Merkozy Is Dead, Long Live The Franco-German Alliance

Angela Merkel openly supported Nicolas Sarkozy during France’s just concluded presidential campaign. Now that her man was beaten by Socialist candidate François Hollande, Merkel is ready to make concessions on growth, but won’t budge on deficit.

Auf wiedersehen Nicolas (Sebastian Zwez)
Auf wiedersehen Nicolas (Sebastian Zwez)
Nathalie Versieux

BERLIN – Germany may welcome Francois Hollande with "open arms," but Angela Merkel has already made one thing very clear: "The fiscal pact is not up for discussion."

The German chancellor was pulling for Nicolas Sarkozy to be reelected. She will now have to get used to a new partner whom she barely knows. Indeed, she refused to meet François Hollande during the French presidential campaign.

"There were contacts beforehand. The debate wasn't always easy, but discussions took place and both teams are now better prepared to each other than in 2007," says Chantal Mairesse from the Genshagen Foundation. That's also because, unlike Nicolas Sarkozy five years ago, Hollande has several Germanophiles among his top advisors.

"Between France and Germany, it's not about people," says German member of Parliament Andreas Schockenhoff. "Both teams will have to work in a constructive fashion and not waste time."

Merkel's real worry isn't the new French president, but financial markets that seem – at least from Berlin – to be waiting for Paris to quickly express support for the fiscal pact, before the Irish referendum later this month. Insiders of Merkel's party, the CDU, say that if France is seen dragging its feet, the Irish will say ‘No" to the pact -- and that will be the end of the common currency.

The "G" word

On both sides of the Rhine, commentators believe the new French president won't clash head on with German interests. Merkel is also aware that she will have to soften her stance.

In recent speeches, the German chancellor has started mentioning ‘growth" as a tool in the fight against the debt crisis. But she hasn't given an inch on fiscal discipline.

"A newly elected president must present a few successes to his voters," says Schockenhoff. "One way or another, he will have to rewrite a line here and there in the fiscal pact to make it seem as if he got something out of Germany."

And that without Berlin thinking it has budged at all. "There are fundamental lines that must be followed, but in between there is some leeway if you have smart negotiations," says Stefan Seidendorf from the Franco-German Institute of Ludwigsburg.

Three of the proposals Hollande wants to submit to his European partners in order to kick start growth are acceptable to Merkel: opening more funding options for the European Investment Bank, mobilizing any leftover European structural funds not currently used, and creating a tax on financial transactions.

Hollande's fourth proposal – creating euro bonds – has been met with a very public Nein. For Germany, it is unthinkable to mutualize the debt of southern European countries. At least for now. "When Angela Merkel says she won't do something, we know she'll change her mind tomorrow or the day after," jokes Axel Schafer, a Social Democrat member of the Bundestag. Indeed, his own party, once hostile to euro bonds, has just started supporting them.

Read more from Le Temps in French

Photo - Sebastian Zwez

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.

Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!