French Prime Minister Moves to Dissolve Cabinet --- PARIS — The collapse of the French government on Monday exposed widening divisions both within France’s leadership, and Europe more broadly, over austerity policies that many now blame for threatening to tip the eurozone back into recession. -- Prime Minister Manuel Valls announced that he would dissolve his government after a rancorous battle in his cabinet over whether the belt-tightening measures taken by President François Hollande — at the urging of Germany and European Union officials in Brussels — were impeding France’s recovery. -- The dispute broke into the open when Mr. Vall’s outspoken economy minister, Arnaud Montebourg, insisted in an interview over the weekend that austerity had gone too far. “The priority must be exiting the crisis, and the dogmatic reduction of deficits should come after,” he told the newspaper Le Monde. -- He also took direct aim at the policies of Angela Merkel, the German chancellor. “Germany is caught in a trap of austerity that it is imposing across Europe,” he said. -- The cabinet reshuffle precipitated by those comments was the second major shake-up since Mr. Hollande took over the presidency in 2012. Since then, the French economy has nearly flatlined, and Mr. Hollande has been dogged by some of the lowest approval ratings for a French president in decades. -- The government collapse did more than throw France’s politics into disarray. It also bared the growing disagreement between France and Germany — Europe’s largest economies — over whether Ms. Merkel’s prescription of austerity threatens to turn a five-year euro crisis into a long-term malaise of low growth and high unemployment. -- The announcement in Paris coincided with a visit by Ms. Merkel to Spain, where she praised Prime Minister Mariano Rajoy for austerity measures that have included a freeze on public salaries and more flexible labor laws. While Mr. Rajoy credits the steps with restoring faint growth to Spain’s economy, the changes have not been popular. During the visit, the chancellor was forced to delay a planned speech after throngs of protesters booed her. -- Asked about events in France, Ms. Merkel told reporters that she wished Mr. Hollande success, but declined to comment on French domestic politics. But tension with the French government has been evident. -- In early August, after Mr. Hollande was quoted telling French reporters that a change in economic direction might be needed in Europe, a German government spokeswoman, Christiane Wirtz, crisply commented that the German government “sees no reason to undertake any correction in its policies,” and certainly not because of “rather glib statements from Paris.” -- Last week, Mr. Hollande acknowledged the problems his government faced, saying in an interview with Le Monde that austerity policies the country had been compelled to follow to meet the eurozone’s budget deficit target had made it nearly impossible to achieve a recovery after six months of zero growth and more than a year of weak economic activity. The eurozone consists of the 18 members of the European Union that use the euro. - Read More, NYTimes
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