The French Elections and the Franco-German Equation
For German leaders today – most born after 1950 and many since 1960 – both the EU and the Franco-German relationship have been a part of Germany’s political DNA. For the immediate post-1945 German generations, their determination to set Germany on a new course in a new Europe was founded on a particular equation of Franco-German partnership, with France playing a lead rider role and Germany accepting the role of the horse. During the last two decades the political and economic geometry of Europe has altered in favor of a more dominant position for Germany. While France can continue to strut on the world stage of the UN as one of the five permanent veto-wielding members of the Security Council and aspire to position itself as a power with global reach, Germany has become the dominant player in Europe. With that fact in mind, the results of the French elections during the coming weeks, regardless of who wins the Presidency, will not change that fact.
The current economic crisis has reaffirmed German dominance in the shaping of the policy responses and in almost all key economic and financial policy challenges of the euro zone and the EU overall. During the 20 years since German unification, France, the second largest euro zone economy, has seen Germany increasingly take de facto command of Europe’s economic choices. During the last decade, Germany’s economy has become far stronger than its French counterpart. Nothing speaks more loudly about this reality than the global markets’ pecking order of national economies’ performance and outlooks. In this last year in particular, it has been clear that Berlin is determined to export its “culture of economic stability” to the entire euro area. This intention is not just an analysis of what Europe needs: Chancellor Angela Merkel also has domestic political reasons to stick to this agenda. As several regional elections are proving, she needs to be aware that German public sentiment is fearful of a fragile currency – the euro, now that it has replaced the revered deutschmark – whose declining credibility could threaten the country’s social security savings. This does not just reflect Germany’s past experience of financial collapse after World War I, it is also a conclusion that emerges from analysis of the on-coming challenges contained in the demography of the next 20 years.
A Difference of Opinions
“Economic governance” of Europe is at the heart of an ongoing argument between Paris and Berlin. France wants the euro zone to be the main focus, whereas Germany wants all 27 member states in the EU to be involved in policy decision-making. The difference, from Merkel’s viewpoint, is that Germany needs these “non=euro” EU members to be made to behave responsibly. With Greece as their poster child, Germans are leery of the EU’s southern members. These countries are big recipients of EU subsidies intended to modernize their economies, but they have not translated this largesse into newly disciplined budgetary attitudes to replace their old habits of inflate-and-devalue as a way to maintain their economic momentum. Moreover, German banks have significant exposure in these countries should default actually occur.
Right now, Germany has a Europe it likes. Unification was achieved along with a strong economic position, limited exchange-rate risks and a degree of discipline enacted in the Growth and Stability Pact. Also, it has the largest weight in the European Parliament and the Council of Ministers under the rules set by the Lisbon Treaty. The current arrangements suit a Berlin that approaches with caution a more centralized European structure – especially after the recent decision by Germany’s Supreme Court to limit increased control by Brussels over German sovereignty. Meanwhile, France has lost some of its political strength since German unification, both as the lynchpin on the continent as well as its influences in the EU.
Forging some sort of joint French-German vision of Europe’s future, as their predecessors once did, is more difficult now. For one thing, structures of decision-making in Paris and in Berlin are different. Whereas the French President has more command and control, the Chancellor must operate with different levers in a role and system that require difficult consensus building. The Bundestag is a weightier and more self-assured body than its French counterpart, and German governments have to contend with a much greater degree of autonomy on the part of its regional governments and, frankly, its court system, than any French government ever needs to worry about.
The argument that one often hears – if France and Germany can act together, Europe moves ahead; if they are at loggerheads, things stall out – is no longer so self-evident. As the key player now, Germany is not thinking as much about the past, in terms of the old French-German couple as the main motor of Europe. There are now other equations of importance in the mix across the continent, all of which Germany can and will explore in pursuit of its own interests. The legacy of both world wars will remain as a touchstone for some time to come but it will no longer be the first primary reference point. There will be increasing need to forge a new narrative, one that is no longer about where France and Germany have come from, but instead about where they are going together as part of the great European project. There is not a clear description of that narrative, let alone a clear consensus.
With all this in mind, whether Francois Hollande is the next French President or Nicolas Sarkozy is given another term in office, France will be facing the same domestic challenges, as well as the need to solve them within a European Union framework. While Chancellor Merkel and President Sarkozy have presented themselves as the dynamic duo, and Merkel in her capacity as head of her party has openly campaigned for Sarkozy, how President Hollande would work with his German counterpart is not clear. His campaign rhetoric about wanting to renegotiate the fiscal pact – which Merkel fought quite hard for – to strengthen fiscal discipline is already raising flags in Berlin. This rhetoric, along with questions about the role of the European Central Bank, proposing to raise taxes on the rich and the banks, and an increase in state spending all run counter to Merkel’s emphasis on austerity.
Of course, campaign rhetoric quickly faces reality after Election Day. If Hollande wins, his challenge will be to merge his election promises to encourage growth and at the same time regain its AAA rating which it lost last year, much to the embarrassment of the French. Meanwhile, Germany’s economy is humming along at a much stronger clip, a fact that Merkel does not need to remind anyone.
Despite the fact that Hollande and Merkel come from different political camps, there is no reason to expect that ideology would be an insurmountable barrier. The fact that Sarkozy and Merkel share the same political party persuasions has certainly not prevented serious clashes between them. And there are precedents in past Franco-German tandems between leaders of different political parties, exemplified by Helmut Kohl and Francois Mitterand or Gerhard Schroeder and Jacques Chirac. It may very well be that some personal chemistry would emerge between Chancellor Merkel and a possible President Hollande. However, in the weeks following the Presidential election in France, further elections for the National Assembly will be due. These elections, which determine the political contours of that representative body, will also be instrumental in forming the political parameters of the next French President.
France and Germany need to work closely with each other to plot the most promising way for Europe to move forward. However, at this moment, they are not synched sufficiently to deal with the choices and challenges that lie ahead. The question about the source of leadership for Europe is not going to be answered in Brussels. The Europe of 27 remains a cluster of nation-states with different political systems and styles of governance – a difference nowhere better illustrated than by France and Germany. But since both these countries have a serious stake in the both present and the future of Europe, they are going to have to come up with a persuasive new case to explain why and how they need to partner up.
Whoever the French President will be, he will have to sell the idea of partnership to the voters, as will Chancellor Merkel on her side of the Rhine. At a time of economic nervousness and political uncertainty all over Europe, it is a tough job to carry out.