Macron’s eurozone plans put eastern EU members on the spot

French President Emmanuel Macron is impatient to reinvigorate the eurozone. But this poses a dilemma for the EU’s eastern members: stay out and risk losing clout in Brussels or join and risk losing economic sovereignty?

USA Präsident Macron vor der UN-Vollversammlung (Reuters/S. Stapleton)

Macron reiterated his view this week that a multi-speed Europe led by a core of ‘avant-garde’ countries could be the price worth paying for pushing the eurozone — and the European project more widely — forward in the aftermath of the Brexit vote.

“We should imagine a Europe of several formats — going further with those who want to advance, while not being held back by states which want to progress slower or not as far,” Macron said.

“It appears that Macron would like a tighter, more centralized eurozone with France and Germany at its heart,” Liam Carson of Capital Economics told DW. “However, he remained fairly vague on euro-zone specifics, probably because of the worse than expected outcome for [German Chancellor Angela] Merkel in the German election.”

But Macron’s words have fallen on some deaf ears in Central and Eastern Europe, a region struggling with political uncertainty and growing Euroskepticism, despite continued strong growth.

Of the nine new member states that joined the EU in 2004-2009, the Baltic countries, Slovakia, Slovenia, Cyprus and Malta have adopted the euro, while Poland, the Czech Republic, Hungary, Romania, Bulgaria and Croatia have not yet done so.

Critics argue that speeding up the process of monetary — as a precursor to fiscal — integration might fuel the overheating that was seen in Southern Europe after the 2007-8 financial crisis and subsequent recession.

But, “if the eurozone can generate growth throughout the 19 nations and not just the center, then any new institutions may prompt the non-euro members to want to join. If not, then the divisions would surely widen,” Linda Yueh, a professor of Economics at London Business School, told DW.

Watch video01:16

ECB policy seen as less than stimulating

‘It’s now or never’

Will Hutton, a British economist, told DW that while a two-speed Europe is a risk, “the time has come for this. Macron’s plans are the biggest boost to Europe since the early 1990s, the era of Jacques Delors.”

“Sure, Macron is using Merkel’s weakness, but Europe is on the cusp of an economic run and while some eastern European economies might not be able to stand the pace, Europe can’t go on at the speed of the slowest for much longer,” Hutton said, adding that the UK might even be knocking back on the EU’s door in the next five to ten years.

All non-euro EU member states except Denmark and the UK are already legally obligated to work toward adopting the euro, by satisfying various “convergence criteria,” namely:

Inflation — Member states should have an average rate of inflation that doesn’t exceed that of the three best-performing member states by over 1.5 percent for a period of one year before being assessed.

Government budgets — Member states’ ratio of planned or actual government deficit to GDP should be no more than three percent. Their ratio of government debt to GDP should be no more than 60 percent.

Exchange Rates — Member states should have respected the normal fluctuation margins of the exchange rate mechanism (ERM) and should not have devalued their currency against any other member state’s currency for at least the two years before being assessed.

Interest rates — Member states should have had an average interest rate over a period of one year before being assessed that does not exceed by more than two percentage points that of the three best-performing member states.

Central & Eastern Europe: weary and ​​​​​wary 

“It seems unlikely that any of the major economies in Central and Eastern Europe will adopt the euro any time soon,” Carson says.

“With respect to the criteria, as things stand, Poland, Romania and the Czech Republic all meet the debt, interest rate and inflation criteria for joining,” although he added that there is a good chance that loose fiscal policy in Poland and Romania will cause budget deficits to widen beyond the 3 percent of GDP threshold by next year.

“Hungary’s deficit could also widen beyond 3 percent of GDP and with public debt still well above 60 percent of GDP, it also fails the debt criteria.”

“More importantly, political appetite for joining the euro is generally waning. Accession to the eurozone in Poland and Hungary is unlikely to happen under the ruling PiS (Law and Justice) and Fidesz governments, which have both become increasingly hostile towards EU oversight of domestic policy,” Carson says.

“Poland’s opposition is based on ideological grounds, but also public support is not sufficient. In the Czech Republic the main obstacle is public support. Most of the parties would have been open to introducing the euro, but public opinion has prevented that so far. In Hungary there is strong public support and a governmental decision ahead of the 2018 elections might be a popular step,” Daniel BarthaExecutive Director of the Center for Euro-Atlantic Integration and Democracy (CEID)  in Budapest, told DW.

