Sound advice from Paris

Date: 23/01/1997

French novelist Gustave Flaubert once observed that “you can calculate the worth of a man by the number of his enemies”.

French Prime Minister Alain Juppé and his government certainly lack friends. The man given the premiership by President Jacques Chirac back in 1995 has seemingly spent most of his time in office rather than in power, only able to offer the French people year after year of austerity.

As if that were not enough, the German establishment France's bosom pal for the past 50 years has turned nasty.

This week, past and present presidents of the Bundesbank rounded on Juppé. His crime: suggesting that the EU's elected politicians should have a say in economic policy.

“The basis of the French position is that we do not want all decisions on economic, budgetary, fiscal and monetary policy to be shaped by a technocratic, automatic system under the sole authority of the European Central Bank,” Juppé said last month. “That is not our concept of democracy.”

Not only is it not the French concept, it should not be anyone's.

Critics have been right to condemn French attempts to stymie moves to liberalise postal, telecommunications and energy supply services in the EU, but now Paris is to be congratulated.

It may have taken them a long time to come around to the idea, but now Juppé and his Finance Minister Jean Arthuis are proving themselves to be champions of democratic accountability.

Instead of speech-making against the French proposals, Karl-Otto Pöhl, Hans Tietmeyer and Helmut Hesse would do better to read them.

At the moment, they are still vague (largely because of the paranoid knee-jerk responses they prompted from across the Rhine), but a speech by Arthuis last summer gave an outline of French ideas.

Their 'stability council' would be an informal gathering of ministers akin to the club of highly-industrialised states known as the Group of Seven an association never established by treaty. This would encourage “close dialogue” between EMU members on budgetary procedures and aims, the analysis and conduct of economic policy, and on exchange rate targets for the euro.

Is this really so terrifying? Much more frightening is the prospect that governments should be stopped from doing this by central bankers.

Under the Union treaties, budgetary policy remains the responsibility of governments and contrary to what some people in Frankfurt might say so, ultimately, is exchange rate policy.

The more central bankers carry on in this vein, criticising the EU's elected representatives for 'playing politics', the more important it becomes that they do.