France calls for euro rebirth, transfer union
Emmanuel Macron, France's 37-year old reforming economy minister, has called for a Euro Area economic government that would include a transfer union. He also called for a powerful euro commissioner in Brussels.
Macron told a German newspaper that the euro crisis and the negotiations for a bailout package for Greece proved that the monetary union could not go on as before.
"The status quo leads to self-destruction," Macron warned. "The centrifugal forces are too great, both politically and economically."
The idea of a transfer union is strongly resisted by the German government and last Tuesday in Berlin, the minister had told German ambassadors (see pic above; the white-haired Frank-Walter Steinmeier, German foreign minister, was in the front row) that the debt crisis could be compared with a religious war with debt-scolding Calvinists battling over-indulgent Catholics.
“Some people, some member states, failed,” Macron said in English, according to Bloomberg News. “They didn’t respect their commitments. They have to pay it till the end of their life.”
On the opposite end are the Catholics, “definitely France is on this side,” with an arguably more sanguine perspective on profligacy, Macron said. “We failed, but we go to church, we explain the situation and we can start another week the day after,” he said.
“Probably, we have to find the balance between these two approaches,” Macron said in the speech, which also included calls for Franco-German unity, at times in German.
In his interview with the Sueddeutsche Zeitung newspaper published Monday, Macron said transfers were essential if the 19-member currency union is to survive.
"If the member states are not ready, as has been the case thus far, for any form of financial transfer in the currency union, we can forget the euro and the euro zone."
"A currency union without financial equalization - that's impossible! The strong must help," he said.
"The Euro-government would be led by a commissioner with broad powers," said Macron. The commissioner must also receive considerably more funding than is available from the EU budget: "The higher the budget, the more credible Europe would be." More money is needed to protect the member states against financial shocks and propagated to encourage investment southern euro area countries.
The former investment banker at Rothschild, who became a millionaire from the $11.9bn sale of Pfizer’s baby food business to Nestlé deal, according to the Financial Times, was appointed last September to the government by Manuel Valls, the Spanish-born prime minister.
In his interview with the Sueddeutsche Zeitung Macron said he was convinced the French would approve such euro reforms in a referendum and said radical steps should be taken by 2019 at the latest and become part of a revised EU Treaty. The minister added that he was aware of German politicians' reluctance to agree to such a scheme.
The Germans would unlikely have a change of mind short of evidence that the Valls/ Macron reform programme works.
On 5 Aug France's Constitutional Council — following a complaint by opposition parties — ruled that the provision for lower caps on compensation payments for workers in small companies was unconstitutional.
The Council rejected only 17 provisions among 308 articles of the so-called Macron Law, approving almost the entire reform package. The other elements will be tabled again, notably in the budget law at year-end.
Last March, with resistance from his own party, the prime minister got the president’s permission to use a controversial clause, last used nine years ago, in the French constitution that allows the government to override parliament and pass a bill without a vote. “I was angry,” Macron told the FT. “But it’s our duty to pass this law. The French wanted it, international investors were waiting for it, and so were our European partners who expect us to modernise our economy.” Six months into the job, the economy minister had seen France plunged into political turmoil because of a bill whose flagship measure gives mayors the power to let shops trade on 12 Sundays a year, rather than five, and which opens up parts of the French economy, such as intercity coach services and legal professions, to more competition.
At the annual conference of his Socialist party last weekend in the Atlantic port of La Rochelle, Manuel Valls described France’s existing work code as “so complex that it has become inefficient: curbed activity; wage earners who no longer know their rights”.
The prime minister said: “We have to give more latitude to employers, to wage earners and to their representatives so that they can decide for themselves.”
Among other things, he said the reforms would mean “more flexibility for companies”
In an op-ed this month, Anne-Sylvaine Chassany, Paris Bureau Chief of the Financial Times wrote:
"It was a predictable scenario. Farmers dumped manure in cities, burnt tyres and blocked the road to Mont-Saint-Michel in Normandy to protest against falling meat and dairy prices. Within days, President François Hollande had pledged more than €600m in aid. A few weeks earlier, taxi drivers had gone on a rampage, overturning cars in central Paris, causing chaos at the capital’s main airports — and frightening rock stars — to demonstrate their anger at the rise of Uber, the California-based car service. Four days later, police held two of the company’s European executives in custody for a whole night.
Can the government do much to prevent milk and pork prices from falling? Not really. Is it in the country’s best interests to shut down UberPop and protect a corporation known for its poor customer service? Probably not." More