Euro Zoned

Let Down by France, Merkel Praises Spain as Euro Model

Just two political pilgrims on the path of austerity. Source: DPA
Rajoy and Merkel: Just two political pilgrims on the path of austerity.
  • Why it matters

    Why it matters

    Germany is dependent on France, the euro zone’s second largest economy, to keep Europe on the path of reform and recovery.

  • Facts

    Facts

    • French President François Hollande has once again reshuffled his government amid economic and political paralysis.
    • After years of austerity, Spain’s economy appears to be improving.
    • Mrs. Merkel is backing Spain’s economy minister to head a group of euro zone finance ministers.
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News that French President François Hollande was once again reshuffling his troubled government took Angela Merkel by surprise while she was in Spain.

The news came as Germany’s chancellor was visiting Prime Minister Mariano Rajoy at his home in Galicia in northwest Spain.

Together, the leaders walked along the Way of St. James, an 800-kilometer (500-mile) footpath to the reported site of the remains of James, one of Jesus’ 12 apostles, in Santiago de Compostela. Strolling along the popular pilgrimage path was undoubtedly meant to symbolize the difficult path out of Europe’s economic crisis.

Spain is certainly making progress in this regard, which caused Mrs. Merkel to praise and acknowledge Mr. Rajoy’s efforts. When Mrs. Merkel was asked in Santiago de Compostela about the events in France, she had to muster all of her diplomatic dexterity. Mr. Hollande had started to take courageous steps, she said. “I wish the French president every success with his reform agenda,” she added.

The chancellor emphasized her expectations for the future and kept silent about her disappointment that France under Mr. Hollande has attracted more attention for its governmental chaos than for its desperately needed economic reforms.

Government sources in Berlin told Handelsblatt that the developments in France have caused “concern” in the German capital.

“France is our most important partner, but it is also our biggest problem child,” said Norbert Barthle, a budgetary spokesman for the parliamentary caucus of Mrs. Merkel’s conservative Christian Democrats (CDU). He said France must finally address its economic problems and these can only be solved from within.

Until now, Paris has seemed to look for solutions outside of its own borders. The country has repeatedly demanded more time to meet the E.U. deficit limits. Parts of the Socialist government have questioned the legitimacy of the budget constraints. And the call for a more active role for the European Central Bank (ECB), which would presumably more reflect French influence, has been repeated.

“The reforms and efforts were worth it. We know we must continue this reform agenda.”

Spain's Mariano Rajoy

Berlin is already sending words of warning to the new government. “We agreed with France and other European partners on an overall plan for the stabilization of the euro,” Ralph Brinkhaus, deputy head of Mrs. Merkel’s conservatives parliamentary group, told Handelsblatt. “I assume that France will live up to its promises, without ifs and buts, regardless of the French government’s composition.”

Mr. Rajoy’s words, by contrast, must have sounded sweet to the chancellor’s ears. Spain, like France, had long complained about the austerity measures favored by Mrs. Merkel. But now that the economy is growing again, one hears a different tune coming from Madrid.

“The reforms and efforts were worth it,”said Mr. Rajoy. “We know that we must continue with this reform agenda.”

Mrs. Merkel had a prize for her new model student. Germany is backing the Spanish government’s wish to have Spain’s Economy Minister Luis de Guindos head the group of euro zone finance ministers, Mrs. Merkel said.

“De Guindos was a good minister in difficult times,” Mrs. Merkel said.

There hasn’t been such German praise about a French minister for a very long time.

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