Similarities may push Merkel, Hollande together
BERLIN/PARIS (Reuters) - Five years ago, Nicolas Sarkozy flew straight to Berlin after his inauguration and shocked his hosts with some blunt talk on planemaker Airbus, one of the most sensitive of Franco-German issues.
That first visit set the tone for the months that followed. German officials looked on in horror as the new French president reneged on budget pledges, announced plans for nuclear cooperation with Libya and claimed credit for influencing decisions by the European Central Bank.
On Tuesday, Francois Hollande will be sworn in as president after beating Sarkozy and make the same journey to Berlin. This time, German officials are confident of a calmer start to Europe's most important working relationship.
The impulsive Sarkozy and the reserved Merkel eventually overcame their rough beginning, earning the moniker "Merkozy" for cooperating to combat first the global financial crisis, and then the euro zone debt disaster.
But they were always too different to be close. That is why Merkel and her conservative entourage, despite openly supporting Sarkozy's re-election campaign, are looking forward to working with his Socialist successor.
"People forget that there was a lot that divided Merkel and Sarkozy," a German official close to the chancellor said, requesting anonymity. "We expect there to be more common ground than differences with Hollande."
An EU ambassador in Brussels put it more bluntly: "I don't think it's a secret that some leaders are not sorry to see Sarkozy go."
Hollande will get a grand welcome in Berlin with military honors and dinner on the eighth floor of the Chancellery, which offers scenic views over the Tiergarten park and Reichstag.
However, allies of both leaders have warned of a rock-hard line in talks that will focus on Hollande's demand for new growth-boosting measures in Europe.
The spokesman for Hollande's Socialists Benoit Hamon told French television on Sunday that Merkel could not be the "sole decider of Europe's fate based on German interests".
Volker Kauder, the leader of Merkel's Christian Democrats (CDU) in parliament, has warned Paris that German taxpayers will not pay for the generous promises that Hollande made on the way to his election victory just over a week ago.
But beneath the confrontational rhetoric, aides on both sides have been highlighting the similarities between Merkel and the new French leader, whose relationship could well prove decisive for the euro zone's future.
On Tuesday evening, the two leaders are expected to discuss the broad outlines of a new "growth pact" to complement Merkel's "fiscal compact" on budget discipline.
If such a pact comes together, Hollande will be able to hold this up as a triumph before of French parliamentary elections in June. But it may prove a hollow one, as Merkel looks unlikely to give much ground on the substance of new growth measures.
"He can easily pick these low hanging fruit and return to Paris to declare victory, but this will not deliver growth," said Jean-Pisani Ferry, who runs the Brussels-based Bruegel think tank.
The Germans have already signaled they are open to more flexible use of EU structural funds, a bigger role for the European Investment Bank and use of "project bonds" to boost infrastructure investment in struggling euro members such as Spain - as long as this doesn't mean building a third highway between Valencia and Zaragoza, as one Berlin official put it.
But they have made clear in public and private that any new debt-financed stimulus in Europe is off the table.
People close to Merkel also rule out any easing of budget deficit targets for struggling countries such as Greece and Spain, though some believe she will ultimately have to budge on this as both the European Commission and International Monetary Fund see the goals as unrealistic.
In Berlin, the view is that the government has already taken a huge step for Europe by signaling a tolerance of higher inflation.
Merkel is likely to press Hollande and his advisers for reassurances that France will introduce a "super law" binding his government to strict deficit-cutting targets. Berlin also wants to finalize French backing for the appointment of German Wolfgang Schaeuble as head of the Eurogroup forum of euro zone finance ministers.
"Hollande won't want to block things," said Christian Paul, a French Socialist lawmaker.
A deal seems possible, but calling it a "grand bargain" may be giving too much credit.
When Sarkozy took power nearly two years into Merkel's first term, they seemed a perfect match. Both were conservatives who favored closer ties with Washington, opposed Turkey's bid to join the EU and wanted reforms of the welfare state.
But the German leader may have more in common with Hollande in the areas that really count.
The two were born less than a month apart in the summer of 1954 and grew up in religious households with distant fathers and mothers they were close to.
Both have simple tastes. When she became chancellor in 2005, Merkel insisted on staying in the modest apartment opposite Berlin's Pergamon Museum where she still lives with her husband.
Hollande has complained about having to move into the Elysee Palace from his flat in Paris's 15th arrondissement, and said he wants to continue to take the train and do the family shopping as head of state.
Merkel's Social Democrat predecessor Gerhard Schroeder was known for his expensive Italian suits, and Sarkozy as "President bling bling" for his flashy lifestyle, but neither Hollande nor the German leader are fussed about fashion.
Both required a thorough makeover when they ran for office - Hollande going on a diet and trading in his round spectacles for designer frames, and Merkel getting a brand-new hair-do and wardrobe. Their down-to-earth simplicity is one reason voters backed them over more charismatic incumbents.
"The two of them have a lot in common," said an external adviser to Hollande, who requested anonymity. "They are both very human people: uncomplicated, easy going and unpretentious. They both have a keen sense of humor. People who know them feel they will gel better than Merkel did with Sarkozy."
It took scandals within both of their parties to turn Merkel and Hollande into viable candidates in the first place.
Were it not for the sex scandal that ended Socialist Dominique Strauss-Kahn's political career, Hollande would surely not have run against Sarkozy.
Had former Chancellor Helmut Kohl not dragged down his anointed successor Schaeuble in a party financing scandal, he and not Merkel might have become chancellor.
On the policy front, Merkel ran in 2005 as a hard-charging economic reformer in the image of British "Iron Lady" Margaret Thatcher, only to push her party to the left once in office.
The expectation in Berlin is that the same - in reverse - will be true for Hollande.
After running as a big-spending Socialist, German officials believe the new president will be forced to become a reformer himself in the image of Germany's Schroeder, whose overhaul of labor market rules is credited with making the German economy competitive - and Merkel's life as chancellor far easier.
Sarkozy did not do the same favor for Hollande, waiting until the final years of his term to get serious about reforms.
The Socialist takes over at a time when French debt has swelled to 90 percent of GDP, the trade deficit is at a record 70 billion euros and nearly one in four young French workers is unemployed. The public sector accounts for 56 percent of annual output, higher than in any other European country.
That leaves Hollande with very little wiggle room and no real alternative but to warm up to Merkel - as Sarkozy eventually did - no matter how isolated she has come to look in Europe over the past weeks as resistance to Germany's bitter fiscal medicine builds up.
Unlike Sarkozy, many see Hollande as committed to European integration. In 2005, months before Merkel became chancellor, he was pelted with eggs after campaigning hard, but to no avail, for a "yes" vote in a French referendum on Europe's constitution.
This is where the new French president and Merkel, who herself talks openly about "political union" in Europe, may end up finding common ground - and overcoming the growth-versus-austerity spat that has dominated the run-up to their first encounter.
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