France runs into German wall on EU growth drive

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Berlin rejected President Francois Hollande's call on Tuesday to set a mid-term target for the euro.  (Reuters) Berlin rejected President Francois Hollande's call on Tuesday to set a mid-term target for the euro. (Reuters)
SummaryFrench efforts to divert Europe from economic austerity have foundered twice in a week.

French efforts to divert Europe from economic austerity have foundered twice in a week due to German resistance, underlining a growing policy divide that is hobbling the core partnership.

Berlin rejected President Francois Hollande's call on Tuesday to set a mid-term target for the euro, a move he hoped would bring the single currency down to a level that would make it easier for French industry to sell its goods abroad.

Three days later, German Chancellor Angela Merkel joined forces with Britain's David Cameron at a Brussels summit to push through the first ever cut in the 27-nation's budget, taking an axe to spending on infrastructure projects backed by Paris.

"Is it the budget I would have liked if it was just up to me? No. But the problem with Europe is that there are others involved," a resigned Hollande told reporters after all-night talks secured a deal on EU funding from 2014-2020.

Both Hollande and Merkel have insisted that the Franco-German motor is still driving EU integration 50 years after the friendship pact between the former World War Two foes.

But while they say achievements such as last year's deal on EU banking supervision show that Paris and Berlin can still overcome their differences to forge compromises, the French voice is increasingly struggling to make itself heard.

"EU budget: Hollande left out of pocket", ran the headline of the left-leaning Liberation newspaper on the roughly three-percent cut in EU spending, mainly at the expense of transport, energy and telecoms projects which Paris has argued would foster growth and make Europe's economy more competitive.

"Cameron and Merkel impose austerity on Hollande" was how the conservative Le Figaro summed up the meeting.

PRE-SUMMIT HUDDLE

Hollande could have expected a hero's welcome in Brussels for his handling of his first war in the African state of Mali, where French forces have driven al Qaeda-linked rebels out of its main northern towns and into the hills.

Moreover, with Cameron having put Britain's EU membership on the line by promising a referendum on it if re-elected, last week's summit could have offered France and Germany the stage to rally together in a demonstration of European solidarity.

But in the budget wrangling that ensued, it was Hollande who looked isolated as his efforts to forge a coalition of southern and eastern European states demanding more generous spending were quashed by Germany, Britain and other northern countries.

EU officials were mystified when Hollande, citing other engagements, chose not

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