François Hollande: Towards a European ‘New Deal’?

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As part of an ongoing series, EURACTIV France is profiling major candidates in the 2012 French presidential elections, analysing in detail what their political action, programmes and policies mean for the European Union. François Hollande, Socialist candidate and current front-runner, promises a break with the 'Merkozy' consensus on Europe's economic crisis and a revision of the fiscal compact treaty.

Click hear to read the original version of the profile of François Hollande on EURACTIV France.

In his entourage Hollande passes for a 'convinced European'. "It is one of his oldest and most structured commitments," says a source close to him. However, his career has had both ups and downs because of European affairs (see background) and some say he would have preferred to steer clear of the topic in his run for the presidency.

As one French Socialist politician told EURACTIV, "At the beginning of his campaign, Hollande and those close to him did not want to talk about Europe. It doesn't sell. They were forced to do so when Sarkozy put the treaty on the table and they had to react".

This is perhaps not so surprising given that 'Europe' – often perceived as a symbol of austerity and laissez-faire capitalism in France – has been one of the most divisive issues within the Socialist Party.

Hollande, long successfully caricatured as weak and indecisive, has been able to win over a large part of the French public, portraying himself as a "normal" candidate. While he has long had a prominent role in national politics, the Socialist candidate has never held ministerial office, earning him the title the "novice Mr. Hollande" from The Economist weekly. Similar language often appears in the French press.

His advisors dismiss these concerns. One asked rhetorically, "Before coming to power in Great Britain, David Cameron had never been a minister: Has it prevented him from governing?"

Critic of Brussels

Hollande has grown increasingly critical of the EU's management of the economic crisis. "I have been European, and I still am, but Europe as I dreamed of it does not work," he said last October in a debate with Martine Aubry, his Socialist contender during the primaries.

This disillusion is reflected even more strongly in a speech he gave on 26 June 2010: "The old model, that of the postwar era, has broken without Europe being capable of forging a new one. Europe is surely not social democratic; but Europe is not [free market] liberal either. … The problem is it isn't anything anymore. It no longer represents anything. It no longer builds anything."

For him, the Union is returning to "its demon: national particularism. Let us not blame any person or state in particular; everyone complacently returned home."

National self-interest and selfishness has, since the beginning of the crisis, severely tested the idea of solidarity in the EU, the object of endless wrangling between wealthier northern governments and southern economies suffering from austerity.

Returning to growth

By asserting, at the beginning of December, that he would renegotiate the treaty reinforcing fiscal discipline in the EU, Hollande signalled to his European partners that he is ready to fight, even if the exercise is costly politically and would mean a time-consuming legal battle.

His objective is a return to growth. Hollande plans on relying on loans from the European Investment Bank (EIB) or eurobonds to fund big infrastructure projects. The projects, sums and countries concerned remain vague however.

Hollande also promises to start a debate on the role of the European Central Bank in the eurozone crisis. Many economists believe its unwillingness to buy debt from peripheral economies and drive down interest rates on new loans – acting as a lender of last resort – is a major cause of the continuing debt crisis and return of recession.

"It is not a question of questioning the [independent] status of the ECB, but to ensure that monetary policy takes into account other criteria. All the more so given that inflation is dropping," said Karine Berger, one of Hollande's economic advisors.

Some are sceptical, as one EU expert told EURACTIV, "it's all for show. And the Germans will never accept it, not without an intellectual revolution on their part."

It is also unclear what changes Hollande would demand for the fiscal compact treaty. "It is only a matter of adding a section on growth," said one source close to the Socialist candidate, suggesting the agreement will be left in place intact.

The truth may be encapsulated in the noncommittal reply of one EU expert in the Socialist party who said they want to "complement" the treaty "but everything will depend on the political balance of power with the other countries."

Hollande would in any event have every interest in getting a substantial revision: Some economic experts think his plan to achieve a balanced budget by 2017 is in contradiction with the treaty as currently proposed.

A 'power struggle' with Merkel

If elected, Hollande has promised to "speak frankly and clearly" to the Germans. Sarkozy has not forced the issues of eurobonds, the ECB's role or greater financing of the European rescue fund, all of which Germany opposes, at least in the absence of stronger common rules for fiscal discipline.

"I prefer a power struggle rather than submission," said Hollande during a 26 January televised debate with Foreign Minister Alain Juppé.

These statements have made him the target of mockery of some on the right, who say these are signs at best of the candidate's naïveté and at worst of his ignorance of European political realities.

On the left, his approach is considered pragmatic. The absence of growth makes impossible any chance that governments can stabilise their public finances. Berger said "it's a matter of a being coherent with the budgetary objective that we have chosen".

Hollande's rhetoric is not as aggressive as that of Arnaud Montebourg – a Socialist politician who had been accused of Germanophobia for attacking what he called "Merkel's Bismarck-style policy". Nonetheless, he has not been shy about criticising Germany.

In 2010 Hollande said, "Germany is not trying to impose its model on the rest of Europe. It's worse than that: It has decided to work for itself, no longer considering Europe to be its frame of reference, but rather a burden that it grumblingly drags along".

And in an April 2011 speech he attacked Germany's privileged trading position saying, "Of course, we have to reduce our deficits, limit our debt … but at the same time the Germans need to understand that it is not possible to [forever] have positive trade balances on the backs of one's European partners".

