Leftists Scholz and Sanchez try to coordinate on budgets, migration

[January 17, 2022]  By Andreas Rinke and Belén Carreño

MADRID/BERLIN (Reuters) - German Chancellor Olaf Scholz and Spanish Prime Minister Pedro Sanchez will seek consensus during talks in Madrid on Monday over more left-leaning policies for Europe on areas ranging from fiscal policy to migration.

The visit of Scholz, who took over from conservative chancellor Angela Merkel last month, comes with high expectations from Sanchez, with sources saying he sees the trip as a step in rebuilding the Madrid-Berlin axis.

"We got along well with Merkel's government, but Scholz belongs to our social democratic family. There is more of an ideological fit," a senior Spanish government official told Reuters.

Achim Post, the general secretary of the European parliament's Socialist bloc and a prominent member of Scholz's Social Democrats in Germany, noted that left-wing parties are now leading Spain, Portugal, Germany and the Nordic countries.

He said he hoped Scholz and Sanchez, who are due to hold a news conference at 1500 GMT, would seize the opportunity by pushing policies such as the more equal distribution of refugees among European Union countries.

"The fact that the governments in Spain and Germany are now both led by Social Democrats opens up new scope for jointly strengthening cohesion and progress in Europe," Post told Reuters.

Spain's Socialists, the PSOE, followed Scholz's negotiations in November to form a coalition government with trepidation, fearing too many concessions to the liberals.

The "traffic light" coalition with the Greens and liberal Free Democrats that emerged, however, reassured Europe's social democratic family, a Social Democrat MEP told Reuters.

"The positions of Scholz and Sanchez will not be exactly the same, but neither will they be contradictory," he said.

Spain's Prime Minister Pedro Sanchez speaks during a news conference after the European Union leaders summit in Brussels, Belgium, June 21, 2019. REUTERS/Francois Lenoir/

FRUGALS VS SPENDTHRIFTS NO MORE?

During the 2010 debt crisis, Germany was seen in Spain as a leading member of the northern European "frugals" that imposed financial restrictions and looked down on "spendthrift" southern neighbours.

The Sanchez government sees Scholz's visit as a start in breaking up those two blocs, the Spanish senior government official said.

"We will not abandon our agreements with Paris and Rome, who continue to be key partners," he said, adding though that a shared ideological stance might enable Spain to bring Germany round to their way of thinking.

European finance ministers will meet today to discuss when to return to the stability pact suspended during the pandemic.

Madrid hopes to convince Berlin to support a more relaxed set of eurozone fiscal rules also backed by France and Italy, setting GDP to debt reduction targets at a more "realistic" level and slowing the deficit reduction drive.

The latest data shows that the average eurozone is close to 100% debt GDP, from Greece with at a ratio of 207%, to Estonia with 19%. Spain stands at 122% and Germany is close to 70%.

"We need a new credible rule. Most of the big euro countries cannot meet the 60% target," the Spanish source said.

(Reporting by Andreas Rinke and Belen Carreno, writing by Emma Thomasson, editing by Aislinn Laing and Ed Osmond)

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