Germany warns Francois Hollande eurozone austerity treaty not up for negotiation

“The presidential election just sent a new signal: if there is not a
restoration of confidence between peoples and Europe, we will see a rise of
populism that will eventually hinder the European project, and one day break
up the euro,” he said.

Mrs Merkel’s only concession to Mr Hollande has been to say that Germany will
discuss new policies to boost economic growth but only if he agrees to
ratify the fiscal pact which was signed by Mr Sarkozy.

“We are in the middle of a debate to which France, of course, under its
new president will bring its own emphasis. But we are talking about two
sides of the same coin – progress is only achievable via solid finances plus
growth,” she said.

During talks in Berlin late next week after Mr Hollande is sworn in as
president on May 15, Mrs Merkel will remind the French president that his
support for the austerity pact is the condition for European Central Bank
support for struggling financial institutions, including major French banks.

Mrs Merkel, who is riding high in the domestic polls as the “Iron
Chancellor” who has stamped Germany’s fiscal doctrines on profligate,
highly indebted euro members such as France, will not climb down for a
Socialist president who is an ally to the German Social Democrats ahead of a
key regional election in six days.

Mrs Merkel will warn, issuing Mr Hollande with a barely veiled threat, that if
he is seen to clash with her in order to weaken eurozone austerity pledges,
he would rattle markets and undermine investor confidence at a critical time
for the French economy.

Peter Altmaier, the chief whip of Mrs Merkel’s Christian Democrats, said that
Mr Hollande needed to learn that while his election was a major change in
France, his victory would not be allowed to change anything on the EU level.

“It is very important indeed to send a message to the markets that
nothing will fundamentally change,” he said.

“The fiscal compact was signed by 25 member states of the EU. And if each
and every national election would lead to a renegotiation of the compact,
then we would never ever achieve a result. So Mr Hollande is going to change
French domestic politics but as far as the European situation is concerned,
this fiscal compact was signed by the 25 member states.”

The European Commission added its voice to Germany’s to tell the new French
president that all previous agreements between France and EU were binding
despite the election, including the fiscal pact and austerity measures
agreed by Brussels with Mr Sarkozy.

“We expect agreements to be ratified. That is the very basis of the EU,”
said a Commission spokesman.

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