Will Macron invoke emergency powers? Article 16
France will have to face the discipline of the global debt markets on its own. The European Central Bank (ECB) cannot legitimately intervene to hold down French borrowing costs unless, and until, the country faces a full-blown financial crisis.
If the ECB were to abuse its legal powers to let France off the hook, it would set off a political and legal storm, and further erode German confidence in the management of the euro.
Article 16 – the constitutional clause that allows him to assume emergency powers. The powers can be invoked if there is a threat to the “execution of France’s international obligations”.
Macron could reasonably argue that failure to pass a budget prevents the country from fulfilling its EU treaty commitments.
Charles de Gaulle invoked Article 16 in 1961 following the Algiers putsch by retired army officers
The ECB cannot salve French amour propre. It was able to prop up high-debt countries during the deflation years by purchasing €5 trillions (£4.1 trillions) of bonds under the cover of quantitative easing. That is no longer impossible.
The bank has since invented an anti-spread shield (TPI) but has never dared to use it, and for good reason – it is highly contentious and a flaming violation of the no-bail clause in the Lisbon Treaty.
The ECB arrogated to itself the power to buy distressed bonds as it sees fit, but only on behalf of countries that pursue
a) “sound fiscal and macroeconomic policies”; b) are not “subject to an excessive deficit procedure”; c) do not have “severe macroeconomic imbalances”; d) where the “trajectory of public debt is sustainable”; and e) where stress is “not warranted by country-specific fundamentals”.
Any sustained help would require a “macroeconomic adjustment programme”, which means an austerity package by the EU bail-out fund (ESM) – and probably an IMF regime, given the scale of France’s €3.3 trillion debt.
This would come with tough conditions and require a vote in the German and Dutch parliaments.
There is zero possibility that Left-wing Popular Front or Marine Le Pen’s Eurosceptic nationalists would accept such terms, or any terms at all.
France is in breach of every one.
Nothing can be resolved until Macron either falls on his sword or learns the meaning of democracy and falls on his knees at Canossa.
Ambrose Evans-Pritchard Telegraph 5 December 2024
Tillbaka till Rolfs länktips 6 december 2024
https://englundmacro.blogspot.com/2024/12/rolfs-lanktips-6-december-2024.html
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