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HEALTH

Macron and Merkel propose €500 billion plan to relaunch EU economy

France and Germany on Monday proposed a €500 billion recovery fund to finance the relaunch of the European Union's economy, which is facing the biggest economic crisis since the World War II because of the coronavirus pandemic.

Financed by “borrowing from the market in the name of the EU”, the fund will flow to the “worst hit sectors and regions” in the 27-member bloc.

Countries benefiting from the financing would not have to repay the sum, said France's President Emmanuel Macron. 

“What is sure is that these €500 billion will not be repaid by the beneficiaries,” he said at a joint video news conference with Chancellor Angela Merkel.

“We are convinced that it is not only fair but also necessary to now make available the funds… that we will then gradually repay through several future European budgets,” said Merkel.

The borrowing would not amount to the so-called “coronabonds” sought by Italy and Spain because it would be made and repaid under the framework of EU budgets, rather than a direct mutualisation of debt by member states.

But it nevertheless marks a major shift by Germany, which has until now rebuffed talk of common borrowing.

Germany, the Netherlands and other rich countries had long seen coronabonds as an attempt by the indebted south to unfairly take advantage of the north's fiscal discipline.

But Merkel said the seriousness of the crisis meant that “solidarity” must be the order of the day.

“The aim is to ensure that Europe comes out of the crisis more cohesive and with more solidarity,” said Merkel, calling the proposal “courageous”.

 

'Constructive'

EU chief Ursula von der Leyen on Monday hailed the plan proposed by France and Germany to relaunch the
bloc's economy.

“I welcome the constructive proposal made by France and Germany,” said Von der Leyen who is head of the European Commission, the EU's executive arm that would implement the plan.

“It acknowledges the scope and the size of the economic challenge that Europe faces,” she said.

“This goes in the direction of the proposal the commission is working on which will also take into account the views of all member states and the European Parliament,” Von der Leyen said.

The joint stance by France and Germany is significant as it will put pressure on the EU's more frugal minded member states to contribute the extra money needed to pay for the plan.

The €500 billion will come in addition to the EU's normal spending plans for 2021 through 2027, which are currently under negotiation.

Europe has seen some of the worst effects of the pandemic, with highly indebted countries such as Italy and Spain calling for help from richer partners such as Germany and the Netherlands.

Those countries are reluctant to get into a major borrowing scheme with their southern partners that are seen as overspending and reluctant to implement necessary economic reforms.

“It is going to take willingness to reach an agreement and everyone is going to have to shift their positions,” a European official said on condition of anonymity.

The latest statements by German Chancellor Angela Merkel “will help”, the source added.

Member comments

  1. Wow, what a great plan! Borrow in the market, no doubt millions of EUs will find their way into the pockets of middlemen, then lend it to already indebted nations. Whose corrupt politicians and mafia will skim a good portion. Furthermore, why don’t they wait a few more months to act, so Italy, Spain, and Greece can sinker deeper in debt? Many knew the EU was inept, except in dictating policies, immigration rules, and inane laws, but this crisis has shown how utterly corrupt they are. Germany, France, and Holland acted like Jackals instead of a single union. Hopefully, this will quicken the demise of the EU, and a replacement will be created, which does two things – makes trade more efficient and border crossings for EUROPEANS and Visa holders seamless.

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ELECTIONS

Will Macron resign in case of a French election disaster?

The polling is not looking good for president Emmanuel Macron's party in the snap elections that he called just two weeks ago. So will he resign if it all goes wrong?

Will Macron resign in case of a French election disaster?

On Sunday, June 9th, the French president stunned Europe when he called snap parliamentary elections in France, in the wake of humiliating results for his centrist group in the European elections.

The French president has the power to dissolve parliament and call fresh elections – but this power is rarely used and in recent decades French parliaments have run on fixed terms. Very few people predicted Macron’s move.

But polling for the fresh elections (held over two rounds on June 30th and July 7th) is looking very bad for the president’s centrist Renaissance party – currently trailing third behind Marine Le Pen’s far-right Rassemblement National and the combined leftist group Nouveau Front Populaire.

Listen to the team from The Local discussing all the election latest in the new episode of the Talking France podcast. Download here or listen on the link below

The election was a gamble for Macron – but if his gamble fails will he resign?

What does the law and the constitution say?

Legally, Macron does not need to resign. In France the presidential and the parliamentary elections are separate – Macron himself was re-elected in 2022 with a five-year mandate (until May 2027).

His party failing to gain a parliamentary majority does not change that – in fact the centrists failed to gain a overall majority in the 2022 parliamentary elections too (although they remained the largest party). Since then, the government has limped on, managing to pass some legislation by using constitutional powers.

The constitution also offers no compulsion or even a suggestion that the president should resign if he fails to form a government.

In fact the current constitution (France has had five) gives a significant amount of power to the president at the expense of parliament – the president has the power to dissolve parliament (as Macron has demonstrated), to set policy on areas including defence and diplomacy and to bypass parliament entirely and force through legislation (through the tool known as Article 49.3). 

In fact there are only three reasons in the constitution that a president would finish their term of office early; resigning, dying in office or being the subject of impeachment proceedings.

Since 1958, only one president has resigned – Charles de Gaulle quit in 1969 after the failure of a referendum that he had backed. He died 18 months later, at the age of 79.  

OK, but is he likely to resign?

He says not. In an open letter to the French people published over the weekend, Macron wrote: “You can trust me to act until May 2027 as your president, protector at every moment of our republic, our values, respectful of pluralism and your choices, at your service and that of the nation.”

He insisted that the coming vote was “neither a presidential election, nor a vote of confidence in the president of the republic” but a response to “a single question: who should govern France?”

So it looks likely that Macron will stay put.

And he wouldn’t be the first French president to continue in office despite his party having failed to win a parliamentary majority – presidents François Mitterand and Jacques Chirac both served part of their term in office in a ‘cohabitation‘ – the term for when the president is forced to appoint an opposition politician as prime minister.

But should he resign?

The choice to call the snap elections was Macron’s decision, it seems he took the decision after discussing it just a few close advisers and it surprised and/or infuriated even senior people in his own party.

If the poll leads to political chaos then, many will blame Macron personally and there will be many people calling for his resignation (although that’s hardly new – Macron démission has been a regular cry from political opponents over the last seven years as he enacted policies that they didn’t like).

Regardless of the morality of dealing with the fallout of your own errors, there is also the practicality – if current polling is to be believed, none of the parties are set to achieve an overall majority and the likely result with be an extremely protracted and messy stalemate with unstable governments, fragile coalitions and caretaker prime ministers. It might make sense to have some stability at the top, even if that figure is extremely personally unpopular.

He may leave the country immediately after the result of the second round, however. Washington is hosting a NATO summit on July 9th-11th and a French president would normally attend that as a representative of a key NATO member. 

You can follow all the latest election news HERE or sign up to receive by email our bi-weekly election breakdown

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