France/Germany/Euro Area

Statements by Nicolas Sarkozy, President of the Republic, at his joint press conference with Angela Merkel, Chancellor of Germany (excerpts).

Paris, December 5, 2011


THE PRESIDENT – Ladies and gentlemen, thank you for being here. I’d like to tell Chancellor Angela Merkel how happy we are to welcome her once again.

We’ve been working together practically every day: we’ve talked on the telephone, our colleagues are working to constant deadlines. And I think I can say the Franco-German agreement is the most comprehensive one. It will be the subject of a letter Mrs Merkel and I will be addressing to President Van Rompuy on Wednesday, which will detail all the measures we want to see adopted by the Euro Area.

What do we want? Basically, we want to ensure that the deregulation which led to the Euro Area’s current situation can’t recur under any circumstances. That’s Germany and France’s wish. What happened must no longer be able to happen.

To that end, we want a new treaty – to make all the European peoples who belong to Europe and the Euro Area realize that things can no longer continue flourishing as they have until today.

Our preference is for a treaty among all the 27, so that no one feels excluded from the Franco-German move, but we’re entirely prepared for a treaty among 17, open to all those states that would like to join us. The treaty would include the following elements – I’ll make do with mentioning their main headings – and the letter we’ll send President Van Rompuy will contain more detail of it. After he’s received it, we’ll make it public: First of all, we want automatic sanctions in the event of non-compliance with the rule of a deficit lower than 3%. And we want only a qualified majority to be able to oppose it – that is, the opposite of the situation today; what’s called a reverse majority.

The second thing – which we proposed on 21 July – is that we want a golden rule, strengthened and harmonized at European level, so that all the budgets of the 17 include a constitutional measure enabling national constitutional courts to verify that the national budget is geared to a return to equilibrium.

Thirdly, we agreed on the issue of the involvement of the private sector, and said that what happened in Greece won’t happen again; from now on we’ll get in line with the jurisprudence on the subject, which is that of the IMF.

Fourthly, we want [the creation of] the European Stability Mechanism to be brought forward from 2013 to 2012, and internally we want decisions to be able to be taken not unanimously but by a qualified majority, which we estimate at being around 85%.

Fifthly, we want the heads of state and government who comprise the Euro Area’s economic government to meet every month for as long as the crisis lasts, and each of these meetings will have to have a clear agenda focusing on the need to stimulate growth in the Euro Area.

Finally, regarding the ECB – and this shows the depth of our discussion – we agreed to confirm what we declared with Mario Monti at the Strasbourg summit: confidence in the ECB, the independence of the ECB, and refraining from any positive or negative comments on its action.

There you are. I’ll finish by saying that, in this extremely troubled period, in the face of this extaordinarily grave crisis, France thinks more than ever that her alliance and understanding with Germany and the Chancellor are absolutely essential strategic points.

Germany and France are two big economies of Europe. Taking the risk of us diverging means taking the risk of Europe and the euro exploding. The crisis gives us an extra duty of unity. We’re moving together towards the same Europe, a Europe of governments and a Europe that won’t begin the mistakes of the past again, where there has been too much irresponsibility, where too many decisions have been taken without all the lessons being learned. Today, at the height of the crisis, we must make up for all those delays that have accumulated.

Finally, I want to make one last point: we, Germany and France, entirely agree that eurobonds are in no way a solution to the crisis. In no way! Moreover, I want to say to French people: what an odd idea it would be to pool the debt, because Germany and France would pay for the others’ debt without being able to control the issuing of the others’ debt! And how do you persuade the others to make the efforts we ourselves are currently making if we pool the debts right now? All that makes barely any sense. (…)

Q. – Madam Chancellor, Mr President, you’ve travelled a long way since your walk on the beach in Deauville. Now you’re talking about automatic sanctions: couldn’t the European Court of Justice also take a decision on what’s wrong with regard to deficits, if need be? (…)

THE PRESIDENT – You know, when you choose – as the Chancellor and I have chosen – to move towards convergence and strengthening the unity between Germany and France, it’s a strategic choice, it’s an historic choice, because we both think that what’s most invaluable about what our predecessors left us is the friendship between France and Germany. There were 70 years of bloody confrontation between our countries, and for 70 years there has been peace. What do we want the future to be? We want that future to involve convergence and the maintenance of peace.

To that end, each must learn to understand the other, to accept the other’s differences and create the conditions for an agreement, with compromises that each gets something from. What’s our aim? Not for Germany to beat France or France to beat Germany. Our aim is for the euro and Europe to emerge stronger, for us to get back to growth, for there to be fewer unemployed people. And for that reason we’ve decided to travel a long way together, not just since Deauville.

Now, on the European Court of Justice things are quite clear. As the Chancellor very rightly said, the European Court of Justice won’t be able to cancel national budgets. That’s not possible. However, we hope each constitution in each of the 17 Euro Area countries will adopt a strict golden rule that is directed towards equilibrium. Besides, can you ask anything else of a budget than to move towards reducing deficits and debt?

And it’s the European Court of Justice which will be able, if need be, to check whether each country’s golden rule is in line with the treaty which will be signed by the 17. That’s the agreement we’ve come up with. It seems to me to be completely in line with the European institutions, respect for sovereignty, respect for parliaments’ prerogatives and effectiveness.

(…) The goal the Chancellor and I have is for the whole agreement to have been negotiated and concluded between the 17 Euro Area members in March, because we have to move quickly, and so the ratifications will take place after France’s two important political landmarks: the presidential and general elections. At that point we’ll see how to resolve the problems. (…)

Q. – As has just been pointed out, private-sector involvement in the ESM will no longer be called upon in the future, yet this had been perceived as fair in Germany, i.e. that the banks also take on a share of the risk. How are you now going to explain that this fairness will disappear in the future? (…)

THE PRESIDENT – The Chancellor and I always said that Greece was a special case. And I don’t mean to offend anyone by saying that you can’t compare a big economy such as the Italian or Spanish economy with what happened in Greece. And what the Chancellor and I want is to say to investors all over the world that in Europe the rule is that we repay our debts, we reduce our deficits, we regain the path of growth and we repay our debts. This is part and parcel of the renewed confidence Chancellor Merkel was calling for. (…)

Q. – A quick question to clarify the timetable. Are you hoping to get a sort of agreement in principle from your partners as early as the European Council at the end of the week? Moreover, you talked about there being a new treaty in March; how long are you giving yourself to decide, if necessary, that getting an agreement from the 27 isn’t possible and that you’ll therefore have to move on to negotiations between the 17?

THE PRESIDENT – As early as Thursday. The timetable, for us, is very simple: on Wednesday we’re writing to President Van Rompuy, on Thursday and Friday we intend to present all our proposals and we’ll then seek everyone’s views and see if there’s any reason to opt for a treaty decided by the 27 or a treaty decided by the 17. Our wish is to make swifter progress on restoring confidence in the euro and Euro Area. There you are, we don’t have time, we’re conscious of how serious the situation is and of the responsibilities we shoulder. So things are clear: [we must act] as soon as is possible on the basis of this agreement between Germany and France, which is open to others./.

Last modified on 07/12/2011

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