May 4, 2012 / 1:56 PM / 8 years ago

Hollande eyes quick consensus with Merkel on growth

PARIS (Reuters) - French Socialist Francois Hollande will seek to lay the foundations of a new Franco-German consensus on growth and ease fears of a breakdown in relations on his first trip to Berlin if elected president, a close adviser said on Friday.

Two days before the French vote to elect a new president, Hollande’s lead over conservative rival President Nicolas Sarkozy has narrowed in some opinion polls but he remains the clear favorite to take power in the final runoff.

Hollande has said that if elected he would make his first trip abroad to Berlin to meet Chancellor Angela Merkel and start developing personal ties, smoothing over ideological differences after she chose to back Sarkozy during the campaign.

Hollande has campaigned as a critic of austerity policies associated with Merkel and Sarkozy, which he says choke growth.

Pierre Moscovici, Hollande’s campaign manager, said while the trip would be mostly a symbolic exercise to show Franco-German relations were intact, it would also allow him quickly to impress his pro-growth ideas on his German counterpart.

A newly elected Hollande may be in a position of strength to start pulling the Franco-German position in his direction on the trip, likely to happen soon after a swearing in ceremony on May 15. Hollande plans to travel to the United States on May 17.

“I think there’s a possibility for a new European compromise, which will happen via a new Franco-German understanding,” he told the European American press club.

“This will be his chance to talk with her about his plans for Europe, his plans for growth, because it’s necessary to dive quickly into the heart of the matter - things will not wait.”

BACKBONE FOR GROWTH

Hollande called during his campaign for a renegotiation of a European budget discipline treaty. He has since sent reassuring signals to Merkel that he would not force a ground-up review but add to the treaty to put more emphasis on growth.

Moscovici said Hollande had no intention of provoking a new European crisis over the direction of economic policy.

A German source familiar with contacts between Berlin and Paris said Hollande’s staff had signaled he was willing to agree to the appointment of German Finance Minister Wolfgang Schaeuble as chairman of the Eurogroup of euro zone finance ministers if Merkel accepts his proposals for a growth pact.

In Brussels, a senior EU official said progress was being made behind the scenes towards an agreement on growth measures.

“It’s too late to amend the fiscal compact. Everyone, including Hollande, knows that. But there is momentum for a growth pact that would sit alongside it, it’s taking shape,” the official said.

Another senior Hollande aide who has been involved in discreet contacts with Germany, Jean-Marc Ayrault, when asked about a possible deal on Schaeuble as Eurogroup head, said there would be give and take with Berlin.

“Nothing is settled, it will be a negotiation. Each side will make a step towards the other with the requirement for a growth pact,” Ayrault told Reuters.

Hollande’s growth plan focuses on four elements: common EU “project bonds” to fund infrastructure, a more robust financing role for the European Investment Bank (EIB), a financial transactions tax and more efficient use of EU structural funds.

Merkel aides say she is not opposed in principle to any of Hollande’s ideas but is skeptical about the utility of project bonds. The conservative German leader has said she opposes stimulus measures that rely on more government money.

As more euro zone governments call for moving away from austerity-only policies, Hollande’s camp has taken comfort from European Central Bank governor Mario Draghi’s recent calls for a “growth pact” to supplement the euro zone’s fiscal pact.

The Socialist’s camp has prepared a memorandum expanding on his growth plan to be distributed to member states at a European Council summit on June 28 or 29. Moscovici said an informal meeting in Brussels could be held in late May or early June.

Hollande’s presidential program, which calls for creating tens of thousands of new jobs for teachers and policemen, as well as raising the minimum wage, does not include plans for reforming France’s rigid labor regulations.

However, Draghi has put the onus on governments to boost growth through structural reform - a call echoed by Merkel who has said labor markets should be opened up by reducing barriers to hiring young people and improving professional training.

Asked if Hollande would move closer to Draghi and Merkel’s position on structural reforms in exchange for concessions on growth in the EU treaty, Moscovici said: “It will indeed be a negotiation among the 27 (member states), with respect for the European institutions.

“But I do believe that it (Hollande’s plans) can constitute the backbone for a European growth strategy.”

Additional reporting by Emile Picy, Jean-Baptiste Vey and Catherine Bremer in Paris, Annika Breidthardt and Andreas Rinke in Berlin, Luke Baker in Brussels; Editing by Paul Taylor and Peter Graff

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