The end of an affair for France and Germany

The faultlines on Greece are set to deepen and widen, writes François Heisbourg

by: François Heisbourg
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European integration is a game that involves up to 28 players and at the end the Franco-Germans win. So it has been for close to 70 years, and so it was again in Brussels last Monday with Angela Merkel and François Hollande setting the terms of a deal subsequently blessed by all others. This may have come as a surprise, given the huge differences between the two countries’ positions. The Franco-German system was being tested to the limit.

The often-forgotten secret is that France and Germany rule the roost not because they agree but because they do not: De Gaulle wanted a Europe of nation states, Adenauer was a self-avowed federalist, and a few days ago Berlin was actively considering Grexit, while Paris worked to keep Greece in the single currency. Because the two countries often represent polar opposites within the mainstream EU conversation, a deal struck by Germany and France can usually be accepted by all, minus the UK. This does not mean the couple’s balance remains unchanged. During the cold war, a strategically dependent Germany ceded the central role to France. Nowadays, German leadership on issues such as Ukraine is made acceptable thanks to cover provided by France. Similarly, the deal struck in Brussels on Greece bears the “no-debt-forgiveness” footprint dear to Germany.

Last Monday, France was one of only three countries out of 18 ready to sign on to a new bailout deal with Greece (Italy and Cyprus were the two others). But it is France and Germany together who took the final decision. Germany kept debt restructuring off the table. France also got what it wanted: no Grexit. Mr Hollande received high acclaim on his return from Brussels.

So the tired old couple still works some of its magic. The fact Ms Merkel and Mr Hollande share character traits may have helped: unabrasive and diffident, they are born proponents of the quest for compromise, important in German coalition-building and the Socialist party’s art of synthesis.

However, this could be a last fling, as the faultlines that opened last week deepen and widen. By openly contemplating the forced secession of Greece, Germany has demonstrated that economics trump political and strategic considerations. France views the order of factors differently, as is clear in Mr Hollande’s July 14 proposal to make the eurozone a politically accountable body with its own parliament and budget. This could still be fudged if the new bailout scheme were successful.

Unfortunately, by having avoided what they loathe — debt forgiveness — the Germans may now be hoist with their own petard. Adding billions to Greek debt, enforcing pro-cyclical pension cuts and tax increases in the middle of renewed recession, and positing as in 2011 a €50bn privatisation programme: this is as unlikely to work now as it was in the past. Now it has acquired the formal status of plan B, Grexit is likely to come back. France would then be faced with an impossible choice: to flow with the German-led tide of Grexit, clearly as a subordinate, or to fight a losing battle to prevent a country from being forced out of the European family.

Even Franco-German co-management may not be up to striking a workable compromise. The change behind the scenes is that the Paris-Berlin bond can no longer take strength from the shared project of European integration: France’s 2005 rejection of the proposed EU constitution was a turning point. The relationship has instead become utilitarian and as a result the EU’s days of ever closer union may be at an end.


The writer is special adviser at the Paris-based Fondation pour la Recherche Stratégique

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