The Palace of Culture and Science in WarsawPoliticians in Warsaw have warned that the creation of a multi-speed Europe could “break apart” the EU.

Poland

“Brexit is not a risk for the EU … A bigger threat is if the EU starts to break apart into a multi-speed union, into blocs where some are stronger and can decide about others,” President Andrzej Duda said this month. “The result could be a divided EU that’s not politically or economically viable, which may break apart the bloc,” he added.

The bedrock of common understanding that Merkel and ex-Polish PM Donald Tusk shared is now long gone. And ties between Warsaw and Paris have been strained since August after Macron’s speech criticizing what he called Warsaw’s attack on democracy and a French plan to tighten rules on EU posted workers, such as Polish truck drivers.

The Law and Justice (PiS) government has also taken aim at Germany, demanding war reparations, attacking plans to build a second Nord Stream gas pipeline to Russia that bypasses Poland and being highly critical of its western neighbor’s policies towards refugees.

Nonetheless, Poland will start to debate whether to join the eurozone when the bloc becomes a stable and transparent entity, Konrad Szymanski, the Polish deputy foreign minister in charge of European affairs, has said.

About 80 percent of Polish international trade is accountable in euros, so entering the eurozone will significantly decrease currency risk and simplify transactions with foreign companies. Despite this, over two-thirds of Poles oppose joining the euro area.

Prague, the Czech capitalA general election to be held October 20-21, will show whether the Czechs will seek to join the EU hard core.

Czech Republic

The Czech Prime Minister Bohuslav Sobotka wants his country to set a date for the adoption of the euro and has “the ambition to belong among the most advanced European countries.”

The Czech Republic has been cautious about joining the euro, on both the left and the right. No firm date has been set and in recent years governments have shied away from making predictions.

The country has a long reputation for running a credible monetary policy and traditionally has had interest rates below those in the eurozone.

“In the Czech Republic, Andrej Babis, who is the heavy favourite to become Prime Minister following next month’s elections, has continued to strongly reiterate that the Czech Republic shouldn’t adopt the currency,” according to Carson.

Hungary

Hungarian economic policy cannot abandon its long-term intention of joining the eurozone, “but there is no rush,” the economy minister, Mihaly Varga, said in June. Vargo said a currency system where monetary policy is unified but fiscal policy is not is also a viable route.

But a senior Hungarian politician said in early August that Hungary could only consider adopting the euro when its level of economic development is closer to that of the eurozone countries.

“That is, if there is genuine convergence,” Andras Tallai, state secretary at the economy ministry, said.

Hungarian parliament bulilding is seen as ice floes float on the Danube river in Budapest In 2013, Hungarian Prime Minister Viktor Orbán proclaimed euro adoption would not happen until the country’s purchasing power parity weighted GDP per capita had reached 90 percent of the eurozone average.

“Otherwise, Hungary could be the loser of accession similar to some Mediterranean countries,” he went on, adding that Hungary won’t yet enter the Exchange Rate Mechanism (ERM) — a kind of ante-chamber for eurozone aspirants — but already meets all of the Maastricht criteria for adopting the euro, with the exception of the forint not being pegged to the euro.

Hungary has to enter to the ERM2 (the exchange rate mechanism) and meet the criteria for 2 years constantly. Hungary meets all other criteria: inflation was 0.1 percent, the deficit 2.4 percent and interest rates are also around 1 percent, and although the debt level is beyond the 60 percent limit, as it is constantly reducing, Hungary also meet that criterion.

Romania

Former Romanian Prime Minister Sorin Grindeanu has said Romania will adopt the euro only after wages in the country come close to those in other EU member states.

Romania has second lowest minimum monthly wage out of 20 EU member states, of 1,450 lei ($341/321 euro), after Bulgaria, according to a study by KPMG.

A study conducted last November by the European Institute of Romania showed that the country could join the Eurozone 13 years from now – if it sustains the average growth rate of the last 15 years.

Currently, Romania is below 60 percent of the European Union average in terms of GDP per capita.

“The story is slightly different in Romania. The foreign minister, Teodor Melescanu, recently announced that Romania will adopt the euro. However, he stated that this won’t happen until 2022. And given that previous plans to adopt the euro have been shelved, this date could easily be delayed. In short, Romania won’t become a member of the euro-zone any time soon,” Carson says.

