France’s Macron hails democracy in Athens — and takes a sideswipe at the IMF

Key Points
  • French President Emmanuel Macron emphasized the cultural ties that bind Greece and France together, and spelled out his idea for a more cohesive euro zone
  • He recommended a European - rather than international - monetary fund to handle future crises
Macron lays out vision of deeper EU integration
Macron lays out vision of deeper EU integration

French President Emmanuel Macron delivered an ambitious vision for how the European Union should reform, but used the opportunity to lash out the International Monetary Fund (IMF) for its role during the euro zone debt crisis.

Macron was in Athens for a two-day visit, accompanied by 40 business executives from companies including Total and Vinci in a trip designed to encourage investment and show goodwill towards a country which is emerging from a multi-year recession.

In the historic speech Thursday on the Pnyx hill in Athens - the founding place of democracy - Macron emphasized the cultural ties that bind Greece and France together, and spelled out his idea for a more cohesive euro zone, warning that "sovereignty, democracy and trust" are all "in danger."

He went on to stress the importance of bloc-wide structural reforms and reiterating calls for further fiscal coordination via the creation of a central euro zone budget and finance ministry.

Notably he posited the creation of a new European Monetary Fund to handle future crises, adding that "as far as I am concerned, the IMF had no place in EU affairs."

Greece has undergone three economic bailouts since 2010 that were accompanied by substantial austerity measures including tax increases and social security cuts. The EU and IMF oversaw the implementation of these measures – which has prompted backlash from a population that saw its unemployment rate rocket to 28 percent and output contract by more than 20 percent in the midst of the crisis.

The IMF has typically stuck to a "two-line" approach regarding Greece: The organization believes there is a need to keep undertaking structural reforms to make the Greek economy competitive, while also implementing some form of debt relief for long-term sustainability. In Macron's speech he also added that while he also welcomes Greek reforms, they must "be accompanied by measures to lighten Greek debt."

French President Emmanuel Macron walks through the Galerie des Bustes (Busts Gallery) to access the Versailles Palace's hemicycle for a special congress gathering both houses of parliament (National Assembly and Senate), near Paris, France, July 3, 2017.
Etienne Laurent | Reuters

The IMF is yet to officially comment on Macron's speech on Thursday.

The visit also comes at an interesting time for Greece's Prime Minister Alexis Tsipras who himself may be looking to get a popularity boost on the back of Macron's symbolic visit.

In June, the Parliament passed further fiscal measures following the results of the bailout review in December. The economy is just starting to grow again and with unemployment on the decline, Tsipras – who is lagging behind rival party New Democracy in the polls – will look to capitalize on the positive comments from the French president to further encourage investments into the country and pave the way for an eventual full return to markets once the third bailout program ends in Autumn 2018.

The bigger question is one of debt relief (link to my former article).

President Macron will be back in France Friday night to host German Chancellor Angela Merkel. He is set to unveil a further roadmap for euro zone integration in the coming months, likely waiting until the German elections are over. In August, Merkel said she backed Macron's proposals for a euro zone budget and ministry.