If you’re just maybe starting to pay attention to the French Presidential election — which could see Nicolas Sarkozy ousted from power — you could do a lot worse than to read this interview with the current frontrunner François Hollande in German newspaper Der Spiegel.Hollande is leading in the polls, but so far, German Chancellor Angela Merkel has refused to meet with him due to her backing of Sarkozy, with whom she has built a strong relationship during the crisis.
Controversially, Hollande favours renegotiating the austerity pact that was agreed to last year, and though this stance would seem to be turmoil-causing, it’s hard to argue with his argument and understanding of the economy.
Here are a few choice snippets from the piece:
SPIEGEL: You have antagonized the chancellor by demanding a renegotiation of the European Union fiscal pact, which obligated the member states to impose austerity measures. If you are elected, could your first meeting end up being a little embarrassing?
Hollande: It won’t be embarrassing for anyone. For me, it will be an opportunity to tell her exactly what I want: a reorientation of Europe in the direction of more growth. This is a necessity that the fiscal pact doesn’t take into account.
Hollande: I think that France has not made it clear enough recently to our German friends how important it is to introduce euro bonds as a tool against speculation. And how the necessary budget discipline needs to be accompanied by growth. And it is undoubtedly because my country is dealing with an alarmingly high deficit and a degradation of its rating by one agency, which wasn’t good for an even balance of power.
SPIEGEL: The chancellor believes that the fiscal pact is the only way Europe can reduce its debt and save the euro. What don’t you like about it?
Hollande: I want to renegotiate it. Not all of it — some things seem reasonable to me. I’ve already committed myself to a balanced budget and better economic governance. But what bothers me most is that there is nothing about growth in the fiscal pact. And then there is some uncertainty with regard to the automatic sanctions — that is, what is expected of countries to reduce their deficits.
SPIEGEL: If you feel that Germany is supposed to be the engine, then you’re asking too much of your partner.
Hollande: You’ve significantly reduced the deficit in Germany. And you still have growth reserves. The German trade unions are in the process of negotiating wage increases. Greater purchasing power would spur domestic demand in Germany, from which we can also benefit.
SPIEGEL: And where is the money with which you want to stimulate the economy supposed to come from?
Hollande: There are a few structural funds in the EU that still have unused money in them. We also have the European Investment Bank.
SPIEGEL: Whenever the EU pays, Germany always has to pay the most.
Hollande: That’s why we need European bonds. Then Europe as an institution could borrow money to initiate growth projects, with that money coming from the savings of its people.
SPIEGEL: Mrs. Merkel is opposed to euro bonds, partly because Germany would then have to pay higher interest on its debt.
Hollande: I don’t want euro bonds that serve to mutualize the entire debt of the countries in the euro zone. That can only work in the longer-term. I want euro bonds to be used to finance targeted investments in future-oriented growth projects. It isn’t the same thing. Let’s call them “project bonds” instead of euro bonds.