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Europe's new power couple

Wednesday, May 23, 2012 - 02:07

May 23 - In a shift away from Europe's traditional Franco-German partnership, France's new President Francois Hollande met Spain's Prime Minister Mariano Rajoy to discuss the need for growth, banking liquidity and euro bonds ahead of the EU summit in Brussels. Joanna Partridge reports.

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How times have changed. Before nearly all summits for the past two years, Nicolas Sarkozy met with German Chancellor Angela Merkel to discuss their strategy. But France's new President Francois Hollande met his Spanish counterpart - not the German leader - ahead of Wednesday evening's EU summit in Brussels. Hollande's policies seem more akin to those of Spain's Prime Minister Mariano Rajoy. SOUNDBITE: French President, Francois Hollande, saying (French): "The first priority is injecting liquidity into the European financial system, to ensure that European banks, all European banks, can be consolidated. We are also concerned about growth. All of us are following budgetary consolidation policies at our own level." Spain has once again attracted investors' attention - due to its struggling economy and banking sector. Madrid is in the process of plugging a hole of at least 8 billion euros at its embattled lender Bankia, as part of an effort to clean up its debt-laden banks. Despite this, Rajoy repeated that Spain is not planning to seek bank bailout funds. SOUNDBITE: Spanish Prime Minister, Mariano Rajoy, saying (Spanish): "As of today, the government does not have any desire or any intention of turning to any of funds from the EU or any other international organisation." Before heading to the summit, Hollande said he would address the need for euro bonds - which Germany still opposes. One Spanish analyst is expecting a showdown between Hollande and Merkel. SOUNDBITE: Daniel Alvarez, XTB Trading Analyst, saying (Spanish): "We know there will be a clash between two ways of dealing with the situation - the German way, the way of the nucleus of Europe captained evidently by Mrs. Merkel on one side and on the other side we will have what some are already calling the Latin block comprised of the peripheral countries plus France, and captained by Mr Hollande." At the summit, leaders' minds will undoubtedly be focussed on the possibility of Greece leaving the euro zone. But after two years of trying to tackle the crisis, it's clear policymakers still disagree on what action they need to take. Joanna Partridge, Reuters

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Europe's new power couple

Wednesday, May 23, 2012 - 02:07