French President Nicolas Sarkozy came under fire from opposition leaders for seeking China’s help to resolve the euro area’s debt crisis.
“It’s shocking,” Martine Aubry, the general secretary of the Socialist Party, said in the Sunday newspaper, Journal du Dimanche. “The Europeans, by turning to the Chinese, are showing their weakness. How will Europe be able to ask China to stop undervaluing its currency or to accept reciprocal commercial accords?”
Sarkozy reached out last week to his Chinese counterpart Hu Jintao to build support for an enlarged rescue fund designed to solve the region’s sovereign-debt crisis. The leaders talked just hours after a euro-region summit on Oct. 27 ended with an agreement to boost the European Financial Stability Facility to about 1 trillion euros ($1.4 trillion), leveraging existing guarantees by as much as five times.
French opposition party objections to a Chinese role come six months before the country’s presidential election, and amid growing concern about public debt in France and in Europe. France’s public debt, which is more than 80 percent of gross domestic product, and its budget deficit are considered by a third of the French as the most important issues confronting the economy, above purchasing power and unemployment, according to an Ifop poll published yesterday in Ouest-France newspaper.
Sarkozy went on national television on Oct. 27 to explain the plan hatched in Brussels to end the two-year long sovereign debt crisis. He said China has “a major role to play,” pointing out that global growth and stability is in the Asian economic giant’s interest. China has the world’s largest foreign-exchange reserves at more than $3.2 trillion.
Sarkozy’s China outreach preceded a Group of 20 summit he will host on Nov. 3 and 4 with Europeans, seeking to bolster the role of the International Monetary Fund in overcoming the euro-region’s woes.
The response to the problems in Europe “should have been European,” Aubry said in Journal du Dimanche, concurring with Francois Hollande, the Socialist Party candidate in the April-May 2012 elections, who called reaching out to China “an admission of weakness.”
“The financial stability fund should have been strengthened by transforming it into a bank or by giving it the possibility of issuing euro bonds or through the European Central Bank,” Aubry said. “Incapable of doing that, they turned to China.”
Nicolas Dupont-Aignan, a presidential candidate from the “Debout la Republique” Party, went further, calling it “dirty money.”
On France 3 television, he said China “has cheated on all the rules of the game: social slavery, pollution, environment, copying… It is now, after having cheated, telling us ‘we are going to buy you.’”
Chinese Premier Wen Jiabao has signaled willingness to aid the European Union as financial turmoil within the region threatens to crush export demand in China’s biggest market.
“The Europeans have their back against the wall and China is the lender of last resort,” Patrick Bennett, a strategist at Canadian Imperial Bank of Commerce in Hong Kong, said in a Bloomberg Television interview before Sarkozy’s call on Oct. 27.
The EFSF, established last year to sell bonds to finance loans for distressed euro nations, has also gained the authority to buy sovereign bonds on the secondary and primary markets, offer credit lines to governments and recapitalize banks as the Greece-triggered debt troubles have spread.
“It is a normal round of discussion with important buyers of EFSF bonds,” Christof Roche, spokesman for the Luxembourg-based facility, said on Oct. 26.
Premier Wen said last month that while China was willing to help, developed nations also needed to put “their own houses in order.”