12 November 2012

Jean-Dominique Guiliani: France, a problem for Europe?

The crisis is demanding that the old nations make in-depth reform which is vital if we are to face the competition of the newcomers in the international arena and to protect the most vital part of our identity. But France, the only country to do so in Europe, is dragging its feet.

It is always a difficult time after the Presidential elections in France. Generally it is a period in which the excessive number of gifts promised by the candidate are handed out. But this time round the crisis will not leave the country of Colbert, Napoleon, Schuman and de Gaulle the time to do this. Affecting the world, the crisis is demanding that the old nations make in-depth reform which is vital if we are to face the competition of the newcomers in the international arena and to protect the most vital part of our identity.

But France, the only country to do so in Europe, is dragging its feet and is persisting with a unanimously condemned model, whereby excessive public spending is used artificially to stimulate domestic demand, the driver of domestic consumption, which is behind imbalances in trade. It is falling into debt because of the daily costs incurred in running its overstaffed local and national civil services; it is convinced that growth will come back one day, but institutional France has not understood that it has to open its eyes and raise domestic, regulatory financial means to do this and also address some hitherto taboo issues if we are to maintain the model of a social market economy.

Hence Mario Monti's Italy, following in the footsteps of G Schröder's Germany, has reformed its labour market; it has slimmed down its State and almost done away with one layer of local civil service. Hence, in the wake of Ireland and Portugal, Spain is no longer hesitating to cut into public spending to a total of €63 billion. On several occasions in a bid to put its failing State back into order, Greece has approved measures that were unthinkable five years ago. Everywhere across Europe the age of retirement is going up, people have to work more, public spending is decreasing along with debt and deficits. France is the only one not to have implemented a similar programme, in spite of a forced response in support of a competitiveness pact for its businesses. It now has to go further otherwise it will become a problem for Europe. 

Indeed its partners can no longer accept that their own efforts be endangered - these were already extremely difficult to implement - and they are right to be concerned about losing the Franco-German engine of Europe. Balance in Europe relies in part on good Franco-German relations, which is only possible if the couple is in harmony - which is no longer the case. Against the 150 billion German trade surplus we might compare the French deficit of 70 billion. German debt is stabilising at around 80 per cent of the GDP whilst in France it is soaring towards 100 per cent. French growth is and will be less than half of Germany's, public spending higher by over 10 per cent (56 per cent against 46 per cent of the GDP), unemployment one and a half times more. Although Franco-German dialogue is working on the surface because it cannot do anything else unless we bring our fundamental interests into question, the estrangement is growing stronger either side of the Rhine. It is a question of the basis of economic policy and not, as some believe in France, of left-right political rifts. It is also due to different visions of Europe, which are mainly based on a lack of knowledge and pre-conceptions. 

The French presidential campaign also witnessed the resurgence of a certain anti-German feeling, to the great dishonour of its spokesmen. It masks the fear of difficult reform and a certain amount of distress in the face of solutions that have to be implemented. By reforming its labour market, many French leaders feel that they "would be giving in to Germany" whilst in fact they would be giving up the easy life! It is urgent, now more than ever before, for the two partners to get back on the path of true harmony; this also includes reviewing the content of their policies, which can be nothing but harmonious and joint. The future of every European depends on it, likewise the collective project for Europe's unity.

Original editorial

© JD Giuliani