Eurozone crisis: Angela Merkel forced to postpone ‘fiskalpakt’ ratification

The Social Democrats have stepped up opposition to the German leader’s
emphasis on “fiscal consolidation”, or austerity, after French and
Greek elections on Sunday.

Sigmar Gabriel, the chairman of the Social Democrats, blamed the rise of
far-Right and Left parties in Greece on her “unreflective diktat”
on austerity, to be enshrined in treaty law via the fiscal pact signed by 25
EU leaders last March.

“We’re seeing the results of this policy in Greece: the right-wing
radicals and the enemies of Europe have gained seats in parliament,” he
told Focus magazine.

In another serious setback for Ms Merkel, Mario Monti, the technocrat
appointed as Italian Prime Minister in November 2011, yesterday appeared to
switch his allegiance to the new French President with a call for a European “coalition
of the willing” on growth.

“The greater warmth, the greater insistence that Hollande puts on the
issue of growth are welcomed by Italy,” he said.

Italy’s reverse has sunk the Chancellor’s plan for a joint Italian-German
ratification “with Monti and Merkel gathered for the event, framed by a
solemn declaration on common European destiny,” according to document
leaked to La Repubblica.

The ratification delay for the fiscal pact – which has only been ratified in
Greece, Slovenia and Portugal so far – raises serious questions over its
future and has rallied anti-austerity campaigner for a No vote in an Irish
referendum on 31 May.

“It is clear that the austerity treaty is in real trouble,” said
Paul Murphy, an Irish Socialist Party MEP. “The Irish people should
take the opportunity to strike it another decisive blow.”

According to a senior source in the French treasury, Mr Hollande will keep up
his calls for the fiscal pact to be renegotiated until after he secures his
parliamentary elections on June 10 and 17. He will then do a deal with a
weakened Mrs Merkel.

“Hollande will likely bluster before the legislative elections,” the
official told Le Canard Enchainé weekly.

“Merkel, who is already weakened, cannot afford a clash with Hollande 18
months before German elections and Hollande cannot afford to re-ignite debt
war in Europe.”

Bosses working for state-owned companies in France will be banned from earning
more than 20 times their lowest-paid workers under one of the first laws to
be passed by the country’s new president-elect, François Hollande.

The law, due to be passed by decree this month, is among a raft of campaign
promises to “moralise” remuneration by France’s first Socialist
leader in almost two decades.

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