French President Emmanuel Macron clinched a major win in the country’s recent parliamentary elections, and as Germany looks toward federal elections in September, Chancellor Angela Merkel has a good shot at being reelected for a fourth term. With Britain leaving the European Union and the U.S. somewhat disengaging from the continent, the idea of a liberal democratic Franco-German engine leading the EU to a renewed position of strength is once again being discussed. The Cipher Brief’s Kaitlin Lavinder spoke with Thomas Wright, director of the Center on the United States and Europe at the Brookings Institution, to ask him what a Franco-German led Europe would like and whether it’s a real possibility.
The Cipher Brief: What are your thoughts on this idea of a Franco-German engine in Europe?
Thomas Wright: There’s been a lot of pessimism about Europe for a long time, including by me. What’s happened recently is there’s renewed optimism about this Franco-German engine because it looks like Merkel will be reelected, and Macron really came from nowhere, and so people are a little bit optimistic and think that maybe in light of Brexit, if Britain does leave, that we may see some opportunity for renewed Franco-German cooperation to finish the European project.
I personally share some of that optimism. I think there is a little bit of an opportunity now, but it’s misdiagnosed a little. This Franco-German engine has always been said to be important, but it’s also overstated; it has never functioned as it’s intended, not for some time. Here, the hope is that there will be this grand bargain where France will engage in structural reform in the economy and then the Germans will say that’s really great, so we’ll engage, we’ll do what you want to do on European integration and have more mutualization of liabilities and fiscal integration, more solidarity between the countries, and this will be the path forward. I don’t think that’s going to happen.
The problem in Europe, in the EU, is they went halfway on integration – enough to be the anti-Goldilocks moment, they’re totally exposed and they haven’t finished the job, but they can’t go backwards. If you look at the monetary union, but no fiscal or financial union, nobody knows how to unwind the euro, so they can’t go in reverse; but nobody can agree what going forward looks like because there’s a fundamentally different view in France and Germany and elsewhere. If you look at free movement of peoples – there’s the Shengen area that allows free movement of peoples, but there’s no control of common borders. People don’t want to unwind Shengen because that would be the end of Europe, but they can’t figure out how to move forward on shared control of borders because, particularly in the east, sensitivities about sovereignty are too high. This has been the problem for a while. Even if they can agree, the peoples of these countries fundamentally disagree on what they’re willing to stomach in terms of future integration.
The idea that Macron and Merkel can sort this out is premised on the Germans folding – that they will give up their strong beliefs on what the future of European integration will look like, in exchange for domestic reform in France. My view is that they will not do that. It’s not just [German Finance Minister Wolfgang] Schäuble – it’s particularly Schäuble, but not just him. They are very wedded to this Austrian school of economics of austerity, but also very strict fiscal responsibility, in terms of no deficit-funded investment of any sort, regardless of the rate of loans. Macron will come up short if he thinks that in exchange for reforms, which may or may not even be possible, that he’s going to get a fundamental shift in the German position. I don’t think any German chancellor could do it, even if Merkel replaces Schäble, which she may not do if she wins in September [in the German federal elections]; and even if [opposition leader and presidential candidate Martin] Schulz won, I still think there would be huge pushback because they have a fundamentally different view of the euro crisis than everyone else.
I’m a little bit optimistic because I think that maybe we’ve reached the point where the French will compromise and accept the German view – which I’ve always thought is wrong-headed, I prefer the French vision – because ultimately, the French vision isn’t particularly viable because it’s not particularly viable with the Germans. The question facing Europe is, do they go with some German version of an integrated future or do they stay where they are? Staying where they are is sustainable politically, but it’s not viable. Additional things will go wrong.
TCB: What about the idea of the multitiered Europe?
Wright: That’s existed for a while. You’ve had it with the euro, with countries in and countries out, and with Schengen, countries in and countries out. But I don’t think the multitier option is a solution to this particular problem. The problem on the economic side is that monetary union without fiscal and financial union creates systemic risk and divergence within the eurozone; it creates divergence because one interest rate for everyone at different levels of growth creates these asset bubbles and these oddities within the eurozone that can’t be counteracted by fiscal policy, like it is in the United States, because there are no transfers and the debt is national, not mutual, so the risk is not evenly distributed. I don’t know how you would change that in a multispeed way. There either is a proper banking union, or there’s not. There’s fiscal union, or there’s not. There isn’t now; and they can’t do it for some members of the eurozone and not for others.
