French Socialists talk tough on deficit, euro

Reuters News
Posted: Jul 17, 2011 2:09 PM
French Socialists talk tough on deficit, euro

By Leigh Thomas

PARIS (Reuters) - France's two top Socialist leaders cast themselves as tough on public finances and the euro-zone debt crisis Sunday, in a challenge to President Nicolas Sarkozy ahead of an election next year.

Martine Aubry and Francois Hollande, both candidates to run for the Socialists in the 2012 presidential election, called for radical action to deal with euro-zone debt as bloc leaders prepared to meet this week.

Sarkozy is cultivating an image as France's guardian against a dangerous explosion of debt, partly with plans to write a budget-balancing rule into the constitution. The Socialists say they would reject this in a special bicameral vote, effectively killing the bill.

Aubry, a former labor minister who was the architect behind France's 35-hour working week, said that if elected president she would stick to the current government's aim of cutting the deficit to an EU-imposed limit of 3 percent of output in 2013.

"You can't want to be president and not respect France's commitments," Aubry told Europe 1 radio, echoing a promise by Hollande to stick to the 2013 deadline.

"For me it's a question of sovereignty because there would be nothing worse than to become president in 2012 and then France is attacked by the financial markets," said Aubry.

France has the weakest public finances among the elite club of six AAA-rated countries in the euro zone that also includes Austria, Finland, Germany, Luxembourg and the Netherlands.


The premium France pays investors to hold its debt instead of low-risk German bonds rose last week to a euro-lifetime high on concerns the euro-zone crisis was spreading to core Europe.

"Urgent measures are needed to contain the contagion and allow Greece and other states in difficulty to refinance," Aubry said in an article due to appear in Monday's edition of Liberation newspaper.

With euro-zone leaders meeting Thursday, she called for Eurobonds underwritten jointly by euro zone countries, revision of European Central Bank's statutes, an international tax on financial transactions and the creation of a post of euro-zone economy minister.

Hollande, neck-and-neck with Aubry in polls ahead of a Socialist Party vote in October to choose a presidential candidate, said Eurobonds should be issued to buy back Greek bonds and that the ECB should also purchase Greek debt.

In an article in Le Journal du Dimanche, Hollande said a euro-zone finance minister would only add to the cacophony of European officials speaking about the debt crisis and that instead the presidencies of the European Commission and the European Council should be merged.

Aubry and Hollande have become the leading Socialists since former International Monetary Fund chief Dominique Strauss-Kahn's arrest in New York in May on sex assault charges threw his political future into question.

Budget Minister Valerie Pecresse accused Hollande and Aubry of trying to upstage each other with comments that she said could undermine efforts to resolve the euro-zone crisis.

"On such serious subjects, all attempts to stir political disputes must be avoided," she said.