Sarkozy adviser calls for more flexible Europe

10th December 2007, Comments 0 comments

Senior adviser to Nicolas Sarkozy describes European competition policy as "perfectly absurd"

   LONDON, December 10, 2007 - A senior adviser to French President Nicolas Sarkozy signalled key faultlines between Paris and the European Union Monday, describing European competition policy as "perfectly absurd" while calling for reform to European institutions to make them more flexible.

   Speaking to the Financial Times, Henri Guaino also suggested France would press for reform of the European Central Bank to give political leaders more control of monetary policy, and warned that France would not cut spending or raise taxes to narrow its public finance deficit.

   "European affairs cannot be governed only by general, impersonal, automatic rules which have been fixed in advance," Guaino told the business daily.

   "Europe should debate these things together and decide together, as happens in all other democracies in the world."

   He pointedly criticised the European Commission's implementation of the 27-nation bloc's competition policy, telling the paper that the "theory of competition is not sacred. It evolves, it changes."

   Comparing Europe's anti-trust policies to those of the United States, Guaino said: "We say you are big and therefore in a dominant position. You will therefore have a tendency to abuse it. From the point of view of all the principles of law this is perfectly absurd."

   "Yes, openness is better than restrictiveness. Yes, competition is better than a monopoly. But if you have a religious, dogmatic vision you are going to end up putting the European economy in a sitution of extreme inferiority compared with all other countries."

   On the European Central Bank, the independent institution which decides on the 13-nation eurozone's monetary policy, Guaino said the bank "could not escape its political environment. The bank cannot live its life outside the European political debate, outside public opinion."

   "For the moment, there is no project to change the statutes of the ECB but France wants to strengthen economic governance and to discuss this monetary policy because in a democracy we should be able to discuss everything."

   France has been a critic of the ECB's interest rate increases in recent years, as well as its policy on the euro, and has argued for more political influence in the bank's decision-making process.

   Guaino also gave warning that France would not see "public spending fall very easily" in "the short term" and would instead rely on economic reforms to help plug the public finance gap.

   The overall deficit -- which includes social security, local government budgets and the state budget -- will inch downwards to 2.3 percent of GDP for 2008 from 2.4 percent of GDP in 2007, according to the government.

   France, the eurozone's second largest economy, has come under pressure from its European partners to rein in public spending and meet a 2010 target for a balanced budget.

   "The most important thing to sort out the public finances for the longer term is to replace bad public spending with useful public spending," he said.

   "And if it works, it is going to improve productivity, and spending will fall as a share of gross domestic product."


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