A New Franco-German Feud
For decades the Franco-German alliance has been at the core of the European Union. But under the pressure of the European economic crisis, the two sides are increasingly sniping at each other in a war of memos. The tensions between Chancellor Angela Merkel and French president Francois Hollande after the loss of Merkel's chum Nicolas Sarkozy in 2012 that both sides seemed initially to have successfully suppressed are now out in the open. Gallic pique is running up against Teutonic stubborness, and it's not hard to see who is going to win this latest round in the Franco-German confrontation.
First a memo from the French socialists leaked in which they urged "confrontation" with Germany and attacked its economic "selfishness." The Socialists see a German-British cabal that is trying to enforce a free-market diktat upon Europe. Their summation is pretty accurate, minus the petulant tone:
The [EU] community project is now scarred by an alliance of convenience between the Thatcherite accents of the current British prime minister – who sees Europe only as à la carte and about rebates – and the selfish intransigence of Chancellor Merkel who thinks of nothing else but the savings of depositors in Germany, the trade balance recorded in Berlin and her electoral future.
Is Merkel not supposed to be thinking about the savings of German depositors, the trade balance, and the matter of her political future?
Now a memo has leaked from the German side, authored by members of Merkel's coalition partner, the Free Democrat Party, a band of doughty free marketeers who incline toward classical economics. The memo announces that France is on the skids, close to a lost cause. "Europe's problem child" is what it calls France—"French industry is increasingly losing its competitiveness. Businesses continue to move overseas, and the profitability of businesses is low."
There is a lot of truth to both memos. After visiting Germany last week, it became clear to me that Merkel is going all-out for reelection which means that she is not going to budge on the German insistence upon further auterity in Europe. She is thinking politically rather than economically, and she knows full well that German voters are transfixed by the prospect that their decades of savings may be sacrificed on the pyre of European unification, squandered by shiftless southern countries. A new political party has emerged on the right that is called the Alternative for Germany. It probably will not pass the 5 percent voting hurdle to enter the German Bundestag, a measure enacted to avoid a repetition of the Weimar Republic when tiny political parties tied the first German democratic republic in parliamentary knots. But the party is already attracting much attention as a populist, right-wing threat to the ruling coalition. It only needs to siphon off a few percentage of votes from Merkel's Christian Democrats and the Bavarian Christian Social Union to pave the way for a Red-Green—Socialist and Green party—coalition to return to power. Merkel is too shrewd to allow that to happen. So she and finance minister Wolfgang Schauble are pouring scorn on the notion that the way out of the European crisis is to abandon austerity and return to the free-spending of the days of yore. At the same time, the German Bundesbank continues to attack the European Central Bank for failing to remain sufficiently vigilant about combatting inflation.
Are the Germans, as the French suggest, being selfish? Well, yes. But it's hard to blame them. A famous German saying has it that "Bei Geld hoert die Freundschaft auf"—when it comes to money, there friendship ends. Perhaps the Germans are hostage to a mindset formed in the 1920s when the Reichsmark was debauched by hyperinflation and it took a wheelbarrow of cash to buy a cup of coffee. But that searing memory is based on real experience, not fantasy. The more the Germans look at Europe, the greater the mess looks. So the temptation to try and minimize the damage, particularly at a moment when the Germany economy itself is markedly slowing, is proving overwhelming.
For the Germans the crisis raises a host of older questions about the true nature of German identity. European? Or German? So far, the political elites have been firmly committed to European unity. There is no reason to believe that a rhetorical shift looms. But Merkel is making it clear that her priorities are winning reelection and safeguarding German assets. She is not about to break with the orthodoxy that more austerity is the road to prosperity. Instead, she is bolstering it. While the verbal brickbats that the two sides are hurling at one another hardly portend the dissolution of the EU, they do suggest that the fabled goal of European unity is like the horizon, always receding as you approach it. As the head of the most powerful country in Europe, Merkel is going to do it the German, not the French, way.