France

How about this for a claim by Nicolas Sarkozy, made in a TV appearance yesterday? ‘Europe is no longer at the edge of the cliff.’ It's quite some statement, so let's hear it again: ‘Europe is no longer at the edge of the cliff.’ Of course, Sarkozy has reasons for saying it beyond mere pre-electoral braggadocio: the rates paid on Italian and Spanish 10-year bonds have generally been falling since the the beginning of the year; the euro has been making some tentative progress against other currencies; and so on. But it still constrasts heavily with much else that is being said around the eurozone. Only last week, Angela Merkel was talking of the overall failure to ‘stabilise the situation’ in Greece.

The word is that France will be downgraded by Standard and Poor’s tonight. AFP is reporting that French officials expect France to drop to a AA+ rating, losing its treasured AAA status and increasing how much it will have to pay to borrow money. 2012 has, so far, been relatively quiet on the euro front. But expect the issue to return to centre stage over the coming weeks. There are the downgrades coming tonight – France is apparently not the only eurozone country that S&P will mark down with Austria set to lose its AAA rating too – and a coercive and chaotic Greek default seems increasingly likely.

The story being briefed out of the year’s first Franco-German Summit is that President Nicolas Sarkozy won the backing of Chancellor Angela Merkel for a tax on financial transactions, a levy that the British government objects to and that Ernst and Young say would leave a €116bn hole in Europe’s public finances. But before the City begins building barricades and the PM puts on his bulldog mask, it is worth taking another look at the news from Berlin. For no sooner had the agreement been announced than the tax was rejected by Chancellor Merkel's junior coalition partner, the pro-business Free Democrats, who say they will only back a Europe-wide tax scheme. They are not alone. The Netherlands and Ireland feel the same.

The relationship between Turkey and France — which started with the alliance between Francis I and Suleiman the Magnificent — is in precarious territory following the French Parliament's decision to ban denial of the Armenian Genocide. Turkey's moderate Islamist government has taken as hard a line on the issue as previous Kemalist governments did, and has announced, in response to the French move, that Turkey would halt 'all political consultations, joint military activities and manoeuvres.' Not content with a formal rebuke, Turkish Prime Minister Recep Tayyip Erdogan has sought to make the conflict personal; claiming (falsely) that Sarkozy's father served in Algeria in the 1940s and would have direct knowledge of 'massacres' committed there by French troops.

If it was not all so serious, the efforts to save the single currency would be worthy of a comic opera: the Germans could compose the score, the Italians could write the libretto, and the French could take care of the stage directions. The latest IMF-related effort is, perhaps, best described by the website ZeroHedge, which is required reading during these troubled times: “Germany will be responsible for €41.5 bn, France at €31.4 billion, and Italy will need to provide €23.5 billion and Spain another €15 billion.

Normally, 'read-outs' on telephone calls between members of the British government and their counterparts overseas are fairly bland affairs. But today's one on a conversation between Nick Clegg and the French Prime Minister Francois Fillon is an exception to this rule. Clegg, we are told, informed the French PM that 'that recent remarks from members of the French Government about the UK economy were simply unacceptable and that steps should be taken to calm the rhetoric.' To be sure, there is some more diplomatic language before and after this (the full text is at the bottom of this post) but the willingness of the deputy Prime Minister to be quite so sharp with the French is striking especially given the tensions in the coalition over Europe policy these past seven days.

Judging from much of the coverage in UK media, you would be forgiven for thinking that Britain is on the fast track to becoming the North Korea of Europe — eccentric and completely isolated from the rest of the world. Indeed, the media narrative over the past couple of days has largely treated the agreement reached at the summit as concrete, supported in full by everyone apart from Britain. Or ‘27-minus’, as Commission President Jose Manuel Barroso put it. The reality, of course, is quite different. Leaving aside whether Cameron could have played his cards better (he could have), as Gideon Rachman pointed out in yesterday’s FT, ‘the picture of an isolated Britain’ will become blurred as the rest of Europe grapples with the Merkozy deal.