European Affairs

In this emergent form, the partnership has become more asymmetric than either side is ready to concede. But both will eventually have to recognize the shift in power.

The current economic crisis has reaffirmed German dominance in the European Central Bank (ECB) and in almost all key economic and financial policy choices of the eurozone and the EU overall. At the same time, German economic interest in the euro area is declining as it looks increasingly to the growing markets in Asia. Look at Merkel's recent trip to China and the impressive entourage of German business leaders who traveled with her. During the 20 years since German unification, France, the second largest eurozone economy, has seen Germany increasingly take de facto command of Europe's economic choices. During the last decade, its economy has become far stronger than the French. Nothing speaks more loudly about this reality than the global markets’ pecking order of national economies’ performance and outlooks. In this last year in particular, it has been clear that Berlin is determined to export its “culture of economic stability” to the entire euro area. This intention is not just an analysis of what Europe needs: Chancellor Angela Merkel also has domestic political reasons to stick to this agenda. As she found out after this spring’s elections in North Rhineland Westphalia, Germany’s largest province, she needs to be aware that German public sentiment is fearful of a fragile currency - the euro, now that it has replaced the revered deutschmark - whose declining credibility could threaten the country’s social security savings. This does not just reflect Germany’s past experience of financial collapse after World War I: it is also a conclusion that emerges from analysis of the on-coming challenges contained in the demography of the next 20 years.

“Economic governance” of Europe is at the heart of an ongoing argument between Paris and Berlin. France wants the 16-nation eurozone to be the main focus, whereas Germany wants all 27 member states in the EU to be involved in policy decision-making. The difference, from Merkel’s viewpoint, is that Germany needs these “non euro” EU members to be made to behave responsibly: Germans are leery of the EU’s southern members. These countries are big recipients of EU subsidies intended to modernize their economies, but they have not translated this largesse into newly disciplined budgetary attitudes to replace their old habits of inflate-and-devalue as a way to maintain their economic momentum. Moreover German banks have significant exposure in these counties should default actually occur.

Right now, Germany has a Europe it likes. Unification was achieved along with a strong economic position, limited exchange-rate risks and a degree of discipline enacted in the Growth and Stability Pact. Also it has the largest weight in the European Parliament and the Council of Ministers under the rules set by the Lisbon Treaty. And the current arrangements suit a Berlin that has become less ambitious about a more centralized European structure – especially after the decision last year by Germany's Supreme Court to limit increased control by Brussels over German sovereignty.

Forging some sort of joint French-German vision of Europe's future, as their predecessors once did, is more difficult now. For one thing, structures of decision-making in Paris and in Berlin are different. Whereas the French President has more command and control, the Chancellor must operate with different levers in a different role and system that require difficult consensus building. The Bundestag is a weightier and more self-assured body than its French counterpart, and German governments have to contend with a much greater degree of autonomy on the part of its regional governments and, frankly, its court system than any French government ever needs to worry about. And, right now, both Merkel and Sarkozy are facing strong domestic political headwinds as they look toward the next round of elections -- another complicating factor, at least for now.

The argument that one often hears -- if France and Germany can act together, Europe moves ahead; if they are at loggerheads, things stall out – is no longer so self-evident. As the key player now, Germany is not thinking as much of the past in terms of the old French-German couple as the main motor of Europe. There are now other equations of importance in the mix across the continent, all of which Germany can and will explore in pursuit of its own interests. The legacy of both world wars will remain as a touchstone for some time to come but it will no longer be the first reference point. There will increasing need to forge a new narrative, no longer about where France and Germany have come from, but instead about where they are going together as part of the great European project. There is not a clear description of that on either side on the Rhine now.

Part of that project must involve the further evolution of European defense capabilities and that is bound to generate uncertainties. As much as President Nicolas Sarkozy has sought to strengthen the EU’s security dimension, while steering France's reintegration into NATO's military command his support is less than enthusiastic in Berlin – and perhaps even in London, where euroskepticism is part of many leaders’ genetic make-up. Germany's defense spending remains lower than French or British, a situation that impacts on Germany's role in matters relating to European defense. Efforts to pool resources will only be further constrained by the continuing economic uncertainty, and the domestic current of opinion opposing any increased expeditionary role for German forces is bound to gain in light of the widespread unpopularity of the Afghan mission. As the new NATO strategy continues through 2010, figuring out the economic, political and military equations between a viable Common Security and Defense Policy (under the EU’s post-Lisbon Common Foreign and Security Policy) and the Alliance will continue to be a challenge for Germany and France.

In today's global chess game, Europe and the U.S. need each other, but their relationship is not interdependent enough to tackle all the challenges they both face. In a similar way, France and Germany need to work closely with each other to plot the next and best way for Europe to move forward, but they are not synched sufficiently to deal with the choices and challenges ahead. The question about the source of leadership for Europe is not going to be answered in Brussels. The Europe of 27 remains a cluster of nation-states with different political systems and styles of governance -- a difference nowhere better illustrated than by France and Germany. But since both these countries have a serious stake in the present as well as the future of Europe, they are going to have to come up with a persuasive new case to explain why and how they need to partner.

Dr. Jackson Janes is Executive Director of the American Institute for Contemporary German Studies (AICGS) at the Johns Hopkins University in Washington, D.C.