On a day that François Hollande was inaugurated and held his first meeting with German chancellor Angela Merkel, his appointment of a new prime minister in Jean-Marc Ayrault may be the third-most important news of day in French politics.

Nonetheless, Ayrault’s appointment to lead Hollande’s government is the first clear sign we have of how Hollande might govern over the next five years, long after the bloom of his (short) inaugural honeymoon is over and with many, many more meetings between the two leaders of the Franco-German axis that has traditionally moulded the European Union’s direction.  It’s not quite a surprise, given that Hollande seemed to hint at the appointment last week when he said his prime minister “must know the Socialist Party well, its left-wing members of parliament and be on the best of terms with me.”

Ayrault, also the mayor of Nantes, has served as the president of the Parti socialiste parliamentary group in the Assemblée national since 1997, when Hollande was chairman of the Parti socialiste. The two worked hand-in-hand during the ‘cohabitation‘ government of prime minister Lionel Jospin, who served simultaneously with President Jacques Chirac from 1997 until the 2002 election when Jospin, in a shock result, was edged into third place by the Front national‘s Jean-Marie Le Pen.

As Le Monde put it:

Ce sont deux sociaux démocrates, deux adeptes du compromis, deux européens convaincus qui se sont donnés pour mission d’apaiser la France et de la redresser. (“The pair are both Social Democrats, both supporters of compromise, both Europeans who believe their task will be to soothe France and also to reform it.”)

Known as a quiet pragmatist, a “normal” prime minister for a “normal” president (in a presidency that may come to be more reminiscent of Pompidou rather than Mitterand), Ayrault is notably moderate, notably uncharismatic and notably Germanophile — he is a former German teacher.

So what does Ayrault’s appointment indicate about Hollande’s thinking? 

Hollande wants to make nice with Merkel. First and foremost, Ayrault’s Germanophile background is a sign that Hollande will take very seriously the relationship with Merkel, his German counterpart.  Imagine the message Hollande would have sent to Merkel had he chosen longtime PS dinosaur Laurent Fabius as prime minister — the only significant center-left politician to oppose the EU constitution in 2005.  Every postwar French president has taken the Franco-German relationship very seriously — but it will take a little extra work this time around, and Ayrault’s selection, even as Fabius remains a favorite for foreign minister, is a mark of respect to Berlin.

Merkel actively campaigned for Hollande’s opponent, former president Nicolas Sarkozy, and the two were so much in sync as to the European Union’s program of austerity that they came to be known as ‘Merkozy.’  Hollande, to the contrary, was elected on a platform that argued a more balanced approach — he promised to balance France’s budget by 2017, but he also pledged to raise taxes and cut the budget more slowly than Sarkozy.  Insomuch as Merkel argued that Hollande’s election would be catastrophic, she will now have to find a way to work with the new voice of Europe’s suddenly-emergent “pro-growth” wing.  But despite the rhetoric, the differences between the two have never been as wide as either side has claimed — Merkel realizes that voters across the eurozone would eventually sour on austerity in light of anemic GDP growth and rising unemployment, and Hollande realizes that the sovereign debt crisis and France’s ‘AAA’ credit rating downgrade in January by Standard and Poor’s means that he has only so much room for expansionary spending, even if coupled with a tax increase of France’s wealthiest earners.

Hollande wants to make nice with the markets. As noted above, Hollande indicates he is realistic enough to know that he has only so much room to boost French spending in hopes of accelerating growth.  As such, Ayrault’s selection, rather than the selection of, say, Martine Aubry (a more fiery leftist, author of the 35-hour workweek law and runner-up in the PS presidential nomination race in 2011), is a firm nod that Hollande understands how difficult the balancing act will be.  As such, we can take more seriously his promise to cut the budget by 2017 than his promise to implement a 75% tax on all earnings over €1 million.  That does not mean that Hollande will not necessarily attempt to raise tax rates, nor does it mean that he will be incredibly aggressive in cutting France’s budget (although if he appoints centrist François Bayrou, who finished fifth in the presidential race, to his cabinet, we will know that Hollande is very serious about France’s fiscal woes). Above all, Ayrault’s selection indicates that Hollande is not interested in revisiting some of Sarkozy’s central reforms, such as raising France’s retirement age from 60 to 62 and loosening restrictions on overtime.

Hollande is not worried about the far left in next month’s legislative elections.  Leftist firebrand and Front de Gauche leader Jean-Luc Mélenchon is back in the news in advance of parliamentary elections for the Assemblée nationale on June 10 and June 17, challenging FN leader Marine Le Pen directly for the same parliamentary seat, but his 11% finish in the first round of the presidential election was somewhat disappointing in light of the excitement his campaign aroused in the weeks leading to that election.  Hollande’s selection of a moderate and a prime minister who’s never served in government and not entirely known as a charismatic leader, is a sign that he believes Mélenchon will not threaten the PS in next month’s election.

Sarkozy’s government model has been a success.  Finally, Ayrault’s selection is an endorsement of the Sarkozy model of the president-prime minister relationship.  Given that the presidential term is now five years, not seven, it may well be that a president can no longer afford a competing center of power in his or her prime minister — like Aubry would have most certainly been for Hollande.  I’ve argued that Ayrault is very much the center-left analog to Sarkozy’s long-time prime minister, François Fillon, seen as a highly competent, if not incredibly charismatic, prime minister.  In a country where the job of prime minister had long been seen as a career-killer, Fillon remained more popular than Sarkozy throughout much of the past five years and he may now be France’s most popular center-right politician (not counting, of course, Marine Le Pen).