* French PM says Franco-German couple at heart of Europe
* Comes after France sided with Spain, Italy on austerity
* Pledges France to budget commitments, boost
competitiveness
By Daniel Flynn
JOUY-EN-JOSAS, France, Aug 29 (Reuters) – The French
government sent a firm message of reassurance to Germany on
Wednesday with a pledge to cooperate closely on European
integration, seeking to dampen talk that Paris is siding with
southern European nations against austerity.
Prime Minister Jean-Marc Ayrault said Paris was determined
to press ahead with closer European integration to resolve the
euro crisis — a persistent German demand but a divisive issue
for France’s ruling Socialist Party, where many are reluctant to
cede more authority to Brussels.
Ayrault also told a conference of business leaders that,
with the euro zone’s debt crisis weighing heavily on France’s
economy, his government’s top priority was to restore stability
to Europe and this meant France must stick scrupulously to its
own EU deficit-cutting commitments.
President Francois Hollande’s policy of showing sympathy to
debt-laden nations like Italy and Spain as they face more
austerity demands has stirred concern in some quarters that he
is not closely aligned enough with Germany’s Angela Merkel.
Yet Ayrault, a German speaker who has input on bilateral
issues, said Paris was keenly focused on relations with Berlin,
the euro zone’s top economy and effective paymaster.
“The new phase of European construction will only be
possible on the basis of a Franco-German agreement,” Ayrault
told an annual conference of France’s Medef business chamber.
“Franco-German friendship is the heart of the European project.”
“The Franco-German couple is more necessary than ever,” he
said, adding however that this could not be an exclusive pact,
and that Italy in particular should also play a “driving role”.
His comments, which seemed aimed at silencing any concerns
about the Franco-German relationship, were echoed by Foreign
Minister Laurent Fabius, who told a meeting of French
ambassadors that the Paris-Berlin axis was “crucial” to Europe.
Officials in Berlin have also suggested that Hollande, who
won power in May with a campaign against German-led austerity,
has recognised that he needs to work closely with Berlin to
resolve the four-year-old euro zone crisis.
“The French have finally realised that they need us to get
things done in Europe,” one senior German official said this
week, after a meeting between French Finance Minister Pierre
Moscovici and his German counterpart Wolfgang Schaeuble in
Berlin on Monday.
People close to Hollande say he is working on keeping his
communication with Merkel clear and seeking a common approach on
key issues like the euro, despite their differing sensibilities.
“They are frank with each other,” said one source.
DETERMINED TO KEEP GREECE IN EURO
Last weekend, Hollande followed Merkel’s firm line after
meeting with Greek Prime Minister Antonis Samaras in Paris,
saying Greece must show its commitment to reform before
receiving further aid from Europe.
Ayrault, however, made it plain that France continues to
favour further support for southern Europe.
“Integration with solidarity that means, in the short term,
that we are determined to do everything to keep Greece in the
euro zone,” he told the conference.
“It also means strengthened stabilisation mechanisms for our
partners in southern Europe. In this context we must push ahead
quickly with a banking union,” he said, referring to plans for
joint European bank supervision.
He reiterated that France was determined to retain its
financial credibility by hitting its 3 percent deficit target
next year, though he recognised that this would require paring
back spending next year.
The government needs to find some 30 billion euros ($38
billion) i n deficit cuts next year, half of which it has said
will come from spending.
“But budget restraint alone is not enough, we see that today
in the countries of southern Europe: without growth, nothing is
possible,” he said.
Further economic integration in Europe could not take place
without reforms to deepen the democratic responsibility of
European decision-making, Ayrault said, adding that Paris would
make proposals on the issue soon.
Ayrault also sought to comfort corporations alarmed by
billions of euros in tax rises in this year’s budget, telling
the Medef conference that an upcoming tax reform would help to
improve France’s flagging competitiveness — an apparent
reference to plans to reduce social charges on labour.
“We welcome the prime minister’s speech…but speeches are
not enough: we imperatively need in the coming weeks a
pro-business budget for France,” Medef chief Marisol Parisot
told a news conference.
R Soft Web Hosting
