Thursday, October 30, 2008

What's up, Sarko?

Economic weakness is leading to a recession, even in Europe.

The signs of economic caution are everywhere here, including even a sudden drop in the sale of bottled water.

Now, that's serious.

Trying to counteract fears of higher unemployment as the economy slows, Mr. Sarkozy announced a new program of subsidized work contracts, warned companies not to make unjustified layoffs and promised to loosen restrictions on short-term job contracts and Sunday work.

Warned companies to not lay people off unjustifiably? What a novel idea. As Sarko presses to make inroads, to prevent the recession from deepening, others remain skeptical.

The Socialist he beat for the presidency, Ségolène Royal, said Tuesday that “with a new plan practically every two days,” Mr. Sarkozy had “a credibility problem.” At the very least, she said, “we must pay attention that each plan announced should start before announcing the next.”

And other major states, especially Germany, are skeptical about his intentions. They believe that Mr. Sarkozy, who has often excoriated the Central Bank for its focus on limiting inflation, wants to sharply increase the size of France’s budget deficit — despite European Union restrictions — to stimulate an economy considered to be in recession and to create jobs.

Imagine him wanting to stimulate an economy; what a radical idea. Still, Sarko is something of a loose cannon.

Recent pronouncements by Mr. Sarkozy have rubbed the Germans and the British the wrong way, in part because he has reverted to an old habit of acting without consulting his allies. Quite unusually for Europe, Mr. Sarkozy has also called other leaders to summit meetings on extremely short notice, sometimes just a day, a senior European diplomat said, causing consternation and confusion. Mr. Sarkozy’s relations with the German chancellor, Angela Merkel, have deteriorated again, diplomats and French officials say, over both his lack of consultation and his efforts to pressure the European Central Bank.

Then again, he is bold. That can cut two ways, but action is certainly needed, and it would be better to act sooner rather than later.

In particular, Mr. Sarkozy has called for two European initiatives that have been widely criticized. The first is a European Union sovereign fund to protect the ownership of important business with suddenly low stock prices. The other is a “unified economic government” of the European Union that would bring the heads of state together on economic issues, and not just the finance ministers.Mr. Sarkozy argues that leaders must lead, and that with the Czech Republic and then Sweden, neither of which uses the euro, taking over the European Union presidency in 2009, Europe’s ability to deal with the global financial crisis will be reduced.

There's one of those European anomalies: countries that are in the EU but do not use the euro. And why not sovereign funds?

President Nicolas Sarkozy of France passed a mirror after delivering a speech on employment measures on Tuesday.

No comments:

Post a Comment