French Point Man in Euro Debt Crisis Keeps Out of the Limelight

Published: Monday, January 2, 2012 at 3:14 p.m.

Last Modified: Monday, January 2, 2012 at 3:14 p.m.

Mr. Fernandez, the director general of the Treasury within the Ministry of Economics and Finance, has already been through a similar crisis-management exercise. When Standard & Poor?s cut the top credit rating of the U.S. government in early August, most of the French elite were on vacation.

To prevent the American crisis from sending a financial tsunami across the Atlantic, Mr. Fernandez scrambled on a summer Saturday morning to organize a series of emergency calls with his boss, Finance Minister Fran?ois Baroin, and others in the circle of main policy makers.

Later that day, Mr. Baroin appeared on French television to question the validity of the U.S. downgrade. Mr. Sarkozy interrupted his vacation in a show of engagement. But behind the scenes, it was Mr. Fernandez who took on the heavy lifting.

It was not the first time in the two-year European crisis that Mr. Fernandez has been at the center of the storm. And it will not be the last.

As France and Germany take the lead in trying to keep the euro together, Mr. Fernandez has emerged as one of the top power brokers in Paris, advancing the French position on a range of issues, including the banking sector?s participation in a Greek bailout, the creation of a rescue fund for troubled countries and the recent deal to shore up the foundations of the euro currency union.

So much confidence has been placed in Mr. Fernandez that the French press have started calling him the ?guardian of the triple-A.? At 44, a youthful technocrat whose soft blue eyes belie an inner sang-froid, Mr. Fernandez chuckles about the nickname with an almost embarrassed air. ?I?m a civil servant,? he says demurely. ?I do what I have to do.?

What he must do now could prove crucial to how France bears the brunt of the shock should the country be downgraded. Because the event has been widely telegraphed, Mr. Fernandez and other officials do not expect the impact to be devastating. Still, it will probably make it more expensive for France to service its debt, and more difficult for the Europe-wide rescue fund ? of which France is a major backer ? to operate. That could renew tension between France and Germany over how to manage the problem.

Indeed, For every photo opportunity in which Mr. Sarkozy and Chancellor Angela Merkel of Germany trumpet a new step forward in the euro crisis, Mr. Fernandez has spent countless hours behind the scenes with the other go-to man on the French team, Xavier Musca, Mr. Sarkozy?s chief of staff, and Berlin?s point man, J?rg Asmussen, the deputy finance minister, smoothing rough patches in the sometimes testy French-German relationship.

Meanwhile, Mr. Fernandez exchanges e-mails frequently with officials at the U.S. Treasury Department to keep current on developments across the Atlantic. His ability to parse mind-numbing financial issues better than nearly any other French civil servant helped French leaders look smart during the meeting of the Group of 20 leading economies that France hosted this year.

For all of his responsibilities, Mr. Fernandez barely registers on the public radar. That is the way he likes it. In a country where discretion is a highly prized commodity, his effectiveness comes from operating in the shadows.

?Ramon is the right man in the right place,? said Christine Lagarde, who worked with Mr. Fernandez until last summer, when she resigned as the French finance minister to become the managing director of the International Monetary Fund. ?He is smart, experienced, a good negotiator, but also a critical part of a close-knit network of advisers to the leading political figures.?

In December, Mr. Sarkozy made Mr. Fernandez a chevalier of the French Legion of Honor, calling him a pillar in the management of France?s future.

Yet such moments are rare. Mr. Fernandez generally eschews the trappings embraced by most other government dignitaries, right down to riding a scooter to work. The idea of being driven around ?gives me a headache,? he said. On the scooter, ?you take some fresh air, you don?t waste time, and you are forced to focus on just one thing.?

During a rare interview, he described himself as a mere player in a vast French government apparatus. In reality, he is a key figure in a remarkably well-oiled machine, where the top officials of nearly every ministry went to the same exclusive French universities, and are all on cosy terms that facilitate easy dialogue.

The intimate structure allows the government to close ranks against attacks from ?outsiders,? for instance by opening rapid investigations against market speculators, or, more recently, the ?American? ratings agencies.

Whether that proves to be an effective strategy remains to be seen. Last month, the three major ratings agencies ? Standard & Poor?s, Moody?s and Fitch ? said they would review all European Union countries, including France, for a possible downgrade after a summit meeting of European leaders in early December was widely considered a flop.

After hard negotiations, officials agreed on a Europe-wide pact aimed at stabilizing the euro zone, only to see the British prime minister, David Cameron, refuse to sign on.

That breakdown led to a war of words between Paris and London soon after, with Mr. Baroin and several other French officials speaking out within hours of each other to suggest that Britain was more deserving of losing its gilt-edged status than France.

Mr. Fernandez, not surprisingly, kept out of the limelight. Instead, he said, the agencies and skeptical investors had a point: Euro zone governments ? France?s included ? have not done a good enough job explaining what he sees as dramatic progress toward strengthening the euro zone.

?We need to communicate better with a language that?s spoken by the markets,? he argued. ?Otherwise, it makes no sense to think we have a solution if others don?t think we have one.?

The son of a French novelist and a renowned French academic, Mr. Fernandez slipped into an art metaphor to elaborate on the situation.

?It?s become difficult for observers to see the global picture anymore,? he said. ?People are looking at it almost like a pointillist tableau, where you see one dot here that represents reforms to the euro architecture; another dot there that?s the European bailout fund; a third one that?s a recapitalization of European banks, and so on.?

?But the global picture is being created day after day,? Mr. Fernandez continued, ?and the challenge now is to get people to step back and look at all of the facts together, and recognize that we have dealt with the fundamental causes of the crisis.?

One of the biggest current challenges is figuring out how to restore investor confidence during the long period it will take for new treaties strengthening the bloc?s foundations to be approved and implemented. For example, plans to leverage the bailout fund for the euro zone, the European Financial Stability Facility, to as much as ?1 trillion, or $1.3 trillion, are still being hatched after faltering numerous times.

The I.M.F is expected to help make up some of the shortfall, but the fund is waiting to hear the details of how the euro zone will put together a new contribution of up to ?200 billion.

Yet another meeting between Mr. Sarkozy and Mrs. Merkel is scheduled for next Monday to address this and other issues ? something that risks being met with further questions by investors.

?European officials have failed to address the real problem ? the banking system, which is much too fragile,? said Daniel Gros, the director of the Center for European Policy Studies in Brussels.

But Mr. Fernandez argued that at this stage, it would be wrong for observers to continue to insist on seeing the glass as half-empty.

?We know we have to deliver, and we are working on this,? he said. ?From time to time, as we reconstruct the euro?s building blocks, we have had to be pragmatic and change course ? or even reverse ourselves ? and we have done this where necessary.?

Ten years down the road, Mr. Fernandez predicted, ?the euro zone will not only still be there, but we will be stronger, and there will be more of us around the table.?

Europe ?has gone through some dark periods in its history, including right now,? he added. ?But there is a political willingness in every country to maintain the euro project, which is stronger than any other constraint coming from the markets.?

Source: http://www.tuscaloosanews.com/article/20120102/znyt01/201023010

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