France’s strategy in Western Europe, as it has been since World War II, is to preserve a balance of power with Germany through integration. Macron’s original goal was to create a fiscal union and eurozone finance minister, hoping to put centralized authority in a figure more amenable to French control. German Chancellor Angela Merkel quickly tempered those ambitions, and in the end, Merkel and Macron settled on a small shared budget for eurozone members (much smaller than France had hoped and lacking the ability to assist countries during downturns), a larger backstop for European banks, and little else.
As Europe’s largest economy, Germany is the de facto gatekeeper of eurozone reform. Without Berlin’s buy-in, Paris’ proposals will go nowhere. But getting Berlin on board is an uphill battle. (In late 2012, during the eurozone crisis, a eurozone budget was suggested. Merkel shot the idea down with the question, “But where is the money supposed to come from?”) Life is pretty good for the Germans at the moment, and it’s not easy to convince people who are mostly content that things need to change. Moreover, the Germans know that when their government assumes more of the European burden, citizens disproportionately bear the cost. For Macron, securing German support was always a difficult prospect; but until France instituted structural reforms and demonstrated what Berlin deemed sufficient respect for EU rules, winning Germany’s support would be impossible.
To be sure, the Germans need the eurozone to survive every bit as much as the French do. Should a recession send Europe spiraling into another crisis, Berlin would almost certainly come to the rescue as it did before. But German politics have changed a good deal since 2012, with the rise of the euroskeptic Alternative for Germany party (now Germany’s third- or fourth-largest party, depending on the poll) and concomitant shift to the right within its largest party, the Christian Democrats. Germany’s reluctance to put up its money last time, and the conditions it attached to its help, did tremendous damage to the image of liberalism and democracy in the EU from which the bloc still has not recovered. It’s not a cycle Paris wants to relive, especially given that France could someday find itself in need of aid. Germany wouldn’t try with France what it did with Greece, but neither would it give a no-strings-attached bailout – and that’s assuming France could be saved.
So, if he wants to enact eurozone reforms before the next crisis hits, all Macron needs to do is the near-impossible. By the end of Germany’s Agenda 2010 reforms, the country had broken the now-sacrosanct 3 percent deficit rule for five straight years. Germany’s budget deficit soared to 4.18 percent; France’s projected 2019 deficit of 3.2 percent is ascetic by comparison. Now that the yellow vest protesters have seen their efforts pay off, and with Macron’s tanking approval numbers, France’s compliance with the rule may not be possible. The biggest obstacle to France’s ability to get back on the right side of the rules, however, is the European economic slowdown and impending recession.
The momentum the Macron government had built up in domestic reforms was impeded by the yellow vests. That means Germany’s support for eurozone reform will not be forthcoming – and it was always a bit of a long shot that Germany, with of its own domestic political instability, would willingly go along with Macron’s reforms anyway. France will keep playing catch-up, while Germany keeps writing the rules.
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