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Analysis
Germany enters French election campaign

Germany enters French election campaign

Merkel’s go-for-Sarkozy gamble

by David Marsh

Mon 30 Jan 2012

On the eve of yet another European summit to shore up the single currency, Germany has dramatically entered the campaign for the French presidential elections this spring.

French president Nicolas Sarkozy, in a televised interview last night, referred constantly to German economic prowess as the benchmark for France’s own performance. Both he and (in a separate TV debate on Thursday) François Hollande, the Socialist candidate in the April/May presidential poll, lauded Gerhard Schröder, the former German chancellor, who inaugurated unpopular but effective economic reforms to improve German competitiveness.

Sarkozy, trailing in the opinion polls, used his TV appearance to announce an increase in value added tax to 21.2% to help fund a cut in payroll taxes, as well as measures to boost productivity and competitiveness for French business. He had some good news: last year’s budget deficit might have been as low as 5.3%, down from the previously-estimated 5.7%. Appearing at times more like a presidential contender than the man who has been in the top job for 4 ¾ years, Sarkozy admitted a range of French economic defects and the need to catch up with its eastern neighbour. ‘France has 100,000 exporting companies, Germany 400,000,’ he said.

In a highly unusual move, Angela Merkel, the German chancellor, who has gained popularity on both sides of the Rhine during the euro crisis, will join the campaign for Sarkozy in France in coming weeks. Announcing this in Paris at the weekend, Hermann Gröhe, general secretary of Merkel’s Christian Democrat party, fiercely attacked Hollande for proposing ‘outdated concepts and left-wing dreams from the rag-bag of politics’ in his 60-point programme unveiled on Thursday. Instead of Hollande, ‘we need a strong France with a strong president at the helm,’ Gröhe said.

Merkel’s campaign entry is a double-or-quits strategy. By signalling her support for Sarkozy, a day ahead of a Brussels summit that will outline the new fiscal treaty intended to bind Europe together, Merkel will boost the president’s fortunes well before he has formally declared his candidacy. Both she and Sarkozy are banking on Hollande’s strong start petering out, a scenario repeatedly played out in French election campaigns, where early favourites often fade as polling day approaches.

Hollande says he would ‘renegotiate’ European leaders’ accord for a new fiscal treaty to reemphasise growth in Europe. He wants the European Central Bank to act more aggressively to damp down bond market speculation and favours governments mutualising borrowing through Eurobonds – measures that Merkel hitherto has sturdily opposed.

Merkel may have calculated that, if Sarkozy wins, his evident debt to her will make France more compliant to German policy requests. However, if Hollande maintains his early lead and triumphs in May, Germany can expect no favours from France. Such political calculations – as well as straightforward differences in party political allegiances – have normally prevented French and German leaders from joining national campaign trails in each other’s political backyards. Merkel’s status gives her the leeway to take risks that others would shun.

Meanwhile, one clear-cut result of the Merkel-Sarkozy alliance will be to sideline still further David Cameron, the UK prime minister. Always somewhat precocious in appearance, Cameron has taken on the air of an insufferably British schoolboy, taunting the straight-laced but thin-skinned teacher of home economics, Frau Angela Merkel. At the Davos conference last week, Cameron poured scorn on flaws in the euro currency system. He claimed France and Germany needed to adopt British precepts by taking ‘bold and decisive’ steps to solve the debt crisis. Exactly where Cameron gets his jaunty self-confidence is not clear. According to latest IMF figures, Britain’s fiscal deficit last year was 8.6% of GDP, against 10.4% in the recession year of 2009, whereas the deficit across the euro area was a much healthier 4.3% against 6.5% in 2009.

If Merkel’s go-for-Sarkozy gamble pays off, she will achieve a multiple victory: keeping a grateful incumbent in the Elysée Palace, strengthening the forces holding the euro together, and scoring points against her own domestic Social Democratic opposition. An additional bonus would be to wrong-foot the British prime minister by showing she can carry out her own policies in her own time without heeding advice from abroad.

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