Thursday, October 23, 2014

Germany Warns France

"Germany’s chancellor, Angela Merkel, said Thursday that there can be no exceptions to European Union rules on national deficit targets, a clear message to France after it backed off promises to bring down its over-budget spending."

And I thought they were becoming friends:

"French foreign minister, in a first, attends German Cabinet meeting" by Alison Smale | New York Times   October 16, 2014

BERLIN — Germany and France are making a concerted effort to improve relations between the Continent’s most important pair of countries.

On Wednesday, Laurent Fabius, the foreign minister of France, became the first in that post to attend a German Cabinet meeting.

The visit, which the French Foreign Ministry said “reflects the dynamism of French-German relations,” followed a similar Cabinet session in Paris in May attended by Germany’s foreign minister, Frank-Walter Steinmeier.

Since they signed the landmark Élysée Treaty in 1963, the Continent’s two biggest powers have developed a closeness unseen between any other two European nations, particularly countries that battled each other for centuries.

But gaping differences in economic status and philosophy have darkened the mood in recent months. The German economy is still growing, and unemployment here was 4.9 percent in September, according to the European Union’s statistics office. By contrast, the jobless rate in France is stubbornly stuck at 10.5 percent.

Speaking privately, German officials have expressed alarm at the unpopularity of President François Hollande, whose Socialist party garnered barely 14 percent of votes in European parliamentary elections in May. The rise of Marine Le Pen and her populist National Front, which won 25 percent of the European vote in May, worries Berlin, where Chancellor Angela Merkel remains popular after nine years in power.

Merkel’s finance minister, Wolfgang Schäuble, came under fire at meetings of the International Monetary Fund and the World Bank in Washington last weekend for sticking to his declared goal of balancing the federal budget here.

Many outside experts and even influential German economists have urged the government in Berlin to loosen the public purse strings to stimulate German and European growth.

So far, Schäuble has declined to do so, and he won vocal backing from the Social Democrats with whom Merkel’s center-right party governs in a coalition. Economics Minister Sigmar Gabriel, the Social Democrats’ leader, insisted Tuesday that there was no need to change course even as he announced that the government was now projecting just 1.2 percent growth in Germany this year, down from 1.8 percent predicted earlier.

However, both Schäuble — perhaps the most vocal advocate of European integration in the government — and Gabriel seem eager to engage the French in new common projects to overcome the perceived rift between Europe’s indispensable couple.

The Finance Ministry revealed Wednesday that the two German ministers would host their French counterparts, Michel Sapin and Emmanuel Macron, on Monday in Berlin.

Hours later, Macron unveiled a blueprint for proposed legislation intended to help lift competitiveness in France’s flagging economy, a move that appeared to nod at German demands that France push structural overhauls faster than the government has been doing.

The measures include plans to allow shops to open Sundays and late into the evening and to open the market for notaries and aspects of the legal profession to new competition.

“We need to remove all obstacles that impede growth,” he said at a news briefing.

In addition, according to a document seen by Reuters recently, Gabriel and Macron have assigned two influential academics, one in Paris and the other in Berlin, to come up with ways to expand cooperation. 

We got the message.

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"EU urges members to submit draft budgets" by James Kanter | New York Times   October 16, 2014

LUXEMBOURG — EU authorities Wednesday warned eurozone countries, including France and Italy, to hand in their draft budgets by the end of the day under rules aimed at staving off future financial crises.

Since the revelation of a huge hole in Greek finances five years ago set off a devastating debt crisis, member states of the currency bloc must submit draft budgets to the European Commission, the European Union’s executive arm, by mid-October.

By Wednesday evening, Austria, Finland, Germany, Latvia, the Netherlands, Slovakia, Slovenia and Spain had handed in budgets. But several countries where concerns about the economy are greatest still had not.

“Those documents need to be sent to us by today,” Simon O’Connor, a spokesman for the European Commission, said at a news conference.

“There are no sanctions” for missing the deadline, but “we don’t expect countries not to comply with this requirement,” he said.

