BRIEF POLICY

AFTER MERKOZY: HOW FRANCE AND CAN MAKE EUROPE WORK Ulrike Guérot and Thomas Klau

The rise of the Socialist leader François Hollande to the SUMMARY The eurozone crisis has shown that the Franco- powerful presidency of France will transform the politics German tandem remains a vital driver of of the eurozone and rebalance the European Union’s most European governance. The election of François important partnership. Both historical evidence and the Hollande should be good news for the tandem’s recent experience of the “Merkozy” era suggest that cross- capacity to generate constructive compromise in party constellations in Franco-German relations often work Europe. It will help correct the perception that best for Europe. When the leaders of the two countries start Germany is the overly dominant partner, although French influence has been underestimated. As from different ideological positions and belong to different the historical evidence shows, the partnership party political families, it makes it easier for others to between Berlin and Paris tends to work best for contribute to the debate, mediate and recognise Franco- Europe whenever it produces a synthesis between German deals as their own. When the relationship between politically opposed starting positions. This makes Berlin and Paris is seen as too symbiotic, on the other it easier for other countries and political forces to hand, it diminishes the duo’s potential as a laboratory of buy into Germany’s and France’s proposals for beneficent European compromise – precisely the problem new European policies. with “Merkozy” during the last year. Despite some grandstanding on both sides, the outline of a new eurozone deal rebalancing Barring the unforeseen, Hollande will lead France at least austerity with new measures to help growth until May 2017. Under an extreme scenario for the next is already recognisable. Once it is achieved, five years, a severe worsening of the euro crisis could see France and Germany should embark on a work governments and parliaments forced to choose between programme to adapt national administrative and the rapid creation of powerful federal instruments (such as political practices to the new European rulebook. and Hollande should also move to joint debt liability or a common treasury) and the collapse facilitate cross-border labour mobility in the EU of the euro. Even without such a dramatic chain of events, and take steps towards modest eurozone welfare however, the economics and politics of the eurozone are policies than can act as automatic financial set to dominate Hollande’s time in office: his spectacular stabilisers. Finally, Berlin and Paris should inauguration-day visit to Berlin demonstrates this vividly. engage in more consultations with their European partners. All this will help to create goodwill for In the short run, the Franco-German tandem will be busy the treaty change that, in the long term, is needed to give the eurozone the leadership it needs. managing the difficult situation resulting from the elections in Greece, the worsening growth prospects for the eurozone, 2 ECFR/56 May 2012 www.ecfr.eu AFTER MERKOZY: HOW FRANCE AND GERMANY CAN MAKE EUROPE WORK EU treaty change will therefore return to the EU’s political EU’s the to return therefore will change treaty EU Third, France and Germany should make a sustained sustained a make should Germany and France Third, The choice of Jean-Marc Ayrault as prime minister, a low- a minister, prime as Ayrault Jean-Marc of choice The Rebalancing the eurozone’s macroeconomic policy policy macroeconomic eurozone’s the Rebalancing Hollande, in fact, has been careful to formulate his demands a longer-term issue. This brief argues that France and and France that argues brief This issue. longer-term a of adoption legal the for way the freeing July, by achievable victory electoral Hollande’s before even signalled Merkel Hollande’s of half second the during than later no agenda already been taken: the 25 signatories of the Fiscal Compact to policies eurozone and EU new for push Hollande’s and Germany should define and take action on other eurozone other on action take and define should Germany remains deficits and debt public down bringing of Compact full-blown 2013, by force into enter to scheduled Compact electorate, and boost the chances to secure popular support popular secure to chances the boost and electorate, of All inclusive. more leadership joint their make to effort Given the worsening of growth prospects in the eurozone and cross-border job searches and take first steps towards towards steps first take and searches job cross-border collaborator, his directeur de cabinet Christophe Chantepy. Christophe cabinet de directeur his collaborator, has effect this to decision political a that overlooked often resulting from the reform of EU and eurozone governance. eurozone and EU of reform the from resulting more forceful and more accountable political leadership it it leadership political accountable more and forceful more reasonably fast. Given sufficient political will, this should be more even it makes Greece in elections the from resulting regular treaty after a maximum of five years. With the Fiscal welcomed as another positive signal in Berlin. Ayrault, a Ayrault, Berlin. in signal positive another as welcomed mandate. make it back to the top of the EU’s political agenda. It is is It agenda. political EU’s the of top the to back it make this would strengthen the eurozone’s political efficiency, efficiency, political eurozone’s the strengthen would this improve the EU’s standing with disaffected parts of the the of parts disaffected with standing EU’s the improve practice governmental European and national make to the FiscalCompactby2013. EU the and (EIB) Bank Investment European the through growth for more do to ready be would government her that Angela Chancellor budgets. balanced reach to timelines so desperatelyneeds. the difficult situation in Spain and Italy, Hollande’s election sufficiently compatible to deliver on the new missions missions new the on deliver to compatible sufficiently initiate a programme of administrative and political reforms have would that policy economic joint eurozone’s the in Berlin. to acceptable them of most make to as way a such in should act as a welcome catalyst for a course correction correction course a for catalyst welcome a as act should to set is change treaty term, longer the In demand. sustain have committed to attempt to integrate it into the EU’s EU’s the into it integrate to attempt to committed have key socialist with an aversion to grandstanding, strong strong grandstanding, to aversion an with socialist key policy priorities in the intervening years. First, they should they First, years. intervening the in priorities policy urgent for France and Germany to come to a new agreement unquestioned. The renewed tension in the financial markets Second, they should launch a work programme to facilitate to programme work a launch should they Second, be will politics, to approach pragmatic a and roots local for a new attempt at giving the eurozone and the EU the the EU the and eurozone the giving at attempt new a for framework is for now; full-blown EU treaty change is is change treaty EU full-blown now; for is framework former German teacher, speaks German – as does his closest building a small complementary European welfare system. system. welfare European complementary small a building budget – provided the ultimate goal enshrined in the Fiscal the in enshrined goal ultimate the provided – budget national back pushing as such – anyway necessary been – a situation worsened by the dysfunctional elements of the of elements dysfunctional the by worsened situation a – An electiveandselectiverelationship A closer look reveals a further layer of complexity. Even on Even complexity. of layer further a reveals look closer A an as act to Germany and France for vital was it Although France and Germany have driven European integration integration European driven have Germany and France European policy. The discreet operational alliance between the German and German the between alliance operational discreet The In acknowledging the Franco-German tandem’s central role, Lisbon Treaty’snewsystemofEuropeangovernment. Nicolas Sarkozy and Angela Merkel, the Franco-German Franco-German the Merkel, Angela and Sarkozy Nicolas acted as the self-appointed nucleus of the eurozone’s crisis eurozone’s the of nucleus self-appointed the as acted and broad macroeconomic issues. Because the euro crisis crisis euro the Because issues. macroeconomic broad and military the and 2011 year the As role. leadership joint a circles leadership European from exclusion permanent a as now initiative Franco-German for need grudging the a of acceptance capitals, many In institutions. eurozone and crisis, the contain to order in government emergency hoc ad German engine dominates European institution-building institution-building European dominates engine German goes hand in hand with deep resentment about what is seen group of like-minded countries. And we know that once once that know we And countries. like-minded of group Treaty Fiscal the make to how about thinking ideas, good eurozone’s system of governance, Paris and Berlin have have Berlin and Paris governance, of system eurozone’s decades. France was never Germany’s closest partner in in partner closest Germany’s never was France decades. “We call. of port first Berlin’s not is Paris issues, economic dominates European politics today and because it is playing Franco- The issues. regulatory many and competition EU joint of bypassing casual its in careless and dominant couple has been perceived by many of its partners as divisive, once we have established a common position among our our among position common a established have we once out in precisely these two policy fields, it feeds the mistaken operation in Libya have amply demonstrated, foreign policy neither are defence, nuclear policy, trade, environmental, environmental, trade, policy, nuclear defence, are neither we start speaking with the French, then the trouble starts.” trouble the then French, the with speaking start we only French the call We with. approach an share really we partners the are These first. Dutch the and Finns the with do we that control, fiscal of system a build to how and work on reflecting brainstorming, real “The policy. financial with such no is there politics, EU of areas most in restriction: management system. “The (European) Commission was was Commission (European) “The system. management to take the lead and act swiftly”, said a French official. “This unable therefore and unprepared politically and technically the of weakness the to Responding obsolete. tandem the make would enlargement eastern big EU’s the that think the even more hawkish Dutch finance ministry goes back back goes ministry finance Dutch hawkish more even the core of range whole the across mark joint their leave to alone let relationship, Franco-German special a as thing president former of stewardship symbiotic increasingly the since the 1950s. The euro crisis has shown it was false to to false was it shown has crisis euro The 1950s. the since impression that France and Germany are able, or aiming, aiming, or able, are Germany and France that impression is not an area of regular Franco-German co-ordination, and Under popularity. or prestige duo’s the enhanced not has it is whywehadtostepin.” it matters to take note of an important but rarely mentioned know that we normally want things which are very different from what the French want”, said a German official dealing official German a said want”, French the what from Europe. Rather, it is the partner with whom achieving a In France, hardly a week goes by without reports of yet compromise has the greatest overall impact on EU policy. another closure of a factory or company. Unsurprisingly, when French interlocutors are asked about the prospects for their country’s relationship with Germany, the fear of Imbalances hurt décrochage (economic decoupling) is a recurrent theme.2 The only structural economic factor bolstering French self- The euro crisis has reaffirmed the relevance of the Franco- confidence when the country looks across the Rhine is its German tandem and changed its internal dynamics. These much healthier demography. But this does little to counter are now harder to read and more difficult to manage. the prevailing sense of angst in France. The French have For decades, there was what Stanley Hoffmann called the feeling that they are “no longer on the same eye-level as the “symmetry of asymmetry” between a France that was the Germans”, a French observer said. perceived to lead in political terms and a that was stronger in the economic sphere, which worked as The euro crisis has exacerbated the sense of fragility. France a stabilising feature of the duo. In reality, Germany shaped objectively faces a far greater risk than Germany that the the EU politically at least as much as France, and French markets will lose confidence in its ability to refinance its economic growth averages often matched and occasionally debt. This reduces France’s room for manoeuvre and outperformed Germany’s. But the sense of balance that arose makes it imperative to French policymakers to sustain the from a politically confident France and an economically perception that they form part of a bloc with Germany rather confident Germany helped the couple through numerous than with Italy or Spain. The political consequences for power battles. France are real, but the tendency in Europe and in France itself has been to overstate them to the point of distortion. Even more than German reunification, the Treaty of Nice There is a widespread perception that until the election of dealt a first big blow to this equilibrium by ending the most François Hollande, Germany alone has called all the shots powerful expression of institutional equality between the in the crisis, forcing France and others to subscribe to the two, namely their similar share of votes in EU Council German vision of how to manage the eurozone.3 But this is formations. Since then, an increasing divergence of not how things are seen in Berlin. economic performance has reinforced a sense of growing disparity. Germany, having reformed its welfare state and The fact is that Germany has seen several of its sacred labour laws and overcome the long crisis resulting from cows led to the ideological abattoir during this crisis; Bild integrating the bankrupt GDR, has strengthened its primacy (Germany’s best-selling tabloid) stirred up popular emotion as the EU’s most successful big economy. France, of course, whenever another such sacrifice became inevitable. For is not a weak power: as a military nation ready to engage example, the creation of the European Financial Stability overseas and a veto-wielding member of the United Nations Facility (EFSF) and the European Stability Mechanism Security Council, it has preserved global stature. Moreover, (ESM) amounted to an implicit recognition that financial thanks to the shrewd eurozone crisis management of solidarity for debt-laden countries under massive pressure Sarkozy, France managed to escape the Italian and Spanish from the financial markets must be a permanent feature contagion scenarios and the downward economic spiral that of Europe’s monetary union – a de facto breach of the ensued for these countries. “no bailout” principle enshrined in the EU treaties at Germany’s insistence. The self-reinvention of the ECB as Yet a rapid shrinking of France’s industrial fabric, a guardian of financial stability, expanding its mandate to accelerated by the rise in the euro’s external exchange save banks from collapse and facilitate the refinancing of rate, has fed a sense of anxiety and dispossession, with otherwise bankrupt states, was another blow to Germany’s globalisation publicly debated as a threat rather than as psyche – and a move seen by many citizens as a further an opportunity. Germany, whose industrial base is ideally betrayal of the promises made when the euro replaced the structured to meet the demand of countries such as China, deutschmark in 1999: most Germans want their central still produces close to 30 percent of its GDP in the industrial bank to focus on fighting inflation. sector, whereas the figure for France has dwindled to less than 20 percent.1 France lacks small and medium-sized More recently, statements by Bundesbank President Jens enterprises able to compete on a global scale; Germany has Weidmann and Finance Minister Wolfgang Schäuble that roughly a thousand of them. They deliver wealth to rural Germany must accept a little higher inflation to balance the areas and act as economic and entrepreneurial educators for European South’s loss of competitiveness dealt yet another the population, showing that global entrepreneurial success is achievable even for small companies located in rural parts of the country.

