FRANCE AND GERMANY SEEK DIFFICULT COMPROMISE ON EURO POLICY




Robert Harneis-TDO- (FRANCE) France and Germany aim to reach a compromise on euro reform by June, despite German reluctance on deeper monetary union.

The French and German leaders made the pledge during French president Emmanuel Macron's brief visit to Berlin on April 19.

Macron understands that the present incoherent state of the Euro with a fixed exchange rate but differing economic policies is not sustainable. During his election campaign to remedy the problem he proposed a joint Eurozone budget, Finance Minister and parliament. In the face of widespread opposition to the idea not just in Germany, he has watered down these proposals but they remain essentially the same. Germany has proved reluctant to use its money to underwrite these proposals.

Speaking in Berlin the French President said “No currency union can survive if there aren't instruments for convergence," He called for financial "solidarity" and adopting his usual high flown style on difficult subjects said "We live in a moment of the European adventure that is truly unique. Also within our states there are serious doubts about the European Union and strong nationalistic visions … this is a moment that is decisive for the future of Europe

He spoke of past French and German leaders - Konrad Adenauer and Charles de Gaulle, Francois Mitterrand and Helmut Kohl - as models for a new Franco-German EU partnership. He did not mention that Charles de Gaulle would never have contemplated any form of European currency.

"In the past we had predecessors who had the strength to resist mistaken trends and even counter them. This is something expected from us," Macron said.

Merkel was less fulsome despite her pledge to forge a joint position with France in time for a June summit of EU leaders in Brussels.

"There are always different starting points when it comes to the opinions of Germany and France. We need open debates and we need the ability to compromise," she said.

Germany wanted to move quickly on eurozone bank regulation, she added, and she agreed that the euro "isn't yet crisis resistant," but she said the joint deposit guarantee scheme would have to wait until "the more distant future". In other words Germany has no intention of guaranteeing the bank deposits of the entire Eurozone.

"We want to make sure that liability and risks go together. We agree that solidarity is needed but that competitiveness is also necessary," the chancellor said.

Markus Blume, the head of the CSU party in Merkel's centre-right CDU/CSU bloc, made clear that there were strict limits on how far the Chancellor could go. "A new beginning for Europe cannot just mean new money. Europe must become more efficient and better, not more expensive," he told press on the day of Macron's visit, adding "Macron speaks of more Europe but he also thinks of France first," Blume said.

The two leaders are due to go to Washington next week to try to persuade US president Donald Trump not to impose protectionist tariffs on EU exports. "We will argue for a return to the norm and argue for the justification of exemptions for the EU," Macron said on Thursday. "On trade issues, I think I can say that we both believe in respecting the multilateral framework that the trade organizations represent and that the European Commission represents," he added.

Merkel said she would "introduce the European perspective" to Trump. "Above all it will be about making clear that the transatlantic partnership is important to us, even when there are differences of opinion," she said. The EU-US partnership was a "great treasure, that I would like to nourish and cherish," she added, amid concerns that the US tariffs could ignite a trade war.

EU leaders are also concerned that the US may renege on the JCPOA Iranian nuclear deal and attempt to stop Europe trading with Iran.