Frankreich PK Migrationsgipfel in Paris (Reuters/C. Platiau)Angela Merkel is supporting Macron’s call for a new powerful eurozone finance minister post to oversee economic policy across the bloc. She said the new role could provide “greater coherence” to economic policy.

Merkel holds the key

German Chancellor Angela Merkel also backed a plan for a European Monetary Fund (EMF) that would redistribute money within the bloc to where it was needed.

Macron believes that the monetary union suffers from too little centralization and needs its own budget, while Merkel views the bloc’s problem as over-centralization and too little national responsibility.

Merkel has backed her Finance Minister Wolfgang Schäuble‘s proposal to turn the European Stability Mechanism, the eurozone’s bailout fund, into the EMF, but she does not see the official possessing “expansive powers.”

Merkel has said she wants a budget of “small contributions” rather than “hundreds of billions of euros.”

France will implement these deep structural reforms on the proviso that Germany agrees to modest steps towards fiscal federalism in the eurozone. But many in Germany — and far beyond as well — appear skeptical about Macron’s ability to achieve his domestic goals.

Still, observers say, Merkel will want to help Macron politically as it is in Germany’s interests to see that he is not replaced at the next presidential election in France by Marine Le Pen of the National Front.

Watch video02:11

Macron calls for more European unity

 

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UN: France anti-terror draft law would affect civil liberties

UN human rights experts have warned France that the planned legislation could have “grave consequences” for civil liberties. They fear a permanent state of emergency.

Soldiers patrolling in Nice (Reuters/E. Gaillard)

The UN’s Human Rights Office has expressed concern about a French draft law that translates as a “bill to strengthen internal security and the fight against terrorism.”

It could affect people’s “right to liberty and security, the right to access to court, freedom of movement, freedom of peaceful assembly and association, freedom of expression and freedom of religion or belief,” according to a statement by two UN human rights rapporteurs, Fionnuala Ni Aolain and Michel Frost.

France: “The normalization of emergency powers has grave consequences for integrity of rights protection” @NiAolainFhttp://ow.ly/xbLD30fsAzZ 

Read more: Macron:Fighting Islamist terror France’s top priority

The draft law, which was passed by the senate and is now being debated in the National Assembly, would incorporate temporary measures granted to authorities in a state of emergency into ordinary law.

‘Vague wording’

In the statement, the two UN experts criticize the “vague wording” of the bill, which they say does not define terrorism nor the threats to national security sufficiently well. Ni Aolain and Frost are also worried that Muslims may face “discriminatory repercussions.”

They argue that a government’s options for cracking down on terrorism are “limited by its compliance with international human rights standards.”

That means that a state of emergency must be proportionate and have a time limit, according to the statement.

French President Emmanuel Macron argues that the law is necessary to combat terrorism and foil further plots once a state of emergency imposed in 2015 expires.

Watch video00:28

France marks one year since Nice terror attack

 

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French President Emmanuel Macron sets out vision for EU

Emmanuel Macron says EU members must forge a common path. France’s president has set out his vision for a rebooted European Union, targeting skeptical German politicians who made strong gains in Sunday’s elections.

Frankreich Emmanuel Macron, Präsident | Präsentation Europäische Initiative in Paris (Reuters/L. Marin)

On Tuesday, Emmanuel Macron said Germany and France had overcome the legacy of two world wars together and alongside their partners could improve the European Union together. The former economy minister took power as France’s president in May, promising to strengthen the eurozone and deepen EU integration as the bloc prepares for Britain’s departure. He has already begun to undertake an aggressive neoliberal agenda in France.

“Here we are with a Europe that is more fragile than ever bearing the brunt of globalization as we know it and falling victim to ideas like nationalism and identitarianism,” Macron said in a heavily anticipated speech delivered at Paris-Sorbonne University on Tuesday. “The dangers, the ideas of the past are growing once more,” he added, alluding to the growing power of the far right in EU nations.

Read more – Macron’s EU vision meets Merkel’s realities

Macron has grown desperate to receive German Chancellor Angela Merkel’s endorsement of his agenda, which includes plans to give the 19-member eurozone a finance minister, budget and a parliament independent of the 28-country EU’s existing 750-seat transnational legislature. But Macron’s plans received a blow on Sunday, with the shock result of the elections in Germany, where the anti-immigration, euroskeptic Alternative for Germany (AfD) emerged as the parliament’s third-largest party.

