It’s July, and most Germans are more concerned with the beach than their forthcoming elections. Beyond the German border, however, many international eyes remain focused on Berlin, the new European hegemon, and the expected policy changes that will follow the vote in September.
Those Germans that are pondering the future of Europe might argue that the keys to integration lie in Paris rather than Berlin. Over the weekend I participated in a Franco-German gathering, and came away with both good and bad news. The good news is that many young people – the new generation for Franco-German relations – took part; the bad news is that most of these youngsters were concerned not only with the deterioration of the relationship between Paris and Berlin, but also in the French capacity for economic reforms and its ability to have an appropriate broad discussion about its European goals. It is fair to argue that with the French “no” in the constitutional referendum of 2005, France somehow stopped discussing Europe in the broader public sphere.
With a little more distance and more experience, I believe that Franco-German relations were never quite as rosy as we often pretend: even the so-called glorious times of Helmut Kohl and Francois Mitterrand in the early 90s, and the forging of the euro, were rather a “war of seven years”, as Pascal Riche and Eric Aeischmann have described it. France and Germany always made Europe work under pressure – the question is whether they will succeed this time, and this time means after the German elections. The rumours are that a major Franco-German initiative on deeper eurozone integration can be expected after the elections, more or less independently from the election outcome. Yet, nobody seems to know whether in these rumours the wish is father to the thought!
The last EU Council of June 28th has produced some good results on the Single Resolution Mechanism (SRM) in the process of making banking union. But with respect to the completion of Economic and Monetary Union (EMU) euro governments are lagging behind and backtracking from earlier, more ambitious plans. As in December 2012 and March 2013, EU leaders failed to meet the expectations they had previously raised, with no substantial progress on issues related to the four main building blocks of a genuine Economic and Monetary Union.
The 2013 June Council was initially the deadline for a roadmap on four issues: ex ante coordination of major national economic policy reforms; the social dimension of EMU, including social dialogue; the feasibility of mutually agreed contracts for competitiveness and growth; and “solidarity mechanisms” to enhance the efforts made by member states which enter into contractual agreements.
But as seen, results were again vague. EU leaders signalled that they will look at indicators and policy areas to be taken into account in the framework of a strengthened economic policy coordination, in October.
France and Germany will need to get involved in these issues soon, and their decisiveness to push things forward after the elections, especially within the eurogroup, will matter a lot!
Interestingly enough (and rather unexpectedly), France and Germany made a move on this in May, when they published a common paper. This came after harsh Franco-German disputes (if not a dialogue of death) over how to govern the eurozone: where the French talked about domestic demand and minimum wages, the Germans talked about competitiveness and growth. Notably, however, the EU Commission is mentioned only once in the paper. The subtext is that further euroland integration may take a different institutional shape. But not long before the paper came out, on May 16th Francois Hollande had made a proposal for political union.
Although it was not specified what this political union would mean in concrete terms, and whether France would be ready to pool more sovereignty at the EU level, this was significant. For the first time, this proposal meant that France was reacting to the German idea of redesigning the European parliamentary system, with two-chambers. And here we come to the core of things, which is legitimacy.
French President François Hollande’s harsh reaction to the country-specific recommendations proposed by the Commission in May indicate the limits of European economic integration under the current system. The orders cannot come from Brussels; a different base for legitimacy must be found, especially for economic reforms, which are induced by the EU. Hollande’s furious remark was that Brussels “cannot dictate to us what we have to do. [...] On structural reforms, especially pension reforms, it is for us and only us to say what is the right way to attain the objective.” These remarks were mainly aimed at French voters, who have become more sceptical about the EU, with some parts of the electorate increasingly attracted to the populist anti-EU/euro rhetoric of the far-right National Front led by Marine Le Pen. But President Hollande’s public outburst and Chancellor Merkel’s clear statement in a recent interview in Der Spiegel that she does not think it is necessary to transfer further competences to the EU/Commission, show the limits of integration and the real hurdles on the way towards a genuine EMU.
France and Germany need to become the frontrunners to overcome these hurdles: if more competences to the EU/Commission are not the solution and “orders” from Brussels don’t do it, then France and Germany should, indeed, pave the way to a newly designed system of parliamentarian accountability within the eurozone – a sound basis of legitimacy for the management of an increased fiscal capacity and new solidarity mechanisms. That would be a real breakthrough for that crucial period after the German elections!
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