There's something wrong with President Macron

Is Emmanuel Macron, possibly with Italy's Matteo Renzi, the future of Europe?Doesn't seem likely. The problems of Europe are too deeply set, and there's no real imagination to put things right

What's wrong with Macron?
Tim Hedges
On 15 May 2017 10:45

There’s something I don’t like about Emmanuel Macron. I should add that there was something I didn’t like about Hollande, Sarkozy, Chirac, Mitterand, Giscard and Pompidou (de Gaulle seemed an Act of God), but with Macron it’s hard to put one’s finger on it.

It’s not the youth, although I am not sure I would have made a good President at 39 and am not sure he will, nor is it the rather strange wife. It i’s that I find it difficult to place him, even from his own rhetoric.

Is he a maverick, having just started a political party, sorry ‘movement’, a year ago? Or is he an establishment figure, having been to the ENA, the Oxford PPE of France, with a spell in a bank and time as an unelected minister?

We know he is in favour of Europe (unlike an increasing number of his compatriots), and also in favour of changing Europe, although many who propose change never say in what way they would change things and how they would achieve such change.

Macron is young and reformist, and attracts talk in the press of a new dawn for his country. We in Italy have seen this with our own Matteo Renzi, of course, full of talk about reform, just 42 and also married to a schoolteacher (albeit one nearer his own age). It is said the pair had a spirited conversation on Macron’s election, a vibrant mutual love-fest.

Could these two be the future of Europe, a changing of the guard? How would this new Europe look?

Macron has said he would like a Eurozone parliament, thus presumably excluding Denmark, Sweden, Poland, the Czech Republic, Romania, Bulgaria, Hungary and Croatia. He would like a Euro Finance Minister (again not pleasing tothe eight non euro countries), and likes the idea of eurobonds.

The first two look as if they would require treaty change, which requires unanimity and in some countries a referendum. There will not be unanimity, and what with the fiasco of the constitution in 2005 and more recent events, Europe isn’t too keen about giving people the vote. They don’t want too much of this democracy stuff creeping into the body politic. Macron certainly wouldn’t risk it. Non-starters, then, both.

This last one, eurobonds, is a traditionally popular staple among the lunching classes. The word eurobond used to mean borrowings which hoovered up the dollars left in Europe after the Marshall Plan. But now it means borrowing by the European Union, which would pass the money on to where it was needed.

The idea is that new borrowings, say for infrastructure, um….collecting Lisbon’s rubbish, no, um....bailing out Alitalia, no, sorry, sorry, that borrowings for sensible, Europe-type things should be by the Union as a whole. What’s not to like?

The problem is this. So you have an IOU, as it were signed jointly by the 27 members of the EU. Where would you present it for payment? Athens, Riga, Bucharest? or Berlin? Not a difficult question.

The good Germans would pay you and it would then get added to the list of intra Eurozone liabilities, which is called Target 2 and is already out of control.

Italy already owes €400 billion under the Target 2 system, accounting for almost half Germany’s creditor position. If Italy defaulted, Germany would be liable for 33 percent of this figure, assuming it could get others to cough up. That is €133 billion, before we have eurobonds.

Eurobonds mean borrowings by the unsuccessful countries of Europe guaranteed by Germany. And the response from Germany? Finance Minister Wolfgang Schaeuble, welcoming Macron’s election, said he would have plenty to do domestically, a clear implication that France will not be taken seriously until it gets its deficit under control.

The furthest Germany is prepared to go is looking at the bailout mechanism. It is not going to contemplate joint liability. Martin Schulz, the SPD candidate in the election might look at it; but he is not going to win the vote in September. Mutti Merkel is.

The next few years are going to be about Macron fighting French workers over benefits, hoping to gain credibility with Germany. In Italy, Renzi must get elected and then do the same.

So, has the time finally come for a rejuvenated France and Italy to take the helm and revive Europe with popular new ideas? Nein.

Tim Hedges, The Commentator's Italy Correspondent, had a career in corporate finance before moving to Rome where he works as a freelancewriter, novelist, and farmer. You can read more of his articles about Italy here

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