Angela Merkel has lost the bet. She was hoping to continue to pursue the common vision for European politics that she shared with former French president Nicolas Sarkozy but instead, she has now “won” a socialist counterpart. She will now have to cope with the new French president François Hollande, who is willing to renegotiate the last Fiscal Compact decided by France and Germany.

She had refused to receive him during his campaign, but yet he chose to visit her for his first diplomatic meeting. After being sworn in as the seventh president of the French fifth republic, François Hollande took a flight to Germany. He wanted to send a clear message to Angela Merkel, the same that he had been repeated during his campaign “It is time to open a new path for Europe”.

François Hollande won the French election by, partially, campaigning against the proposition of Merkel to focus on the austerity and, from his part, proposing a more growth-oriented policy for the European Union. Now that he is in power, his priorities are to renegotiate the Fiscal Compact signed by 25 of the 27 EU countries and prove that re-launching the economies inside the eurozone will help, better than the Fiscal Stability Treaty, to exit the financial crisis.

For his first meeting with the German chancellor, François Hollande retained his positions while insisting on the importance of reaching agreement with Angela Merkel.

It is important to remember that, since the creation of the European Union, France and Germany have always tried to be together represented as a united diplomatic couple.  With Nicolas Sarkozy, Angela Merkel had developed a friendly relationship. In fact, they were in such strong agreement over EU policies, the media created the name of Merkozism policy. With Mr. Hollande’s plane stroke by lighting while flying to Berlin, after his inauguration as President, many are predicting a love-hate relationship between the new German-Franco couple.

Angela Merkel stays cautious. Despite of her declining popularity, she refuses to let François Hollande lead the dance.

Effectively Angela Merkel’s party, CDU (Christian Democrats), has recently suffered low results in state elections and a critical defeat in North Rhine-Westphalia, the most populous state of Germany.

Now that German Social Democratic party (SPD) is winning more power in the German parliament, they have announced that they will support the French president to introduce a new pact to boost the European economy. SPD leaders Sigmar Gabriel, Frank-Walter Steinmeyer and Peer Steinbruck recently published a document entitled “The way out of the crisis – Growth and Employment in Europe” for which they said they have worked closely to French Socialist party.

The SPD insists on the necessity of adding the notion of economic-growth to the rigorous fight against youth unemployment. Just like François Hollande did in his campaign, the German Social Democrats focused a part of their program on youth activities. They proposed using the resources of the European Social Fund to create a new European fund for investment that would support economic projects in the EU countries which most suffered from the crisis. They also recommend, jointly with French socialists and in agreement with European Commission president Jose Manuel Barroso, promoting “project bonds” –a project aimed at encouraging European investments by starting projects in the EU, which are financially supported by the European Central Bank.

In spite of the similarities between the programs of the SPD and PS (French Socialist party) the document released on15th of May by the SPD does not call for a revision of the Fiscal compact. Contrary to the plans of François Hollande, his German partners refused to call for a renegotiation of the whole Fiscal Stability Treaty, and prefer to adopt a new pact to complete the first already approved by most European countries. “The fiscal pact will not be at the centre of negotiations. It’s about adding something to it”, said SPD leader Sigmar Gabriel.

Nevertheless, François Hollande’s intentions for the European Union seem today to be supported and promoted by many politician leaders. The European Commission chief Jose Manuel Barroso, after congratulating the French President for his victory, stated,  “We clearly have a common objective: re-launching the European economy to generate durable growth,” and added “We must now transform these aspirations into concrete actions.”

The new French president has even received an overseas encouragement by the American President Barack Obama. After they met, both satisfy, they agree on the necessity to boost the economy. Furthermore, the first G8 meeting for François Hollande has been marked by the eventuality of an economic growth. François Hollande, who, in the past judged the G8 meeting as useless, benefited last week from a strong international support. In 2003, he used to say that the G8 was “a club for rich men and powerful leaders, who enjoy making wishes together”. Invited to this club, he has answered the press in Washington that today, being a member of this group, allows him to make a difference if needed.

During his first G8 gathering at Camp David, he took the opportunity to reaffirm his concerns about the financial crisis and managed to focus G8 discussions on the economic growth. Barack Obama leading the summit has urged Germany to accept more pro-growth policies “All of us are absolutely committed to making sure that growth and stability and fiscal consolidation are part of an overall package,” said the US president. After a private meeting between President Obama and Chancellor Merkel, the German leader told, “we have to work on both threads (growth and deficit-cutting), and the participants have made that clear, and I think that is great progress.”

In this new, revitalized fight against the deficit, the European Union hopes to overcome the financial crisis, but knows that it will be possible, only, if Germany and France, maintain a strong alliance.

François Hollande recognizes that collaborating with Germany is essential. In fact, many saw his choice of Prime Minister, Jean Marc Ayrault, as a gesture of diplomatic respect to Germany. Jean Marc Ayrault is a former German teacher and is much acquainted with German politics. As a politician, Mr. Ayrault has the reputation of being a consensus builder. As such, he could be the perfect mediator for future debates between France and Germany and certainly a strong asset for Hollande.

Despite the end of the Merkozy era, France and Germany will have to continue their journey, both hoping for greater future prospects for the European Union, while knowing they will have to work together to achieve them.

Article written before today (23/05/12)  European Summit in Brussels.