Since Sunday, Macron has spoken twice with Merkel, as well as other EU leaders and European Commission President Jean-Claude Juncker — who does not support the idea of a separate eurozone budget or parliament. Merkel does not oppose having a eurozone finance minister, but differs with Macron on how powerful to make the role.

French Pres  calls for:

EU asylum office,
EU general attorney,
EU defence budget,
EU intelligence Academy,
EU transaction tax.

‘It’s a lie’

Macron used his speech to argue for institutional changes, initiatives to promote the EU, and new ventures in the technology, defense and energy sectors. He called for fellow EU leaders to pay attention to domestic needs but not to forsake the bloc in doing so and suggested that countries could integrate foreign soldiers into their armies as France will.

Read more – Macron: More Europe, please

Macron also called for a common tax on carbon emissions, as well as increasing investments into “development” projects in regions such as Africa.

“It’s a lie that hunkering down on your own country is ever going to be a successful path,” Macron said on Tuesday. “Let us be bold together and try this new path.”

Along with Brexit and Germany’s elections, Macron’s proposals will likely top the agenda at a two-day summit of the 28 EU members in Estonia starting on Thursday. Germany’s cooperation will prove essential, though Macron also needs to convince other EU partners.

German politicians respond

An early response to Macron’s speech came from Germany’s laissez-faire Free Democrats (FDP), potential partners to Chancellor Merkel’s Christian Democrats in any future coalition government. Alexander Graf Lambsdorff, the top Free Democrat in the European Parliament, said he welcomed Macron’s call to strengthen EU military cooperation and digitization, but he rejected the idea of a joint eurozone budget.

“This was a courageous speech by President Macron, even if not all of his proposals will receive the approval of the FDP,” Lambsdorff said on Tuesday. “The problem in Europe is not a lack of public funds, but a lack of reform,” he added. “A eurozone budget would set exactly the wrong incentives.”

Foreign Minister Sigmar Gabriel, whose Social Democrats intend to lead the opposition under Germany’s next government in a bid to curb the influence of the newly-elected far-right AfD, was more generous in his assessment of the speech, saying in a statement that Macron had delivered “a passionate argument against nationalism.”

“Only with common solutions can we inspire the people in Europe again about Europe,” Gabriel said in his statement. However, he added, “we also need the common European will.”

Watch video05:01

Macron lays out his vision for EU reforms: DW’s Catherine Martens from Paris

mkg/kms (Reuters, AFP, dpa, AP)

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EU cash-dumping in Africa bolsters unruly regimes, aggravates migrant crisis

Martin Jay
Martin Jay is an award winning British journalist now based in Beirut who works on a freelance basis for a number of respected British newspapers as well as previously Al Jazeera and Deutsche Welle TV. Before Lebanon, he has worked in Africa and Europe for CNN, Euronews, CNBC, BBC, Sunday Times and Reuters. Follow him on Twitter @MartinRJay
EU cash-dumping in Africa bolsters unruly regimes, aggravates migrant crisis
Trump’s recent block on US aid to Egypt over human rights concerns raised many eyebrows. But the EU should follow his lead in Africa as it is geopolitical bribery dressed up as aid, which is really the heart of the matter.

Recently, Europe’s four big guns and three African states agreed on a strategy to tackle illegal human trafficking and support nations struggling to contain the flow of people across the desert and the Mediterranean Sea. The move has been prompted primarily by Italy, which accused France and other EU states of not sharing the migrant burden.

But is it an EU problem? And if it is, just how much blame can the EU and Brussels take for the crisis in the first place?

The 28-nation European Union has long struggled to reach any solution to the influx of migrants fleeing war, poverty and political upheaval in the Middle East and Africa. Specifically, it is Africa where Brussels seems incapable of dealing with the crisis, the epicenter of which is Libya, which French President Emmanual Macron is trying to stabilize with a recent initiative to bring together the two rival power blocs for peace talks following a recent ceasefire.

Macron is also leading the much-needed debate about the refugee crisis from Africa. Addressing the leaders of Germany, Italy, Spain, Chad, Niger and Libya, he called for greater cooperation.

A recent conference allowed leaders to iron out a plan setting out a mechanism to identify legitimate migrants who are fleeing war and persecution. The idea is that they can avoid being exploited by traffickers if the UN can register them in Niger and Chad.

“At the core of it, it’s all about fighting illegal migration,” German Chancellor Angela Merkel said.