2 The authors interviewed more than a dozen leading politicians, civil servants, media representatives and researchers in France and in Germany for this paper. 3 See, for example, Ifop, “L’image de l’Allemagne en France”, no. 19787, January 2012; Gerrit Wiesmann and Ralph Atkins, “Schäuble ready to tolerate German inflation”, 1 2011 CIA World Factbook 2011, available at https://www.cia.gov/library/publications/ Financial Times, 10 March 2012, available at http://www.ft.com/cms/s/0/49e9e708- the-world-factbook/fields/2012.html 9abe-11e1-94d7-00144feabdc0.html#axzz1usPB7eor (accessed 15 May 2012). 3 4 ECFR/56 May 2012 www.ecfr.eu AFTER MERKOZY: HOW FRANCE AND GERMANY CAN MAKE EUROPE WORK A narrative of victimisation by external forces is now part of Making theEuropeansystemwork 5  4  France and Germany can marginalise the impact of these these of impact the marginalise can Germany and France To survive and flourish in the long term, the eurozone will eurozone the term, long the in flourish and survive To British speak of “austerity”, a word with mostly negative negative mostly with word a “austerity”, of speak British a central authority. The best way to organise the necessary the organise to way best The authority. central a and between labour and capital. And only a new synthesis synthesis new a only And capital. and labour between and – contract social its redesign now must Europe sense, a approach in the eurozone even more difficult. The political The difficult. more even eurozone the in approach The neighbours. its on austerity destructive imposing and Germans perceive themselves as prudent managers of their of managers prudent as themselves perceive Germans Giving up on the “no bailout” principle, extending the role of cultures willmakethispossible. differences by identifying concrete projects useful to to useful projects concrete identifying by differences where areas identify to is Paris and Berlin for challenge eurozone heads of state and government, an old French idea of a currency union must spell the end of autonomous autonomous of end the spell must union currency a of own finances who are now being asked to rescue a cohort of government spending and living and welfare standards, so standards, welfare and living and spending government for ask legitimately can Germany which for concessions work”, not did eurozone the for vision German initial our connotations, the operative word in the German public public German the is debate in word operative the connotations, n rdn housekeeping. prudent on need to acquire many federal features of government it it government of features federal many acquire to need resistance. “We had to accede to French demands because because demands French to accede to had “We resistance. fierce after only accepted Merkel that Sarkozy by revived would understand. macroeconomic national policy, with power transferred to to transferred power with policy, national macroeconomic member states. This makes the search for a consensual consensual a for search the makes This states. member jolt to German public opinion. that is, the relationship between the state and the market market the and state the between relationship the is, that In eurozone. the of stability greater the to and themselves the debate in both countries – as it is in most other eurozone that is emerging from the euro crisis stronger than ever ever than stronger crisis euro the from emerging is that the ECB and underwriting substantial financial guarantees financial substantial underwriting and ECB the citizen every that way a in this acknowledge to courage the their lifestyle on credit. Whereas the French and the the and French the Whereas credit. on lifestyle their finance longer no eurozone the in states and citizens that of meetings regular convene to decision a against vain in spendthrifts, someofwhomseemunwillingtoreform. said a German official. But the German government lacked government German the But official. German a said something in return: namely cutting, wherever necessary, necessary, wherever cutting, namely return: in something lacks today: the crisis has demonstrated that membership membership that demonstrated has crisis the today: lacks page screamed: “Inflation alarm”. Finally, Germany battled Germany Finally, alarm”. “Inflation screamed: page for eurozone partners are seen in Germany as painful huge painful as Germany in seen are partners eurozone for between the French and the German social and economic economic and social German the and French the between der Not”(“Saveintime, sothatyouhaveinneed”). example, Germanchildren areraisedonthemaxim:“Spareinder Zeit, dannhastDuin Sparen, or“saving”,isawordwithpowerfulpositive connotationsinGerman.For May 2012). Weidmann-Inflation-in-Deutschland-steigt-nur-geringfuegig-1862435 (accessed15 13 May2012,availableathttp://www.finanzen.net/nachricht/aktien/ROUNDUP- “ROUNDUP/Weidmann: InflationinDeutschland steigtnurgeringfügig”,dpa-AFX, – a policy of virtuous frugality based frugality virtuous of policy a – Sparpolitik 5 The French see a Germany Germany a see French The 4 The following day, Bild’s front – has no appetite for putting this item on the political menu political the on item this putting for appetite no has – All major political parties now advocate some substantial substantial some advocate now parties political major All France, however, only a handful of leading politicians and and politicians leading of handful a only however, France, or president EU the of elections direct through system EU European commitment binding the government as a whole a as government the binding commitment European that mean not does years few a for reform institutional EU Treaty, saw his party split over Europe under his leadership The sensible way forward would be the creation of joint joint of creation the be would forward way sensible The In Germany, a broad public discussion about the need need the about discussion public broad a Germany, In However, delaying the high-risk debate about full-blown full-blown about debate high-risk the delaying However, Brussels, co-ordination in the Ecofin or the Eurogroup will Eurogroup the or Ecofin the in co-ordination Brussels, a number of corresponding national reforms to function function to reforms national corresponding of number a at thestartofhismandate. and the European Commission is another example. One of One example. another is Commission European the and very nearfuture. Giving national finance ministers the power to enter into a into enter to power the ministers finance national Giving need – Compact Fiscal ratified yet-to-be the Pact, Growth Germany and France can do nothing to make the eurozone’s cataclysmic crisis, such a profound reform of the eurozone’s a barring But eurozone. the across job their for campaign and complex bewilderingly a on resting approach current economic anxiety in France and great economic and social and economic great and France in anxiety economic of time a at discussion change treaty major a in engaging advocates Many issues. these debating are commentators changes are merely administrative in scope; others have have quite seriouspoliticalorevenconstitutionalimplications. others scope; in administrative merely are changes operandi modus own their adapt states member eurozone’s crisis – the European Semester, the toughened Stability and existing new governance more efficient. It is often forgotten of further mergers of European sovereignty caution against caution sovereignty European of mergers further of not work. The relationship between national parliaments parliaments national between relationship The work. not more legislative power for the European Parliament. In In Parliament. European the for power legislative more macroeconomic cohesion it needs, but it will inevitably inevitably will it but needs, it cohesion macroeconomic the course in ordinary times, led by elected politicians who politicians elected by led times, ordinary in course the treaty change and are requesting a politicisation of the the of politicisation a requesting are and change treaty to the eurozone’s new governance. Some of the required required the of Some governance. new eurozone’s the to that the neweurozone rules agreedso far in response to the the eurozone’s macroeconomic policy co-ordination. This This co-ordination. policy macroeconomic and eurozone’s the EU’s the in parliaments national of involvement the increase to is rulebook eurozone new the of aims core the to reinvent the eurozone’s system of governance and and governance of system eurozone’s the reinvent to institutions powerful enough to manage a crisis and set set and crisis a manage to enough powerful institutions ignore promises his or her finance minister has made in in made has minister finance her or his promises ignore can government of head the if point; in case obvious one is inside member states. The eurozone’s first decade has has decade first powers eurozone’s of The separation states. the member to nod inside a than more much is strengthen its democratic legitimacy has at least started. started. least at has legitimacy democratic its strengthen shown that European agreements between governments governments between agreements European that shown himself – who, when France voted on the Constitutional Constitutional the on voted France when who, – himself hardship in many EU countries. Most importantly, Hollande political architecture looks politically unachievable in the the in unachievable politically looks architecture political the through not obviously is power national of limitation properly. The new eurozone rulebook may ultimately not not ultimately may rulebook eurozone new The properly. fragile array of atypical political bodies, rules and sanctions. rules bodies, political atypical array of fragile fail unless political authorities and administrations in the the in administrations and authorities political unless fail be practical and powerful enough to give the eurozone the eurozone the give to enough powerful and practical be regarding the conduct of macroeconomic policy often fall agreement to let the Commission’s calculation prevail – but, by the wayside. By giving national parliaments a sense of so far, member states have not signalled that they are ready political ownership, the hope is to involve them in holding to do this. France and Germany should take up the task of their national government to account and to avert damaging drawing up a list of other bigger and smaller issues that also scenarios where a parliamentary majority is ignorant of, or need to be tackled to adapt national practices to the new chooses to ignore, European policy guidelines. European rulebook. A European programme of national administrative and political reforms initiated, overseen Faced with this new situation, the relevant committees in and controlled by the European Commission would be an national parliaments understandably wish to be able to alternative; but it would easily be seen as overly intrusive invite the European Commissioner in charge for regular and could backfire politically. Letting member states take auditions – a legitimate request if the macroeconomic the lead would send a strong signal of their commitment to policy proposals tabled by the Commission are to shape the the new governance framework, and none are better placed policy choices of parliamentary majorities. In practice, this than France and Germany. sensible desire poses a major problem. The sheer number of parliamentary assemblies in the eurozone – with many Building on their track record of close co-operation, the member states having two rather than one – makes it French and German finance ministries have already made a obviously impossible for a single European Commissioner start and set up a special working unit in which such issues to meet the demand for direct dialogue. affecting them both can be discussed. Drawing up a list of issues to be addressed, exchanging information with other There are two possible solutions to this problem. Either the member states and inviting those who wish to join in the Commissioners should be given deputies who have time to exercise would turn it into a shared priority. The case of travel regularly to the national capitals and are empowered Greece has shown that administrative issues, meaning the to speak for their senior Commissioner (replicating capacity of public administrations to perform, are directly a practice in many member states’ governments); or related to the eurozone’s viability. The importance of national parliamentarians must travel to Brussels to hold adjusting national administrative and political practice to joint auditions – ultimately raising the issue of a new eurozone governance should never be underestimated again parliamentary assembly in Brussels made up partly or wholly – ignoring the problem would be tantamount to a declaration from national MPs. Currently, the choice in many cases is that the member states themselves have no faith in the new to have the Commissioner address national parliamentary rulebook they have drafted. committees via video screen, in some cases with pre- recorded messages. This leads to deep frustration among national MPs, decreasing the likelihood that parliaments Strengthening eurozone cohesion will really buy into the EU’s joint policy framework. Helping to make the new European rulebook work through Reorganising the work of national governments and changes in national practice would send an important parliaments so that it fits with the new eurozone rulebook is signal to financial markets and national policy actors alike a matter with potentially substantial political implications. – but it would not engage Europe’s citizens. Once they have Other issues are politically less sensitive but hardly thrashed out their compromise on how to boost growth in less important in practical terms. Officials in charge of the eurozone, France and Germany should agree on a further implementing the new co-ordination mechanisms speak work programme to strengthen the eurozone’s cohesion. of a considerable diversity of established national practice Two policy areas, neither of them requiring treaty change, regarding the management of the national economic data could deliver tangible economic and social benefits with flow, including the timing and nature of governments’ substantial political impact. The first concerns the removal assessment of projected fiscal revenue. Yet the Commission of remaining administrative hurdles to labour mobility, the needs comparable data to come in roughly at the same second a move into a partial Europeanisation of selected time in order to draft its joint guidance for member states. welfare state policies through schemes such as the creation Clearly, such problems can be fixed – but in some countries of a complementary European unemployment assurance it will need strong and sustained political will to change scheme, as several French interlocutors suggested.6 administrative practices grown over decades or more. “Making Europe really happen will only work if we accept a Facilitating labour mobility within the EU has been a fundamental change in the ministries throughout the levels priority for decades and considerable progress has been of hierarchy”, said one finance ministry official. made. But the administrative, regulatory and social policy disincentives remain substantial – even if language is A particularly vital issue relating to the Fiscal Compact is the calculation of a country’s structural deficit – a highly contentious issue between economists even when this

