The euro may be dismantled in 10 years unless Paris and Berlin make changes, French presidential contender Macron says

PUBLISHED : Wednesday, 11 January, 2017, 1:30pm
UPDATED : Wednesday, 11 January, 2017, 8:57pm

The euro may not exist in 10 years’ time if Paris and Berlin fail to bolster the single currency union, French presidential candidate Emmanuel Macron said on Tuesday, adding the current system benefited Germany at the expense of weaker member states.

Macron was economy minister under Socialist President Francois Hollande until he resigned last year to create his own political movement and stand as an independent candidate in this year’s presidential election.

“The truth is that we must collectively recognise that the euro is incomplete and cannot last without major reforms,” Macron said in a speech at the Humboldt University in Berlin.

Speaking in English, he added: “It has not provided Europe with full international sovereignty against the dollar on its rules. It has not provided Europe with a natural convergence between the different member states.”

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France must implement labour market reforms and revamp its education system to revive growth, while Germany must accept that more investment instead of austerity can boost growth across the euro zone area, the centrist politician said.

The status quo is synonymous, in 10 years’ time, with the dismantling of the euro
French presidential candidate Emmanuel Macron

“The dysfunctioning of the euro is of good use to Germany, I have to say,” said Macron, adding that a lack of trust between France and Germany was blocking major reforms that would increase solidarity among the 19 members of the euro zone.

“The euro is a weak Deutsche Mark,” said Macron. “The status quo is synonymous, in 10 years’ time, with the dismantling of the euro.”

He proposed the creation of a euro zone budget to finance growth-oriented investments and to extend financial assistance to struggling member states.

However, this would be anathema to German Chancellor Angela Merkel and her Finance Minister, Wolfgang Schaeuble, whose conservatives face an election this year and have faced domestic resistance to bailouts for Greece by hawks who say such payments turn the euro zone into a “transfer union”.

Macron spoke after the co-leader of Germany’s far-right Alternative for Germany (AfD) party earlier sai the euro zone should be split into two with a strong cluster around Germany and a weak cluster including France.

Macron, a rare advocate in France of deeper European integration, has taken the unusual step of encouraging supporters to cheer the European Union at political rallies in contrast with other politicians who often rail against “Brussels”.

Macron, 39, has enjoyed a boost in recent polls, which show him cementing his position as the presidential election’s “third man” and within a whisker of reaching the crucial second round runoff to be held in May.

An opinion poll last week showed conservative candidate Francois Fillon’s lead in France’s presidential election race had narrowed, with both Macron and far-right leader Marine Le Pen gaining on the former prime minister.

In his Berlin speech, Macron also called for European countries to step up defence cooperation in view of shifting US leadership and a Russia with different “values.”

“The US is completely changing its strategy and it’s not due just to the election of Mr Trump,” Macron said. “Today we are in a situation where Europe has to defend its own interests regarding security and the Middle East. We have to re-build a European strategy.”

Expanding beyond his traditional remit of economic policy, Macron argued for common policies with Germany on everything from cyber defence to managing refugees and migrants. European efforts to create a common border service are good but need to go much further, he said.

“I could tell you that Europe is out of date - it would be easier. Talking about turning the tables and using hard talk against Germans seems to be great politics in my country,” he said. “But we need a political willingness to move forward.”

At the same time he acknowledged that re-building trust on economic issues between France and Germany is the key to addressing the region’s problems. Macron said that in office he would back “strong” reforms, including of the labour market.

“There is a French responsibility to fix the situation,” he said. “I will assume my responsibilities. France will assume its responsibilities. And I do trust Germany.”


Additional reporting by Bloomberg