EU programs in Libya pay cash to traffickers – MEPs

And she’s right. Although this is a step in the right direction, aren’t both France and Germany paying diplomatic lip service to the EU in not pointing out one erroneous detail in all of this: if the EU imposed much tougher conditions on aid given to African leaders, forcing them to improve on human rights, the effect on the sheer numbers of people fleeing those countries would be considerable.

They are not fleeing poverty alone, but more oppression.

Médecins Sans Frontières (MSF) recently accused the EU of financing the trafficking business with its aid program in Libya. The program, which has funded coastguards to patrol against human smugglers, has led to the deplorable plight of captured migrants being held in detention centers. Nevertheless, Italian and Spanish MEPs on September 12th regaled the EU foreign affairs chief, Federica Mogherini for her new EU programs, which MSF claims are “short-sighted” and have resulted in the traffickers actually benefiting from EU cash.

Yet the MEPs and MSF missed the point. The international medical organization and the growing numbers of MEPs should look more closely at the EU aid programs for the African countries themselves.

Building detention centers for the refugees is like using a sticking plaster from the first aid box to deal with a decapitation. Simple logic is required. Donald Trump gave us the example in August when he cut off US aid to Egypt, citing human rights concerns.

The problem with dictators on the continent is that they become addicted to Washington or the EU’s aid lifeline. Soon enough, leaders ask for more money to resolve problems which stem from symptoms of escalating corruption. It’s a vicious circle which neither Merkel nor Macron care to acknowledge.

At the auspicious conference, this was apparent, with even EU leaders falling into the trap of throwing more money at the problem.

“If we want to stop human traffickers, then this can only be achieved through development aid,” Angela Merkel said.

Perhaps unsurprisingly, there wasn’t a shortage of African leaders who were ready to present their former colonial leaders with begging bowls.

But money will not solve the issue. In fact, it is EU money – by the lorry load – which is at the heart of the problem.

EU President Antonio Tajani recently recommended that up to $6 billion should be put aside to stop migrants and $10 billion to do the same in Libya’s southern neighbor, Chad. Britain’s Foreign Secretary Boris Johnson pledged on a recent trip to Benghazi and Tripoli €9 million to help control terrorism and people trafficking. With no loss of an irony, the Italians have been accused of paying off local militias to stop the flow of migrants to their shores.

After living in Africa for six years, I have seen with my own eyes how Western money nearly always creates cultures of dependency and makes governments more ingenious at stealing it, illustrated by investigative journalist Graeme Hancock in his investigation into UN corruption, ‘Lords of Poverty.’

Ethan Chorin, a contributor to Forbes magazine agrees.

“Uncoordinated and vague, these pledges have little chance to make progress — but large potential to make things worse,” he argues, while dismissing the case for a ‘Marshall Plan’ for Africa, arguing instead for regional players to stop financing the warlords in Libya.

However, the real core problem, which neither old Europe nor the EU wants to address, still lies with the African countries themselves. And they have good reason.

Nearly 120,000 migrants, including refugees, have entered Europe by sea so far this year, according to the International Organization for Migration. Tragically, more than 2,400 have drowned while making the dangerous journey, often without enough food or water in overcrowded dinghies run by people smugglers.

Yet, most of these people are lower middle-class Africans who want to escape the horror of tyrannical regimes which are oppressing them, convincing them that they have a better life waiting for them in Europe. The real issue is human rights and how the EU continues to blithely support these regimes with hundreds of millions of euro in ‘development’ programs while turning a blind eye to horrific human rights atrocities like torture, rape, and false imprisonment.

Macron should hold the EU to account much more. Ironically, at the very conference where the EU’s foreign policy diva Federica Mogherini is invited – but could not organize as she has so little influence with Paris and Berlin – we are witnessing a farce. The EU is asked to offer its opinion to a problem which is almost entirely created by its own foreign policy ruse with African leaders.

A new UN peace process on Libya – which Macron, not Brussels is taking charge of – might want to ask the EU to hold the leaders of many African countries to account more on human rights atrocities and follow Trump’s example in Egypt.

Baby, you can drive my CAR

The Central African Republic (CAR), for example, which the EU gives hundreds of millions of euro is one of many examples. And we could also, while we’re at it, ask what this money is really for. Being ‘development aid,’ the results are hard to fathom. After working in Brussels for over a decade, I would argue that the money gives Brussels more bang for its buck as those governments are obliged to assist Brussels in its PR program to make itself look more relevant on the world stage.

