Germany and France: The Expensive Friendship

When it comes to the rhythm of European integration, Paris and Berlin evidently do not share the same starting points.

Since the formation of a new German government in spring 2018, the Franco-German machine has been running at top speed. High level meetings have followed one other and all resources are being mobilized to achieve compromises on major European issues such as Eurozone reform and asylum policy. And yet, agreements are sparse. Moreover, they remain distant from the French President’s ambitious European projects. Indeed, a wide gap lies between Emmanuel Macron’s speech about Europe at the Sorbonne and Angela Merkel’s interview at the Frankfurter Allgemeine Sonntagszeitung (FAS) eight months later,¹ in which she reacted to the French President’s proposals. When it comes to the rhythm of European integration, Paris and Berlin evidently do not share the same starting points. And this on several issues, for instance, European defense; what constitutes a major advance for the one represents merely a rstfi step for the other.

The demonstrated willingness of the German federal government to deepen Franco-German cooperation faces two main obstacles: on the one hand, Berlin’s opposition to any new financial transfer; on the other, its fear of upsetting European partners hostile to the deepening of European integration, and thereby weakening cohesion within the EU. In trying to reconcile contradictory, or to say the least, hardly compatible demands, Germany risks not really choosing, and thus displeasing several of its partners at once.

Consensus on the revival of Franco-German cooperation

There is a clear consensus in German political circles to prioritize the Franco-German partnership. In this respect, the German coalition agreement signed by SPD, CDU, and CSU in February 2018 leaves no space for doubt: “We want to develop as much as possible common positions on all important questions of European and international politics, as well as in the areas where the EU, with its 27 members, proves inefficient.” Among the issues mentioned are the resolution of the conflict in Eastern Ukraine, cooperation on security matters, tax harmonization (including the introduction of a common framework for corporate taxes), the fight against global warming, and the creation of a Franco-German center for artificial intelligence.

Before the federal government was even formed, a working group of French and German members of Parliament from all backgrounds began defining modalities and sketching the contours of a new Élysée Treaty. The current version, dating back to 1963, lay the groundwork for bilateral cooperation at the very beginning of the European construction. After adopting a parliamentary resolution for a new bilateral treaty in January 2018, the working group presented a series of ambitious proposals only a few months later, covering economic and social questions, as well as foreign policy and cross-border cooperation.²

The end of resistance

Two factors explain such an eagerness. Firstly, the election of a President who is both reformist and pro-European is globally perceived as an opportunity in Germany—especially as the campaign was punctuated by scathing critiques of the EU and the German government. For years, political leaders from the right as well as from the left have lamented the lack of reform in France, considering it both a risk for the economic stability of the Union, and a hindrance to the deepening of the EU. Emmanuel Macron’s program for domestic policy has thus been welcomed as marking the end of such resistance to change. Its atypical character has allowed each to project onto it her own preoccupations, whether concerning labor market reform on the right, or the consolidation of European solidarity on the left. This feature, in turn, has enabled the German political community to reach a quasi-consensus on the subject.

The second factor concerns international instability. Faced with multiplying crises at the borders of the EU—of which migratory pressure is only one expression—and the uncertainties weighing on the transatlantic partnership since Donald Trump’s election in 2016, Berlin is aware that Europeans must now take their destiny into their own hands. Yet, in a European Union itself experiencing serious tensions and soon to be deprived of the presence of the UK, France is the partner best equipped to cooperate with Germany on these issues. This is the case not only because it wields traditional leadership on diplomacy and security issues, particularly thanks to its permanent seat on the UN Security Council, but also because the two nations have a long history of cooperation on these matters, e.g. on the peace process in Ukraine and the Iran nuclear deal.

Budgetary reticence

The two fields in which France and Germany are the closest are foreign policy, as well as asylum and migration policy. While they do not share the same vision regarding defense and security, both governments see themselves as advocates of a multilateralism threatened by the repeated attacks of the American President. On this point, Germany should take advantage of its temporary seat on the UN Security Council for 2019/2020 to demonstrate its unity with France. Regarding migration issues, they have shared interests. They both wish, on the one hand, to strengthen border control on the external frontiers of the EU by granting more resources to Frontex and, on the other, to place the coordination of asylum policy in the hands of a newly created European agency—a proposal that goes hand in hand with distribution of refugees within the EU, which the states of the Visegrad Group reject.

When it comes to reformation of the monetary Union, however, reaching a Franco-German agreement is proving far more complicated. In Germany, Macron’s flagship project of creating a Eurozone budget provoked an outcry from the start. This immediately resulted in the resurfacing of a reflex closely linked to Germany’s European discourse: the fear of having to pay for others, and thus be roped into an adventure with unpredictable consequences. Nothing better expresses this than the magazine Der Spiegel characterizing France the day after the election as “Teurer Freund”— which means both “dear friend” and “expensive friend”. If a Eurozone budget is unacceptable to the federal government, it is because it suggests a “union of transfers” to which public opinion is viscerally opposed, and because it concerns only a portion of the EU member states.

