Macron wins Merkel's support on reforming euro zone

German Chancellor Angela Merkel and French President Emmanuel Macron at a press conference on Monday in Berlin. Mr Macron was on his first official trip abroad as president.
German Chancellor Angela Merkel and French President Emmanuel Macron at a press conference on Monday in Berlin. Mr Macron was on his first official trip abroad as president.PHOTO: AGENCE FRANCE-PRESSE

He seeks 'historic reconstruction' of Europe even as proposals spark concern in Berlin

BERLIN • France's new President Emmanuel Macron has secured backing from key ally Chancellor Angela Merkel for his bid to shake up Europe, despite scepticism in Berlin over his proposed reforms.

Mr Macron used a visit to the German capital to meet the veteran leader in his first official trip abroad, to call for a "historic reconstruction" of Europe.

During his campaign, Mr Macron had thrown up ideas on reforming the euro zone, noting that the currency bloc cannot go on as it is if it wanted to avoid falling prey to protest and populism.

Among reforms he wants are moves to set up a separate budget for the 28-member group, and to give it its own Parliament and finance minister.

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But the proposals have sent alarm bells ringing in Berlin, and initial relief about his victory against far-right leader Marine Le Pen have also given way to fears about his reform plans.

CHANGE POSSIBLE

From the German point of view, it's possible to change the treaty if it makes sense. If we can say why, what for, what the point is, then Germany will be ready.

GERMAN CHANCELLOR ANGELA MERKEL, on French President Emmanuel Macron's proposed reforms for the euro zone.

German Finance Minister Wolfgang Schaeuble warned that such deep-reaching reforms would require treaty changes, which were "not realistic" at a time when Europe has been hit by a surge of anti-euro populism.

But at a joint press conference following their talks on Monday, Dr Merkel adopted a conciliatory tone and offered what appeared to be a key concession.

"From the German point of view, it's possible to change the treaty if it makes sense," she said. "If we can say why, what for, what the point is, then Germany will be ready."

Germany and France are the euro zone's two biggest economies.

Dr Merkel's approach underlined her view that it was crucial not only for France, but for Germany, to help Mr Macron succeed - a point that she has repeatedly stressed.

Yet, it remains to be seen if her approach would go down well in Germany, which is deeply adverse to shouldering the burdens of euro-zone laggards.

Mr Macron sought to bat away German fears on debt, saying he was opposed to mutualising "old debt" between euro-zone countries. However, he signalled readiness to look at sharing future burdens.

"I am not a promoter of the mutualisation of old debt" within the euro zone, he said after meeting Dr Merkel, adding, however, that the joint financing of future projects should be considered. Any reforms would likely still have to wait until after September, when the German leader faces re-election.

"Her room for manoeuvre is very limited - with her migration policy, she has used up a lot of political capital in her own party," said a German minister speaking on condition of anonymity. "On the other hand, Macron's style suits the Chancellor. She likes substance, she likes people who are hands on and she knows he won't take her for a ride."

Back in Paris, Mr Macron spent yesterday selecting his Cabinet with new Prime Minister Edouard Philippe. After promising to overcome the ideological divisions that have long hampered French policymaking, Mr Macron has a delicate balancing act to pull off.

The announcement of their choice is due later today, a day later than planned, to allow for checks on the "tax status" of potential ministers and any conflicts of interest, the presidency said in a statement.

AGENCE FRANCE-PRESSE, BLOOMBERG

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A version of this article appeared in the print edition of The Straits Times on May 17, 2017, with the headline 'Macron wins Merkel's support on reforming euro zone'. Print Edition | Subscribe