largely artificial economic figure does not serve as a hair- 6 To avoid paying for poor policy, a sensible European unemployment assurance scheme trigger for evaluating a country’s respect of its European would cover only short-term unemployment. That way, it would finance transfers related to variations in the business cycle rather than transfers to regions with treaty obligations. The easiest answer here would be an structurally high jobless rates due to inadequate regulation, bad infrastructure, poor training or wrong incentives. 5 6 ECFR/56 May 2012 www.ecfr.eu AFTER MERKOZY: HOW FRANCE AND GERMANY CAN MAKE EUROPE WORK Another option would be a pan-European complementary complementary pan-European a be would option Another With striking unanimity, senior French officials and and officials French senior unanimity, striking With 7  Treaty in January 2013 could be an excellent occasion to to occasion excellent an be could 2013 January in Treaty the up keep to working is Commission European The The economic case for introducing them was strong even even strong was them introducing for case economic The all the member states is often difficult and extremely slow slow extremely and difficult often is states member the all announce the launch of an ambitious Franco-German work Franco-German ambitious an of launch the announce and welfarepaymentsdown. crisis euro the Because endeavour. ambitious more even an according to average wage levels in each member state. member each in levels wage average to according collapse, facilitate labour mobility and send a strong signal strong a send and mobility labour facilitate collapse, otherwise might it where places in demand sustain crises, of the issue in an EU environment of nationally fragmented nationally of environment EU an in issue the of commonly advocated would be a complementary European complementary a be would advocated commonly exacerbates economic and social disparities in the eurozone, open tootherEUmemberstateswhowishparticipate. other successful single currency zones. Such stabilisers help regulations and welfare state provisions, agreement among agreement provisions, state welfare and regulations reduces individual member states’ margin for budgetary budgetary for margin states’ member individual reduces national unemployment insurance schemes and modulated and schemes insurance unemployment national mechanisms for the eurozone – a structural feature of all all of feature structural a – eurozone the for mechanisms manoeuvre and exacerbates economic and social disparities to help sustain the momentum by acting as pioneers in this in pioneers as acting by momentum the sustain help to Germany and France stop to nothing is There achieve. to the acquisition of language skills – keeping the initiative initiative the keeping – skills language of acquisition the times and not just about exerting pressure to bring wages wages bring bad to pressure through exerting about get just not and people times helping about is policy EU that the main obstacle. With countries in the south of Europe Europe of south the in countries With obstacle. main the into establishing a system of automatic financial transfer transfer financial automatic of system a establishing into in the EU, the case has grown massively for taking a first step sides of the party political spectrum point out, the planned the out, point spectrum political party the of sides complexity the given but countries, EU other in work seek young a Currently, huge. is Baden-Württemberg instance, some sectors and regions, the economic and social case case social and economic the regions, and sectors some in countries shortages labour and severe experiencing Germany as such unemployment youth massive suffering has made it overwhelming. One of the mechanisms most most mechanisms the of One overwhelming. it made has programme to remove remaining policy obstacles to cross- to obstacles policy remaining remove to programme political declaration for the fiftieth anniversary of the Elysée to people, young for especially easier, it make to pressure politicians recommend that France and Germany embark on look forajob–buthasnorighttoGermanaid. unemployment insurance scheme working alongside alongside working scheme insurance unemployment pension scheme – an idea advocated by Italian Prime Prime Italian by advocated idea an – scheme pension Spaniard who has never been formally employed loses loses employed formally been never has who Spaniard field: as French officials and interlocutors from different different from interlocutors and officials French as field: financial support in his country if he moves to Germany to Germany to moves he if country his in support financial for in, employment seek to Spaniards young enticing for border mobility and facilitate cross-border job searches and badly hit regions get through severe economic and social social and economic severe through get regions hit badly before the euro crisis. The crisis, which dangerously dangerously which crisis, The crisis. euro the before formatiert.pdf (accessed 15May2012). swp-berlin.org/fileadmin/contents/products/arbeitspapiere/Paper_US_KS_neu_ Stiftung WissenschaftundPolitik,Berlin,11 July2007,availableathttp://www. See SebastianDullien,“ImprovingEconomic StabilityinEurope”,workingpaper, 7