He emphasized that the tougher rules for reviewing budgets had been approved by the member states themselves.

This year, the requirement to submit a draft budget applies to 16 of the 18 countries using the single currency. Greece and Cyprus are exempt because they are already under close scrutiny as part of their international bailout programs.

If the commission decides that France or Italy should make changes to bring their deficits or debt in line with EU rules, then it must make that request within two weeks of receiving the documents, or by the end of October, assuming that France and Italy make the Wednesday deadline.

The eurozone economy is again a source of global concern since France, the union’s second-largest economy after Germany, has failed to grow as hoped; Italy is still trying to reduce its enormous debt; and Germany, the bloc’s economic engine, is at risk of stalling.

Much attention is on France, where the government announced a “no austerity” budget for 2015, saying it would miss its EU-mandated deficit target for the second time since 2012 by a wide margin.

“The government is reneging on its past commitments with a bewildering lack of compunction,” Bruno Cavalier, the chief economist for Oddo Securities, wrote in a client note. Cavalier branded the country “a serial fiscal delinquent.”

Ask any voter, that is what they do.

The French stance has rattled EU officials intent on ensuring that the fiscal rule book calling for budget deficits of no more than 3 percent of gross domestic product is respected. The 2015 budget, as announced by the French government, would have a deficit of more than 4 percent next year, and France would not meet the 3 percent target before 2017.

EU officials fear a repeat of what happened in the middle of the past decade when large countries such as Germany flouted rules meant to ensure that disparate economies can operate on a single currency by having all governments adhere to basic debt guidelines.

The declarations by the French government were cause for “some worry,” Jeroen Dijsselbloem, the president of the group of eurozone finance ministers, told reporters this week at a meeting in Luxembourg.

Yet there is little appetite for a prolonged showdown with France that would force it to swallow more austerity and that could make the already unpopular government of President François Hollande even weaker while strengthening the appeal of the far-right National Front, led by Marine Le Pen.

Now you know why one is becoming more unpopular while the other is aging yet disparaged. Nobody likes a $ociali$t.

Obliging France to make further cuts also could hurt the economies of its big trading partners, including Germany.

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RelatedEuropean Central Bank starts stimulus purchases

That didn't work here.

Pilots at Lufthansa to start 35-hour strike Monday

Really a wrong time to strike, isn't it?

Twitter to be used for payments in France

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"France seeks to end binge drinking" by Rick Noack | Washington Post   October 17, 2014

WASHINGTON — When the French school semester started in September, most college students had no lack of drinking opportunities. As is common in other countries, French freshmen are usually encouraged to drink heavily in initiation ceremonies. But soon the excessive drinking could face a sudden end.

Rites of passage.

According to a French bill, inciting binge drinking could be punishable with up to a year in jail or a hefty fine. ‘‘It will be made illegal to sell products that make alcohol appear pleasant,’’ French health minister Marisol Touraine reportedly told RTL radio. Targeted products could be ‘‘telephone cases or T-shirts that show amusing scenes based on drunkenness.’’

Organizers of student parties would also be targeted, according to the minister. The proposed law, which also tackles mass-produced food, will need to pass France’s General Assembly early next year before going into effect.

The proposed law is remarkable because France is among the world’s most liberal countries in terms of alcohol consumption. The legal minimum age for consuming alcohol in public is 18 for spirits and 16 for beer and wine.

While regular alcohol consumption among the young has been low despite these lax regulations, binge drinking poses a new and previously little-known problem. The country’s General Commission of Terminology only recently defined binge drinking as the ‘‘massive consumption of alcohol, usually as part of a group, designed to cause intoxication in a minimum amount of time.’’ Defining the phenomenon had become necessary in 2013 after a 30 percent rise in hospital admissions had been reported within only three years.

‘‘We see more and more seriously drunk young people in the emergency room, who will stay for 24 hours, sometimes two days, to sober up,’’ a French doctor told TV channel France24 last year. A 2013 study by the National Institute for Prevention and Health Education confirmed the fears of many parents and doctors that cases of binge drinking were rising rapidly.

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