European issues occupied a great deal of François Hollande’s long-awaited speech to the press yesterday (14 January), with the restart of the EU's Franco-German engine and strengthened fiscal and social convergence in the eurozone at the centre of the French president's reform agenda. euractiv.fr reports.
Although the press conference was mostly expected because of his alleged love affair with French actress Julie Gayet, Hollande’s speech nonetheless focused almost exclusively on the economic reforms awaiting the country.
A social-democrat responsibility pact
After brushing away a journalist’s question about the affair, revealed by a tabloid magazine earlier this month, the president turned to employment and economic issues, in which Europe occupied an important place.
“I have a profound conviction: if France wants to keep its influence in the world … then it must strengthen its economy,” Hollande said, describing his programme of lighter taxes and administrative burdens for companies, with the number of regions set to go down from 22 to 15.
The main measure announced is a “responsibility pact”, an agreement with private sector companies, which offers to suppress €30 billion of family contributions that weigh heavily on enterprises. A special observatory will be established to verify whether the companies hire more young and senior citizens in exchange.
Call for a 'true European government'
Beyond the purely French aspect, the president also talked about the European Parliament elections, calling for the formation of a true economic government for the eurozone after the 25 May vote.
Among the ideas, he mentioned a strengthened European executive branch with new competencies over employment and economic matters and which would have its own financial resources, a reference to the eurozone's ability to issue Eurobonds to finance an economic recovery programme. The battle is still far from being won but represents a logical development for the Economic and Monetary Union that the president wants to boost.
“The future of France is the future of Europe and vice versa,” he claimed.
“Initiatives in Europe have first to happen between France and Germany,” he said, hailing the German government’s decision to establish a minimum wage, which represents a “first step,” according to Hollande.
The president’s wish is also to accelerate cooperation between the two countries. Nearly all the ministers in government will have a bilateral meeting before the forthcoming Franco-German summit on 19 February. Three initiative are expected to re-start the European project:
- Greater social and economic convergence between France and Germany
- More co-operation on the energy transition with the creation of a Franco-German “champion” like EADS in the aerospace sector
- An initiative on common defence industries
The social and fiscal convergence between Europe's two larges economies is essential to drive further EU integration, Hollande stressed. For instance, wage divergences between France and Germany harms the wider European economy, making the minimum wage a key issue for greater convergence in the eurozone. For now, social dumping allows Germany to gain market shares and trade surplus. But greater fiscal convergence would allow for harmonised VAT rates and comparable impositions rates of companies, helping to bridge the competitiveness gap.
Siemens-Schneider Electric alliance?
Turning to the energy transition, a source in Hollande's office said: “We need to go beyond the image of divergent choices, they are only such on the surface”.
Germany wants to eliminate nuclear power from its energy mix, down from 17% currently, while France wants to bring it down to 50%, which means reducing the nuclear share of both countries in similar proportions, Hollande said. As for renewable energies, the issue of network management is common to both countries, he added.
To create a European champion, “we will not proceed like in the 60’s for the creation of the EADS but we can favour alliances,” a source close to the president said. The idea of a rapprochement between Schneider Electric and Siemens for example, which are both leaders in energy efficiency solutions could fit into that project. Saint-Gobain's leadership in energy efficient building materials could also be promoted in a European context.
A Franco-German surveillance drone in the pipeline
On defence industries, discussions already started in December during German Chancellor Angela Merkel’s visit. The 20 December EU summit followed up by sketching ways to organise bilateral co-operations at EU level. The idea of building together a Franco-German surveillance drone, for instance, is allegedly in the pipeline.
The French president also strongly defended the deepening of European integration on security even though French citizens show great defiance towards the EU project.
“We shouldn’t fear Europe, we should fear its weakening,” Hollande insisted. “I will not allow those who want to destroy the European idea,” he added, saying the EU elections represented a true democratic challenge in the face of rising extremist parties.
But he refused to say what top European jobs France could get after the election. The president merely “noted that the candidacy of president Schulz is supported by the French socialist party,” without revealing more about his own views.
Hollande is meeting later today (15 January) with Jean-Claude Juncker, a Christian Democrat, who has openly stated his interest for the European Commission presidency after the election.