A change of government in Berlin as a result of the general the of result a as Berlin in government of change A Winningthesupport theofMerkel government Franco-fora 9  8  Democrats and French Socialists continue to differ in in differ to continue Socialists French and Democrats it position, German the shift To (SPD). Party Democratic Delors has warned since the early 1990s that the EU would lose achieve the support of a majority of the French electorate in a necessarypreconditiona toFranco-German is ainitiative – argument in favour might be to persuade Berlin that creating Minister Mario Monti. Mario Minister and social space. Distinctions would increasingly be made made be increasingly would Distinctions space. social and accused the EU of not doing enough to protect European European protect to enough doing not of EU the accused he when Sarkozy by fed indirectly and Pen, Le Marine and German austerity thinking”, said a party official. Despite Despite official. party a said thinking”, austerity German German action plan for full labour mobility should be feasible; Constitutional Treaty in 2005. coalitionlukewarmisand evenamongopposition the Social elections in the autumn of 2013 would offer a different different a offer would 2013 of autumn the in elections citizens. The former European Commission President Jacques domuch tocounter thewidespread accusation inFrance and convincing the chancellor of taking a first – even modest – modest even – first a taking of chancellor the convincing employeessignificantbecamearejection the thefactor in of other eurozone countries that the EU has become a brutal tool ranges from sceptical to hostile within the current government would help to win the support of German trade unions and,unions tradeGerman of support the win to helpwould when the charge that the EU worked for employersFrance inmaterialised predictionratherhis policies;state welfarethan presidentialby Frenchdebatethe aggressivelyinmade was might still be difficult: “The SPD too feels constrained by by constrained feels too SPD “The difficult: be still might member statesasawhole. economy integrated one as eurozone the view to markets most recent Europe programmeautomaticexplicitlyrejectsEuroperecent most the nucleus of a European welfare state policy – starting from than differentiating between the economic performances of performances economic the between differentiating than thesupport oflarge numbers ofcitizens ifitoffered noactive the interests of big banks and other big businesses. The charge rnfr bten ebr states. member between transfers intense common programmatic work, German Social Social German work, programmatic common intense ideally, German employers’ associations. But the best French succeeds Merkel. Selling the idea to Merkel’s successor successor Merkel’s to idea the Selling Merkel. succeeds step towards the creation of a European welfare state will will state welfare European a of creation the towards step political landscape, especially if a Social Democrat chancellor provisionsdesigned tohelp theunemployed ortheold would SeeingtheEUdevelop evenmodest a arsenal ofwelfare state future referendum on EU treaty reform. far-leftandfar-right candidates suchJean-Lucas Mélenchon forthe lowering of living standards and employment safety in between growth regions and non-growth regions, rather rather regions, non-growth and regions growth between be far more difficult. The Christian Democratic Union’s Union’s Democratic Christian The difficult. more far be mechanisms between states, nototherformsofautomaticfinancial stabilisation. Zukunft fürDeutschland”). However,theexplicitrejectionconcerns automatictransfer europa.pdf (accessed15May2012)(hereafter, CDUBeschluss,“StarkesEuropa–Gute 13–15 November2011,availableathttp://www.cdu.de/doc/pdfc/111114-beschluss- CDU Beschluss,“StarkesEuropa–GuteZukunft fürDeutschland”,24.Parteitag, European pensionsystems”,COM(2010),7July 2010. European Commission,“GreenPaper:Towards adequate,sustainableandsafe 8 All this would help citizens and the and citizens help would this All 9 The attitude in Berlin Berlin in attitude The their approach to numerous economic issues, essentially Looking to the future, two facts stand out. As long as EU as a result of diverging economic cultures.10 But a Social institutions and their leaders are not strong enough to seize Democrat victory in 2013 should still facilitate an agreement power and steer the eurozone through times of dangerous and open up other major fields of potential productive turmoil, France and Germany will remain an indispensable compromise: in principle at least, both the SPD and the crisis-management tandem, stepping in whenever the French Socialist Party (PS) back a future mutualisation of EU or the eurozone need swift and decisive leadership. debt through Eurobonds.11 Secondly, there is no definable group of eurozone or EU member states that Berlin and Paris can co-opt into a regular, informal leadership alliance. Attempts to convene More inclusive Franco-German leadership informal directoires of demographically big member states have invariably run into trouble, with leaders who have In pioneering such policy proposals, France and Germany been “left out” attempting to gatecrash gatherings. The EU3 would go a long way to address the reproach that their policy towards is one of the rare exceptions in which leadership has become dominant, disruptive and sterile. But other member states have accepted that granting France, initiating an ambitious new work programme will not do Germany and the UK a special leadership role within the EU enough to de-escalate the growing tensions within the EU. is the best available option. The G6 gathering of the interior During the “Merkozy” era, Germany and France have at times ministers of the largest EU member states has run into neglected EU institutions such as the European Parliament much stiffer opposition and would trigger an uprising if the and discarded the policy – traditionally pursued especially participating countries attempted to turn it into a leadership by Berlin – of investing in coalition-building among small group concerned with a wider range of issues. countries. Reacting to the growing irritation, Merkel and German Foreign Minister have recently What France and Germany can and must do – beyond conducted a discreet listening exercise to gauge the thinking a regular but inevitably limited cultivation of each and of European partners regarding the future of political every member state – is establish a pattern of informal integration.12 Hollande, for his part, criticised his predecessor’s consultations involving larger and smaller member states. policy during his campaign, promising to pay greater attention These should obey a variable geometry determined by the to other member states while continuing to cultivate Germany topic under discussion and the European mindset of the as France’s most important partner. After his first meeting governments of the day. As the example of Poland and Spain with Merkel in Berlin, Hollande called for a relationship that is has shown, changing political majorities can have major “balanced between our two countries, respectful of our political consequences for a country’s approach to European issues. leanings, and also respectful of European partners and its joint The personalities of the key leaders are also a significant institutions. We want to work together for the benefit of Europe, factor. Jean-Claude Juncker’s influence in European but also by engaging all the other countries of the Union.”. politics has resulted from his personality and experience, not from his power as prime minister and finance minister The conditions for moving to a more open Franco-German of Luxembourg. Mario Monti’s economic expertise and leadership style are there, but the difficulty for Berlin inside knowledge of the Brussels institutions make his voice and Paris in finding the right approach should not be an important one among the current set of leaders – and, underestimated. Enlargement, the Lisbon Treaty and the after the years under Silvio Berlusconi, it is important to growing necessity to develop specific policies for the eurozone signal to Italy that good leadership wins it back a seat in all add to the complexity of managing internal EU dynamics. the innermost circle of European leadership. This is in The disappearance of the Benelux as a relevant grouping in Germany’s interest as much as it is in the interest of France: European politics has deprived the EU of an influential caucus Italian and German institutional approaches to Europe are of mid-sized and smaller member states with deep experience generally closer than those of France and Germany.13 of European integration. The Lisbon Treaty, as one senior official pointed out, has diminished the European Commission Poland has an important function as a bridge between the president’s role as a mediator by creating a competing claim for eurozone members and the wider EU and it makes sense to this function between him and the president of the European respond to the current government’s EU-friendly mindset Council. by seeking it out. Sarkozy had famously poor relations with the Polish prime minister Donald Tusk, continuing a counterproductive pattern of prickly hostility in Franco- Polish relations. France then dealt a blow to Warsaw’s 10 The SPD and the PS have invested considerable time in drafting common concepts for the eurozone’s governance. Since 2008, they have met on average four times a year. attempt to reposition itself at the core of EU politics by See, for example, “Common declaration of the Social Democratic Party of Germany and the French Socialist Party: More courage and solidarity in the crisis – together for insisting that eurozone consultations should be strictly a strong economic government in Europe”, presented by and Martine Aubry, 21 June 2011; see also the interview with François Hollande and Sigmar closed to member states outside the eurozone. “The Poles Gabriel, Libération, 16 March 2012. 11 Barring a major crisis, it is clear that Eurobonds are not for tomorrow. To secure German approval, they would require a major federalisation of the EU or the eurozone, including much strengthened parliamentary controls. 