European Affairs

In recent weeks, Angela Merkel has managed to impose her views about future directions. If Europe is to get “economic governance,” it will involve the 27 EU member states, not just revolve around the 16-state eurozone. The second option was promoted by President Nicolas Sarkozy: Merkel wanted the first and will get it. Similarly, Paris wished to see the creation of a separate secretariat to coordinate national budgetary policies across the European monetary union, but Berlin insists on a different approach: straight-forward, rigid application of the rules of the Growth and Stability Pact. If there is any doubt about who is prevailing in these policy choices, look back to the crisis of Greece last spring: the French thought that it was important for the EU to intervene immediately. The Germans insisted on the need to wait until the Greeks had started cleaning up their own act before Berlin would – and finally did – give the go-ahead on a bailout.

But none of their differences saw French and German leaders publicly butting heads. In recent maneuvers, Paris and Berlin seem set on trying to paper over their differences and display mutual confidence as they deal with critical eurozone issues. After Wolfgang Schauble became the first German finance minister in several years to attend a French cabinet meeting, he and Christine Lagarde, France’s minister of economic affairs, sent a joint letter to the European Council President Herman Van Rompuy suggesting a compromise way ahead in trying to create more EU-wide fiscal discipline. They raised the idea of a flexible political agreement that would punish states breaking EU budgetary policies: “In the short-term, a non-binding political alternative could take the form of a political accord that would enable euro area member states either to bar an offending member state…from taking part in specific votes,” Schauble and Lagarde wrote. This idea offered the advantage of pursuing new fiscal discipline without any need to change the Lisbon treaty: the main effect would be to give political breathing room to both capitals as they grapple with the need to stabilize the eurozone’s future.

Paradoxically, France seems willing to hold her tongue as Germany proposes new economic solutions. Why isn’t France more reluctant to acquiesce in newfound German influence that seems newly sanguine about proceeding without French approval? Because a 27-member EU is a new playing field. French-German agreement is not nearly strong enough to dictate policies. But disagreement between Berlin and Paris can create a bureaucratic stalemate among the member states and backfire on France, an outcome that cannot benefit the French economy (or anyone else’s either).

In the 27 member-state EU, the majority rules on key issues and the French-German engine no longer drives European policy. The special bilateral bond has become more of a sounding board for important ideas and debates and no longer a compass for EU directives. Of course, economic and diplomatic ties remain close between these two nations, but it has been a long time since Paris and Berlin could jointly wield this type of power in the EU – as a singular duo that could “make it or break it” for Europe.

As things stand, Germany no longer feels a need to wallow in postwar guilt and invest in Europe’s reconstruction at the expense of any other national interest. Meanwhile France, longing for Mediterranean support, has its eye on Rome and Madrid. There may even be a little bit of “footsie” going on between Paris and London as the two capitals feel out the possibilities of a much closer merger in their military postures. French officials take the view that the British coalition government is determined to avoid a split on the issue of European integration. There are many rocks on which this course could founder, but there is an area offering scope for radical steps in cooperation – military cooperation that includes some accord on “specialization” -- meaning that France would leave some sorts of defense to Britain and vice versa. This idea, often discussed in Europe but rarely tried, has usually come up in the context of smaller EU countries. It would be a major change if Britain and France agreed on this principle, even in small ways. Diplomats say that they might because both governments want to find ways to compensate for their declining defense budgets, while maintaining their status as the two military powers in the EU with global reach and throw-weight. Such a new relationship, leading the EU movement on security, could counter-balance Germany’s economic pre-eminence in a new three-way equilibrium.

That idea, often evoked in the past and never realized, may come to pass – or may not. For the moment, it is clear that Europe has lost the team of carriage horses that is led by the front pair. So Europe faces a situation in which it has a political structure that has become a form of variable geometry. It is confusing, even for the drivers. It means that Europe, for better or worse, must face up to the need for rethinking where it wants to go and how it intends to get there.

Alain Frachon is a columnist on foreign affairs for the French daily newspaper Le Monde.