www.worldcommercereview.com Ashoka Mody considers between France Mody thefriendship Ashoka have diverged, andthat willnotplug theirfriendship and Germany andfindsthat theirnational interests The myth ofFranco- German friendship German the gapsineuro area architecture www.worldcommercereview.com S nations. French leadersopposedthe Treaty becausetheybelieved ofRome that borders shouldnotbeopened at werethorities unhappy becausetheybelieved that borders should beopenedto allcountries, notjust European Rome, Europe’s greatest achievement, postwar whichopenednational borders to trade withinEurope. au- German phase ofEuropeanThe andBelgium ledthenext Netherlands integration, culminating in1957the Treaty of EDC there was too much integration” 2006). (Judt agreement. driveThe hadrunoutofsteam. unity French Prime Pierre Minister Mendès-France complained, “Inthe inferiorclearly ranks intheEuropean army. But, inAugust 1954,theFrench National Assembly backedoutofthe at politicalunion.Adenauer reluctantly agreed to thearrangement, whichwould have soldiersin placed German a European budget. The EDC Treaty, signed inMay 1952,remains to thisdate Europe’s attempt farthest-reaching a European Defence whichwould merge Community (EDC), national into armies aEuropean by army supported Later thesameyear, insisted whentheAmericans onallowing Germany to rearm, theFrench reluctantly proposed macy. is ourbreakthrough”), andreadily 2006).For agreed (Judt Germany, Europe was away to regain international legiti- in creating aEuropean Coal andSteel Community. Adenauer exclaimed to hisaides,istunserDurchbruch” “Das (“This over Europe, andFrance’s foreign invited Schuman Germany’s minister Robert chancellor Konrad Adenauer to join The lasttimetheFrench successfully ledaEuropean initiative unity was inMay 1950. shadow stillcastaheavy WWII rejuvenate theirown economy andbuilddomesticsocialcohesion. This may takeageneration ormore. the decisioncalculus, have diverged even further. French leadershave apressing taskat hand:theyneedto discusses, however, provides nobasisfor history National interests, suchanexpectation. always central to ship between France andGermany willhelpcomplete thegapsineuro area architecture. As thiscolumn ince Emmanuel Macron’s asFrench election president inMay 2017,hopehaslingered that amythical- friend www.worldcommercereview.com Germany as an important politicalally.Germany asanimportant Thus, Bundestag, inMay 1963,theGerman whileratifying theÉlysée Treaty, the reassurance oftheUS’s andUSPresident support; JohnFKennedywas anxiousto retain politicalandmilitary as away ofcreating aunited European front againsttheUS’s economic andpoliticalmight. ButAdenauer needed the Élysée Treaty, 1963(Figure signed inJanuary 1).French President viewed deGaulle theÉlysée Charles Treaty A narrative firstemerged friendship ofFranco-German inthelead-up to the Franco-German Treaty of Friendship, even today remains afinancialdrag onthemeagre EUbudget. Policy (CAP), asystem ofsubsidiesfor European that farmers helpedundercut indeveloping farmers countries and all, even to European nations. As theprice for agreeing, theFrench installedtheegregious Common Agricultural – cannot be based on a redesign of the euro area euro the of redesign a on based be cannot – rhetorically by a mythical Franco-German friendship friendship Franco-German mythical a by rhetorically A new vision for the future of Europe – even if stirred stirred if even – Europe of future the for vision new A www.worldcommercereview.com tionship’ and‘Franco-German friendship’ are scanned mentionedinEnglish-language books by Google. Note: The figure NgramBooks was created Google usingthe Viewer withwhichthephrases (https://books.google.com/ngrams/info thefrequency ‘Franco-German rela reports - ). It Figure 1. The narrative ofFranco-German friendshipebbsandflows www.worldcommercereview.com generous financial contribution to prop upthe Soviet 2018b:78).ElisabethGuigou,teetering Union(Mody oneof as acentral ofUSforeign objective policy. witha Gorbachev Kohlbought theacquiescence ofSoviet leaderMikhail thisspeculation. Kohlwas backedUSPresidentno evidence to support George HW Bush,whoviewed unity German obsession withasingleEuropean