Mixed Signals

Germany Hesitant over Macron’s Vision

French President Emmanuel Macron delivers a speech to set out plans for reforming the European Union at the Sorbonne in Paris
Who, me? Mais oui. Source: Reuters

Any other day, a two-hour plea from the French president for a stronger European Union would have sent politicians in Germany rushing for the nearest mic. But just a few days after its own election, Berlin is distracted.

Coalition talks are expected to be difficult between Chancellor Angela Merkel’s Christian Democrats, the pro-business Free Democrats and the Green Party. Party leaders are focused on forming a new government and have little attention for anything else – even the future of the European Union.

Emmanuel Macron, an avowed pro-European centrist, first set out his vision for EU reform after winning the French election last May. And on Tuesday in Paris, he again called for more cooperation and harmonization in the economy, immigration and defense, the environment, terrorism and taxation. He proposed a separate budget and finance minister for the 19-nation currency bloc, though he was light on practical detail.

“Europe won’t get any stronger if we open further money pits that curtail incentives for sound budgetary policies.”

Alexander Graf Lambsdorff, FDP politician

Those politicians who did comment in Germany were divided on Mr. Macron’s cri du coeur. The Greens and Social Democrats responded enthusiastically while the CSU, the Bavarian sister party of Chancellor Merkel’s CDU, and the Free Democrats were cooler on the proposals. “Europe won’t get any stronger if we open further money pits that curtail incentives for sound budgetary policies,” said Alexander Graf Lambsdorff, a senior FDP politician and former deputy leader of the European Parliament.

Hans Michelbach, a lawmaker from the Christian Social Union – which tends to be more hawkish than Ms. Merkel’s CDU – echoed this skepticism, saying, “Macron’s plans boil down to turning the euro zone into a borderless transfer union.” These are the “wrong lessons” to take from the euro debt crisis, he added.

Chancellor Angela Merkel, ever the diplomat, said there was a “high degree of overlap” between Germany and France on EU reform “but we still need to discuss the details.” In her first comments on the Macron speech Thursday night, she welcomed a push towards common defense and immigration policies – even pushing for deeper unity on the latter – but sounded more hesitant on Mr. Macron’s euro-zone reform proposals and said Germany would soon be releasing its own suggestions.

Economists too were doubtful, including Clemens Fuest, the head of the Ifo economic institute. He called for a more effective EU in terms of foreign policy, trade policy and security. But he criticized Mr. Macron’s plans for the euro zone, saying more stability in the financial sector is needed, and liability and control in economic and fiscal policy should be reconciled.

“Germany’s overriding priority is to preserve European integration.”

Barbara Kunz, research fellow, The French Institute for International Relations

Across the political aisle, Green party leader Cem Özdemir said Mr. Macron’s vision contained “very exciting thoughts,” though wondered whether a euro-zone parliament was necessary in addition to the current EU parliament. But, Mr. Özdemir added, “it makes no sense that we share a common currency, but don’t have common fiscal policy.”

These contrasting opinions could prove problematic. Berlin is moving towards a coalition between the CDU/CSU, the Greens and the FDP. While it is too early to say where the four parties will stand on many policy areas, the German government has softened its stance on EU reform since Mr. Macron’s visit to Berlin last May.

Onlookers were hesitant to make predictions. “Permanent transfers, even a small unconditional euro-zone budget look like a no-go for the next German government,” said Carsten Brzeski, a chief economist at ING DiBa said. And with the far-right Alternative for Germany pushing a new government to the right, he said he did not expect Berlin to clamor for far-reaching reforms.

But Barbara Kunz, an expert in Franco-German relations, said there is growing realization in Germany that the euro zone does not work best in its current state and therefore something has to give. “Germany’s overriding priority is to preserve European integration,” Ms. Kunz told Handelsblatt Global. “No party in a Jamaica coalition would be prepared to put it at risk.”

This story was updated with comments from Angela Merkel at 8.p.m. Berlin time on Thursday.

Jean-Michel Hauteville is an editor with Handelsblatt Global in Berlin. To reach the author: hauteville@handelsblatt.com.

We hope you enjoyed this free article.

Subscribe today and get full access to market-moving news in Europe's leading economy.