Franco-German motor sputters in crucial euro year

Sun Jan 20, 2013 11:44am EST
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By Noah Barkin and Mark John

BERLIN/PARIS (Reuters) - Germany and France will put on a show of total unity this week to mark the 50th anniversary of the Elysee Treaty that cemented their post-war reconciliation.

But beneath the public display of friendship, the Franco-German motor that has long driven Europe is sputtering and unlikely to offer new policy breakthroughs this year to help speed the euro zone fully out of its crisis.

French President Francois Hollande will travel to Berlin for a joint cabinet meeting and session of parliament due on Tuesday. He will also join German Chancellor Angela Merkel in giving speeches in the Reichstag building where Adolf Hitler once presided.

Hollande has been overwhelmed by domestic problems since taking over from conservative Nicolas Sarkozy eight months ago, and finds himself hemmed in by a growing euro-wariness within his Socialist Party and among the wider French public.

Officials in Berlin are watching his early attempts to overhaul the struggling French economy, worrying that if there is not more progress soon, the euro's crisis could flare up again, enveloping France, and Germany with it.

While Hollande's poll ratings are at rock-bottom, Merkel is at the peak of her popularity. But with a federal election due in September, she is turning inward and thinking less about the leap forward in European integration that she talked about so much last year.

Paris is looking to see whether Merkel will be pushed from power or forced into a coalition with Social Democrats that would drag her closer to the French vision of a risk-sharing Europe that favors economic growth over austerity.

"When it comes to policy they are a long way apart and that makes the relationship tough," said an EU official who works closely with both leaders when they are in Brussels for summits.   Continued...