inreturn for currency France’s green light to unify Eastand West Germany. There is Many have speculated thefallofBerlin that after Wall inNovember 1989,Kohlagreed to satisfy Mitterrand’s seemed briefly to concede ground to Giscardd’Estaing, theBundesbankheldhimback. terms, was chancellors ill-suited emphasisedthat for German asinglecurrency divergent economies. When Schmidt with Starting pushed back. Willy Brandttwo andcontinuing andthenHelmutKohlinhisfirst withHelmutSchmidt valuations, France would gaingreater chancellors 2018b:Chapters withGermany (Mody 1and2).German equality – pushedfor asingleEuropean currency, believingthat by eliminating thehumiliation ofregular French franc de ident George Pompidou in1969,successive French presidents – Valéry Giscard andFrançois d’Estaing Mitterrand euro. however, fact, In relations between France and Germany were fraught theseyears.withPres during Starting - The narrative cooperation ofFranco-German grew to acrescendo in therun-upto Europe’s singlecurrency, the ences inthetwo nations’ interests. although relegated status, to remained secondary alive andwas recharged periodically to temporarily maskdiffer tive transactional ‘relationship’ existed between thetwo European nations. The phrase friendship’,‘Franco-German Although theimpetusfrom theÉlysée Treaty faded, anarrative evolved that, ifnotfriendship, at leastaconstruc of adoring improvisedWest. speechhedeclared, inashort when twice Berliners “IchbineinBerliner” Welle (Deutsche while theylast” 2012).Kennedy, ontheotherhand, travelled to Germany inJuneandwon thehearts oftheBundestag’shearing changes, famouslymoaned, deGaulle “Treaties, you see, are like girlsandroses. They last introduced inthe Treaty’s preamble languagethat recognised Germany’s specialrelationship withtheUS.Upon - - - www.worldcommercereview.com no Prodi, Schröder and Chirac pushedbackagainstany imposition ofpenaltiesspecifiedundertherules. Prodi rec their fiscaldeficitsbelow the3%ofGDPlimit. Hard pressed bythe intrepid European Commission President Roma- indeed years ofrare coincidence andFrench inGerman national interests. countries Both were struggling to bring andFrench inGerman a newfervour scholarship, enough,around curiously 2002–2003 (seeFigure 2). Those were voting rights intheEU’s governance. The continued, narrative nevertheless friendship ofFranco-German reaching Jacques Chirac continued atense relationship, at summitinDecember 2000over theNice sparring theallocation of After theeuro’s Chancellor Gerhard Schröder 1999,German andFrench introduction on1January President with thefirstbatch 2018b:120). ofmembers(Mody made anotherfateful decision.Despite fierce oppositionfrom hisadvisors,Italy jointheeuro heinsisted area that accustomed to Eurofudge, butrarely sorichlysweetened hasitbeen withcynicism” (Stephens 1997). Ayear later, Kohl andGrowthStability Pact, rather Pact. thantheStability Philip Stephens oftheFinancial Times commented: are “We of fostering economic growth. Kohlagreed onlyto aname change–thesystem offiscalrules would becalledthe At theAmsterdam summitinJune1997,French leaderspleadedto have thefiscalframework thegoal also reflect insisted onarigid framework centred onabudgetdeficitlimitof3% GDP. pendent central bank. The French wanted aEuropean fiscalframework that allowed discretion; Kohl national policy European Kohl, central following bankunderpoliticalsupervision; theBundesbankmodel, insisted onahyper-inde circle ofadvisors. Superficially, Kohlgave the French theeuro, German terms. buthedidsoon The French wanted a decade. Why hedidsowe willprobably never know, becauseheoperated withgreat autonomy, relying onaclose Kohl didchangehisposition.From withboundlessvigourfor 1991on,hepushedthesinglecurrency therest ofthe 2009:248). of aquidpro quonever cameup(Schabert Mitterrand’s closestadvisors, says that shewas andKohl, present meetingbetween Mitterrand andtheidea at every - - www.worldcommercereview.com franco-allemande,’ and‘La relation franco-allemande’ are andFrench-language mentionedinGerman- scanned books by Google. Viewer withwhichthephrases (https://books.google.com/ngrams/info thefrequency ‘Deutsch-französische Freundschaft,’ reports ). It ‘Deutsch-französische