Taking place in Paris, the 14th French-German Ministerial Council was planned to project a reassuring image of the French-German EU leadership, 80 days from the French presidential elections.
However, it ended up in a lackluster way, with talks of the 'Troika' - the EU, International Monetary Fund and European Central Bank - on securing a second bailout package for Greece entering overtime and the risk of an orderly default on the increase.
In the absence of an agreement between Greece and its private and public creditors, Sarkozy and Merkel were only able to urge Athens to meet its obligations. We need to address the Greek crisis "once and for all," the French president exhorted. "Time is running out for Athens," said the German chancellor.
But the French and German leaders also submitted a new proposal aimed at reassuring Greece's donors. Under the deal, Athens would have to fund a blocked account serving as collateral to the country's lenders. If Greece is unable to honour its debt, its creditors may be partially reimbursed through the fund.
Details of the proposal remain unclear. Sarkozy raised the idea of paying "the interests of the Greek debt" in an escrow account. Merkel for her part explained that "the payment of interest" be achieved "through an escrow account."
For the German press, the step taken is considerable: "Greece should abandon its fiscal sovereignty", a Süddeutsche Zeitung headline said on 6 February.
In contrast, in France the news went almost unnoticed. "The news did not upset the markets, the UK brokers didn't call me," Nicolas Forest, economist at Dexia AM commented.
Asked to provide details, German officials declined to further clarify the proposal made by the two leaders, but confirmed that the objective was to strengthen budgetary surveillance of Greece.
Difficult negotiations
The Greek government is struggling to find an agreement on reducing the size of its debt with private investors. It is also slow to convince its public creditors, that is to say, the other European countries, of its ability to implement the reforms demanded, which include lowering the minimum wage. Without tangible results, EU leaders may refuse the second aid package to Greece of €130 billion, agreed in October.
Yesterday (6 February) political lines began to move, as the Greek government announced a redundancy plan for 15,000 employees. Failure of negotiations between the Greek political parties on the one hand and with private creditors on the other hand, "would be unimaginable," the French president said.
Merkel too said she hoped that "Greece remains in the euro area", while Sarkozy added he was confident of the success of the negotiations. "The elements of the agreement have never been so close," he said.
Fiscal harmonisation
The French-German summit also discussed progress made on fiscal harmonisation and the publication of a "Green book" on the rapprochement of corporate taxation.
According to Sarkozy, the French corporate tax should be adapted to the German model with a broader base and a lowering of rates in France. This project could be completed by the 60th anniversary of the Elysée Treaty in 2013, the chancellor suggest.
The Elysée Treaty is a bilateral treaty signed on 22 January 1963 by German Chancellor Konrad Adenauer and French President Charles de Gaulle.
Attacks against opponent
Journalists asked Sarkozy to comment statements by Socialist leader François Hollande, who leads in the opinion polls ahead of the first round of French presidential elections in April, that he would re-negotiate the intergovernmental 'fiscal compact' treaty.
Sarkozy said that this agreement on budgetary discipline, which is to be signed in early March, is "a commitment of the state and not of a politician".
Merkel concurred and said that she was not in agreement with the decision under her predecessor Gerhard Schröder to start accession negotiations with Turkey, but that she had to abide by it.
However, Sarkozy didn't comment on the ratification of the fiscal compact by the French Parliament, which is not expected before the presidential elections.
COMMENTS
situation de la Grèce: pour tous ceux qui, comme moi, ont été confrontés à la manière des Grecs de faire du commerce ou à leur manière de gérer une administration, il est clair que l'on a affaire à un non état dans un pays d'inciviques. En effet, chacun y trouve son compte lorsqu'il s'agit de ne pas payer ses impôts ou de détourner les aides européennes. Ce pays n'a aucun sens ni du bien être collectif ni d'une cause nationale.
Il faut se rappeler que sans le président Giscard d'Estaing, la Grèce n'aurait jamais adhéré à l'Union européenne car tous les pays membres de l'époque, à l'exception de la France, y étaient hostiles.
Comme le disait un document confidentiel allemand, publié à la suite d'une fuite, la seule solution véritable est de placer la Grèce sous tutelle face au manque de courage de sa classe politique de mettre en oeuvre des réformes. Toutefois, une telle mesure est impossible pour des raisons du respect de la souveraineté grecque.
Il serait temps que les médias mettent un tant soi peu en sourdine à leurs commentaires lénifiants sur l'augmentation de la pauvreté en Grèce (qui n'est pas à nier) mais mettent à nu la position du gouvernement grec et de ses citoyens qui est de ne pas introduire ou accepter de réelles réformes et de laisser le tout en l'état. je parie que les dirigeants politiques préfèreront sauver leur avenir politique que de sauver l'euro.
Enfin, je dénonce un budget militaire tout à fait disproportionné pour un si petit pays ainsi que le fait que l'Eglise orthodoxe grecque, propriétaire d'un très grand nombre de propriétés, ne paie aucun impôt immobilier.
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