Thursday, April 26, 2012

Hollande Outlines His "Renegotiating" Position

In the first news conference of his campaign, Mr. Hollande said that he would propose four modifications to the European Union treaty, favored by Germany and approved in March but not yet ratified. Most significant, perhaps, he called for the creation of collective euro bonds, but to be used to finance industrial infrastructure projects, not to consolidate debt, which the Germans oppose.
He said he would also call for a financial transaction tax, as his rival, President Nicolas Sarkozy has done, and for loosening up regulations to allow unused European Union structural funds to be spent on growth. Finally, he urged the European Investment Bank to place a greater emphasis on job creation in its allocation of financing.
This is a very modest package, and I see no reason why the Germans shouldn't throw him this bone for the sake of comity. It won't, however, do a thing toward resolving the euro crisis. Let's be frank: it's a very, very modest effort to put the smallest of positive glosses on the bitter pill of austerity policy. Of course, some may see the issuance of collective euro bonds for a limited purpose as the thin end of the wedge, which, in the long run, will eventuate in a federal Europe with its own treasury and taxing authority. But that is one giant leap from what Hollande is proposing, which is a small step indeed.