12 Merkel has so far invited three groups of three heads of state and government to Meseburg Castle in order to discuss European issues. Westerwelle has consulted nine “likeminded” EU foreign ministers on the future of European integration. This 13 In particular, the French Union for a Popular Movement (UMP), the political heir of indicates the strength of German ambition to shape the next round of institutional French Gaullism, takes a much more intergovernmental approach to EU issues than and political integration of the EU. the German CDU. 7 8 ECFR/56 May 2012 www.ecfr.eu AFTER MERKOZY: HOW FRANCE AND GERMANY CAN MAKE EUROPE WORK Finally: treatychange? 14  Europe in the coming decade has weakened Spain’s weight Spain’s weakened has decade coming the in Europe The leading German political parties have put forward forward put have parties political German leading The Hollande’s striking campaign decision to attack Sarkozy for Sarkozy attack to decision campaign striking Hollande’s Reviving the dormant Weimar triangle may not be the best the be not may triangle Weimar dormant the Reviving Parliament or through the creation of a second chamber chamber second a of creation the through or Parliament and increasingly see the creation of European institutions institutions European of creation the see increasingly and and to involve Warsaw in consultations about important important about consultations in Warsaw involve to and political developed never Weimar that given approach, Madrid are more interested in strengthening Spain’s Spain’s strengthening in interested in more actors key are many that Madrid perception a is there Paris and reason endogenous no is There interlocutor. essential an as voter engagement. Other proposals stress the need for for need the stress proposals Other and engagement. democracy voter European strengthen to as so – Council change. German a in”, them keep to us ask and day every come compared, for instance, with Italy’s. The reasons are linked are reasons The Italy’s. with instance, for compared, of powerful European leadership institutions can unleash unleash can institutions leadership European powerful of official said during the last weeks of the Sarkozy presidency. Sarkozy the of weeks last the during said official of influence is for Madrid itself to determine. In principle, principle, In determine. to itself Madrid for is influence of reluctance of leading Spanish politicians to intervene intervene to politicians Spanish leading of reluctance why Spain’s voice in Europe should be so relatively muted, relatively so be should Europe in voice Spain’s why matter of urgency. “The weakness of the system is not about momentum. A better alternative might be to invite Poland to the president of the Commission or the president of the the of president the or Commission the of president the that can shoulder the burden of eurozone leadership as a as leadership eurozone of burden the shoulder can that to current Spanish political preferences, the structure of of structure the preferences, political Spanish current to through an expansion of the powers of the European European the of powers the of expansion an through idea of directly electing a European president – either either – president European a electing directly of idea issues. nlec i Ltn mrc ta i wrig oad a towards working in than America Latin in influence stronger parliamentary control in the EU system, either either system, EU the in control parliamentary stronger said afinanceministryofficial. spending and how to promote growth, but about legitimacy”, basis hoc ad an on meetings bilateral Franco-German some size, economic weight and diplomatic ambition should should ambition diplomatic and weight economic size, stronger SpanishpresenceinEurope. highly problematic dynamics in European politics. Top Top politics. European in dynamics problematic highly Germany criticise to and Merkel to subservience alleged his policymakers in Germany are beginning to feel the heat heat the feel to beginning are Germany in policymakers proposals for institutional reform that would require treaty require would that reform institutional for proposals place Spain among the countries that Germany and France and Germany that countries the among Spain place Spain’s place in such a shifting landscape of informal circles Spanish politics and perhaps to Spanish history. In Berlin Berlin In history. Spanish to perhaps and politics Spanish for excessive dominance serves as vivid proof that the lack the that proof vivid as serves dominance excessive for forcefully in the pan-European debate about how to shape to how about debate pan-European the in forcefully striking a practice, in But, consult. to imperative often find gruene.de/themen/europa/mehr-europa-wagen.html (accessed15 May2012). May 2012);DieGrünen, “MehrEuropaWagen”,9May2012,available athttp://www. www.spd.de/linkableblob/72310/data/20120515_wachstumspakt.pdf (accessed15 – WachstumundBeschäftigunginEuropa”, SPD,15May2012,availableathttp:// S. Gabriel,I.F.W.SteinmeierandP. Steinbrück,“DerWegausderKrise conferences: CDUBeschluss,“StarkesEuropa –GuteZukunftfürDeutschland”; See theresolutionsofCDU,SPDand theGreensattheirrespectiveparty 14 A consensus is forming in Germany around the the around Germany in forming is consensus A As French interlocutors readily acknowledge, the debate debate the acknowledge, readily interlocutors French As Although Hollande is an advocate of deeper European European deeper of advocate an is Hollande Although Yet politicians from across the political spectrum caution caution spectrum political the across from politicians Yet 18 Seehttp://besoindaire.com/lib_ie/h/couverture.html (accessed15 May2012). 17  16 15  European Parliament. French president that he is right when he says that Europe that says he when right is he that president French h rlns f h cntttoa cut ae rgee a triggered have court constitutional the of rulings The It will be the job of friends of a more federal Europe in in Europe federal more a of friends of job the be will It But the informal talks launched by Merkel and Westerwelle and Merkel by launched talks informal the But Berlin, Paris, Rome and other capitals to convince the the convince to capitals other and Rome Paris, Berlin, accountable. more and stronger both are that institutions eurozone and Germany. Some influential publications such as Le Monde Le as such publications influential Some Germany. against major treaty reform at a time when the electorate electorate the when time a at reform treaty major against Commission president who has campaigned for the job in in job the for campaigned has who president Commission of replay early an avoid to eager is he predecessor, Gaullist debate about a referendum as unnecessary and premature. and unnecessary as referendum a about debate referendum unprecedented an experts, constitutional des Entreprises de France (MEDEF) has called for the the for called has (MEDEF) France de Entreprises des change for a few more years. But the provisions of the Fiscal constitutional court, has also started a serious debate about debate serious a started also has court, constitutional related discussion about the need for Germany to change change to Germany for need the about discussion related with their fellow eurozone leaders show that the issue of of issue the that show leaders eurozone fellow their with wants to see action on growth rather than EU institutions. institutions. EU than rather growth on action see to wants needs far more changes than those a better Franco-German better a those than changes more far needs Europe that but – leadership Franco-German better needs a choosing as such change, treaty without possible reforms ainl parliaments. national made up of members of the budgetary commissions of of commissions budgetary the of members of up made the right of legislative initiative from the Commission to the the danger of opening a new Pandora’s Box, senior politicians other and judges some to according requiring, Brussels, to transformation of the EU into a United States of Europe. of States United a into EU the of transformation tandem can deliver. It may be possible to put off treaty treaty off put to possible be may It deliver. can tandem the Europeanelections. for only backing his offered has Hollande being, time the For referendum. constitutional the over debate French the in France is seriously lagging behind the discussion in in discussion the behind lagging seriously is France in proposals reform table to is plan current The Berlin. in its constitution to allow for further sovereignty transfers transfers sovereignty further for allow to constitution its substantial EU reform continues to occupy the government the occupy to continues reform EU substantial integration and more respectful of EU institutions than his than institutions EU of respectful more and integration its responsibilityforintegration. have published appeals for a move to federal European European federal to move a for appeals published have saw its European policy powers boosted by Germany’s Germany’s by boosted powers policy European its saw from both government and opposition have dismissed the the dismissed have opposition and government both from before the summer, one possible idea being the extension of because of the magnitude of the changes involved. Sensing involved. changes the of magnitude the of because  relance_1697621_3232.html (accessed15May2012). http://www.lemonde.fr/idees/article/2012/05/08/construisons-une-europe-de-la- “Construisons uneEuropedelarelance!”, entscheidungen/es20090630_2bve000208.html (accessed15May2012). to controlGermany’sEuropeandecision-making. Seehttp://www.bverfg.de/ In itsLisbonruling,theconstitutionalcourt has giventheBundestagmorerights sovereignty-crisis (accessed15May2012). 31 July2011,availableathttp://www.project-syndicate.org/commentary/europe-s- See, forexample,JoschkaFischer,“Europe’s SovereigntyCrisis”,ProjectSyndicate, 17 France’s business federation Mouvement Mouvement federation business France’s 15 The German , which which Bundestag, German The Le Monde 16 , 8May2012,availableat 18

