Merkel invites Hollande for early talks

PARIS Sun May 6, 2012 7:30pm EDT

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PARIS (Reuters) - German Chancellor Angela Merkel invited French President-elect Francois Hollande to visit Berlin as soon he can for a first meeting that will set the groundwork for a consensus on growth policies vital to the euro zone's future health.

The centre-right chancellor, who joined other European leaders in congratulating the Socialist Hollande for his election victory over conservative incumbent Nicolas Sarkozy, said she was sure the two would work closely together.

Foreign leaders in Berlin, London and Washington who had backed Sarkozy and declined requests to meet Hollande before the election lined up to welcome him to their club.

U.S. President Barack Obama was the first leader from outside Europe to call with congratulations. The White House said he looked forward to working with Hollande on "shared economic and security challenges".

Hollande has long said that his first foreign trip will be to Berlin where he plans to challenge a German-imposed focus on austerity policies by asking that pro-growth elements be tacked onto Europe's budget responsibility treaty.

He and Merkel are under pressure to smooth over ideological differences and start their relationship on a firm footing as worries resurface over the euro zone's debt crisis and the prospect the bloc could tip back into recession.

While the pair have similar personalities that could make for warm relations, they are from opposing political families and Merkel publicly backed Sarkozy's re-election campaign.

German Foreign Minister Guido Westerwelle, speaking at the French embassy, said: "We will now work together on a growth pact for Europe, that delivers more growth through more competitiveness."

Hollande - whose victory marks the end of the Franco-German power duo that earned the nickname "Merkozy" during the height of the euro zone crisis - will likely travel to Germany shortly after his swearing in on May 15.

He is due in Chicago by May 18 for a NATO meeting.

Italian Prime Minister Mario Monti also spoke to Hollande following the election result, as well as to other European leaders, and the pair agreed on the need for close collaboration at European Union level to promote growth.

Monti, who lent support to Hollande's ideas last month by calling for a "growth pact" in Europe, reiterated that budget responsibility was necessary but not sufficient to create growth and said it was vital to adopt concrete measures for growth.

While financial markets are also warming to Hollande's growth agenda, analysts say he will need to reassure investors quickly as fears resurface over the euro zone's debt woes.

NEW VISION

Conservative British Prime Minister David Cameron, who backed Sarkozy's re-election bid, also called Hollande to congratulate him. "They both look forward to working very closely together in the future and building on the very close relationship that already exists between the UK and France," a British spokeswoman said.

Hollande's win, making him only the second elected Socialist president after Francois Mitterrand, was cheered by left-wing parties elsewhere in Europe.

"This new leadership is sorely needed as Europe seeks to escape from austerity. And it matters to Britain," said Ed Miliband, leader of Britain's Labour Party, praising Hollande's plans for Europe.

"He has shown that the centre-left can offer hope and win elections with a vision of a better, more equal and just world," Miliband said.

In his victory speech, Hollande listed "reorienting Europe towards employment and growth" as among his top priorities.

He has made clear he will not to force a ground-up review of the EU's fiscal pact, driven by Merkel and Sarkozy earlier this year, and aides say there will be give and take with Berlin.

Merkel's camp says she is not opposed to his proposal to give the European Investment Bank a more active financing role and making better use of structural funds but she is skeptical on his idea of common EU project bonds to fund infrastructure.

Merkel herself spent an uncomfortable evening as her centre-right Christian Democrats looked likely to lose further local power after a state election in Schleswig-Holstein, continuing a pattern that may erode her chances of a third term next year.

(Reporting by Noah Barkin in Berlin, James Mackenzie in Rome and Stephan Mangan in London; Writing by Catherine Bremer; editing by Anna Willard)

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