In 2016, Federica Mogherini herself pledged to give over €2 billion in reconstruction aid following civil war there. It’s hard to see how this, or the more modest €360 million of state-building ‘aid’ given to CAR is helping crack down on torture, rape and a plethora of abysmal human rights atrocities, but more assist the EU with its delusional view that it is a global player.

According to the US State Department, CAR has an off-the-scale rating on human rights atrocities. These include“extrajudicial executions by security forces; the torture, beating and rape of suspects and prisoners; impunity, particularly among the armed forces; harsh and life-threatening conditions in prisons and detention centers; arbitrary arrest and detention, prolonged pretrial detention and denial of fair trials.”

‘Politics raped European values’: EU court rejects Hungary & Slovakia’s bid to stop refugee flow https://on.rt.com/8mdi 

Photo published for ‘Politics raped European values’: Hungary & Slovakia slam EU court for refusing quota demands — RT...

‘Politics raped European values’: Hungary & Slovakia slam EU court for refusing quota demands — RT…

The European Court of Justice has ruled that the current system of quotas for resettling refugees is proportionate, amid protests by east European states that cite culture clashes and terrorist…

rt.com

The State Department also highlights, for good measure “fatal mob violence; the prevalence of female genital mutilation; discrimination against women and Pygmies; trafficking in persons; forced labor; and child labor.”

But there is no real accountability from the EU on where this money is spent, a point often raised by critics of Brussels which call it a “blind spot,” with as much as half of the annual 23 billion euros lost due to corruption and incompetence.

Nor, any reports from the European Commission on what it is doing to crack down on gargantuan human rights atrocities carried out by the CAR regime.

Is it hardly surprising that there is an exodus of people from this country escaping the vestiges of human rights atrocities which, arguably, are meted by a brutal despot supported by the EU?

If this money was used instead to assist start-up companies and train young people in entrepreneurialism – and be given only on the basis of leaders scrapping their atrocious practices – then not only would the migrants not leave their own countries and head for Europe, but they would create jobs for thousands of others in their own countries.

The problem really is the money going there in the first place, and the unpalatable relationship leaders of these regimes have with Brussels, who almost uncertainly pocket the money themselves. It is really the EU which needs to be held to account much more about its own graft in these countries which is fueling the Libyan refugee crisis.

But who would do that? Macron and Merkel know what €20 billion of aid from Brussels and European states are doing in Africa. They are both guilty of turning a blind eye as they know this money is not improving human rights and creating jobs but merely strengthening unruly regimes who will stop at nothing to remain in power.

Martin Jay is based in Beirut and can be followed at @MartinRJay

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

Courtesy, RT

France’s Emmanuel Macron outlines vision for Franco-German alliance

French President Macron has said boosting cooperation with Germany was crucial to regaining the trust of European voters. His comments came ahead of his first EU leaders summit in Brussels.

Frankreich Wahlen Macron (picture alliance/AP Photo/T.Camus)

French President Emmanuel Macron on Thursday called on Germany to work alongside France in fostering a fresh approach to European politics and winning back the trust of people feeling disenfranchised by the EU.

Speaking to a number of European newspapers ahead of his first EU leader summit in Brussels on Thursday, Macron said the greatest threat facing the bloc was the propensity for lawmakers and voters to veer away from liberal policies.

Read more: Opinion: Europe, En Marche!

“The question now is: will Europe succeed in defending the deep values it brought to the world for decades, or will it be wiped out by the rise in illiberal democracies and authoritarian regimes,” he said.

Watch video01:17

Let The Reform Begin

The French president called on Germany and France to drive the necessary reforms needed to reconcile citizens with the European project. Macron’s policy roadmap would see the EU promote “greater economic and social wellbeing” and introduce tighter rules on workers and make it harder for companies to employ low-wage labor from eastern Europe.

“One country’s strength cannot feed on the weakness of others,” Macron told reporters. The French president insisted that German Chancellor Angela Merkel was in total agreement and realized the need for deeper cooperation. “Germany, which underwent a series of reforms around 15 years ago, is realizing that this isn’t viable,” he said.

Doubts remain over new eurozone ministry

One area where Macron’s vision has drawn skepticism in Berlin concerns the euro currency. The French president has called for a common eurozone budget and a democratically controlled “Euro Ministry.”