They could definitely have a multitiered union on security and defense issues or on some other political issues where some countries would opt out. I guess it’s theoretically possible you would have a group of eurozone countries that would have mutualization of debt; but that’s probably not even technically possible, and no one is proposing that.
In the fundamental problems that they have, they’ll find it hard to do. And the fundamental problems are the economic side and the movements-of-people side.
TCB: When we were talking about economics, you discussed the disparity among nations, and especially Germany and France, and their different ways of viewing economics and economic policy. The same could be applied to military matters and security in the EU – not NATO, but rather within the EU. With Britain leaving the EU, there’s all this talk about actually creating an EU army, which has been talked about for decades. Do you think that Germany and France will get to a point where they will come into more agreement with their views on EU security – that is, by having the EU play a bigger role in security of the continent?
Wright: I think they will make some progress on that. There are a lot of problems, but the uncertainty about what’s happening in the U.S. reminds them, as Merkel said, they have to look out for themselves and try to take care of their own situation. In some ways, security cooperation is easier than the economic. The economic stuff in the EU is fundamental. It’s constitutional-level stuff, in terms of the lack of integration and the need to complete it. It does ultimately pose a security threat in a way because it’s a real issue about cohesion.
It may well be that if Macron and Merkel are looking for ways to move forward, that they’ll be inclined to go more on the defense and security side because it’s easier [than the economic side]. The problem is it’s not totally clear what the way forward is. The EU army thing is a bit of an illusion. What would it be used for? Under what conditions? Where is the command and control? All of those issues that have been there a long time still apply. They don’t want to fully duplicate what NATO is doing. And there’s big issues obviously around EU-NATO coordination and cooperation. But I think we’ll see some general agreements and maybe some new progress. That would be positive.
But the gaps are still massive – even on fundamental issues of strategy, like what’s the purpose of this? Over the years, there have been so many conversations on European security cooperation, and I find them incredibly dull because they’re almost always on the technical side of trying to suggest there’s a technical fix – a new institution, new format, new committee, or even some sort of rapid-reaction force. But rarely is it clear it’s deployable or even what it would be used for. Those are basic differences.
France is obviously more strategically minded than Germany is, not to mention the rest of the EU. So I think there will be some progress there. I think [U.S. President Donald] Trump reminds people it’s important. But I’m not hugely optimistic.
The other thing is there’s a difference in diagnosis of the security situation. A lot of European countries view the internal security threat and the threat from the Middle East and North Africa as much more significant than the Russia threat. The countries to the east and the north view it very differently. So there’s a big gap on some of those fundamental issues as well.
TCB: Moving beyond the technical subjects of economics and military cooperation, I think there’s also this perception that France and Germany could be the engine of a renewed values-based Europe that promotes liberal democracy, when you have countries like Hungary and Poland that are sliding toward illiberalism. Do you subscribe to that way of thinking?
Wright: In the Trump era, they will speak up in favor of values and democracy and human rights. That’s very welcome. I wish President Trump would do that. They have a problem in that they haven’t figured out how to handle Hungary and Poland and other problems of democratic governance that exist within the EU. They haven’t put a huge amount of pressure on Hungary or Poland – although they’re very different and in different stages – so they’re a little hamstrung on how they do that. It would be great if they’re able to push back. It would be great if they push back on Russia’s interference and have a real coherent understanding of the political warfare threat to Europe from Russia. But I don’t see that yet.
These are both liberal – in the classical sense of the word – leaders and they’re centrist and I think they understand the importance of the liberal international order. That’s all to the good. But what that means in practice internally, let alone externally, is unclear.
They still have no idea what to do with the Middle East or Syria. The United States doesn’t know either; but the Europeans are closer. I don’t get any sense there’s a shared strategic understanding of the problems in the region. In fact, they consistently avoid them.
TCB: Is it correct to think about the French-German dynamic as the dynamic that could or could not move Europe forward, as opposed to including any other countries in that dynamic?
Wright: In these circumstances, it’s probably legitimate to talk about Franco-German cooperation. Britain’s sort of out of the picture and Italy is in pretty serious trouble economically. Poland’s out of the picture in a leadership role. You do, by process of elimination, end up with France and Germany. And some important things have happened in France, and it’s right that people would look to Paris as a possible source of support for continuing the European project. There will be some renewed energy. But the problems that Europe has have not gone away. They face a very tough road ahead. But I don’t think there’s any alternative. And I don’t think closer cooperation between France and Germany precludes cooperation with other countries either. It’s just people are keen to find leadership where they can find it, and, at the moment, two of the places where it’s most clearly coming from are France and Germany.