Beziehungen,’ ‘L’amitié Note: Three-year moving average. ‘Deutsch-französische Freundschaft’ and‘L’amitié franco-allemande’ in1945equals 100.The figure NgramBooks was created Google usingthe Figure 2. The believe Germans inarelationship withFrance; theFrench seekfriendship www.worldcommercereview.com the Élysée Treaty. Aromantic viewofthat treaty bolstered thesensethat Germany’s substantial economic leadover Franco-German friendship quickly beganto fade, quickly butitwas friendship Franco-German reinvigorated 2018,the55 inJanuary cron 2017a:2017b). themes, Heinvoked especiallyacallfor warm but fuzzy European sovereignty. The narrative of (seeFigure friendship co-German 3).Macron gave speechesinAthens inParis stirring andat theSorbonne - (Ma many to agree to aeuro area budget. Anewhope was kindled. revivedThe mediaquickly thenarrative ofFran- May 2017,EmmanuelMacron becameFrenchIn president withapromise that hewould persuadeareluctant Ger thejoint guaranteeets andeurobonds (bondsthat would ofrepayment carry by euro area governments). bare minimumto prevent theeuro area from imploding. squashedfancifulideassuchaseuro Shefirmly area budg- Through theglobalandeuro area ensured crises, taxpayer Merkel that theGerman was calledononlyto dothe nism,” nixed Merkel the idea,repeating: “And where to isthemoneysupposed come from?” 2018b:324). (Mody When French President François Hollandehelpfullysuggested that theintention was to create a“solidarity mecha- to isthemoneysupposed comeAt from?” theBrusselssummitlater that month, anannoyed asked:“Where Merkel European headsofgovernment), proposed aeuro area budgetto assist countries in trouble. 2012, at theheight oftheeuro area crisis, Herman Van Rompuy, president oftheEuropean Council (thegatheringof andherfinanceChancellor minister Angela Merkel Peer SteinbrückDecember peremptorilyIn dismissedtheidea. sure to takeanequivalent initiative, French President proposed asimilarEuropean Sarkozy fund. Nicolas German establisheda$700billionfinancial authorities rescue fund, the Troubled(TARP). Relief Assets Program Underpres- When reached theGlobalCrisis its mostfearsome thefallofLehman phaseafter Brothers inSeptember 2008,US andFrenchGerman to undotherules, leaders, aneffort merely rather thanmaking waved themaside. ognised that therules were ‘stupid,’ buthefelt compelled asEuropean Commission president to implement them. th anniversary of anniversary - www.worldcommercereview.com database. Source: Factiva. withwhichthephrases the frequency ‘Deutsch-französische This figure and‘L’amitié reports Freundschaft’ franco-allemande’ are mentionedin Factiva’s globalnews Figure 3.Macron’s revives election theFranco-German friendshipnarrative www.worldcommercereview.com Note: Core inflation istheannualpercentage changeintheHarmonized Indexof Consumer Prices excluding unprocessed andenergy. food Sources: Conference Board, “Total Economy (Adjusted Database Version)”; Eurostat. Figure 4. The great divergence ineuro area incomes andinflation www.worldcommercereview.com spends about45%ofGDP, falling. ratio now at runsabudgetsurplus, 65%ofGDPisquickly anditsdebt-to-GDP 3% ofGDP. ratio remains closeto debt-to-GDP stubbornly 100%ofGDP. Its contrast, government In theGerman ofitshighexpenditures, 2017).Because (Saeed theFrench government strugglesto rein inits budgetdeficitbelow Juncker said, have “We areal problem withFrance. The French too much spend itonthewrong moneyandspend things” above 55%ofGDP. Macron was after elected, Soon theinimitableEuropean Commission President Jean-Claude France’s challenges are staggering. The French government’s extraordinarily highexpenditures have beenstuck economyThe German hasitsown troubles, asMarcel Fratzscher (2018)highlights. ButsetagainstGermany’s, 2018b:393). is dissipating (Mody evidence oftheFrench etal.2017).As(Masuch further economy’s weakness, theinnovative energy ofFrench firms governance metrics. Weakness isassociated insuchmetrics withlow long-term growth rates, asaECBstudyshows omy’s expansion a reflects weak governance system, with France substantially belowGermany inthe Bank’sWorld France isoneofthefew advanced countries with anexpanding ‘informal’ or ‘shadow’ economy. The shadow econ- weaknesses. (see