France to UK: Let’s stay cool

Finance minister Michel Sapin tells POLITICO that Paris is open to talks on EU reforms — to a point.

France’s finance minister says Paris is ready to talk with the UK about reforming the way European Union institutions work, but will draw a red line at changing the bloc’s founding treaties.

Michel Sapin told POLITICO in an interview Thursday that Paris is open to discussions with London on making Europe “less distant, less complex and less bureaucratic.”

But “that should not involve a renegotiation of the [EU’s] treaties,” Sapin said.

In what might be seen as an olive branch offered to Britain before it holds a referendum on EU membership at some point in the next two years, Sapin said France and other member states were all in agreement on a fundamental point: They want to avoid a British exit from the Union.

Sapin said he saw a calmer, less combative atmosphere prevailing around the issue now that the UK elections are over and Prime Minister David Cameron has formed his majority government.

“Confrontation would have meant taking unreasonable risks,” he said.

Sapin’s view reflects a new strategy by France and Germany to deal with — rather than fend off — London’s requests for serious EU reforms: defuse any possible drama, and treat the future negotiations as if they were a normal part of life in the 28-member Union.

In another statement that will be seen favorably in London, Sapin said that one of the major reforms France will actively support is the building of a capital markets union (CMU), a key pillar of the current European Commission’s agenda.

The initiative, which falls in the portfolio of Jonathan Hill, the European commissioner for financial stability, financial services and capital markets union, aims to boost investment by making it easier for companies to raise capital across the EU’s 28 member states.

“The CMU will be the second stage, after the [eurozone’s] banking union,” said Sapin, who was traveling Friday to Madrid and Lisbon to discuss that reform and the future of the eurozone in general.

Businesses throughout Europe will increasingly turn for their financing from banks to financial markets, Sapin said, and “a German fund needs to be able to invest safely in small or medium Spanish business.”

The future capital markets union will require both more liberalization and common regulations throughout the EU, said the French minister, adding that Hill’s blueprint provides “a strong base” on which to build.

Sapin said he didn’t see a major confrontation coming with the UK on the matter unless London asks for opt-outs from the common scheme. The capital markets union will be an EU-wide reform, whereas the banking union is limited to the eurozone.

Asked about the state of drawn-out negotiations between Greece and its eurozone partners, Sapin said he had learned to be “neither optimist nor pessimist. We deal with a given situation.”

Comparing the current mood of the financial crisis talks to what it was during the first three months of the Syriza government, Sapin said there has been significant progress “on process, on the way the talks are conducted.”

But as Greece is reaching its solvency limit in the near future, he said, talks need to accelerate, and gain in intensity.

Sapin also highlighted the “political uncertainty” around the ability of Greek Prime Minister Alexis Tsipras to push a deal through his Parliament.

“We hear a lot of different things coming out of Athens, but there’s one man who must succeed, and it’s the prime minister, so we have to trust him,” Sapin said.

“Europe has already changed a lot in the past years,” Sapin said, citing as progress the EU’s agreements to curb tax evasion by multinational corporations, and pledges to bring more transparency to the tax deals struck by national governments with the big corporates they want to attract. “It must and it will keep reforming.”

The 63-year-old Sapin — a close associate of French President François Hollande, with whom he attended the elite school training the country’s top civil servants — has witnessed a lot of those changes over the years.

He served a first stint as finance minister in 1992 and 1993 under then-President François Mitterrand, and weathered the severe crises that shook the European monetary system at the time.

Hollande appointed him labor minister when he was elected president in 2012, then put him in charge of finance last year when Pierre Moscovici, the previous holder of the job, was made a European commissioner.