Analysis: S&P bomb may bolster "Merkozy" in boon for Sarkozy

Wed Dec 7, 2011 4:05pm EST
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By Catherine Bremer

PARIS (Reuters) - This week's blanket euro zone credit rating warning by Standard & Poor's has infuriated Paris and Berlin, yet it could help President Nicolas Sarkozy's re-election bid by giving new impetus to Franco-German relations.

The balance of power between France and its economically weightier partner is the topic of raging debate ahead of an April election, with opposition Socialists accusing Sarkozy of capitulating to German demands for budget control in Europe.

Sarkozy's hopes of appearing as savior of the beleaguered euro zone seemed to stumble on Monday when he was tipped off, shortly before he and German Chancellor Angela Merkel were to present a crisis master plan, that S&P would slap a downgrade warning on most of the 17-nation currency area.

The two leaders looked strained as they outlined their proposals, yet with Germany now tainted alongside France with the possibility of a downgrade, a new solidarity was visible that belied digs by Socialists at Paris' subservience to Berlin.

"It could play into Sarkozy's hands because now he and Merkel are not just in the same storm, they're in the same boat. If they start fighting now they'll only make it worse," said Philippe Moreau Defarges at the French Institute of International Relations (IFRI).

Illustrating the mood, as the S&P threat hangs over a crucial EU summit on Friday to debate the Franco-German crisis plan, French Finance Minister Francois Baroin said neither Sarkozy nor Merkel would leave the negotiating table before a deal is reached.

"The best way to bring people together is to find them a common enemy. Sarkozy and Merkel now have no choice but to be more united than ever," said Moreau Defarges.

France is under much more pressure than Germany as it was the only triple-A rated euro state singled out as risking a two-notch cut. Presidential insiders have told French media Sarkozy fears the "bell is tolling" and that his neck is on the line.   Continued...