Hollande needs trust-building with Germany

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France's president-elect Francois Hollande, who plans to make Germany his first foreign trip, may not find himself a bon ami in Berlin unless he could manage to recouncil his pro-growth ideas with German Chancellor Angela Merkel's emphasis on fiscal discipline in tackling the ongoing European debt crisis.

Hollande, who beat incumbent President Nicolas Sarkozy on Sunday with some 52 percent of the vote, has vowed to renegotiate the newly-inked fiscal pact to make it more growth-friendly and introduce euro bonds, which are frowned upon by the German leadership.

Merkel managed to push through tighter budgetary discipline and her vision of eurozone austerity thanks to the support of outgoing Sarkozy.

The smooth running of Franco-German motor in the fight out of the eurozone debt crisis is now uncertain with Hollande's victory.

Pro-growth Vs Pro-austeriy

The austerity-focused fiscal treaty Hollande threatens to renegotiate with more pro-growth initiatives is cherished by Merkel as the cornerstone of her European policies to tackle the root of the debt crisis that sprang up in Greece in late 2009.

A total of 25 EU countries, except Britain and the Czech Republic, signed the intergovernmental treaty on fiscal stability in March. The compact is expected to enter into force on Jan. 1, 2013.

Hollande is also in favor of broader mandate for the European Central Bank, and the creation of European "project bonds" to finance investment and infrastructure.

Merkel has responded with more talk of growth, arguing that pro-growth measures is nothing new in her policies and the way out of this crisis has always rested on two pillars -- solid finances and measures for growth and employment.

"It is important that we break with the idea that growth always costs a lot of money and must be the result of expensive stimulus programs," she told the Hamburger Abendblatt.

Although she said she backs structural reforms to spur economic growth, Merkel made it clear that the pact won't be reopened.

German Finance Minister Wolfgang Schaeuble, for his part, said Friday that the fiscal pact has been signed and agreements must be kept.

"We will discuss this with Hollande in a very friendly way," Schaeuble said in a speech in Cologne. "But we won't change our principles."

The German side also harbors the hope that Hollande will come back to fiscal reality once the feisty campaign mood is over.

Merkel's Christian Democratic Union (CDU) is hoping Hollande will be forced to adjust to reality quickly, as he'll soon feel the pressure of the markets when he has to make decisions, German media reported.

"Hollande's program is probably enough for him to win the election, but it is not enough to overcome the economic downturn. The sooner he recognizes this, the more weight his voice will have in Europe," German business daily Handelsblatt noted.

Hollande, Merkel to build working relations

For all their policy differences, both Hollande and Merkel will step forward in a move to build a workable relationship in order to continue the Franco-German cooperation to fight the eurozone debt crisis during "Merkozy" days.

However, as the "Merkozy" chemistry took form years after Sarkozy took office, Hollande and Merkel do not have much time in the thick of the crisis.

It was made worse by Merkel's public snubbing of Hollande in refusing to grant a meeting during the election campaign as she openly supported the incumbent Sarkozy.

Merkel's support for Sarkozy has raised fears at home that it might damage bilateral ties once Hollande wins the election.

"I understand that Mrs Merkel supports Mr Sarkozy, given that they're in the same conservative family of parties," Hollande told German magazine Spiegel during the campaign.

"I'm also the candidate who knows that the German-French friendship is indispensable for Europe. And I will never let myself be carried away to making statements that would change it," he added.

In fact, both sides know that, as the economic motors of the eurozone, Germany and France have to join hands to tackle regional problems, while personal chemistry between leaders has to take a back seat.

"The crisis will force the chancellor to work closely with the French president, no matter who wins. But the more openly Merkel snubs Hollande in the campaign, the more time it will likely take (before they form a working relationship)," German daily Suddeutsche Zeitung commented.

With Hollande displaying every sign to win in the runoff, the German leadership had resigned itself to a France under Hollande's rule and begun to make tentative contacts with the Socialist camp.

The Socialists party had confirmed contacts with the German leadership, though only in the form of messages exchanged between advisers. A German government spokesman also said recently that contacts had been made with the Hollande camp.

Both sides have aired signals that they are willing to work with each other in good faith.

Pierre Moscovici, Hollande's campaign chief, told Frankfurter Allgemeine Zeitung newspaper on Saturday that the new French government would not create a "crisis" with the neighbor across the Rhine. While German Finance Minister Wolfgang Schaeuble indicated on Friday enough flexibility to allow Hollande to "save face."

But as Merkel's Christian Democrats and Hollande's Socialist party belong to two different political camps and represent different ideologies, a Socialist president in France may not make life easy for Merkel.

Political will for cooperation from both sides is needed, as the German-French relations with Hollande as president will chart the course of the eurozone's journey out of its paralyzing debt crisis and the eurozone's future.

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