Divided Europe veers between urgent growth and bleak austerity

BRUSSELS, May 17 (UPI) -- EU leaders are increasingly split on the way forward for the 27-nation European Union amid fears of a deeper recession and more demands on taxpayer funds for bailouts of troubled member states.

French President Francois Hollande warned recession-ridden European Union faced a threat to its identity and called for dramatic moves to stimulate economic growth.


Hollande, who distanced from German Chancellor Angela Merkel's pro-austerity policies soon after becoming president in May last year, blamed the tough cutbacks regime imposed on troubled economies for much of Europe's economic problems.

"What is hitting Europe is a recession ... provoked by the austerity policy," Hollande said at a Paris news conference.

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The president was especially keen to pin the blame on European policies because of latest data that showed France had slipped back into recession.

Hollande has staked his socialist credentials on moves to kick-start the economy but analysts see his African military campaign against Islamic militants eating into the treasury in more ways than anyone in French government is willingly to discuss.

Hollande repeated calls for a centralized economic management of Europe that could see the troubled region's sovereign debt mutualized. Germany is in the forefront of member countries opposing the idea.

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Voter confidence in the EU project has sagged across Europe and Merkel has seen rising taxpayer resistance to financial management usually ascribed to European mandarins in Brussels but actually directed from Berlin.

"If Europe does not advance it will fall or even be wiped out from the world map," Hollande said, the BBC reported. "My duty is to bring Europe out of its lethargy."

Analysts said Europe's increased foreign interventions in Syria and western Africa would likely require more unbudgeted funding in the coming months. Debate on EU foreign policy ventures has been muted or non-existent.

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Both Hollande and Merkel are facing rising voter criticism but Hollande more so. Le Monde newspaper castigated Hollande in a recent survey and German state radio Deutsche Welle cited "the lost year of Francois Hollande," reflecting Berlin's annoyance with the French leader's strident comments questioning Merkel's virtual leadership of Europe.

French Europe Minister Thierry Repentin said in an interview, "We have to stop having this idea that it's Germany that decides everything."

German Finance Minister Wolfgang Schaeuble faced U.S. demands for a policy shift when U.S. Treasury Secretary Jacob Lew visited Berlin in April. In comments after the talks, Schaeuble said economic stimulus and budgetary consolidation were not mutually exclusive.


At the same time, however, Schaeuble and other senior EU leaders continue to pressure southern European leaders to get on with further cutbacks to balance their budgets as part of Brussels' bailout terms. There are no moves toward introducing stimulus packages for countries hit hardest by austerity, including Cyprus, Greece, Portugal and Spain.

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