks.

No Balance

On the eve of the passage of the Fiscal Pact by the French Parliament, there can be no doubt about the balance of power within the EU, it is alleged in Berlin. Germany is "seen throughout the world as the EU's leading economic and political power," writes "Internationale Politik," Germany's leading foreign policy journal, published by the DGAP. Today, no one is talking about "a balance of powers, even with France" as "the EU's second strongest economy."[10]

[1] see also Breaking a Taboo, Die deutsche Frage and Führung und Orientierung
[2] see also Teilsieg für Deutsch-Europa, Europa auf deutsche Art (I) and Europa: Am Rande des Abgrunds, aber deutsch
[3] see also Sarkozy, the German
[4] "Merkel und Hollande werden sich nicht küssen"; www.cicero.de 08.05.2012
[5] see also Pariser Empfindlichkeiten
[6] Claire Demesmay: Das Ende des Kuschelkurses; Süddeutsche Zeitung 24.08.2012
[7] Europäische Gräben; Frankfurter Allgemeine Zeitung 08.10.2012
[8] Eine Kröte namens Fiskalpakt; Frankfurter Allgemeine Zeitung 04.10.2012
[9] Patrick Artus: "La France doit se réindustrialiser"; www.lemonde.fr 10.11.2011
[10] Andreas Rinke: Adieu, Sonderweg; zeitschrift-ip.dgap.org 24.09.2012