Sarkozy defends EU summit’s results at home

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French President Nicolas Sarkozy outlined the results of the eurozone summit in a rare hour-long interview on French television last night (27 October). The President skillfully slalomed through difficult debates, such as China's emerging role and new austerity measures in the face of weaker than expected French growth. EURACTIV France reports.

This was the first time in eight months that Sarkozy had made such an appearance, a fact criticised as too infrequent by some in France, who point to Chancellor Angela Merkel's more frequent attempts to justify public opinion.

During a regular back-and-forth between history and Europe today, the president said that the entry of Greece into the eurozone was premature: "It was a mistake. [The country] was not ready."

In a broadcast watched by some 12 million people, Sarkozy was silent on the deep differences between Paris and Berlin these past months. He recalled the importance of the 'Franco-German engine' saying "Europe would not have resisted," if these two countries had "not reached the same positions".

The explanation of the deal's content was brief. Sarkozy said the goal was to make Greece's debt "bearable" in exchange for greater efforts.

The president argued that lending money to Greece did not mean a loss for France. The €11 billion lent to Athens in the first bailout package "brought in 200 million in interest," he said.

'Why reject the Chinese?'

There were lively reactions with the interviewers on the role of emerging countries. The president minimised its consequences saying: "If the Chinese, who have 60% of global [currency] reserves, decide to invest in the euro instead of the dollar, why refuse?"

During the 26 October summit it emerged that the EU17 are to launch a charm offensive to petition China and other emerging countries for investment in European debt.

Centre-left politicians were critical of the president's appearance. Presidential candidate Eva Joly said on television station LCI that Sarkozy "had not explained what the limits of the Brussels agreement are. I am very disappointed with his presentation".

Tough on bankers

Sarkozy adopted his traditionally harsh tone when talking about the financial sector. He said that in this area the governor of the Bank of France, Christian Noyer, "will have the power to sanction and control".

The goal: to ensure that dividends serve to increase the banks' capital reserves "but not the stockholders," said the president, without detailing the means he intended to use to carry this out.

Sarkozy also discussed new austerity measures to be presented "within ten days" to achieve his deficit reduction targets. With weaker growth prospects in 2012 (1% as against 1.75% projections earlier), the government will have to implement €6 billion-€8 billion in additional savings.

Sarkozy was reticent to say much on this new round of belt-tightening. He limited himself to excluding the possibility of a "generalised increase of VAT," considering that this would weigh too heavily on purchasing power.

EU leaders gathered in Brussels on 26 October, following an inconclusive summit on Sunday, chiefly memorable for the public humiliation dealt on Italian Prime Minister Silvio Berlusconi by French President Nicolas Sarkozy.

While talks among the EU27 were relatively brief, the 17 leaders of the eurozone negotiated between themselves and bankers long into the night, concluding the next day around 4 am.

The compromise deal included a 50% 'haircut' for Greek bondholders amounting to €100 billion, an increase of the European Financial Stability Fund (EFSF) from €440 billion to around €1 trillion, and an agreement that European banks must have core capital reserves of 9%.

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