French President Emmanuel Macron backed Germany’s idea of a European Monetary Fund (EMF) to counter economic shocks in euro zone member states but stressed the ultimate goal of deeper integration should remain a euro zone budget.
Macron, who wants a giant leap forward in European cooperation, pressed for greater financial solidarity towards the bloc’s more vulnerable members. He also used a visit to Greece, which nearly crashed out of the euro zone in 2015, to call for an easing of Athens’ debt burden.
Elected in May, the French leader is trying to reshape and strengthen the euro currency bloc by creating a euro zone finance minister and parliament, as well as a stand-alone budget to cushion against economic shocks and head off future crises.
But he is running into German resistance despite conciliatory public signals from Chancellor Angela Merkel. Her finance minister has proposed transforming the euro zone’s rescue fund, the European Stability Mechanism (ESM), into a fully fledged EMF with more powers to support weaker members.
“We should head towards a European Monetary Fund but this should in no way be mixed up with a (euro zone) budget,” Macron told Greek President Prokopis Pavlopoulos.
With its own EMF, Europe would be less reliant on the Washington-based International Monetary Fund, a key player in successive Greek bailouts.
“We respect the IMF, but we can manage better with an organisation which was set up to have a European mentality and understand the euro zone’s special features,” Pavlopoulos said.
The euro zone is emerging from the near-decade-long economic and financial crisis that almost ripped it apart. But Macron lamented what he called a “kind of civil war” over differences within the currency union. He praised Greece’s austerity reforms but said ordinary Greeks had paid a heavy price.
Greece’s economy is showing signs of rebounding after a deep recession that shrank it by a quarter, boosting hopes it can emerge from years of financial bailouts. Even so, unemployment stands at nearly 22 percent, the highest in the euro zone.
Macron renewed his call for tighter oversight of foreign investments in the EU — a message that Greece has opposed — and urged European investors to support the Greek recovery.
The privatisation of state assets has been a key element of Greece’s bailouts since 2010. China’s COSCO shipping, owner of the world’s fourth largest container fleet, took a 51 percent stake in Greece’s largest port last year.
“A Europe which protects itself is one which protects our strategic investments,” said Macron, who travelled to Athens with about 40 French executives.
“I want Greece to continue to remain attractive, to open itself to international investors, and for Europe to fully support it in order to maintain European sovereignty.”
Euro zone governments in June approved another 11th-hour credit line for Greece worth nearly $10 billion after the IMF said it would in principle join the country’s current bailout, having hesitated for two years.
In June the IMF demanded that Greece adopt more austerity measures in 2019 and 2020, after the current bailout programme expires in August 2018.
Greek Prime Minister Alexis Tsipras said Greece planned to exit its international bailout next August, putting an end to years of crisis and uncertainty.
Europe, he added, needed to create institutions to resolve future crises without having to turn to “third parties” such as the IMF for financial support.
“We are absolutely ready and determined to move in this direction and I’m certain our lenders have the same approach of avoiding hurdles and delays,” Tsipras said.
Greece and the IMF have often crossed swords over Greece’s fiscal progress, its economic targets and unpopular reforms in the labour market. Macron urged the IMF to show “good faith” in upcoming Greek debt talks.
Source: Reuters (Reporting by Michel Rose, Renee Maltezou and Lefteris Papadimas; Writing by Richard Lough; Editing by Mark Trevelyan)