Hollande to Merkel: Political union comes after banking, social unions

Hollande Merkel May 2012.jpg

French President François Hollande has put the brakes on a German-backed "political union", saying it should only be considered after the 2014 European elections and could not happen before there is agreement on creating banking and "social" unions.

In a long interview with French daily Le Monde, Hollande acknowledged that two-speed Europe had now become a reality, with the 17 eurozone countries going for deeper integration at its core.

Looking ahead to future reforms, Hollande said "this eurozone must take a political dimension," responding to calls by German Chancellor Angela Merkel to establish a "political union" and calling for monthly meetings of heads of state from countries sharing the single currency.

But Hollande also sent a clear message that France will not bow to German demands for greater political integration – and a new treaty providing for more centralised controls over debt – without new "solidarity" mechanisms in Europe.

"Political union comes afterwards. It is the step that follows the fiscal union, the banking union, the social union," Hollande said, adding that any moves towards a new European treaty should come at the conclusion of a process of integration that also includes a social dimension.

Asked when he envisioned such a "political union" taking place, Hollande said: "After the 2014 European election," adding that "the aim of [the election] will be the future of the Union."

Hollande also appeared to criticise Germany for dragging its feet on EU proposals for a banking union, which is seen as one of the pillars of the strategy to save the single currency.

"It has not escaped my notice that those who are most eager to talk about political union are sometimes those who are most reticent about taking urgent decisions that would make it inevitable," Hollande said.

German Chancellor Angela Merkel has insisted on achieving a fiscal union in the eurozone – and centralised EU oversight over national budgets – as a necessary step to end the eurozone sovereign debt crisis.

Merkel hopes a summit of EU leaders in December can agree a concrete date for the start of a convention on a new treaty to achieve that.

Seen from Berlin, a fiscal union is a prerequisite for considering any moves towards greater debt sharing – or eurobonds – being advocated by French President François Hollande.

In the meantime, EU leaders at their October summit will look into an interim report by European Council President Herman Van Rompuy, which charts a path towards closer fiscal integration among the 17 countries using the euro.


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