France and Germany’s Plan to Save the EU


France and Germany’s Plan to Save the EU

We had intended to address the deteriorating security situation in Mozambique today. French President Emmanuel Macron and German Chancellor Angela Merkel had other plans. The situation in Mozambique is serious and we will return to it next week, but in the interim, we cannot let France and Germany’s press conference yesterday pass by without comment. Nothing less than the future of the European Union is at stake, and for the first time since COVID-19 crippled the world, there is cause for optimism in Brussels.

Macron has been trying (and failing) to get Merkel to support his vision of a stronger European Union since his first day in office. In the end, it took a crisis “unprecedented in the history of the European Union” to get the EU’s two most powerful member-states on the same page – literally. After their press conference, Macron and Markel released identical copies of a four-point initiative, and even the preamble of the documents is extraordinary. France and Germany’s stated goal is not simply for the EU to weather the economic crisis caused by the COVID-19 pandemic, but for the EU to “come out of it stronger than before.” To do this, France and Germany are proposing to act “as Europeans and join our forces in unprecedented ways.”

The most immediately controversial way is contained in the initiative’s second point, entitled “setting up an ambitious ‘Recovery Fund’ at the EU level for solidarity and growth.” France and Germany are proposing a “Recovery Fund” of 500 billion euros. Crucially, the funds will be raised by the European Commission, which will borrow the money on behalf of the European Union and will allocate the additional funds within the EU’s 2021-2027 budget. These funds will be distributed to European regions and sectors most affected by COVID-19, and they will be distributed as grants, not as loans. The money, however, will not come without strings attached: according to France and Germany, EU support will be contingent on recipients following “sound economic policies and an ambitious reform agenda.”

And what, pray tell, do France and Germany mean by “sound economic policies and an ambitious reform agenda?”

That is what the rest of the initiative document spells out in detail. France and Germany plan to develop the EU’s “strategic health sovereignty” with an EU “health strategy,” designed to reduce EU dependency on global supply chains for access to drugs, vaccines, medical equipment, and cutting-edge technology. France and Germany propose to enhance the bloc’s “digital sovereignty” and to make the European economy the most environmentally sustainable and conscious in the world. Last but not least, France and Germany assert that the challenges of the future require that the EU develop a “resilient and sovereign economy and industrial base” – in addition to a “strong Single Market” – and propose to make the European Union the true global defender of an “ambitious and balanced free trade agenda with the World Trade Organization at its core.”

The key word contained in each one of these major points is “sovereignty.” Every time it is used, it is used in the context of increasing the sovereignty, not of France or Germany, but of the European Union. The European Union that Macron and Merkel have agreed to pursue is a strong political entity charged with safeguarding the interests of bloc’s member states, not just in terms of their individual national distinctiveness, but as a sovereign whole. And in Chancellor Merkel’s own words, this road map is merely a temporary response to the EU’s current crisis: in the long-term, Merkel believes that “Europe must develop further,” and has committed herself and the German government to development along the lines outlined in the joint strategic initiative.

In other words, Merkel is supporting the idea that the collective economic might of the European Union should be leveraged by the entire bloc in order to give targeted help to the countries (like Spain and Italy) that have been hardest hit. In return, Merkel envisions a European Union that is more aligned politically and economically with Germany’s interests. Countries that want to receive European Commission grant money must align their policies with priorities set down by Brussels (or perhaps more precisely, by Paris and Berlin). The cost of equal-burden sharing is the pursuit of common goals and the implementation of common policies. Merkel has finally arrived at the place Macron has been pushing her since May 2017.

As recently as last year, Merkel had hoped that Germany would best protect EU interests by coming to an understanding with China. COVID-19 has shown that such an understanding is impossible – just as U.S. President Donald Trump’s election showed Merkel the US had become an unreliable ally. Neither Germany nor France can stand up to China or the US alone. Only a united Europe can accomplish that. In that sense, COVID-19 has forced Merkel’s hand. If Germany had continued to sit on its hands and ignored the pleas for EU help out of Rome and Madrid, or let the German Constitutional Court’s final word on the European Central Bank reflect German foreign policy, then the unraveling of the EU would only have been a matter of time. The survival of the EU is ultimately more important to Berlin than genuflecting to parsimony.

The European Union borders a fiercely nationalist Russia in the east and a neo-Ottoman Turkey in the south. It also faces significant problems in its two most important bilateral relationships: a strengthening China and a protectionist United States. These external forces are pushing European states closer together even as internal forces, like the nationalist impulses and more narrowly defined economic interests of individual member-states, are pulling the EU apart. The internal forces are still tremendously powerful and will not be overcome easily. Austrian Chancellor Sebastian Kurz tweeted shortly after the press conference that Austria’s “position remains unchanged. [Austria is] ready to help most affected countries with loans” (i.e., not grants). The Dutch government, which has been outspokenly against the idea of common EU debt, said that it would “consider” France and Germany’s proposals as a “starting point for discussions.”

France and Germany’s initiative should not be seen as salvific. It is simply a necessary first step in the EU’s long-term evolution. Even so, forgive us if we take a brief moment to pat ourselves on the back. Earlier this year, we predicted that “by the end of the decade, a new and likely smaller EU will emerge as a more unified, centrally controlled sovereign entity, increasingly responsible for its own defense and capable of projecting European power abroad” – and that France and Germany would “lead the way in pushing for significant reforms to reshape the European Union into a sovereignty entity in and of its own.” France and Germany have made their intentions clear. The question now is whether the internal forces threatening to pull the EU apart or the external forces pushing them closer together are stronger. Our money is on the latter, but either way, there is arguably no more important question in global politics in the years ahead.