Germany's Enthusiasm for Macron Won't Last
The leaders of France and Germany have different ambitions for Europe.
By Clive Crook – BLOOMBERG
2017 MAY 09.
Angela Merkel congratulated Emmanuel Macron on his "magnificent" victory over Marine Le Pen in the French presidential election,
there was no reason to doubt her sincerity. President Le Pen would have
been such a disaster for Europe that the Brexit calamity would have
seemed trivial in comparison.
Even
so, Macron's success and the U.K.'s decision to quit the EU present
Germany with mutually reinforcing problems. They put the German
conception of Europe's future under pressure.
Macron
is pro-Europe in the traditional French way: He wants a deeper European
Union, with closer integration of fiscal policy in particular. Germany
is pro-EU as well, of course, but has generally preferred making the
union broader rather than deeper. Its goal has been to spread the
blessings of peace and prosperity more widely, and especially to its
east, rather than pursuing with French zeal a United States of Europe
(to be led, incidentally, by France).
Seen
in this light, the creation of the euro -- an act of radical economic
deepening -- was Germany's great strategic mistake. In effect, it was
the price Helmut Kohl paid for
French acquiescence to German reunification, but German voters were
never in favor of the single currency, rightly suspecting its
constitutional implications. In case anybody needed reminding, Macron
spelled these out during his campaign.
To work well, a single-currency area needs a prominent fiscal dimension.
In the euro zone, monetary policy cannot work on a country-by-country
basis to attenuate the ups and downs of the business cycle. Without
targeted monetary stimulus, countries can get trapped for longer, and
perhaps indefinitely, with slow growth and high unemployment. Fiscal
policy has to be brought to bear. Yet, at Germany's insistence, the
EU's Stability and Growth Pact,
imposing limits on deficit spending and public debt, makes this
difficult. And Germany has consistently resisted the idea of a "transfer
union"; the European Union's budget amounts to a mere 1 percent of the total income of its 28 member states.
Now that the euro exists, dismantling it would be a financial nightmare,
so economic logic strongly favors a more deeply integrated EU. Macron
gets that. He has talked about an EU budget ministry and centrally
coordinated public investment financed with eurobonds, presumably with
an EU guarantee. He's right -- but that's exactly what Germany doesn't
want. Magnificent as she believed the election result to be, Merkel was
quick to add that
"German support cannot replace French policy-making," and her officials
said Germany wouldn't be dropping its longstanding opposition to
eurobonds.
Macron fought Le Pen by calling for more Europe, not less. It's true that a majority of French citizens count
themselves pro-Europe, but compare Macron's stand with Prime Minister
Mark Rutte of the Netherlands, who dealt with the Dutch brand of
militant populism by making rhetorical concessions to
it. This shows the strength of the French elite's commitment to deeper
integration. If Germany isn't alarmed about that, it should be.
In
resisting these political and economic pressures, Germany used to have
an ally in the U.K. Not anymore. The principal skeptic on deeper
integration -- so skeptical it refused to join the euro system -- is no
longer around to provide cover for Germany's reservations and help check
France's ambitions for the union. Almost all of that burden will now
fall on Germany.
Merkel's
dilemma will soon be apparent. Macron, with unsteady parliamentary
backing at best, will struggle to get his way in Paris -- so the French
structural reforms that he promised and
Merkel is calling for will be hard to deliver. This will raise the
political stakes for EU policy reform: Gains in that area will matter
more for Macron, yet be harder for Merkel to justify to her own voters.
If she continues to resist Macron's proposals, she'll embarrass the new
president and further inflame French euroskepticism. If she gives way,
her own euroskeptics will be energized.
Merkel
might come to regret -- if she isn't regretting it already -- her
failure to help Britain's David Cameron save face last year. His attempt
to wring yet more concessions and special favors from the U.K.'s EU
partners was brusquely rebuffed,
and Cameron was humiliated. Much to his surprise, rather than accepting
this refusal to budge any further, the Brits decided to go, leaving
Merkel to make the case against deeper integration without their help.
How do you say in German, "You don't know what you've got till it's
gone"