Figureterritory 4). deflationary France’s economic thecrisis deep-rootedwoes during years economic reflect recovered from theGlobalCrisis, quickly theFrench economy stalledandthecountry’s inflation rate fell into near between thetwo countriesso farbehindGermany that isunrealistic. any partnership economyWhile theGerman The don’t prospects lookgood. However andappealingMacron’s daring European visionmay be, France hasfallen mote European unity. France andthedifferencestwo inthe countries’ national interests could be overcome by a common desire to pro - www.worldcommercereview.com dynamic countries intheworld. At thesametime, governments needto sensitively address socialstresses. German tasksare at home:to rebuildprimary economies inlong-term decline, especiallywhenmeasured against themost many orFrance, and, hence, willcontinue to dividerather 2018a).For thanunify(Mody Europe to move forward, the be basedonaredesign oftheeuro area. undertheeuro willalways policy favourThe single monetary eitherGer A newvisionfor thefuture ofEurope –even ifstirred by rhetorically amythical –cannot friendship Franco-German in bureaucratic tangles. ance by isrestricted therealities ofFrench stresses. And education budgetary reforms have sofarremained caught andprecarious jobs, thelevel willremainpromiseporary ofsocialanxiety high.His to create greater socialinsur addressing thecountry’s problems. enduring Indeed, to theextent thatreforms hislabourmarket create more tem- Although Macron seemsto recognise France’s handicaps, themeasures hehastakensofarbarely makeadent in ties are setto weaken further. and Poland –have steadily increased. increasingly to trade China,Franco-German looking With exporters German France hasfallensharply, to three area non-euro European whileexports economies –theCzech Republic, Hungary, ades ago, France (seeFigure was destination theprime for exporters German to 5).Since then,theshare ofexports The wideningeconomic gapbetween France evident ininternational trade andGermany flows. isstarkly Two dec drag onlong-term growth prospects. inequalities (Francetains itssadtitleaschampionofsocial atschool” 242016).Suchsocialdivisionsultimately are a ontheFrenchserved Parliament’s committee for cultural affairsandeducation,December saidin 2016,“France re has amongstthelowest rates ofupward intergenerational in mobility Western democracies. Annie Genevard, who ment rate rose thecrisis. during And that for boastssuchalarge government acountry expenditure outlay, France Even more worrisome for France are itslong-standingsocialproblems. The traditionally highyouth unemploy - - - - - www.worldcommercereview.com Source: IMFdata. Figure theirsights away shift exporters 5.German from theeuro area www.worldcommercereview.com June. Ragbag Treaty:Stephens, P(1997),“The EULeaders Ignored theRealIssuesatAmsterdam Summit,” Financial Times, 20 Press. ofMissouri versity T(2009),“How World PoliticsSchabert, IsMade:France andtheReunificationGermany”. of London and Columbia: Uni- Saeed, S(2017),“Juncker: French Too Spend ‘The MuchMoney.’” Politico, 18May. Mody, A(2018b),“EuroTragedy: ADrama inNineActs” Mody, Euro Area’s A,(2018a),“The Political Deepening Divide,” VoxEU.org, 21March. 41(2):159–205. ics EMoshammer,Masuch, K, andBPierluigi (2017),“Institutions, Public andGrowth Debt, inEurope,” Public Econom Sector - Macron, E(2017b),“Initiative forEurope,” 26September, University, Sorbonne Paris. Macron, E(2017a),“Speech by thePresident oftheFrench Republic,” 7September, Athens. ofEuropeJudt, T(2006),Postwar: since AHistory 1945. NewYork: Penguin Group US. Fratzscher, M(2018),The Illusion.NewYork: German Oxford Press. University France 24(2016),“French Inequality,Social StudentsMostAffected by OECD Finds,”December. 14 Welle ÉlyséeTreaty: Enemies,” Old Deutsche (2012),“The forOther AModel 23September. References Princeton University is Mody Ashoka Visiting Professor inInternational Economic Policy at the Woodrow Wilson School, generation. ■ the next leaders have theirown homework to do;for France’s leaders, theirtaskat homeisthemonumental challengefor . NewYork: Oxford Press. University www.worldcommercereview.com This article was originallypublishedonVoxEU.comThis article