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France's Hollande plunges into debt crisis

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Francois Hollande's decisions on eurozone austerity and NATO troop withdrawalsFrance's president-elect Francois Hollande was plunged straight into the European economic debate on Monday, as doubts over his plans and turmoil in Greece threatened to tip the eurozone back into crisis.

The 57-year-old Socialist won power on Sunday, ousting France's right-wing leader Nicolas Sarkozy, and is due to take office formally on May 15 before embarking on a packed calendar of major international summits.

First on his agenda will be Europe's debt crisis, where he is on a collision course with fellow European Union leaders over his plan to renegotiate the bloc's fiscal pact that many credit with saving the eurozone from meltdown.

Hollande promised the cheering crowds that welcomed his election that he would reopen talks in order that the pact focus on growth rather than simply imposing deficit-cutting austerity rules, an idea opposed by Berlin.

"This is the mission that is now mine: To give the European project a dimension of growth, employment, prosperity - in short, a future," he said.

"This is what I will say as soon as possible to our European partners and first of all to Germany," he declared. "We are not just any country on the planet, just any nation in the world, we are France."

Fiscal challenges

The election was marked by fears over European Union-imposed austerity and economic globalisation, and Hollande has said his first foreign meeting will be with Angela Merkel, the German chancellor and the key driver of EU budget policy.

Hollande plans to replace some of Sarkozy's cost-cutting with higher taxes on the wealthy while balancing the budget by 2017, despite a hiring spree in education and a return to retirement at 60 for some workers.

He also wants to renegotiate a European treaty on trimming budgets to avoid more debt crises of the kind facing Greece.

That would complicate relations with Merkel, who championed the treaty alongside Sarkozy.

Under Sarkozy, France pledged to rein in its spending while the rest of the 17 countries that use the euro embark on a strict period of belt-tightening.

Merkel congratulated the president-elect during a phone conversation on Sunday evening, inviting him for early talks in Berlin, adding that he'd be welcomed "with open arms" when he enters office.

World reaction

In comments made in Berlin on Monday, however, Merkel said that the European Union's fiscal pact, which Hollande has criticised, "is not negotiable".

Eamon Gilmore, Ireland's deputy prime minister, meanwhile, warned that his country would not defer a May 31 referendum on the fiscal pact to give Hollande time to rework the treaty.

After seeing Merkel shortly after his inauguration, Hollande will attend several international meetings, including a G8 summit in the United States on May 18 and 19 and a NATO gathering in Chicago on May 20 and 21.

Manuel Valls, Hollande's communications director, confirmed on Monday that France would use the summit to "announce the withdrawal of its forces from Afghanistan between now and the end of the year".

President Barack Obama invited Hollande for talks at the White House, amid concerns about this pledge to hasten the exit of France's 3,300-strong contingent from the NATO-led force in Afghanistan.

The heads of state of several European countries, including the United Kingdom, Spain, Belgium and Italy, also congratulated Hollande on his victory, and pledged to work with him.

World markets opened sharply down on Monday, following Hollande's victory in France and the change of government in Greece.


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