Not all in the Socialist Party believe this is the best way of tackling the issue of Europe's economic governance. "It's a faux-pax," said French MEP Kader Arif (Socialists & Democrats), "all the more so given that the Franco-German couple has always worked well [even] with different [governing] majorities."

Socialists isolated in Europe

Even if Hollande wins the elections, the European Council of national heads of state and government will remain overwhelmingly dominated by centre-right leaders. His potential Socialist and Social-Democrat allies in the eurozone will be limited to Werner Faymann of Austria and Elio Di Rupo of Belgium.

For now, the advocates of a renegotiation are scarce. Even for centre-left leaders the issue is sensitive. Asked by EURACTIV on Di Rupo's intentions on the Treaty one Belgian diplomat said "I wouldn't want to be in his shoes."

In the European Parliament prudence is also the rule. Germany's Martin Schulz (S&D), the European Parliament president, and leader of the Socialist Group Hannes Swoboda (Austria) fully support the European public investments promoted by Hollande, but they do not go so far as to openly defend the idea of treaty renegotiation.

Pierre Moscovici, Hollande's campaign manager, has said he wants a replay of the negotiations over the stability pact in 1997. Then Prime Minister Lionel Jospin had argued for taking growth into account in its objectives, resulting in the "Stability and Growth Pact".

However, this amendment was largely toothless, much like the pact's budgetary restrictions, highlighting the impotence of the eurozone's economic governance. At the time, leaders had agreed on the need for reinforced coordination of economic policies and praised the "important role" of the European Investment Bank.

Hollande's ability to deliver may also be limited by divisions within his own Socialist party. During the examination of the law establishing the European Stability Mechanism (ESM) on 21 February at the French National Assembly, Socialist MPs found themselves between a rock and hard place, torn between a European rescue fund which they consider desirable but whose use they consider ideologically marked by austerity policies.

The Socialist party chose to abstain, upsetting some Socialist MPs would were ready to vote for the text.

Other issues sidelined

The renegotiation of the fiscal compact has tended to eclipse Hollande's other proposals for Europe. The EU is currently negotiating the framework for the €1-trillion EU budget for 2014-2020, which Hollande would like to see invested in "future-oriented great projects".

While Hollande has promised an "ambitious budget" for the Common Agriculture Policy, French Socialist MEP Stéphane Le Foll, who is close to the candidate, has said this does not mean defending its funding to the last euro. The EU's farm policy currently absorbs about 40% of the EU budget, a figure the Commission would like to gradually reduce.

Hollande, like Sarkozy, backs a tax on financial transactions and would like its revenue to go to the EU budget. He also supports the creation of a European ratings agency, a proposal presented by Commissioner for the Single Market Michel Barnier which was ultimately withdrawn last September.

On the institutional front, Hollande has said he wants to combine the positions of presidents of the European Commission and of the European Council (currently held by José Manuel Barroso and Herman Van Rompuy respectively) into a single office and that it should be directly chosen by MEPs.

Barnier has also suggested this, and advocates believe this would give the EU a more distinctive 'face' and strengthen its executive leadership.

Although it is not explicitly mentioned in his programme, the relaunching of European defence is one of Hollande's projects. This choice "will mean a greater selectivity in our contributions to NATO," says Jean-Yves Le Drian, president of the Brittany region and an adviser to Hollande on defence.

Defence issues will be on the agenda shortly after the elections, with a NATO summit planned for 20-21 May. If he is elected, Hollande is likely to use it to announce to allies the withdrawal of French troops from Afghanistan between now and the end of this year. Sarkozy plans for troops to be withdrawn by the end of 2013.

Closer ties with Germany

In 2013, France and Germany will celebrate the 50th anniversary of the Elysée Treaty, signed by Charles de Gaulle and Conrad Adenauer, an enduring symbol of friendship between the two countries. On this occasion, Hollande would like to deepen the partnership between the two countries in several areas, which he detailed during a 5 December visit to Berlin.

He advanced several proposals such as "an acceleration of the establishment of a Franco-German civic service, the creation of a Franco-German research office, the creation of a Franco-German industrial fund to finance common competitiveness clusters (transport, energy or environment) and the establishment of a common military headquarters."

It remains unclear how how Hollande, who wants to meet with Angela Merkel immediately upon taking office, can reconcile closer Franco-German ties with economic demands that are anathema to Berlin and German economic policymakers.

Merkel has not delayed in giving her response as she has simultaneously endorsed Sarkozy's campaign and rejected, apparently for scheduling reasons, a pre-election meeting with the Socialist candidate.

Should Hollande win, it will represent both a challenge both to the EU's existing economic management and to the ability of the 'Franco-German engine', which has so often led European integration, to function despite political differences.

François Hollande became the French Socialist presidential candidate after winning the party's primaries in October 2011. He has since done consistently well in opinion polls, almost always coming ahead of incumbent Nicolas Sarkozy.

This is not the first time that Hollande has faced Sarkozy in an electoral contest. In 1999, both headed their respective party lists with the Socialists winning the largest share of the vote with 22%.

Hollande served as an MEP for six months. He returned to national politics, becoming mayor of Tule in 2001 and an MP in 2002, while continuing to serve as first secretary of the Socialist Party.

Socialist politicians and activists were deeply divided by the ill-fated Constitutional Treaty, which the French rejected by referendum on 29 May 2005. Hollande, who backed the Treaty, emerged significantly weakened, helping to sideline him as a potential presidential candidate in 2007.

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