France escapes sanctions. How was this decision made? (shift) Story…

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JC Juncker and P. Moscovici, two of the architects of the compromise found to give France a 3-month deadline. In the background, commissioner F. Timmermans (credit: CE)

(BRUXELLES2) France will escape the opprobrium of the European Commission for its budgetary slippage. At least for now. Commission officials will officially confirm this on Friday (November 28). Efforts must be made, but this is not the time for sanctions. This is essentially the message that the European executive wants to convey. The decision is postponed until early March. France will not be the only one to benefit from what could appear, in the eyes of some, as a certain leniency but is in fact a very political decision, hard negotiated. Italy or Belgium, in bad shape, for their debt also escape a specific procedure for excessive debt.

Not the right time

At Berlaymont, the headquarters of the Commission, we believe that this was not the time, neither technical nor political, to take a decision, whether it be a sanction measure, a new recommendation or a new deadline for France to put itself in accordance with the deadlines. Theyit's about keeping up the pressure “says a good connoisseur of the file. The Commission believes that now is not the time to give more time or another objective. As a result, she should repeat the standard phrase which means both everything and nothing: " We invite the country to make additional efforts to achieve the recommendations and the objectives set ". A message that means asking France for more effort. " First is the effort. And then we will see for an additional delay or to adopt a new recommendation explains an expert. That which is in force with regard to France (which sets a target of 0,8% structural deficit – excluding inflation – and 2,8% deficit – appears largely unachievable).

20 hours of flight

To achieve this result, it was not easy, especially in the last few days… Internally, we tell the story. There has been a debate in the European Commission about whether sanctions should be adopted. A three-way debate between President Jean-Claude Juncker, Vice-President Valdis Dombrovskis (in charge of the Euro and social dialogue) and Commissioner Pierre Moscovici (in charge of the Economy). This debate should have continued in Australia, on the sidelines of the G20, where Juncker and Moscovici had planned to meet Matteo Renzi (the Italian Prime Minister) and François Hollande (the President of the French Republic). Life decides otherwise. Moscovici must go. His father is dying. And the French commissioner decides to go to his bedside...

Dombrovskis, as a bogeyman

« Dombrovskis then rushed to Brisbane explains a European source, with a fairly simple fixed idea: “ we do not discuss politics, the rule is the rule, and we need sanctions ”. The former Latvian Prime Minister manages to convince Jean-Claude Juncker, the President of the Commission of the correctness of his position. The 20 hours of flight played. " A kamikaze line ". The interview with the 2 heads of government in difficulty does notdidn't go well according to insider accounts. The Italian Renzi explained his line to Juncker: Italy has already made a lot of effort, the deficit has been brought back below the 3% mark, structural reforms are under way, what more do you want? For Holland, it was harder. Because the gauge of reforms on the French side seemed weak. No one has any illusions about the Macron plan, which does not contain reforms capable of generating real structural reform.

Juncker returns to a hard line

Result, when Juncker returns to Brussels, it is on a “hard line”. " France is off limits ". An instruction is given to the services: prepare a sanctions text ". Mission is given to Pierre Moscovici to go see with Rome and Paris so that they propose new measures. Stroke of luck. Dombrovskis returns to his country for 3 days. He leaves the field open. The “Moscos” – as they are called at the Commission – raise the handicap on the “Dombros”, and regain control. " It was then necessary to row a week to bring the ball back to the center ».

The risk of a scrambled message

President Jean-Claude Juncker seems well aware that the weapon of sanctions is dangerous to wield. He has barely just announced a major investment plan, which intends to mark a turning point in Europe. Putting a ladle back on the sanctions would be a step backwards. It would risk " blur the message plead those who do not want to pass sanctions. Jean-Claude Juncker barely comes While examining things thoroughly. Vice-President Katainen, former Prime Minister of Finland, although classified among the hardliners, is proving to be a valuable ally. " He got caught up in the game, from his portfolio in charge of the investment”. The economic descent of Finland is also not unrelated to this softening of the position of a man who was known to be very tough, intransigent, vis-à-vis the Greeks.

We negotiate, Holland advances additional reforms

European Commissioner Pierre Moscovici takes up his pilgrim's staff to discuss with Rome and Paris. Phones get hot. We discuss and exchange grids of figures, proposals for reform, counterparties. At the maneuver, on the French side, Bercy and the SGAE (the General Secretariat for European Affairs), and on the European side, the specialists of DG EcFin, at the technical level; Ministers Sapin and Macron, and Commissioner Moscovici for the political aspects. Matteo Renzi very quickly made an additional reform proposal, with a letter from his Minister of Finance addressed to the Commission (which “leaked” in the Italian press, download Letter from Padoan here) and more detailed annexes (with spreadsheets and other proposals).

François Hollande does the same, with a letter proposing additional reforms, to those presented in France. The letter is kept discreet at first. Paris is careful not to scare it away, as Rome did. Difference in media approach but also in political practice… Finally, with the Paris agreement, the European Commission publishes it. This letter, supposed to contain " reforms that have not yet been publicly presented in France », only contains a long summary of the reforms undertaken (Territorial Reform, Responsibility Pact, Macron Law) and ends with an optimistic ode to OECD data: + 3% of GDP on the horizon… 10 years (download Letter from Valls). But, apparently, Paris has other arguments. This convinces the Juncker-Dombrosvkis-Moscovici trio that the solution is near. The hour of sanctions is moving away...

Oettinger in the ranks of the defenders

Only, in fact, the German commissioner Günther Oettinger (*) camped on a hard line, in line with the position of Berlin, at least of the CDU fringe of the federal government. Worse, he breaks the rule of collegiality by splitting a forum published in Germany and France, in Les Echos, to explain why, faced with the French deficit: Brussels must not give in ! A diatribe that ignites fire among French politicians and goes badly within the Commission. An “engraving explanation” takes place between the chiefs of staff, who are responsible, in this type of conflict between commissioners, for “explaining” themselves frankly but also for preventing the situation from degenerating into a political conflict.

Punishment is not an end in itself

Finally, Juncker chooses a consensual line: recall the principles, do not sanction, and leave a little time to decide. " This decision is wise commented someone close to the decision-making circle. " Technically, it was difficult to get an opinion today. If at the end of the year, budget execution in France turns out to be better than it is said. “And politically” it is always better to encourage reform. Sanctions are made not to be used. Because the sanctions are a failure for Europe because it failed to convince and a failure for the country which failed to make reforms. »

(Nicolas Gros-Verheyde)

(*) Oettinger is in charge of the Digital Economy. But in this type of debate, any commissioner or his team participates in the discussion and can express his views, even if it is not his file. This is the principle of collegiality, often misunderstood in France, because it is not really ministerial practice.

(Maj 28.11 14 p.m. with the letter from France to the Commission)

Nicolas Gros Verheyde

Chief editor of the B2 site. Graduated in European law from the University of Paris I Pantheon Sorbonne and listener to the 65th session of the IHEDN (Institut des Hautes Etudes de la Défense Nationale. Journalist since 1989, founded B2 - Bruxelles2 in 2008. EU/NATO correspondent in Brussels for Sud-Ouest (previously West-France and France-Soir).