French President Emmanuel Macron has ambitious plans for European Union reform and has been counting on cooperation from Germany, France’s closest European ally, to see those plans come to fruition. But when he meets in Berlin Thursday with German Chancellor Angela Merkel to discuss his proposals, he may face resistance.
While Germany is decidedly pro-EU, Merkel is under domestic pressure to push back against economic reforms that could vex taxpayers. And some of Macron’s proposals would do exactly that.
When he gave an impassioned speech in the European Parliament about the future of the continent on Tuesday, Macron appeared to have stepped into Merkel’s shoes as the de facto leader of Europe. He warned against the “erosion of democracy” and argued the EU must change its ways if it is to fend off the current rise in nationalism. He went on to equate the continent’s political divisions with civil war and urged fellow Europeans to act, not to turn into a “generation of sleepwalkers.”
But even as Macron was speaking at the EU parliament in Strasbourg, France, lawmakers from Merkel’s conservative bloc in Berlin were busy discussing how to restrict some of his proposed reforms.
The sticking point is economic integration, and in particular, Macron’s bid to turn the eurozone’s current rescue fund into a full-blown European Monetary Fund, modeled on the International Monetary Fund.
Originally floated by Germany’s former finance minister, Wolfgang Schäuble, and intended as a means to tackle another sovereign debt crisis within the monetary union, Germany and France do not see eye to eye how it would work.
Germany favors a fund available for struggling eurozone member states, but only under strict conditions. Macron would like a more flexible model that shares more risk, but gives more firepower to EU institutions to help in calmer times as well as in crises.
“The Germans want to add a sovereign default procedure that can actually let governments fail on their debt,” says Daniela Schwarzer, the director of the German Council on Foreign Relations.
Schwarzer says the reason Germany wants this is that Merkel’s conservatives worry that a eurozone-wide monetary fund might mean German taxpayers would foot the bill for member states like Greece or Italy, which they view as less fiscally cautious.
“The French vision is quite different,” Schwarzer says. “They believe the eurozone should work more like a nation-state with a monetary policy and a budget. If one region has job shortages, then unemployment insurance kicks in until the region has recovered.”
Ahead of Thursday’s meeting with Macron, Merkel attempted to play down the fierce resistance she is facing from within her own party.
“Germany will be bringing its own ideas to the table,” she said. “We’ll find a compromise with France before the [next EU leaders’] summit in June.”
Merkel personally supports the notion of a European Monetary Fund. But to placate the skeptics within her alliance, the chancellor also says member states must retain the right to veto eurozone bailout packages.
Her coalition partner, the Social Democrats, are unimpressed with the conservative bloc’s show of dissent. Carsten Schneider, the deputy leader of the Social Democrats’ parliamentary group, warns time is running out. Following a long campaign leading up September elections, it took months for Merkel to be able to form a government in March.
“Europe has been waiting for Germany for more than a year,” Schneider told German public broadcaster ARD. “First the election, then the lengthy coalition negotiations. It’s time we play our part.”
But fellow Social Democrat Olaf Scholz, Germany’s new finance minister, is more cautious. Budgetary caution is part of his job description. Referring to Macron’s suggestions as “courageous,” Scholz warned last weekend that not all of them would be feasible.
Like his predecessor Schäuble, whose name became synonymous with hard-line austerity during the eurozone crisis that started in late 2009, Scholz has vowed to continue Germany’s schwarze Null or “black zero” policy of a balanced budget. That’s a cultural trait in a nation of savers, as well as a debt-brake policy written into Germany’s constitution.
So despite Merkel’s warm rhetoric and Scholz’s cautious praise, it’s unlikely that Macron will be able to convince the German government that pooling economic risks is prudent. Whether the finance minister or Merkel’s party scuttles Macron’s plans, commentators believe the French leader may find his warning about failing to act falls on deaf ears in Berlin.