Compact, the pressure on Germany, the weaknesses of the Lisbon Treaty and the imperative need to give the eurozone strong, representative and accountable political authorities will ensure that the issue returns to the agenda sooner than many expect. In the meantime, making the EU’s new rulebook work better, fostering economic growth and launching new policies to boost the eurozone’s social cohesion are the best way to prepare for the next transformative moment in the EU’s history.

9 10 ECFR/56 May 2012 www.ecfr.eu AFTER MERKOZY: HOW FRANCE AND GERMANY CAN MAKE EUROPE WORK About the authors the About A former journalist, he worked as a correspondent in in correspondent a as worked he journalist, former A Ulrike Guérot Ulrike Beyond Maastricht: A new deal for the eurozone the for deal new A Maastricht: Beyond is Head of the Paris Office and Senior Policy Senior and Office Paris the of Head is Klau Thomas York University. Frankfurt, Brussels and Washington and wrote a political political a wrote and Washington and Brussels Frankfurt, focused has work recent His relationship. Franco-German His Relations. Foreign on Council European the at Fellow she 2003 In relations. transatlantic and affairs European Advanced for School Nitze N. Paul the at Studies European Foreign on Council German the at unit Union European International Studies and worked for Jacques Delors at at Delors Jacques for worked and Studies International Langues et Civilisations Orientales (INALCO) in Paris. Paris. in (INALCO) Orientales Civilisations et Langues for Professor also was She Berlin. in (DGAP) Relations ont faitl’Euro December 2010 he co-authored the ECFR publication publication ECFR the co-authored he 2010 December Previously she was Senior Transatlantic Fellow with the the with Fellow Transatlantic Senior was she Previously Notre Europe in Paris. Guérot has published widely on on widely published has Guérot Paris. in Europe Notre areas of expertise include European integration, eurozone eurozone integration, European include expertise of areas Quatremer, he co-authored a history of the negotiations negotiations the of history a co-authored he Quatremer, the of head that to prior and Fund, Marshall German column for for column received the most particularly on European economic governance. In In governance. economic European on particularly most helped conceive and launch in 2000. Together with Jean Jean with Together 2000. in launch and conceive helped lecturer in European studies at the Institut National des des National Institut the at studies European in lecturer politics and economics, French and German politics and the leading up to European monetary union, union, monetary European to up leading She is currently a Visiting Scholar at Deutsches Haus, New Haus, Deutsches at Scholar Visiting a currently is She for her commitment to advancing Franco-German relations. for Germany at the European Council on Foreign Relations. Foreign on Council European the at Germany for Ordre Ordre national du Mérite iaca Tms Deutschland Times Financial is a Senior Policy Fellow and Representative and Fellow Policy Senior a is (Paris,1999). from the French state Ces hommes qui qui hommes Ces , a paper he he paper a , . He is a is He . Acknowledgements

This paper would not have been possible without the willingness of a group of eminent politicians, civil servants, senior officials, media representatives and researchers to share their insights with the authors. In particular, the authors wish to thank Peter Altmeier, Pascale Andreani, Dr. Thomas Bagger, Gabriele Bischoff, Daniel Cohn-Bendit, Claire Demesmay, Sylvie Goulard, Maurice Gourdault- Montagne, Martin Heipertz, Christian Heldt, Jean-Pierre Jouyet, Stefan Mair, Xavier Musca, Arndt Freiherr Freytag von Loringhoven, Felix Pokert, Reinhard Schäfers and Jean- Claude Trichet.

While the authors’ analysis and recommendations are their own, they draw whatever strength they have from the assessments generously offered by their interlocutors. The paper also benefited hugely from an ECFR conference in Berlin that took place on 26 April 2012. Jean-Louis Bianco, Daniel Cohn-Bendit, Sylvie Goulard, Michael Link and Johann Wadephul impressed the participants and organisers with the intellectual brilliance and political creativity of their exchanges.

Warmest thanks goes to colleagues at ECFR who took the trouble to share their reactions and spot the many lacunae of our initial draft: Dimitar Bechev, Olaf Böhnke, Sebastian Dullien, Konstantin Gebert, Silvia Francescon, Mark Leonard and José Ignacio Torreblanca. We owe a huge debt of gratitude to our masterful editor Hans Kundnani, whose eagle eye gave the text clarity and structure. Dick Oosting and Alba Lamberti provided invaluable support throughout, as did Alexia Gouttebroze, Andreas Mullerleile and Nicholas Walton.

Our work drew on the unstinting help of our colleagues in ECFR’s offices in Berlin and Paris: Felix Mengel, Birgit Gall, Wiebke Ewering, Pirro Vengu, Olivier de France, Céline Niemietz and Thomas du Moulin. It goes without saying that any remaining imperfections are entirely our own.

A special word of thanks must go to the Stiftung Mercator, without whose generous financial support neither the Berlin event nor this publication would have seen the light of day.

11 Among members of the European Council on Foreign Relations are John Bruton (Ireland) Hanzade Dog˘an Boyner Heidi Hautala (Finland) Former European Commission (Turkey) Minister for International Development former prime ministers, presidents, Ambassador to the USA; former Prime European commissioners, current Chair, Dog˘an Gazetecilik and Dog˘an Minister (Taoiseach) On-line Sasha Havlicek and former parliamentarians and (United Kingdom) ministers, public intellectuals, Ian Buruma (The Netherlands) Andrew Duff (United Kingdom) Executive Director, Institute for Strategic business leaders, activists and Writer and academic Member of the European Parliament Dialogue (ISD) cultural figures from the EU member Erhard Busek (Austria) Mikuláš Dzurinda (Slovakia) Steven Heinz (Austria) states and candidate countries. Chairman of the Institute for the Former Foreign Minister Co-Founder & Co-Chairman, Danube and Central Europe Lansdowne Partners Ltd Hans Eichel (Germany) Asger Aamund (Denmark) Jerzy Buzek (Poland) Former Finance Minister Annette Heuser (Germany) President and CEO, A. J. Aamund A/S Member of the European Parliament; Executive Director, Bertelsmann and Chairman of Bavarian Nordic A/S former President of the European Rolf Ekeus (Sweden) Foundation Washington DC Parliament; former Prime Minister Former Executive Chairman, United Urban Ahlin (Sweden) Nations Special Commission on Iraq; Diego Hidalgo (Spain) Deputy Chairman of the Foreign Gunilla Carlsson (Sweden) former OSCE High Commissioner on Co-founder of Spanish newspaper El Affairs Committee and foreign Minister for International Development National Minorities; former Chairman País; Founder and Honorary President, policy spokesperson for the Social Cooperation Stockholm International Peace FRIDE Democratic Party Research Institute, SIPRI Maria Livanos Cattaui Jaap de Hoop Scheffer Martti Ahtisaari (Finland) (Switzerland) Uffe Ellemann-Jensen (The Netherlands) Chairman of the Board, Crisis Former Secretary General of the (Denmark) Former NATO Secretary General Management Initiative; former International Chamber of Commerce Chairman, Baltic Development Forum; President former Foreign Minister Danuta Hübner (Poland) Ipek Cem Taha (Turkey) Member of the European Parliament; Giuliano Amato (Italy) Director of Melak Investments/ Steven Everts (The Netherlands) former European Commissioner Former Prime Minister; Chairman, Journalist Adviser to the Vice President of the Scuola Superiore Sant’Anna; European Commission and EU High Anna Ibrisagic (Sweden) Carmen Chacón (Spain) Member of the European Parliament Chairman, Istituto della Enciclopedia Former Minister of Defence Representative for Foreign and Security Italiana Treccani; Chairman, Centro Policy Studi Americani Jaakko Iloniemi (Finland) Charles Clarke Tanja Fajon (Slovenia) Former Ambassador; former Executive Gustavo de Aristegui (Spain) (United Kingdom) Member of the European Parliament Director, Crisis Management Initiative Diplomat; former Member of Visiting Professor of Politics, University Parliament of East Anglia; former Home Secretary Gianfranco Fini (Italy) Toomas Ilves (Estonia) President, Chamber of Deputies; President Viveca Ax:son Johnson Nicola Clase (Sweden) former Foreign Minister Ambassador to the United Kingdom; Wolfgang Ischinger (Germany) (Sweden) former State Secretary Joschka Fischer (Germany) Chairman, Munich Security Chairman of Nordstjernan AB Former Foreign Minister and vice- Conference; Global Head of Daniel Cohn-Bendit (Germany) Chancellor Government Affairs Allianz SE Gordon Bajnai (Hungary) Member of the European Parliament AFTER MERKOZY: HOW FRANCE AND GERMANY CAN MAKE EUROPE WORK Former Prime Minister Karin Forseke (Sweden/USA) Minna Järvenpää (Finland/US) Robert Cooper Business Leader; former CEO Carnegie International Advocacy Director, Open Dora Bakoyannis (Greece) Society Foundation Member of Parliament; former Foreign (United Kingdom) Investment Bank Minister Counsellor of the European External Action Service Lykke Friis (Denmark) Mary Kaldor (United Kingdom) Leszek Balcerowicz (Poland) Member of Parliament; former Minister Professor, London School of Economics Professor of Economics at the Warsaw Gerhard Cromme (Germany) for Climate, Energy and Gender Ibrahim Kalin (Turkey) School of Economics; former Deputy Chairman of the Supervisory Board, Equality ThyssenKrupp Senior Advisor to the Prime Minister Prime Minister Jaime Gama (Portugal) of Turkey on foreign policy and public Lluís Bassets (Spain) Maria Cuffaro (Italy) Former Speaker of the Parliament; diplomacy Deputy Director, El País Maria Cuffaro, Anchorwoman, TG3, former Foreign Minister RAI Sylvie Kauffmann (France) Marek Belka (Poland) Timothy Garton Ash Editorial Director, Le Monde Governor, National Bank of Poland; Daniel Daianu (Romania) (United Kingdom) Olli Kivinen (Finland) former Prime Minister Professor of Economics, National Professor of European Studies, Oxford Writer and columnist School of Political and Administrative University Roland Berger (Germany) Studies (SNSPA); former Finance Ben Knapen (The Netherlands) Founder and Honorary Chairman, Minister Carlos Gaspar (Portugal) Minister for European Affairs and Roland Berger Strategy Consultants Chairman of the Portuguese Institute of International Cooperation GmbH Massimo D’Alema (Italy) International Relations (IPRI) President, Italianieuropei Foundation; Gerald Knaus (Austria) Erik Berglöf (Sweden) President, Foundation for European Teresa Patricio Gouveia Chairman, European Stability Initiative; Chief Economist, European Bank for Progressive Studies; former Prime (Portugal) Carr Center Fellow Reconstruction and Development Minister and Foreign Minister Trustee to the Board of the Calouste Gulbenkian Foundation; former Caio Koch-Weser (Germany) Jan Krzysztof Bielecki (Poland) Marta Dassù (Italy) Foreign Minister Vice Chairman, Deutsche Bank Group; Chairman, Prime Minister’s Economic Under Secretary of State for Foreign former State Secretary Council; former Prime Minister Affairs Heather Grabbe Bassma Kodmani (France) Carl Bildt (Sweden) Ahmet Davutoglu (Turkey) (United Kingdom) Executive Director, Arab Reform Foreign Minister Foreign Minister Executive Director, Open Society Institute – Brussels Initiative Henryka Bochniarz (Poland) Aleš Debeljak (Slovenia) Rem Koolhaas (The President, Polish Confederation of Poet and Cultural Critic Charles Grant (United Kingdom) Private Employers – Lewiatan Director, Centre for European Reform Netherlands) Jean-Luc Dehaene (Belgium) Architect and urbanist; Professor at the Svetoslav Bojilov (Bulgaria) Member of the European Parliament; Jean-Marie Guéhenno (France) Graduate School of Design, Harvard Founder, Communitas Foundation and former Prime Minister Deputy Joint Special Envoy of the University President of Venture Equity Bulgaria United Nations and the League of Ltd. Gianfranco Dell’Alba (Italy) Arab States on Syria. David Koranyi (Hungary) Director, Confindustria Delegation Deputy Director, Dinu Patriciu Eurasia

