French call for euro presidency to promote 'growth'

FRANCE: The French minister for the economy and finance, Mr Nicolas Sarkozy, has made sweeping proposals for an "economic government of Europe" which may displease London, Dublin and some new members of the European Union.

Speaking at a press conference with Mr Alain Juppé, the head of President Jacques Chirac's UMP party, Mr Sarkozy advocated electing a president of the 12-member euro zone group for a 2½ year term, to enable those countries who share the euro "to define an economic strategy".

The French minister suggested that Europe's finest economists be brought together to advise this "avant-garde". Mr Sarkozy wants the 12 to coordinate their budgetary calendars and reform the stability pact. The latter is "too severe in periods of recession and not rigourous enough in periods of growth," he explained.

The joint press conference by Mr Sarkozy and Mr Juppé was an event in French domestic politics. Mr Sarkozy would like to succeed Mr Juppé as head of the UMP when he steps down to appeal his conviction on corruption charges.

While Mr Juppé was explaining French dissatisfaction with European economic policy, Mr Sarkozy basked in the light of continuous camera flashes. The finance minister said he "totally agreed with Alain" that the European Central Bank's (ECB) policies are "too exclusively monetarist". Paris takes a close interest in European economics. The former governor of the Banque de France, Jean-Claude Trichet, is president of the ECB. And Paris is believed to be seeking the finance portfolio in the next EU Commission.

The ECB "plays its role of stabilising the currency perfectly", Mr Juppé said. But, he added, "Growth is also an objective. It is very important that there be a place of power where this objective of economic growth be considered on an equal basis with monetary stability."

That "place of power" would be the presidency of the euro group, as proposed by Mr Sarkozy. The euro zone group is an informal grouping, not an institution, the French minister noted.

"To endow it with a president elected for 2½ years would give a face to European economic policies. He would have time to master the issues and assume a role as initiator and coordinator of economic policies."

Finance ministers from the 12 euro zone countries have agreed to discuss the proposal at their July meeting.

Mr Juppé also found fault with the European Commission which, he said, "seeks to ensure pure and perfect competition ... the alpha and the omega of the commission's economic policy." Mr Juppé warned that competition must be organised, and that Europe was in danger of creating "a dogma that ends up dismantling certain European groups, and opposing the creation of European industrial champions."

Both Frenchmen called for the creation of "a truly European industrial policy which generates big projects." Mr Juppé noted that the European consortium, Airbus, is the world's largest aircraft manufacturer. He wants Europe to create comparable projects in information technology and communications, heavy infrastructure and research.

Mr Sarkozy mentioned the debate between Paris and London over admitting new members to the euro zone group. Britain, which is not in the group of 12, believes all 25 members of the European finance ministers group, ECOFIN, should have a say in who joins the euro zone. A related question is who should decide what measures are taken against European countries that run up high budget deficits.

"Personally," Mr Sarkozy said, "I think that from the moment you say there's an economic government, the decisions must be taken within that economic government."

At present, the French minister said, Germany votes its national budget in June, and France presents its budget in September and votes it in December.

"I propose that in May or June, the 12 tell each other their intentions for their national budgets, and that we decide together on projected growth and inflation, on the main elements of the macro-economic environment."

It was true, Mr Sarkozy admitted, that "with our English friends there are different points of view" on economic matters. He spent last Tuesday with the British Chancellor Mr Gordon Brown and Prime Minister Mr Tony Blair and found that "our disagreements are not as big as you think."