Reports last month suggested that the proposal had been rejected in Berlin by German Finance Minister Wolfgang Schäuble.

Read more: Macron’s EU ideals meet Merkel’s mastery

However, Macron insisted on Thursday that it was the “only means of achieving more convergence within the eurozone,” and that “Germany does not it deny it.”

On Tuesday, Merkel signaled that she would be open to the idea of a eurozone budget.

“We could, of course, consider a common finance minister, if the conditions are right,” the chancellor said in a speech at the annual congress held by Germany’s largest industrial lobby, the Federation of German Industries. However, Merkel ruled out any European body taking responsibility for member states’ risks and liabilities for debt.

Watch video25:59

Victory for Macron – Challenge for Europe?

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Opinion: Emmanuel Macron’s purges in Paris

The new French president has lost his liberal coalition partner under Francois Bayrou. All for the better: Only now can Emmanuel Macron maintain his credibility, argues DW’s Max Hofmann.

Emmanuel Macron und Francois Bayrou (Picture alliance/dpa/I. Kalashnikova/Sputnik)

“Démission de courtoisie” – the collective resignation of a government that customarily happens after a French parliamentary election – can be loosely translated as a “resignation out of courtesy.” The prime minister withdraws his government and sends them, sometimes with slight changes, back into the race – a formality to take into account new insights gleaned from the election. And so it goes this time as well. But what’s happening in France has nothing to do with courtesy. It’s about credibility.

Four ministers have left (or more precisely: been forced to leave) the cabinet, including all three from the “Mouvement Democrate” (MoDem) under the leadership of centrist Francois Bayrou, himself a political institution in France. Bayrou was hoping to stay on as justice minister and had already announced a new law for the “moral improvement of political life,” or, less pompously, an anti-corruption law. With his proposal he was towing the line of the young president, who has promised to clean up wasteful spending of taxpayers’ money and the use of high-powered positions in government for self-enrichment and nepotism.

Hofmann Max Kommentarbild Max Hoffman is head of DW’s Brussels bureau

Macron forced to take action

Too bad that Bayrou’s entire party has now been targeted by investigations: It’s suspected of misappropriating EU funds to finance some of its official activities, possibly violating a rule stating that the two things must be kept separate. In previous governments such an accusation would have been dismissed as trivial. And compared to what the conservative presidential candidate Francois Fillon has been accused of doing – giving his wife up to a million dollars for heretofore unknown reasons – it probably is. But Emmanuel Macron assumed office promising to clean up politics, and now he must follow words with deeds.

It’s only logical, then, that the young president – who is keeping his cabinet on a very short leash – is starting to clamp down. In fact, there’s no other option for him. The extremely low turnout in the parliamentary elections shows that the political turmoil in France hasn’t dissipated overnight.

Quite the contrary: on the far left and the far right, La France Insoumise and the National Front are waiting eagerly for the government’s first missteps so that they can reap the radical potential of the French electorate. Because he didn’t want to descend into the same elitist corruption of his predecessors, Macron had to take action.

The situation isn’t pretty for the president. First, it never looks good to mistreat a minister who’s already in office. One wonders if it’s really so difficult to do a more thorough job of reviewing potential problems before appointing someone to a position in the government. Second, Macron has been hard-pressed for experienced and “clean” ministers. Members of MoDem are probably out of the running, since even their boss had to go. The president has thus lost his de facto coalition partner. He must now close the gaps from within his own ranks. That won’t be easy, since over half of his party’s members are political newcomers. While Macron is following through on his promise to innovate, at the same time the bar for competence is being set quite low.

Coalition lost, credibility saved

The president himself may have been irritated over the past few days by having to enter into a coalition with MoDem. After all, he won the majority in parliament without Bayrou and Co. It would have been better if his party, “La République En Marche,” had not relinquished seats to some of his partners, but a few weeks ago Macron probably thought his young party was dependent on an alliance with MoDem. On the other hand, it’s better to make a painful break than to draw out the agony. The cooperation wouldn’t have been easy anyway. Now Macron has even more freedom, even if his majority has shrunk due to the absence of his partner. But for the president, a small majority is still better than no credibility.

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French President Emmanuel Macron’s LREM party wins majority in parliament

French President Emmanuel Macron’s LREM party has won a large majority in parliamentary elections which will enable it to push through reforms. But there was a record, low turnout.

