Why differences are hard to patch up? (2)

15:24, June 18, 2010      

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In the realm of financial monitoring or supervision, Germany and France agreed to push for an agreement on bank levies and a financial transaction tax to date. Germany took the lead in introducing a "naked transaction", or a short sale that has been carried out without first borrowing the shares or at least ensuring that the shares can be borrowed. On this issue, nevertheless, France is not happy about not being consulted. Sarkozy said that he and his government "did not have a cue how to do this, or, indeed…"

As a matter of fact, Germany has long had a moral right to have a greater say in EU affairs – this… could claim greater democratic legitimacy within the EU decision making. In spite of this, what is the reason for the differences between Germany and France?

Of late, a German resident reporter in France noted that many French economists believe in Keynesianism, or the Keynes effect theory of John Maynard Keynes (1883-1946). Under the theory, a country will implement a policy of economic expansion and promote its economic growth by increasing demands. In essence, France fears that it will subject itself to the punitive mechanism eventually owing to the rigid, strict implementation of the SGP.

On the contrary, Chancellor Merkel has inherited a market economy theory. She is very market-oriented and bent on economic supervision with the state-formulated rules and regulations. Apparently, varied management concepts result in different ways and means to cope with the financial crisis at present.

It is precisely for this very reason that it is difficult for Germany and France to mend their disparities in a short period of time. German media criticize government for paying its 4.8 billion euro share of the Greek bailout package and following the footsteps of France on the whole, while France and most EU member nations insist that Germany had hesitated and lost the most ideal opportunity, so the whole bailout package has unnecessarily shot up by a big margin. Against this major background, new problems are likely to crop up in German-French coordinated endeavors.

By People's Daily Online and contributed by noted PD desk-editor Liu Huaxin

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