Germany has ruled out any possibility of renegotiating the EU's fiscal pact, which is seen by the bloc as a defense against default. Persuading Berlin and the union otherwise is now a major challenge for Hollande as it was his main election promise.
In his victory speech on Sunday, Francois Hollande promised his people he would re-open talks so that the pact, according to which the 17 eurozone members agreed on tough measures to slash their deficits, focuses on growth rather than simply imposing deficit-cutting austerity rules.
“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.”
Berlin has opposed the idea.
"I believe the fiscal pact is correct and secondly I think that we can't simply re-open for discussion everything we have already agreed after an election in a small or big country," Germany’s Chancellor Angela Merkel said on Monday, commenting on Francois Hollande’s intentions at a news conference.
She pointed out that the fiscal pact has been signed by 25 EU countries.
However, Merkel said that they will meet the newly-elected French leader “with open arms” when he visits Germany after his inauguration on May 15. She added that Franco-German cooperation is essential for Europe and “we all want Europe to succeed.”
“We are in the middle of a debate to which France, of course, under its new president will bring its own emphasis. But we are talking about two sides of the same coin – progress is only achievable via solid finances plus growth," Merkel said.
Europe’s debt crisis and the changes in France’s economy are the main issues on Hollande’s agenda.
A socialist, who claimed his election is a signal of hope for Europe that "austerity does not have to be inevitable," has vowed to slow the pace of Sarkozy's public spending cuts. He has also promised to reverse austerity measures, lower the pension age and reduce wealth inequality.
“This is part of the reason why he did, in the end, get a majority, be it a slim majority,” former Belgian MP and international consultant Lode Vanoost told RT.
But even though Hollande might be able to deliver all the promises he made, Vanoost says it is uncertain what reaction will follow from other EU members and especially from Germany.
“The thing is, in the short run he can certainly deliver these issues for a very simple reason – the financial consequences of policies always follow a year after you take them. The thing is how other European countries will react to it,” Vanoost said. “Will they go in the same way, or will they counter-react? And a lot will depend on how Germany will react to these issues.”
Political analyst Pepe Escobar says Hollande’s intentions of “re-negotiation of financial arrangement in the world” means “the end of the US dollar as the reserve currency.” This, he says, will be point “where Obama and Hollande will clash head on, in spite of Obama’s sympathies for Hollande, for the left in France and for the left in Europe in general.”
“So, ‘Bye, Bye, Merkozy, now it is Merkollande.’ Hollande on the internal front in Europe will try to convince Merkel that this austerity business is drowning Europe. And on the external front he’ll coordinate with BRICS and say: ‘Look, another way to change the whole system is to try to change the financial system as it works.’ And that will mean a basket of currencies as a reserve currency in the world. So, expect major fireworks inside Europe and across the world as well,” Escobar told RT.
Watch RT's interview with Pepe Escobar