www.ecfr.eu Ingrid Bonde (Sweden) to Brussels; former Member of the Fernando Andresen Guimarães Center of the Atlantic Council of the CFO & Deputy CEO, Vattenfall AB European Parliament (Portugal) United States Head of the US and Canada Division, Emma Bonino (Italy) Pavol Demeš (Slovakia) European External Action Service Bernard Kouchner (France) Vice President of the Senate; former EU Senior Transatlantic Fellow, German Former Minister of Foreign Affairs Commissioner Marshall Fund of the United States Karl-Theodor zu Guttenberg (Bratislava) Ivan Krastev (Bulgaria) (Germany) (Germany) Chair of Board, Centre for Liberal Member of the European Parliament Kemal Dervis (Turkey) Former Defence Minister Strategies Vice-President and Director of István Gyarmati (Hungary) Aleksander Kwas´niewski Han ten Broeke Global Economy and Development, President and CEO, International May 2012 (The Netherlands) Brookings. Centre for Democratic Transition (Poland) Member of Parliament and Former President spokesperson for foreign affairs Tibor Dessewffy (Hungary) Hans Hækkerup (Denmark) and defence President, DEMOS Hungary Mart Laar (Estonia) Former Chairman, Defence Minister of Defence; former Prime Commission; former Defence Minister Minister ECFR/56 12 Miroslav Lajcˇák (Slovakia) Marcelino Oreja Aguirre (Spain) Pierre Schori (Sweden) Deputy Prime Minister and Foreign Member of the Board, Fomento de Chair, Olof Palme Memorial Fund; Minister Construcciones y Contratas; former EU former Director General, FRIDE; former Commissioner SRSG to Cote d’Ivoire Alexander Graf Lambsdorff (Germany) Monica Oriol (Spain) Wolfgang Schüssel (Austria) Member of the European Parliament CEO, Seguriber Member of Parliament; former Chancellor Pascal Lamy (France) Cem Özdemir (Germany) Honorary President, Notre Europe and Leader, Bündnis90/Die Grünen Karel Schwarzenberg Director-General of WTO; former EU (Green Party) (Czech Republic) Commissioner Ana Palacio (Spain) Foreign Minister Bruno Le Maire (France) Former Foreign Minister; former Senior Giuseppe Scognamiglio (Italy) Minister for Food, Agriculture & Fishing President and General Counsel of the Executive Vice President, Head of Public World Bank Group Affairs Department, UniCredit S.p.A Mark Leonard (United Kingdom) Director, European Council on Foreign Simon Panek (Czech Republic) Narcís Serra (Spain) Relations Chairman, People in Need Foundation Chair of CIDOB Foundation; former Vice President of the Spanish Government Jean-David Lévitte (France) Chris Patten (United Kingdom) Former Sherpa to the President of the Chancellor of Oxford University and co- Radosław Sikorski (Poland) French Republic; former Ambassador to chair of the International Crisis Group; Foreign Minister the United States former EU Commissioner Aleksander Smolar (Poland) Juan Fernando López Aguilar Diana Pinto (France) Chairman of the Board, Stefan Batory (Spain) Historian and author Foundation Member of the European Parliament; Jean Pisani-Ferry (France) Javier Solana (Spain) former Minister of Justice Director, Bruegel; Professor, Université Former EU High Representative for the Adam Lury (United Kingdom) Paris-Dauphine Common Foreign and Security Policy & CEO, Menemsha Ltd (Germany) Secretary-General of the Council of the Member of Parliament; Chairman of the EU; former Secretary General of NATO Monica Macovei (Romania) Bundestag Foreign Affairs Committee Member of the European Parliament George Soros (Hungary/USA) Lydie Polfer (Luxembourg) Founder and Chairman, Open Society Emma Marcegaglia (Italy) Member of Parliament; former Foreign Foundations CEO of Marcegalia S.p.A; former Minister President, Confindustria Teresa de Sousa (Portugal) Journalist I´ñigo Méndez de Vigo (Spain) Charles Powell Secretary of State for the European (Spain/United Kingdom) Goran Stefanovski (Macedonia) Union Director, Real Instituto Elcano Playwright and Academic David Miliband Andrew Puddephatt Rory Stewart (United Kingdom) (United Kingdom) (United Kingdom) Member of Parliament Member of Parliament; Former Director, Global Partners & Associated Alexander Stubb (Finland) Secretary of State for Foreign and Ltd. Minister for Foreign Trade and Commonwealth Affairs Vesna Pusic´ (Croatia) European Affairs; former Foreign Alain Minc (France) Foreign Minister Minister President of AM Conseil; former Michael Stürmer (Germany) chairman, Le Monde Robert Reibestein (The Netherlands) Chief Correspondent, Die Welt Nickolay Mladenov (Bulgaria) Director, McKinsey & Company Ion Sturza (Romania) Foreign Minister; former Defence President, GreenLight Invest; former Minister; former Member of the George Robertson Prime Minister of the Republic of European Parliament (United Kingdom) Moldova Former Secretary General of NATO Dominique Moïsi (France) Paweł S´wieboda (Poland) Senior Adviser, IFRI Albert Rohan (Austria) President, Demos EUROPA - Centre for Former Secretary General for Foreign European Strategy Pierre Moscovici (France) Affairs Member of Parliament; former Minister Vessela Tcherneva (Bulgaria) for European Affairs Adam D. Rotfeld (Poland) Spokesperson and advisor, Ministry of Former Minister of Foreign Affairs; Foreign Affairs Nils Muiznieks (Latvia) Co-Chairman of Polish-Russian Group Council of Europe Commissioner for on Difficult Matters, Commissioner of Teija Tiilikainen (Finland) Human Rights Euro-Atlantic Security Initiative Director, Finnish Institute for International Relations Hildegard Müller (Germany) Norbert Röttgen (Germany) Chairwoman, BDEW Bundesverband Minister for the Environment, Luisa Todini (Italy) der Energie- und Wasserwirtschaft Conservation and Nuclear Safety Chair, Todini Finanziaria S.p.A Wolfgang Münchau (Germany) Olivier Roy (France) Loukas Tsoukalis (Greece) President, Eurointelligence ASBL Professor, European University Institute, Professor, University of Athens and Alina Mungiu-Pippidi (Romania) Florence President, ELIAMEP Professor of Democracy Studies, Hertie Daniel Sachs (Sweden) Erkki Tuomioja (Finland) School of Governance CEO, Proventus Foreign Minister Kalypso Nicolaïdis (Greece/ Pasquale Salzano (Italy) Daniel Valtchev, (Bulgaria) France) Vice President for International Former Deputy PM and Minister of Professor of International Relations, Governmental Affairs, ENI Education University of Oxford Stefano Sannino (Italy) Vaira Vike-Freiberga (Latvia) Daithi O’Ceallaigh (Ireland) Director General for Enlargement, Former President Director-General, Institute of European Commission International and European Affairs Antonio Vitorino (Portugal) Javier Santiso (Spain) Lawyer; former EU Commissioner Christine Ockrent (Belgium) Director, Office of the CEO of Telefónica Editorialist Europe Andre Wilkens (Germany) Director Mercator Centre Berlin and Andrzej Olechowski (Poland) Marietje Schaake Director Strategy, Mercator Haus Former Foreign Minister (The Netherlands) Carlos Alonso Zaldívar (Spain) Dick Oosting (The Netherlands) Member of the European Parliament Former Ambassador to Brazil CEO, European Council on Foreign Klaus Scharioth (Germany) Relations; former Europe Director, Stelios Zavvos (Greece) Dean of the Mercator Fellowship CEO, Zeus Capital Managers Ltd Amnesty International on International Affairs; former Mabel van Oranje Ambassador of the Federal Republic of Samuel Žbogar (Slovenia) Germany to the US EU Representative to Kosovo; former (The Netherlands) Foreign CEO, The Elders 13 Also available Supporting Moldova’s Egypt’s Hybrid Revolution: after the Tymoshenko from ECFR Democratic Transition a Bolder EU Approach verdict Nicu Popescu, October 2009 Anthony Dworkin, Daniel Korski Andrew Wilson, December 2011 New World Order: The Balance (ECFR/17) and Nick Witney, May 2011 (ECFR/47) of Soft Power and the Rise of (ECFR/32) Herbivorous Powers Can the EU rebuild failing European Foreign Policy Ivan Krastev and Mark Leonard, states? A review of Europe’s A Chance to Reform: How the Scorecard 2012 October 2007 (ECFR/01) Civilian Capacities EU can support Democratic February 2012 (ECFR/48) Daniel Korski and Richard Gowan, Evolution in Morocco A Power Audit of EU-Russia October 2009 (ECFR/18) Susi Dennison, Nicu Popescu The Long Shadow of Relations and José Ignacio Torreblanca, Ordoliberalism: Germany’s Mark Leonard and Nicu Popescu, Towards a Post-American May 2011 (ECFR/33) Approach to the Euro Crisis November 2007 (ECFR/02) Europe: A Power Audit of Sebastian Dullien and Ulrike EU-US Relations China’s Janus-faced Response Guérot, February 2012 (ECFR/49) Poland’s second return to Europe? Jeremy Shapiro and Nick Witney, to the Arab Revolutions Paweł Swieboda, December 2007 October 2009 (ECFR/19) Jonas Parello-Plesner and The End of the Putin Consensus (ECFR/03) Raffaello Pantucci, June 2011 Ben Judah and Andrew Wilson, Dealing with Yanukovych’s (ECFR/34) March 2012 (ECFR/50) Afghanistan: Europe’s Ukraine forgotten war Andrew Wilson, March 2010 What does Turkey think? Syria: Towards a Political Daniel Korski, January 2008 (ECFR/20) Edited by Dimitar Bechev, June Solution (ECFR/04) 2011 (ECFR/35) Julien Barnes-Dacey, March 2012 Beyond Wait-and-See: (ECFR/51) Meeting Medvedev: The Politics The Way Forward for What does Germany think of the Putin Succession EU Balkan Policy about Europe? How the EU Can Support Andrew Wilson, February 2008 Heather Grabbe, Gerald Knaus Edited by Ulrike Guérot and Reform in Burma (ECFR/05) and Daniel Korski, May 2010 Jacqueline Hénard, June 2011 Jonas Parello-Plesner, March (ECFR/21) (ECFR/36) 2012 (ECFR/52) Re-energising Europe’s Security and Defence Policy A Global China Policy The Scramble for Europe China at the crossroads Nick Witney, July 2008 (ECFR/06) François Godement, June 2010 François Godement and Jonas François Godement, April 2012 (ECFR/22) Parello-Plesner with Alice (ECFR/53) Can the EU win the Peace in Richard, July 2011 (ECFR/37) Georgia? Towards an EU Human Rights Europe and Jordan: Reform Nicu Popescu, Mark Leonard and Strategy for a Post-Western Palestinian Statehood at the before it’s too late Andrew Wilson, August 2008 World UN: Why Europeans Should Julien Barnes-Dacey, April 2012 (ECFR/07) Susi Dennison and Anthony Vote “Yes” (ECFR/54)

