Raffarin hits out at 'brutal' German austerity policy (HOLD MEIN BIER, GOTTERDAMMERUNG)

The Times ^ | December 12, 2002 | Adam Sage

[MadIvan]

THE French Prime Minister, Jean-Pierre Raffarin, has cast a shadow over Franco-German relations on the eve of the European Union summit in Copenhagen by denouncing Germany’s economic policies.

In an outburst that appeared to undermine President Chirac’s attempt to restore the Franco-German alliance, M Raffarin described Gerhard Schröder’s approach to Germany’s economic problems as brutal and inefficient.

At a dinner in Paris on Tuesday, he said that the German Chancellor’s austerity programme was threatening growth throughout Europe. Dispensing with the diplomatic language that usually characterises EU relations, he said: “Germany is following a rather brutal policy which risks weakening the whole of European growth. Our German friends are cracking down just about everywhere. I’m not sure that this brutal method is necessarily efficient.”

M Raffarin’s attack drew a frosty response from the German Finance Ministry, which said that it had no intention of abandoning measures designed to bring the German budget deficit within the 3 per cent ceiling fixed by the European Union stability and growth pact.

M Raffarin was addressing a Paris business group known as “Croissance Plus” which means more growth. If the virulence of his comments was a surprise, so, too, was the timing, with Paris and Berlin trying to renew an axis that has been damaged by mutual distrust between M Chirac and Herr Schröder.

The two men had appeared to be on course for better relations, agreeing at the recent EU summit in Brussels, for instance, to cap expenditure on the Common Agricultural Policy until 2013.

That deal was followed by a series of moves to align Franco-German policies over Turkish membership of the EU as well as over institutional reform. This had sparked concern that other countries, including Britain, could be sidelined, as they were in the 1980s and early 1990s.

However, M Raffarin’s tirade illustrates a fundamental divergence between the two countries, which is likely to place the Franco-German alliance under continuing strain.

Both are struggling to meet the economic criteria set for European monetary union, with France coming near to the 3 per cent budget deficit ceiling, and Germany almost certain to break it. Their response has been a joint attempt to force through measures to loosen the criteria.

In the meantime, Herr Schröder has told his compatriots to tighten their belts, whilst M Chirac and M Raffarin have all but ignored warnings from Brussels to take similar steps.

France has cut income taxes by 5 per cent this year and made no more than a token attempt to rein in its public spending.

M Raffarin, who has also agreed a €310 million (£200 million) Christmas bonus for the unemployed, taking the overall budget deficit from €46.8 billion to more than €47 billion, says his aim is to boost economic growth. In contrast, Herr Schröder has said that he will raise taxes and social security charges, and reduce the welfare budget.He has been criticised for hiding the extent of Germany’s economic woes ahead of his recent general election victory.

For M Raffarin, Herr Schröder’s policies have two unpalatable consequences. Not only do they leave him looking like Europe’s black sheep, the only leader who is not even trying to meet the eurozone criteria, but they will inevitably have a knock-on effect on French growth.

Pascal Coret, a French economist with CDC Ixis, said Herr Schröder’s austerity programme was weighing on the German economy. “Given the importance of the German GDP in Europe . . . that might end up by weighing on its partners as well. The Prime Minister was trying to say that Germany should not drag other countries down with it.” The centre-right French Prime Minister, who has made few mistakes since coming to power in May, has put his reputation on the line by reprimanding Germany’s Social Democratic Chancellor. If the Franco-German relationship suffers lasting damage as a result, it may be seen as his first significant blunder.

[MadIvan]

You a German government is on the wrong track when even the French feel moved enough to criticise them.

Regards, Ivan

[MadIvan]

Bump!

[Imal]

You a German government is on the wrong track when even the French feel moved enough to criticise them.

I don't know about that. The French weren't very critical of the German government about 50 years ago, and they sure turned out to be on the wrong track then!

[thedugal]

Although you did forget the "know" as in "You know a German..." I still feel a bit embarrassed for old Imal. Must be one of those guys who sits around FR waiting for someone to say "French" so he can shout "cheese eating surrender monkey" first.

In any event, good post.