From the very beginning of the European integration project, France and Germany have been at the core of the whole enterprise. It was German Chancellor Willy Brandt who joined French President Georges Pompidou at the very first European summit in The Hague in 1969. It was the Kohl-Mitterrand tandem that took up a leadership role after the end of the Cold War, bartering German reunification for the European Monetary Union. Throughout European integration history it shows that the Franco-German “twin engine” has taken care of European crisis management, using the European Council as a provisional government for Europe.
The latest financial and public debt crisis put the “Merkozy” tandem – the collaboration between former French President Nicolas Sarkozy and German Chancellor Angela Merkel – at the centre of Europe, and although most will find it hard to admit, everyone looked to them for answers. However, the engine sputtered and guidance was erratic if not absent. Yet both agreed upon the cure for Europe’s illness: austerity and more austerity. Opposing views of other European leaders, focussing on growth measures rather than austerity, were proven wrong – not to say ignored – and the Merkozy’s proposals were implemented with vigorous enthusiasm. But if French and German leaders were so likeminded, then why was their handling of the crisis so unsuccessful?
It is a common misunderstanding that the Franco-German engine means that France and Germany always agree and impose their views on the rest of Europe. On the contrary, the two powerhouses of Europe usually find themselves at opposite ends – as they have for numerous centuries. As a recent ECFR report shows, diverging opinions in Franco-German relations often work best for Europe. When the leaders of the two countries start from opposite positions, it becomes easier for others to contribute to the debate and recognise Franco- German deals as their own. Indeed, when the relationship between Berlin and Paris is seen as too symbiotic it diminishes the duo’s potential as a laboratory of beneficent European compromise – precisely the problem with the Merkel-Sarkozy tandem.
But now Sarkozy is gone and newly elected President François Hollande swore to combat austerity, putting growth and solidarity back on the European agenda. Spanish Prime-Minister Rajoy and Italian Prime-Minister Monti support him, leaving Merkel isolated. With Sarkozy out of the picture, some say the Franco-German tyranny is now finally over. Granted, the Merkozy dominance is – quite literally – decapitated, but to me this means that the Franco-German engine is only just warming up. Although the situation might seem like a complete stalemate, room has been made for debate and compromise. Up until now, austerity was Europe’s cure, but a new engine is in the make. If only Merkel and Hollande would leave their trenches, they would see that combining German demands for austerity with French demands for solidarity could lead to a new engine of disciplined growth.
The proposal of the “four Presidents” – Van Rompuy, Barroso, Draghi and Juncker – already points in this direction, and was the stake of last night’s summit. The main challenges ahead, from a political point of view, were the entrenched positions of Germany and France and the general lack of willingness to compromise. Guy Verhofstadt made an accurate assessment in saying that “we seem to be wasting time going round in endless circles, waiting for someone else to make the first move. Francois Hollande is saying that we need more solidarity among member states before conceding more sovereignty to the EU whilst Angela Merkel will not countenance any more solidarity until there is agreement on further transfers of sovereignty to a full fiscal union.”
The tensions were played out fully overnight, with Monti and Rajoy holding the European growth pact hostage and refusing to sign the deal until they were guaranteed some short-term measures to help their troubled economies. History shows that when tensions are so high and opinions are so diverging, it is usually the lowest common denominator that makes it in the end. However, taking into account the severity of the situation, it might not be a bad idea to break with tradition and choose the highest common denominator over the lowest. And against all odds the summit up until now did actually reach agreement on some major issues. Most importantly, the presidents’ proposals were well received and Van Rompuy has been charged with designing a timetable for realisation
There further was agreement on the growth pact, on the banking union and surprisingly also on a mechanisms that would allow troubled banks to get direct financial support from Europe, without national governments functioning as an intermediate. All this seems as major concessions on Merkel’s part, but she countered that the principle of “no performance without counter-performance” remains intact. Indeed, she made very well clear that these measures are conditional and will only be applied if public debt is lowered and the economic reforms that were promised are actually being executed – meaning that troubled countries will have to show they are doing their homework, before they can get extra help. These (re)actions are, to me at least, proof that Europe’s leaders are finally doing what they should be doing, i.e. debating and compromising, with respect for each others’ positions.
So no, the summit, which continues today, is a not a complete failure yet, but neither is it expected to bring the grand answers many are hoping for. There is still no agreement on Eurobonds, nor on the exact road towards a more comprehensive economic union. What has been agreed so far are merely short to medium term solutions, without a consensus on a long-term strategy to overcome Europe’s fundamental imbalances – and it is unlikely there will be any time soon. However, on a more positive note, the seed of debate and compromise on disciplined growth has been planted and now needs to be given time to grow. The Franco-German tandem has not failed Europe yet, but it’s time they stop their pointless bickering and take some action towards fruitful compromise, allowing Europe’s new engine to take shape.
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