May 8 (Bloomberg) -- Germany is ready to talk with France about spurring economic growth in Europe so long as President-elect Francois Hollande holds to his commitments in the fiscal pact, the chief whip for Chancellor Angela Merkel’s party said.
Peter Altmaier, deputy Christian Democratic Union floor leader, rejected a campaign pledge by Hollande to reopen the budget treaty, saying the pact was signed by 25 of the European Union’s 27 leaders in March and cannot be renegotiated. He also rebutted Hollande’s call for joint debt issuance, saying “nobody in Europe is talking about euro bonds.”
“My message is: we can talk about many things that stimulate growth in the end, on condition that the basic decisions in the fiscal pact are honored and that the policies of budget consolidation remain unchanged,” said Altmaier told reporters in Berlin today.
Altmaier’s comments underscore the horse-trading under way between Europe’s two biggest economies as they try to re-establish a common front on fighting the debt crisis after Nicolas Sarkozy lost the May 6 election. Merkel, who publicly backed Sarkozy, is under pressure from Hollande and anti-bailout parties elected in Greece the same day to ease her insistence on austerity and focus on creating growth.
Merkel called Sarkozy yesterday evening to thank him for his “close and trustworthy” collaboration in combating the crisis, the German government said in an e-mail. She and Sarkozy are convinced “Germany and France will continue to bear the responsibility to promote a united Europe through working together.”
To encourage growth, “there is a whole range of things you can do, starting on the European level,” Altmaier said. He cited European Investment Bank project bonds and redirecting unused European structural-fund money. The idea of joint bonds for certain projects came from the European Commission and “we have to await the proposals,” he said.
“It’s mainly about mobilizing private capital for certain public projects, which is completely different from euro bonds,” Altmaier said. “We have no proposal that’s ready for signing, nor anything else.”
The French election result “is by no means without opportunities,” Altmaier said, citing “nuances” in Hollande’s campaign rhetoric that show “he doesn’t fundamentally question the fiscal pact.”
“I’m very optimistic that the fiscal pact will be ratified and can come into force,” Altmaier said. The pact was “decided against the background that the policies of fiscal spending and ever greater government deficits have defeated themselves.”
That message was reinforced by Finance Minister Wolfgang Schaeuble in an interview broadcast late yesterday on ARD television.
“The commitments on deficit reduction that every country in Europe has undertaken will be upheld also by France,” he said. “I have absolutely no doubt about that.”
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