This week's Charlemagne print column covers last night's summit of European Union leaders in Brussels. Read a sneak preview below.

HOW quickly François Hollande is changing the terms of European politics. When he spoke about the need for more growth, others quickly echoed him. And now that the new French president is talking about the need for Eurobonds, even the IMF and the OECD have joined the chorus of those demanding joint euro-zone debt issuance. At his first European Union summit, over an informal dinner in Brussels on May 23rd, Mr Hollande found more allies. Predictably, though, he ran into firm opposition from Germany.

That did not seem to bother him. Finding agreement can wait for the next summit, in late June, if not later. For now Mr Hollande was demonstrating that he was different from his predecessor, who stood on the same podium in Brussels in March. Before every summit Nicolas Sarkozy would seek a common position with the German chancellor, Angela Merkel. By contrast Mr Hollande chose to meet the Spanish prime minister, Mariano Rajoy, before the pair took the train (not the presidential jet) to Brussels.



Mr Hollande was all too happy to highlight his differences with the chancellor. “For Mrs Merkel Eurobonds are the end point of a process of integration. For me they are the starting point,” he declared. This is a striking change of tone from the election campaign, when Mr Hollande, though critical of Mrs Merkel's brand of austerity, seemed keen to find an accommodation. He flew to Berlin within hours of his inauguration. Most of his calls for growth-inducing European investment seemed modest, based on existing proposals by the European Commission. When he spoke of “Eurobonds”, he had once suggested that he merely meant “project bonds”, a scheme to sweeten debt issued by private firms to finance EU-backed infrastructure projects.



That pretence is over. Mr Hollande now wants countries to pool new public debt. Is it acceptable, he asks, that Spain must borrow at 6% while Germany can raise money almost for free? This week Germany sold two-year bonds with a 0% coupon.



For Germans, Eurobonds are the wrong prescription at the wrong time. Mrs Merkel says they are illegal under EU treaties and do not contribute to growth. Financial Times Deutschland, a German daily, calls the dispute “The German-French Ice Age.”



Yet it is too soon to conclude that Franco-German relations have gone into the deep freeze. Any new French president is bound to cause some realignment in Europe. Perhaps Mr Hollande, boosted by a successful trip to America, is setting out a tough opening position ahead of the June summit. Perhaps he is playing up his differences with Germany for the sake of domestic politics, as he seeks to secure a clear majority for his Socialist Party in elections to the National Assembly next month.



There is certainly a need to reappraise policy as the euro zone's debt crisis enters a perilous new phase. Investors are fleeing both the banks and the sovereign bonds of Mediterranean countries. Without a restoration of confidence in the ability of the euro zone to survive, it is hard to see how growth can return. Spain, sucked into a worsening recession, is pleading for the European Central Bank (ECB) to inject more liquidity into its banks and buy its government bonds.



More ominously, the exhausted Greeks may soon vote themselves out of the euro zone. Although the politicians said they wanted Greece to stay in, the Bundesbank seemed ready to boot it out. It declared that the turmoil caused by a Greek exit would be “considerable, but manageable given prudent crisis management.” A bigger danger, it suggested, is that agreeing to a substantial renegotiation of Greece's bail-out conditions “would damage confidence in all euro-area agreements and treaties”.



Others are not so sanguine. Few have any real confidence in the firewalls erected so far. Thus the call for the ECB to do more with its vast arsenal. Two sets of longer-term reforms make sense.



One is to create a form of “banking union”, with a Europe-wide system of deposit guarantees, recapitalisation and regulation. This would help break the link between weak banks and weak sovereigns. The other is to move towards greater “fiscal union”, including the creation of Eurobonds. This would reduce borrowing costs for troubled countries and create a safe asset for banks to hold.



The euro's future

So Mr Hollande is right to reopen the debate on the euro's future. He is also right in thinking that an exclusive Franco-German duopoly cannot pretend to run the euro zone. But there are limits to how far he should push the confrontation with Mrs Merkel. The chancellor is hardly without friends in Europe. She is backed by, among others, the remaining AAA-rated countries, such as Finland and the Netherlands. And everybody knows that the crisis has, for the moment, shifted financial power to creditor states.



A prolonged Franco-German dispute will lead to a debilitating stalemate that will help nobody, least of all France. The harsh truth is that France is more vulnerable than Germany. It is forecast to miss its budget-deficit target next year, and French banks are dangerously exposed to troubled Mediterranean countries.



So Mr Hollande will need to practise the art of persuasion. Above all Germany must be reassured that greater risk-sharing will not amount to handing its credit card to profligate governments. Mr Hollande might tell Mrs Merkel that creating a more solid euro zone, far from creating moral hazard, will make it easier to threaten Greece or others with expulsion. And setting out clear conditions for the introduction of Eurobonds could create incentives for countries to keep to the path of reform. Mr Hollande wants all issues to be put on the table. He, too, should be asked what France is offering by way of domestic reforms and concessions to Germany's wish for deeper political union.