Schröder and Chirac team up to avoid own goal

Date: 29/03/01

The spirit of Franco-German togetherness so absent at Nice is alive and kicking once more. Simon Taylor witnessed a return to form by the EU's top play-makers in Stockholm

RUMOURS of the death of the Franco-German alliance, as Mark Twain would have put it, are greatly exaggerated.

If Swedish Premier Göran Persson needs an excuse for the modest achievements of last weekend's Stockholm summit, he should look no further than the return to life of the special relationship between Paris and Berlin.

It came as little surprise that French Prime Minister Lionel Jospin would block any attempts by the Swedes to set a date for electricity market liberalisation in the summit conclusions. After all, Jospin can not afford to give Jacques Chirac an easy prize in next May's presidential elections by letting the Gaullist accuse him of selling Electricité de France down the Seine.

But what did shock officials at the summit was German Chancellor Gerhard Schröder's reluctance to put any pressure on France over the date, given German industry's keenness to get into the French market. Schröder's comments at the closing press conference emphasised Germany's sensitivity to French concerns. "I did not want to have a conflict with France or to see France isolated," he said.

Chirac was clearly prepared to return the compliment. Responding to Schröder's call for a seven-year delay before granting citizens from central and Eastern Europe the right to work in the EU, Chirac admitted that this was a difficult subject for the Germans and that it would have to be considered along with other sensitive topics.

The impression that France and Germany were team-mates again after behaving like opposing sides in Nice was reinforced at a signing ceremony with UEFA President Lennart Johansson to unveil a new regime for football transfers. Schröder, who once harboured ambitions to become a professional player, clearly enjoyed showing off his ball skills. Chirac applauded like a true fan.

Swedish diplomats also expressed surprise that UK Prime Minister Tony Blair, widely seen as the liberalisation hawk as far as the energy sector was concerned, did not press Jospin towards setting a date. Instead, he left it to Spanish premier José María Aznar to take on the French.

Aznar called for safeguards to keep EdF from competing in Spain's liberalised electricity market while France's remained closed. But the Swedes stressed that the idea was to force the French to liberalise their electricity sector, not to stop them operating in other countries. Finally a compromise was found by including language suggested by the Council of Ministers' legal service on preventing any distortions of competition while the EU's market is not fully opened.

Diplomats attributed Blair's reluctance to press the point with the French to his own inability to push for an early deal on postal liberalisation for similarly election-related reasons. Others argued that Blair was too preoccupied with the worsening foot-and-mouth crisis in the UK, which forced him to leave the summit as soon on Saturday morning.

French diplomats confirmed that the new spirit of understanding with their German colleagues at Stockholm was the result of a process of reconciliation begun soon after the Nice treaty negotiations had exposed the biggest splits between Berlin and Paris in years. "There are tangible signs of greater attention to each other's concerns," said one diplomat.

In January, Chirac, Jospin, Schröder and Foreign Ministers Hubert Védrine and Joschka Fischer met in the small Alsace town of Blaesheim to try to patch up their relationship. French diplomats said that the exchanges were "very frank" - diplomatic code for rancourous.

Since then the sides have held a series of informal meetings to discuss areas of mutual interest. This process culminated in a secret meeting between Fischer, Védrine and the French and German farm ministers, Jean Glavany and Renate Künast, on 13 March. Their talks focused on the direction of EU farm policy in response to the BSE and foot-and-mouth crises, as well as the coming challenges of enlargement and a new round of trade liberalisation talks.

Tough comments by Chirac and Jospin about France's bottom line on reform showed that Paris has spelt out to Berlin how far it is prepared to go next year. Chirac stressed that while he would consider "necessary re-orientations" of the Common Agricultural Policy (CAP), France was not prepared to give up its position as the world's second biggest exporter of farm goods.

"We have a limit and that is that France's exporting vocation should not be threatened," Chirac said, claiming that the US would like to see France and the EU kept out of world markets.

The French president even went as far as criticising previous CAP reforms which had cut prices and put pressure on farmers to change their methods to make up for income losses. This had been the reason for the move to more industrialised agriculture in the EU, he claimed.

French diplomats have confirmed that the recent contacts with their German counterparts have established "common ground" on farm reform between the Red-Green coalition governments. This has included a greater focus on quality production, a shift in spending towards smaller producers and more emphasis on environmentally-friendly agriculture.

But they say difficult negotiations lie ahead on the fundamental principles of the next reforms, especially on the sensitive question of price cuts, which would make EU exports more competitive but put small farmers at a disadvantage. Likewise, there are differences of opinion over national financing, which is dear to Germans' hearts but strikes fear into the French, who see it as the end of a Common Agricultural Policy and the destruction of one of the cornerstones of the EU.

Despite the softening of Chirac's opposition to any meaningful farm reform next year, EU diplomats expect little tangible progress until the presidential elections are out of the way in May. Neither of the two candidates can move substantially on farm policy or industrial liberalisation without being accused of selling out French interests.

But with the deadline for making progress in the enlargement negotiations on agriculture closing and the next WTO round increasing pressure for change, the EU faces a very tight window for agreeing reform in 2002.

The Franco-German alliance may be spluttering back to life. But beyond the new consideration the two sides showed each other in Stockholm, electoral concerns may require intensive care for another year at least.

The European Council, Stockholm, 23-24.3.01 showed the Franco-German alliance in full swing.