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

JunckerMoscoviciTimmermans@E141112
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)

(BRUSSELS2) France will escape the opprobrium of the European Commission for its budgetary slippage. At least for now. Commission officials will officially confirm this this Friday (November 28). Efforts must be made, but now is not the time for sanctions. This is in essence the message that the European executive wants to send. 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, it was felt that it was not the time, neither technical nor political, to take a decision, whether it was a sanction measure, a new recommendation or a new deadline for France to implement in compliance with deadlines. Theyis about maintaining 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 of all, it's the efforts. And then we will see for additional time or to adopt a new recommendation » explains an expert. The one 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 has not been easy, especially in the last few days... Internally, we are talking. There was 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 on the plane played out. “ A kamikaze line ". The interview with the 2 heads of government in difficulty is notdidn't go well » according to internal testimonies. The Italian Renzi explained his line to Juncker: Italy has already made a lot of effort, the deficit has been brought below 3%, structural reforms are underway, what more do you want? For Hollande, 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

As a 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 check with Rome and Paris so that they can propose new measures. Stroke of luck. Dombrovskis returns to his country for 3 days. He leaves the field open. The “Mosco” – as they are called at the Commission – are overtaking the “Dombro” and regaining control. “ It was then necessary to row a week to bring the ball back to the center ».

The risk of a garbled 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. Recasting sanctions would be a step backwards. This 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 involved in the game, putting his portfolio in charge of the investment.” The economic decline of Finland is also not unrelated to this softening of the position of a man who had been known to be very harsh and intransigent towards the Greeks.

We negotiate, Holland advances additional reforms

European Commissioner Pierre Moscovici takes his pilgrim's staff to discuss with Rome and Paris. Phones get hot. We discuss and exchange grids of figures, proposals for reforms and compensation. In charge, on the French side, Bercy and the SGAE (the general secretariat of European affairs), and on the European side, specialists from DG EcFin, on the technical aspect; Ministers Sapin and Macron, and Commissioner Moscovici for political aspects. Matteo Renzi very quickly made a proposal for additional reform, 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 initially kept discreet. Paris is careful not to leak it, as Rome did. Difference in media approach but also in political practice… Finally, with the Paris agreement, the European Commission published it. This letter, supposed to contain “ reforms that have not yet been presented publicly in France », contains in fact only 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 time for sanctions is moving away...

Oettinger in the ranks of the defenders

Only, in fact, the German commissioner Günther Oettinger (*) stands on a hard line, in direct line with the position of Berlin, at least of the CDU fringe of the federal government. Worse, he breaks the rule of collegiality by breaking into a column published in Germany and France, in Les Echos, to explain why in the face of French deficit: Brussels must not give in ! A diatribe which sparks fire among French political leaders and goes down badly within the Commission. A “grave explanation” takes place between the heads of cabinet, who are responsible, in this type of conflict between commissioners, of “explaining” themselves frankly but also of preventing the situation from degenerating into a political conflict.

The sanction 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).