international analysis and commentary

The geopolitics of Franco-German relations at a time of multiple crises

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A never-changing objective of diplomacy in Europe over the last 200 years has been to make sure that the central European powers avoid fighting each other, and that they be capable of countering Russia. The crucial factor when it comes to containing Moscow’s ambitions is the connection between France and Germany. When they are strong and act together, the Russian bear stays home. But when the two countries have an argument, the continent pays for it: a French-German argument normally entails an expansion of Russia as a consequence. When the Elysée Treaty’s 40th anniversary was celebrated in 2013, Alain Juppé called France and Germany “the privileged guardians of European cohesion”. Yet, the goodwill of the anniversary seems to have been quickly forgotten as contemporary problems hit hard on the agendas of Angela Merkel and François Hollande in the following months.

The Russian issue is back. The decision of the Kremlin to annex Crimea and invade East Ukraine may be in some measure a consequence of the French-German troubled relationship. The geopolitical structure of these relationships helps explain the current situation. First, Germany imports gas from Russia, and lots of it. In exchange Germany exports cars, machinery and chemicals. The trade link always worked in the European context, as Berlin (or rather, mostly Bavaria) also guaranteed a role for France in terms of participating in the export flow. As for France, in terms of energy it imports uranium from Russia, yet this rare mineral does not seem to have created a strong geopolitical influence; thus, Paris is currently less vulnerable to Moscow’s pressures or blackmail attempts.

The situation started changing around ten years ago, when Germany realized the benefits it could enjoy by substituting its traditional French (as well as Italian and Spanish) suppliers with new partners: mostly China and some of its own neighbors in Eastern Europe. France never really managed to free itself from its super-unionized and tax-intensive model, which was set up before the latest wave of globalization, and proved unsustainable after it. So, Germany essentially switched to China – and China itself directly took its toll on French industry.

It was more than a commercial separation: it was an ideological one. At about the same time, France’s then-President Jacques Chirac tried to engage in some internal reforms, but essentially failed, and France stalled in a wave of strikes and protests. Other attempts were made and were met with record demonstrations of up to three million people (many of whom were students) on the streets in one day: March 28th, 2006. Such was the state of affairs and the French national mood right before the arrival of the global recession.

However, as France was fighting students, Germany was reforming at full steam. In a strange historical paradox, as France’s conservative UMP did not manage to change the country, it was the Social-Democrats in Berlin who envisaged the need to introduce overarching reforms. In Germany, the benefits for the unemployed were curbed, and taxes for higher income people and companies were reduced. Bureaucracy was made less “Prussian”, and education was reformed to better connect higher education and business.             

In other words, France proved to be somehow too reliant on the successes of the 1990s: growing GDP (although moderate) with less working hours per-capita, reduction in the wealth gap with the US, internationalization of French companies and a new impact of French culture on the Western world, with a new set of movie-makers, writers and intellectuals entering the global stage.

Yet, investment in research and development stagnated, and large scale reforms were virtually absent: France acted as a spoiled nation, whereas Germany – then holder of The Economist’s title of “Sick Man of Europe” – perceived the need to change. Somehow, the crisis for Germany came at the right point, and paved the way for a “new deal” that allowed the country to exploit the benefits of the second wave of globalization.

Then came the European sovereign debt crisis. At this point, the separation turned into a divorce. When he took office, François Hollande did not conceal the new French strategy: ally itself with Italy and Spain to counter Angela Merkel on the “austerity” policy. On the side, Paris showed, at least initially, a shadowy pattern of behavior towards arms sales to Russia (see the “Mistral” military vessels deal with Mr. Putin, currently suspended), leaving Germany de facto alone in introducing some form of coordinated European policy concerning Ukraine and its implications. Connecting the dots, the French message to Germany seems to be: relieve the pressure on the debt/austerity package and receive French cooperation on the “Russia problem” in exchange.

The divorce was quiet. France took a break from central European politics – and showed no hesitance at intervening in other quadrants, such as in Mali, when its very own interests (uranium) were at stake. To the disdain of the fans of French grandeur, Hollande, instead of leading the hexagon to seize a renewed role in Europe, sought to lead some sort of “League of Broken Countries”. Thus, it is no wonder that Hollande’s approval rate was at 13% in October 2014 (it is rumored that Louis XVI was at 11% when he was on the verge of approaching the guillotine).

How did the Germans react? First, it should be clear that French-German relationship generally concerns the elites, border towns (often switching sides, like Strasbourg), and hipsters in Berlin at best. The people in general are not really interested; this differs, for example, from the reciprocal fascination and exchanges that countries like France and Italy may experience. The relationship between the Germans and the French is basically a sentiment of distrust that is generally considered more acceptable than some of its historical precedents.

But how long will this last? As things stand, on the key elements of economic policy Angela Merkel uses the same language with Hollande that she adopts with Italy’s Matteo Renzi. Hollande stated in October 2014 that France will be able to meet the Maastricht criterion of 3% deficit/GDP only by 2017. Merkel replied that “sustainable and long-term growth is possible only on the basis of stable finances”, that translates from Merkelian as “forget it”.

There is a saying in Berlin that Merkel has a special sense of detecting winners, and neutralizing them; but also of detecting losers, and avoiding them. As a Christian-Democrat, the worst she could think to do is to engage in any sort of political gamble with a French president who is a Social-Democrat, who cannot control his own country and who has terribly low approval ratings.

And if the elite lose it, the people will follow. The disappointing economic performance of Germany in the first two quarters of 2014 signals that stagnation is reaching Berlin. The French will accuse the German government of blindly following the austerity recipe even against its own interests, whereas the Germans may hold the French (alongside the Italians, Spaniards and Greeks) responsible for the downturn. As never before, Europe’s core would need two leaders capable of changing the game; hopefully these leaders will be Merkel and Hollande, or more time will be lost.