Berlin and Paris seek unity on global crisis

11th March 2009, Comments 0 comments

Berlin and Paris have tried before to forge joint action to pull Europe out of its economic slump with multi-billion euro stimulus packages but their efforts have broken down in acrimony about how much to do and spend.

Berlin -- France and Germany will strive at a meeting in Berlin Thursday to stake out common ground to deal with the global economic slump ahead of a key Group of 20 gathering next month in Britain.

The euro zone's two biggest economies will "make joint proposals for a new financial architecture" and "define the means of increased economic coordination," according to the French prime minister's office.

A day later, German Chancellor Angela Merkel will press on with preparations for an April 2 meeting of the G20 developed and emerging economies, holding talks with British Prime Minister Gordon Brown.

Berlin and Paris have tried before to forge joint action to pull Europe out of its economic slump with multi-billion euro (dollar) stimulus packages but their efforts have broken down in acrimony about how much to do and spend.

Merkel declined to finance a European economic stimulus package proposed by French President Nicolas Sarkozy, leading the latter to quip: "France is working on it, Germany is thinking about it."

Berlin nonetheless then drafted a second, bigger stimulus plan of its own and Sarkozy acknowledged that Merkel was also hard at work.

Germany has felt the full brunt of the global economic downturn and now sees unemployment climbing steadily just six months ahead of general elections.

Europe's biggest economy, heavily dependent on exports, saw them collapse in January by more than 20 percent compared to the same period last year.

The government has had to bail out several banks, including the country's second-largest, Commerzbank, and is now mulling state aid to the auto manufacturer Opel, owned by struggling US giant General Motors.

"The Germans realised they could not get by without state aid," said Martin Koopmann, a Franco-German specialist at the Konrad-Adenauer Institute.

That led to "an appeasement" in relations between the two capitals, he added.

Frank Baasner of the Franco-German Institute in the southwestern German town of Ludwigsburg, said there was already "a relatively strong convergence between emergency plans, though each was worked out without consulting the other ahead of time."

That was because both countries have "relatively comparable needs," Baasner said.

Both took measures to protect their banking sectors and to help soften the shock for workers affected by partial layoffs.

The two countries are trying now to help their automobile sectors too but not through coordinated actions, which could cause some problems, Koopmann noted.

French loans to automakers, for example, force them to keep French factories running and French workers employed, which has raised charges of protectionism.

Other topics that still cause friction are the Airbus A400M military transport plane and relations between the nuclear engineering groups Siemens and Areva.

The German conglomerate has said it will cease cooperation with Areva and has unveiled a cooperation agreement with a Russian company, provoking irritation in France.

But the meeting on Thursday is expected to focus on matters of common interest, such as financial market regulation, that will be at the heart of the G20 meeting on April 2 in London.

"They should be able to propose very concrete dossiers ahead of the G20," Baasner said. "These are issues that benefit from a consensus."

Berlin and Paris also agree on how to deal with tax havens, an issue on which Merkel wants to send a "clear signal," her spokesman said.

French Finance Minister Christine Lagarde and German counterpart Peer Steinbrueck called recently for ties with such financial centres to be cut.

Both will attend the meeting in Berlin, as will the ministers of defence and foreign affairs, Merkel's office said.

Laure Fillon/AFP/Expatica

0 Comments To This Article