France starts ratification of EU fiscal pact

French President Francois Hollande’s Socialist-led government Wednesday kick started ratification of a European Union budget discipline pact it grudgingly accepts as the next step out of the euro debt crisis. Created in March by Hollande’s predecessor Nicolas Sarkozy and 24 other EU leaders including Germany’s Angela Merkel, the fiscal compact requires eurozone countries to slash their public deficits or face legal action and possibly fines. Its entry into the Cabinet Wednesday paves the way for likely approval by the French parliament in coming weeks, despite noisy dissent within Hollande’s left-leaning coalition and growing disenchantment with the EU among a French public facing 13-year unemployment highs and fearing worse to come. “We don’t like this pact, it is a Sarkozy legacy. Merkel insisted on it because France has been breaking stability pact rules since 2003,” said Elisabeth Guigou, head of parliament’s foreign affairs committee. “But you don’t have to love a pact to ratify it. It’s one part of a deal and just the first step,” said Guigou, one of the senior Socialists tasked with rallying the coalition behind the accord. The pact is due to be submitted to the French parliament in early October. It should pass through easily if some of the deputies in Sarkozy’s conservative UMP party vote for it. It will be the latest small step toward resolving Europe’s sovereign debt crisis since Germany’s constitutional court this month allowed a permanent bailout fund to go ahead, and pro-European parties came out ahead in a Dutch election. But the passage of the bill will carry a political cost for Hollande and does nothing to forestall a looming clash with EU paymaster Germany over the deeper measures Berlin believes are needed for the euro’s longer-term survival. Even if it doesn’t change the outcome, a vote against the accord from some left-wingers and ecologists within Hollande’s coalition will be a political embarrassment just as surveys show a steady decline in public support for him since his election in May. To sweeten the pill – and to try to take the sting out of a series of street protests due against the pact – the government is putting it into parliament alongside the package of EU-wide growth measures he secured at his first EU summit last June. Moreover, France’s top court has also said the new budget rules do not require any change to the constitution, meaning Hollande in turn can skip a referendum on it, which he would not be certain of winning. “The public is falling out of love with the European Union,” French European Affairs Minister Bernard Cazeneuve conceded Tuesday – a day after a survey showed nearly two-thirds of the French public would reject the 1992 Maastricht Treaty that led to the euro. The EU budget pact enters into force either when 12 out of the 17 eurozone countries ratify it, or on Jan. 1, 2013. Half a dozen, including Germany, have already backed it. To set an example of fiscal responsibility, Hollande has promised to find 30 billion euros ($39.17 billion) of savings in the 2013 budget to shave France’s public deficit to 3 percent of gross domestic output next year en route to a fully balanced budget by the end of his five-year mandate. Yet economists question how he can achieve such savings without dragging the economy into recession. Hollande acknowledged this month that growth next year was likely to be in the region of 0.8 percent, well below the official forecast of 1.2 percent. The 2013 budget is due to be announced Sept. 28. But there is potential for more upsets down the line. From : The Daily star.