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Hollande pursues crusade for growth

07 May 2012, 19:59 CET
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Hollande pursues crusade for growth

François Hollande - Photo EC

(BRUSSELS) - Francois Hollande has challenged Europe's austerity fix for the debt crisis with his crusade for growth, but Berlin stood firm Monday in defence of budgetary discipline.

One of only a handful of Socialist leaders at the European Union table, Hollande's win adds another voice for the left after the ousters of Britain's Gordon Brown, Portugal's Jose Socrates and Spain's Jose Luis Zapatero.

Losing no time the freshly-elected French president said his victory marked "a new departure for Europe and hope for the world" because it showed "austerity can no longer be the only option."

But as unemployment hits its highest level ever in Europe since the creation of the euro, Hollande's calls to rethink a just-inked and long-negotiated EU fiscal pact to enforce budgetary discipline made markets anxious and ruffled German Chancellor Angela Merkel.

"There is real potential for friction," said analyst Maurice Fraser of London's Chatham House think tank.

"Can they change the wording, will he be happy with a vague shift?" he said of a pact agreed by 25 of the EU-27 on terms largely penned by Merkel and her French ally, outgoing incumbent Nicolas Sarkozy.

"These issues will take a long time to negotiate with Germany," Fraser added. "And the Franco-German motor will need to demonstrate the show is not coming apart. They might have been high-handed but at least they looked like credible European leaders."

Amid fears of a breakdown in the Paris-Berlin partnership that drove Europe through the crisis, Merkel said "at its core, the discussion is about not whether we need budget consolidation or growth -- it is absolutely clear we need both.

"It is not possible to renegotiate the fiscal pact," her spokesman Steffen Seibert stated earlier.

Yet Hollande's crusade has already prompted EU pledges to consider an investment pact to stimulate growth at a summit next month.

"The lines have shifted, with (Italian leader) Mario Monti, (European Central Bank president) Mario Draghi and even Merkel" talking about growth, said Dominique David, the head of France's International Relations Institue, IFRI.

But as austerity fatigue sets in across the continent, Hollande has to gear up for parliamentary elections next month and will need to show his electorate he can deliver.

Meanwhile Spain has cashflow trouble, Italy is fighting to stay afloat and an under-performing France is already facing lengthening jobless queues and growing disparity with Germany.

So much speculation touches on whether the new leader of the world's fifth economy -- Europe's second -- will hugely disrupt EU and eurozone politics with his calls for a swing to growth.

"Europe should have no real reason to fear his victory," said analyst Thomas Klau of the European Council on Foreign Relations.

The new French leader, a pro-European said to have arch European federalist Jacques Delors as his mentor, "is a natural compromise-builder," Klau said.

"Hollande is far more predictable than Sarkozy, who was a man of his own, a little bit all over the place," said a senior EU diplomat.

Hollande has four demands, which were already in the EU pipeline: more money for the European Investment Bank; a new financial transactions tax; new EU bonds to fund large job-creating infrastructure projects; and the use of unspent EU funds to spur growth.

Hollande "might change the face of the EU," said Hugo Brady of the Centre for European Reform in Brussels.

"Because a lot more is needed than the fiscal compact to save the single currency, it will be easier for Hollande to present himself as the spokesman for the disenchanted of the crisis," he said.


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