AFTER MERKOZY: HOW FRANCE AND GERMANY CAN MAKE EUROPE WORK Dworkin, September 2010 Daniel Levy and Nick Witney, A Global Force for Human (ECFR/23) September 2011 (ECFR/38) China and Germany: Why the Rights? An Audit of European Emerging Special Relationship Power at the UN The EU and Human Rights The EU and Human Rights at Matters for Europe Richard Gowan and Franziska at the UN: 2010 Review the UN: 2011 Review Hans Kundnani and Jonas Brantner, September 2008 Richard Gowan and Franziska Richard Gowan and Franziska Parello-Plesner, May 2012 (ECFR/08) Brantner, September 2010 Brantner, September 2011 (ECFR/55) (ECFR/24) (ECFR/39) Beyond Dependence: How to deal with Russian Gas The Spectre of a Multipolar How to Stop the Pierre Noel, November 2008 Europe Demilitarisation of Europe (ECFR/09) Ivan Krastev & Mark Leonard Nick Witney, November 2011 with Dimitar Bechev, Jana (ECFR/40) Re-wiring the US-EU relationship Kobzova & Andrew Wilson, Daniel Korski, Ulrike Guerot and October 2010 (ECFR/25) Europe and the Arab Mark Leonard, December 2008 Revolutions: A New Vision for (ECFR/10) Beyond Maastricht: a New Democracy and Human Rights Deal for the Eurozone Susi Dennison and Anthony Shaping Europe’s Afghan Surge Thomas Klau and François Dworkin, November 2011 Daniel Korski, March 2009 Godement, December 2010 (ECFR/41) (ECFR/11) (ECFR/26) Spain after the Elections: the A Power Audit of EU-China The EU and Belarus after “Germany of the South”? Relations the Election José Ignacio Torreblanca and John Fox and Francois Godement, Balázs Jarábik, Jana Kobzova Mark Leonard, November 2011 April 2009 (ECFR/12) and Andrew Wilson, January (ECFR/42) 2011 (ECFR/27) Beyond the “War on Terror”: Four Scenarios for the Towards a New Transatlantic After the Revolution: Europe Reinvention of Europe Framework for Counterterrorism and the Transition in Tunisia Mark Leonard, November 2011 Anthony Dworkin, May 2009 Susi Dennison, Anthony Dworkin, (ECFR/43) (ECFR/13) Nicu Popescu and Nick Witney, March 2011 (ECFR/28) Dealing with a Post-Bric Russia The Limits of Enlargement-lite: Ben Judah, Jana Kobzova and European and Russian Power in European Foreign Policy Nicu Popescu, November 2011

www.ecfr.eu the Troubled Neighbourhood Scorecard 2010 (ECFR/44) Nicu Popescu and Andrew March 2011 (ECFR/29) Wilson, June 2009 (ECFR/14) Rescuing the euro: what is The New German Question: China’s price?’ The EU and human rights at the How Europe can get the François Godement, November UN: 2009 annual review Germany it needs 2011 (ECFR/45) Richard Gowan and Franziska Ulrike Guérot and Mark Leonard, Brantner, September 2009 April 2011 (ECFR/30) A “Reset” with Algeria: the (ECFR/15) Russia to the EU’s South

May 2012 Turning Presence into Power: Hakim Darbouche and Susi What does Russia think? Lessons from the Eastern Dennison, December 2011 edited by Ivan Krastev, Mark Neighbourhood (ECFR/46) Leonard and Andrew Wilson, Nicu Popescu and Andrew September 2009 (ECFR/16) Wilson, May 2011 (ECFR/31) ECFR/56 14 ABOUT ECFR

The European Council on Foreign Relations (ECFR) is the first pan-European think-tank. Launched in October 2007, its objective is to conduct research and promote informed debate across Europe on the development of coherent, effective and values-based European foreign policy.

ECFR has developed a strategy with three distinctive elements that define its activities:

•A pan-European Council. ECFR has brought together a distinguished Council of over one hundred Members - politicians, decision makers, thinkers and business people from the EU’s member states and candidate countries - which meets once a year as a full body. Through geographical and thematic task forces, members provide ECFR staff with advice and feedback on policy ideas and help with ECFR’s activities within their own countries. The Council is chaired by Martti Ahtisaari, Joschka Fischer and Mabel van Oranje.

• A physical presence in the main EU member states. ECFR, uniquely among European think-tanks, has offices in Berlin, London, Madrid, Paris, Rome, Sofia and Warsaw. In the future ECFR plans to open an office in Brussels. Our offices are platforms for research, debate, advocacy and communications.

• A distinctive research and policy development process. ECFR has brought together a team of distinguished researchers and practitioners from all over Europe to advance its objectives through innovative projects with a pan-European focus. ECFR’s activities include primary research, publication of policy reports, private meetings and public debates, ‘friends of ECFR’ gatherings in EU capitals and outreach to strategic media outlets.

ECFR is backed by the Soros Foundations Network, the Spanish foundation FRIDE (La Fundación para las Relaciones Internacionales y el Diálogo Exterior), the Bulgarian Communitas Foundation, the Italian UniCredit group, the Stiftung Mercator and Steven Heinz. ECFR works in partnership with other organisations but does not make grants to individuals or institutions. www.ecfr.eu AFTER MERKOZY: HOW FRANCE AND GERMANY CAN MAKE EUROPE WORK

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© ECFR May 2012.

ISBN: 978-1-906538-56-9

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