Euro bonhomie

Lonely Germany looks forward to a stronger partnership with Macron’s France, writes Jan Techau

Emmanuel Macron’s victory in the French presidential elections last month put the smile back on Berlin’s face. But it wasn’t just a sign of happiness about the defeat of Marine Le Pen, the French nationalist right-winger who had promised to make cooperation in the European Union all but impossible. It was about something much deeper than that. Macron’s victory was a sign of hope for Germans that soon they would no longer be alone in Europe. 

One of the great misperceptions in the current debate about Germany in Europe is that Berlin somehow harbours aspirations to dominate the EU, and that being Europe’s last bastion of both economic success and sober, stable politics, this would suit the country well. 

Nothing could be further from the truth. Germans felt deeply uncomfortable about this position and had embraced it rather unwillingly. True, German politicians would love to see more governments in the EU, especially in the eurozone, embrace its ideas of fiscal prudence and deficit reduction, but that should not be mistaken as an appetite for domination. 

For good reason, the worst-case scen-ario for German statecraft is to be lonely. With Britain having extracted itself from EU matters and France being too weak to wield as much influence as it once did, Germans were feeling just that: isolated in a way that violated their post-war ‘never again, never alone’ mantra.  Macron’s victory created the prospect that, finally, Paris would return to the EU map. There is nothing Germany wants more than being in tandem with France again.

The same reasoning lies behind German hopes that Macron will succeed in implementing the structural economic reform his country needs so badly. It is not primarily out of  German economic arrogance that commentators remind the French of the homework they must do − even though these sentiments do exist. 

Germany wants France to reform because it knows that without an economically strong France, the tandem cannot work. Too blatant an  inequality between the two nations only leads to mistrust and envy, and too much of that puts the EU as a whole a risk − Germany’s biggest geo-political nightmare.

So Berlin’s No 1 wish from Macron would be a successful domestic reform agenda, and a newly unleashed economic dynamism that would not only create jobs and growth, but take the oxygen out of the slow-burning French fire of political populism. Fortunately, this is very much in line with the new president’s priorities. 

On other issues the chemistry between Germany and France looks a lot better than observers would have it. A case in point is the euro. Both sides have known for years that the current construction of the shared currency is not sustainable. Since 2012, when Macron acted as economic adviser to President François Hollande, he has been in touch with key German government players discussing what can be done. 

An elaborate plan was devised, including much intensified fiscal coordination in the eurozone, a euro finance minister, and an emergency fund to alleviate economic hardship during crises. For various reasons, the time for this plan never came, but its blueprint has been present in the debate ever since. 

The important thing is that the fundamentals of a compromise for the eurozone had already been identified between Angela Merkel’s team and the French. Once German elections are out of the way, this is a strong base to work from for any kind of future euro architecture. 

From a Berlin perspective, it is crucial that this plan does not envision eurobonds. For Berlin, the mutualization of debt in the eurozone, under which the risks of some countries’ debts would be borne in part by the German taxpayer, remains anathema. Macron was smart enough to never ask for it while on the campaign trail. In  essence this means that another key German request has already been fulfilled. The two sides can enter negotiations about the most crucial issue in the EU architecture and for the European economy without insurmountable obstacles. 

Another issue that will be watched closely is defence. Many observers keep on claiming that Berlin and Paris see London’s departure from the EU as a liberation from the shackles that made more EU defence integration impossible. In reality, neither side is particularly interested in real defence integration in the EU. France, like many Europeans and other NATO partners, holds a residual mistrust of Germany’s willingness to commit to the kind of robust, high-risk crisis management missions that are the litmus test for meaningful cooperation in the military field. 

In turn, Germany fears that it might get dragged into the kind of military interventions it abhors. 

The clash of cultures between France, that has a strategic military agenda, and Germany, which has none, is too big.
Expect instead a flurry of semi-meaningful activities at the EU level, such as the proposed EU Defence Fund, which will enable some joint research and prototyping but adds very little to the deployable capabilities of European nations. Everything else will be decided on a case-by-case basis, as is the preferred modus operandi for almost all EU member states.

Finally, Berlin will watch closely how Paris positions itself in the transatlantic relationship. Macron’s perceived closeness in this field to former prime minister Dominique de Villepin, an America sceptic − to put it mildly − is seen as worrisome by Atlanticists in Berlin. German Westbindung has traditionally consisted of both a French and an American pillar. Berlin will carefully avoid any situation in which it is forced to prefer one over the other. 

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