By DAVID PEARSON
BLAGNAC, France—The euro's exchange rate against the dollar is still too strong and is hurting the competitiveness of companies in the euro zone, French President Nicolas Sarkozy said Thursday.
The single European currency's exchange rate "is better today with a rate of $1.29 or $1.30 ... but it is still too high," Mr. Sarkozy said. He pointed out that if the euro were appreciate to $1.40 from it's current level of around $1.30, the operating income of Airbus would decline by €1 billion ($1.31 billion).
Mr. Sarkozy, visiting an assembly plant of European commercial aircraft builder Airbus, told the company's employees and local dignitaries that he will "fight" during France's presidency of the Group of 20 industrialized and developing nations to ensure that euro-zone companies have a competitive exchange rate and aren't a victim of "monetary dumping."
Airbus said Tuesday that the strong euro had not prevented the company from netting major contracts from airline customers, announcing a $15.6 billion order from Indian low-fare carrier IndiGo for 180 of its narrow-bodied A320 jets.The French president reaffirmed that reducing the volatility of raw material prices is also a main priority for France in the G-20.
Mr. Sarkozy called for greater economic and fiscal harmonization among euro-zone governments, and said he will work to this end with German Chancellor Angela Merkel. "We can't share the same currency and have different economic strategies," he said, calling for macroeconomic and structural convergence to improve economic governance.
He said it was not right that Ireland, which has received massive financial aid from its European Union partners and the International Monetary Fund to lift it out of its financial crisis, should at the same time have a competitive advantage compared with other euro-zone countries through a much lower corporate tax rate. Referring to calls in some quarters for France to leave the euro zone, Mr. Sarkozy said this would be "folly".
"Alone, France can't resist outside pressures. France is going to borrow €180 billion in the financial markets this year to finance 35 years of accumulated budget deficits, he said. "Thanks to the euro we can borrow at 3% or a bit more; at the beginning of the 1990s we were paying 10%," he said.
"Dismantling the euro zone would be like dismantling Europe ... I will do everything I can to preserve the euro," he added, noting that the single currency had protected France during the economic crisis.
Greece and Ireland have received massive bailouts from their euro zone partners, and financial markets remain jittery that Portugal and possibly Spain may also get into financial difficulty.
Mr. Sarkozy reaffirmed his government's pledge to get France's budget deficit down to 3% of gross domestic product by 2013 and said he is working to change France's constitution so that future governments will be obliged to aim for balanced budgets after decades of deficit spending.
The French economy grew by more than 1.5% in 2010, noting that one year ago, the most optimistic economic forecasters were predicting a 1% rate, Mr. Sarkozy said. He said 2011 will be a year for......Read more
