PARIS (MNI) – Greece should be given more time to cut its budget
deficit and reform its economy, France Prime Minister Jean-Marc Ayrault
said in an interview published over the weekend with a French online
news site.
Ayrault told Mediapart that he favored giving Athens more time “on
one condition: that it is sincere in its commitment to reforms,
particularly the fiscal ones.” He added that, “the solution cannot be
Greece’s departure from the euro.”
Ayrault’s comments are significant because it is the first time
that France – the Eurozone’s second largest economy – has publicly
supported the request from Athens for more time to cut its deficit.
Greece is seeking a two-year extension on the timeframe in which it
is expected to hit its fiscal targets, though it has not yet formally
requested it. Spreading out the deficit cuts over a longer period would
ease some of the economic and social pain afflicting the country and put
the government of Greek Prime Minister Antonis Samaras in a more tenable
political position.
However, Greece’s desire for more time is meeting strong resistance
from Germany and some of its like-minded peers from the Eurozone’s
“core” northern tier. They believe that more time for Greece means more
money, and they are not in the political mood to lend the Greeks more.
Ayrault also took the opportunity to criticize some members on
left-wing side of his government’s majority coalition – particularly the
Greens and the Lefist front – for their opposition to the EU fiscal
compact, whose ratification Ayrault is hoping to shepherd through
parliament.
The compact is considered a major step towards greater fiscal union
among Eurozone states, because it requires all signatories to enshrine
the requirement of a balanced budget in their national statute books.
Its opponents say it represents a surrender of French sovereignty to
Europe, and that it would tie the governments hands in times of
recession.
But Ayrault suggested that the fiscal pact is an indispensable
pillar of the overall strategy to overcome the crisis and preserve the
monetary union.
“The logical consequence of their approach would be to leave the
euro,” the prime minister argued. “We are going all the way in defense
of the euro. Not because of dogmatism but out of a sense of reality.”
Ayrault also ruled out an increase in the value added tax or in a
social security tax known as the “general social contribution” (CSG) as
a means of reducing the public budget deficit.
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