Watch video00:44

LREM acting president: ‘The size of this majority provides France with an opportunity’

Macron’s year-old Republique en Marche (Republic on the Move, LREM) and Modem allies were set to win between 350 and 361 seats in the 577-seat National Assembly, based on partial results after the second round of the legislative elections announced shortly after midnight. Before voting closed, pollsters had predicted LREM would win between 400 and 470 seats.

Macron’s success was marked by record low turnout of just under 44 percent.

With 82 percent of the vote counted, the Interior Ministry said Macron’s party had 42 percent of the vote, the conservative Republicans had 22 percent and the far-right Front National 10 percent. The Socialists, who held the presidency before Macron’s independent presidential victory in May, were decimated and only won six percent of the vote.

Following the initial results, French Prime Minister Edouard Philippe said the voters had given a clear majority to President Macron, and that his government was “humbled and determined” after securing a victory in the polls.

A diverse National Assembly

Philippe also said the diversity of new lawmakers was a good sign for France. “This majority will have a mission: to work for France,” the PM said. “With their vote, the French have, by a wide majority, chosen hope over rage, optimism over pessimism, confidence over withdrawal.”

German Chancellor Angela Merkel was among the first to congratulate Macron. She lauded him for winning a “clear parliamentary majority” in elections Sunday, government spokesman Steffen Seibert said. Seibert added, in a tweet, that Merkel wished for “further good cooperation for Germany, France, Europe.”

Kanzlerin : Glückwunsch, @EmmanuelMacron, zur klaren parlamentarischen Mehrheit +auf weiter gute Zusammenarbeit für DEU, FRA, Europa.

Foreign Minister Sigmar Gabriel was quoted on Twitter by his ministry as saying “the road is clear for reforms, in France and in Europe.”

AM @sigmargabriel: Durch-Marche von @EmmanuelMacron auch in Assemblée nationale! Der Weg ist frei für Reformen, in Frankreich und in Europa.

FN Le Pen’s first seat

Far-right leader Marine Le Pen, who lost to Macron in the presidential election, won a seat in parliament for the first time, her National Front party confirmed. She won her northern constituency of Henin-Beaumont with a large majority and said would “fight with all necessary means the harmful projects of the government.”

Projections showed the conservative Republicans and their allies to be the largest opposition group with 97-133 seats while the Socialist Party and its partners will secure 29-49 seats.

Le Pen’s National Front may get four to eight seats but the party looked set to fall well short of its 15-seat target which would allow it to form a parliamentary group and benefit from privileges. “It is absolutely scandalous that a movement such as ours, which won … 3 million votes in the first round of these legislative elections, cannot form a group in the National Assembly,” Le Pen said.

Watch video05:08

Laetitia Avia, En Marche party candidate, speaks to DW’s Max Hofmann

Jean-Christophe Cambadelis, the secretary general of the Socialist Party, announced his resignation from the party leadership, saying “the defeat of the left” in the election “cannot be overlooked.” He said the Socialist party needed to change its ideas and its organization and that a “collective leadership” would replace him.

Low turnout

During last Sunday’s first round of voting, LREM garnered 32.3 percent of the vote. In French elections, if no candidate wins more than 50 percent of the vote in the first round, a runoff is held between the top two vote-getters.

The voter turnout on Sunday was lower than expected, with the final turnout estimated at between 42 and 43 percent. By midday Sunday, only 17.75 percent of voters had cast a ballot, down from the 21.41 percent recorded at the same time of day during the 2012 parliamentary run-off vote.

– Emmanuel Macron’s storming of the Bastille

A voter collect ballots ahead of voting (picture alliance/AP Photo/C. Paris)Election fatigue was said to have kept voters from the polls on Sunday

A mandate to push through reforms

The result means that Macron should be able to push through both Prime Minister Philippe’s government as well as proposed liberalizing reforms that are opposed by both parties on the left and the far-right National Front.

LREM lawmakers can now overhaul France’s labor policies by cutting tens of thousands of public-sector jobs and overhauling the pension system.

“From this evening, it is time for the presidential majority to get to work,” the prime minister said. “This majority will be united behind the government to put the president’s program into action.”

Rival parties spent the last week trying to motivate their supporters, alerting them to the risks of a presidential supermajority.

France’s trade unions also warned Macron against using his majority to impose austerity measures.

Watch video01:39

Macron hopes popularity will translate into reforms

shs/jm (AFP, Reuters)

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