PARIS France will only sign up to a process of deeper economic integration in Europe if urgent measures to pull the euro zone out of crisis are agreed upon at the same time, European Affairs Minister Bernard Cazeneuve said on Tuesday.
Paris and Berlin are both determined to reach an accord at an end-June European Union summit to calm the raging euro zone crisis but they disagree on the process required to get there, Cazeneuve told Reuters.
France wants a growth package worth 120 billion euros ($152.12 billion) in investment to be put into action as well as moves towards an integrated banking framework to protect savers and governments from any fallout from ailing banks.
President Francois Hollande is also pushing for the euro bloc to consider a system of mutualised bonds in the long term, or a redemption fund that would lump together public debt above 60 percent of GDP and pay it down over some 25 years.
"We believe that any process of further political integration, which we are open to, must follow the creation of instruments to end the crisis. We cannot make one a condition of the other, the two must go together," Cazeneuve told Reuters in an interview.
Berlin wants an agreement on an eventual fiscal union as a condition for agreeing to some of the proposals Hollande has laid out in a document spanning a growth package, fiscal stability measures and a road map to fiscal integration and mutualised debt.
Cazeneuve said France believed it would be much easier for governments to explain to their electorates the need for closer political and fiscal integration if the EU is seen to be taking concrete steps in parallel to end the bloc's debt crisis.
He would not say which elements of France's proposals would be considered sufficient for Paris to sign up to deeper fiscal integration, something which would mean giving EU institutions more control over national budgets and would be read by many voters as a loss of sovereignty.
The rift between Paris and Berlin is turning into a test of Hollande's resolve five weeks after he took power and launched a challenge to Chancellor Angela Merkel's insistence on pure austerity policies.
"Any elaboration of new instruments that enable the crisis to be overcome can justify a process of deeper integration, and any process of deeper integration can be given more democratic legitimacy when supported by crisis resolution instruments that are efficient and immediately operational," Cazeneuve said.
(Editing by Daniel Flynn)