Germany has no appetite for ambitious European projects

Admittedly, the two governments have, in the meantime, agreed on reform of the Banking Union and the creation of a budget for the Eurozone. Announced in June 2018 at the Meseberg meeting, the latter initially appears to be a concession to France. Yet insofar as neither the sum nor the nature of this budget has been specified, the agreement remains vague.

Poland and other Central Europe countries also rejected a budget specific to the Eurozone, albeit for other reasons. They fear that this will entail a reduction of the European budget.

The reasoning is in fact quite different on each side of the Rhine. For Paris, the budget must be permanent and relatively significant (1 to 2% of the GDP) in order to help states in difficulty and finance common investments. While the German Chancellor also refers to an “investment budget”, her approach is far more cautious, both with regards to the sum and the functioning of the mechanism. If such a Eurozone budget ever comes out, the federal government will ensure that it is not a blank check and that it is equipped with safeguards. It should also insist that the funds be aimed at specific, temporally limited projects—e.g. digitalization and infrastructures, fields in which Germany lags behind.

Furthermore, the priority given to a balanced budget by the German government restricts its appetite for ambitious European projects. The participation of the Social Democratic Party in the government has no impact on this budgetary “fetishism,” to use the French President’s oft-quoted expression.³ While its candidate may have supported French proposals during the campaign, its leaders fell back in line quickly thereafter. From a political perspective, it seems more profitable to insist on maintaining pension levels rather than pushing for costly European projects. The success of the Alternative für Deutschland (AfD), the nationalist party which entered the Bundestag in fall 2017, is evidently not inciting the traditional parties to take risks in this regard—in fact, quite the contrary.

Cohesion before strengthening

Apart from budgetary questions, Germany is torn between reviving the Franco-German cooperation and maintaining European cohesion. The French government clearly prefers a multi-speed Europe, of which the Eurozone would be at the forefront, even if this requires leaving behind countries reluctant to go deeper in European integration. Concerned about the centrifugal forces threatening the stability of the EU—more than ever since the implementation of Brexit—and convinced that guaranteeing European unity is its own responsibility, the German government is tempering Parisian fervor. The negotiations regarding PECSO, the Permanent Structured Cooperation on Defense, reveal Germany’s caution. While France has hoped for ambitious measures, Germany has insisted on their inclusive character. It was ultimately decided in late 2017 that all member states (with the exception of the United Kingdom) would participate, but the project’s ambitiousness was seriously diminished.

Although France will remain a privileged partner, the Franco-German cooperation should not be, according to Berlin, at the expense of internal EU cohesion.

Among the French President’s proposals, the most contested by other Europeans is the Eurozone budget. Due to the political vacuum left by Germany’s lengthy governmental negotiations, several northern European states came together, echoing the message that had been, until then, communicated by Berlin: the reinforcement of the Eurozone can only pass if budgetary rules are respected. Poland and other Central Europe countries also rejected a budget specific to the Eurozone, albeit for other reasons. They fear that this will entail a reduction of the European budget—from which they profit—and also that states that do not belong to the monetary Union will be sidelined from major EU decisions. Sensitive to this twofold opposition, Berlin is softening its position. It has only barely accepted the notion of such a budget, of which the modalities will be defined with the other members of the Eurozone—half of whom are opposed.

The risk of too moderate propositions

Another disagreement is linked to EU asylum policy, in particular to quotas for the distribution of refugees. The four states of the Visegrad group are vehemently opposed to it. The situation is different from that of the Eurozone budget, insofar as their objection does not so much concern a Macronian project as a demand of the German government made since the summer of 2015. Germany is nevertheless trying to be conciliatory. Without abandoning the idea of distribution, it is treating the subject more discreetly. Moreover, it has joined a discourse, present elsewhere in Europe, by foregrounding its desire to harden asylum policy and reinforce protection of the EU’s external borders. The threat from the AfD, pressure from the Christian Social Union (CSU) within the governmental majority, and the dissatisfaction of a portion of the population have all contributed to this change. Germany is simultaneously seeking the support of Paris in the search for middle- and long-term European solutions.

Although France will remain a privileged partner, the Franco-German cooperation should not be, according to Berlin, at the expense of internal EU cohesion. In the future, concessions to the French government will likely be made on two conditions: on the one hand, that other European partners not be slighted; on the other, that the German population realize the benefits from them, or at least not consider them contrary to the country’s interests. European border controls and investments in a digital economy fall into this category. Certain ambitious projects are at risk, however, of being trapped, especially if they are divisive and require financial transfers. This wide gap between the deepening of Franco-German cooperation and the maintaining of European cohesion has the advantage of avoiding the status quo in a Europe that is subject to internal tensions. The flip-side of the coin is that the proposed answers risk being too moderate or delayed for the EU to be able to address its challenges. Furthermore, the risk for Germany is to upset an impatient France, which it needs support from, while at the same time rushing European allies hostile to European deepening.