An acid test for French-German diplomacy

Published in Business Spectator (Melbourne), 25 September 2014

The welcome with military honours with which French Prime Minister Manuel Valls was greeted in Berlin this week was perhaps the most normal part of his first official visit to Germany. Everything else shows that French-German relations, once the cornerstone of the EU’s architecture, have reached a low point.

German newspapers were full of unflattering coverage of France’s political and economic malaise, when Valls arrived. There was not even a hint of schadenfreude in their articles, with no sign of malicious glee or gloating over the neighbour’s problems. To the contrary, the Germans are deeply concerned about France’s future and they did not hold back in telling Prime Minister Valls about it.

The chairman of the Bundestag’s select committee on Europe Gunther Krichbaum, a member of Angela Merkel’s Christian Democrats, admonished the French that they “had not yet delivered an explanation on how they sought to consolidate their budget”. Herbert Reul, head of the Christian Democrats in the European Parliament, was even more strident in his language, saying it was impudent for the French to claim they could not cut spending as that would be “a slap in face of the Greeks and the Portuguese who had to accept pension cuts.”

Yet another Christian Democrat, the deputy head of the parliamentary faction, Andreas Schockenhoff, said that it was not enough for France to only accept a leading international role when it comes to foreign policy and security questions. Instead, it also had to deliver a solid economic and fiscal policy. A backbench Christian Democrat, Christian von Stetten, demanded greater economic reform efforts and even bluntly declared that “the model of the French welfare state is broken.”

With all these members of Merkel’s party openly criticising the French government for its economic policy ahead of Valls’ visit, it is hard to believe that their statements were a mere coincidence and not orchestrated. German frustration over France’s apparent inability to sort out its economic problems is deep-seated and also shared by the Chancellor, even though Merkel had to phrase her opinion more diplomatically.

When she said in their joint press conference that more money was not always needed to generate more growth, it was clear that she rejected French demands for increased infrastructure investment as a stimulus program. Then Merkel, like a good teacher, reminded her French guest that economic reforms in France were not meant to satisfy German expectations but to help France itself.

However, when a journalist asked Merkel whether she was nevertheless satisfied with France’s reform efforts, her answer was tellingly evasive: It was not about her personal satisfaction or dissatisfaction with France and in any case France was going through an “exciting phase”. In other words: Merkel is not at all impressed about France’s economic progress.

And Valls? What did the French Prime Minister have to say about all these frontal and diplomatic assaults he had to endure while in Berlin?

Before his visit, he had already made clear that he would not make any excuses for once again failing to deliver a budget deficit compliant with European Treaty law. For his domestic audience, he cannot dare to appear to be in a weak position in Europe and thus he stressed at every opportunity how much he was at eye level with Merkel. He had not travelled to Berlin to ask for anything, Valls claimed, and the conversations with the German Chancellor had therefore been “direct and frank” – which can only be translated as heated and confrontational.

There can be no doubt about it: France and Germany have grown apart. For decades, the unlikely couple had shaped the progress of European integration. Though it had never been an easy relationship, and though there had always been philosophical and practical differences between the two countries on either side of the river Rhine, they still managed to work together in pursuit of shared goals. Often this cooperation was also accompanied by close personal ties between the leading politicians on both sides: Konrad Adenauer and Charles de Gaulle; Helmut Schmidt and Valéry Giscard d’Estaing; Helmut Kohl and François Mitterrand.

Under Angela Merkel as Chancellor, these ties have never been as strong as in previous times. Maybe having grown up in East Germany, Merkel never instinctively related as much to France as her predecessors. A better explanation, however, might be that France’s and Germany’s interests have become irreconcilably different.

Monetary union had diametrically opposite effects on France and Germany. Initially, it was Germany that struggled with the new currency when it was introduced. The German economy had entered with a high exchange rate and had to regain competitiveness through a process of internal devaluation and labour market reform in the early 2000s. Meanwhile France enjoyed lower interest rates than those it was used to but failed to seize the opportunity to put its economy on a more sustainable footing.

The past years have then seen Germany reap the rewards of its previous efforts, while France is punished for its failure to reform by high and persistent unemployment, low growth and deteriorating public finances.

Seen from Germany’s perspective, France’s problems are of its own making. The Germans do not feel responsible for helping out their neighbours. The French however, unable to devalue their currency to claw back at least some of their lost competitiveness, blame the Germans for what they perceive to be a stability and austerity obsessed ideology.

Regardless of who is right and whether Germany really is such a great economic role model, the positions held in Paris and Berlin are miles apart. There is not much common ground on which Merkel and Valls (or his President François Hollande) could meet.

In the past, a French prime minister or president visiting Germany would have not only been greeted with military honours but also been treated with polite interest and respect, maybe even admiration. After 15 years of monetary union, which was meant to bring Europe’s nations closer together, only the diplomatic formalities of this past are left.

There is a gulf of mutual misunderstanding and mistrust where there used to be the French-German axis that once shaped European affairs.

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