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Macron-Merkel meeting a test for EU budget

March 16, 2018

For months, French President Emmanuel Macron has been waiting for a response from Berlin regarding his EU reform ideas. Now Angela Merkel is coming to Paris as the re-elected chancellor. But he shouldn’t expect too much.

Emmanuel Macron and Angela Merkel
Image: Getty Images/AFP/L. Marin

Things are moving quickly now that Germany finally has its new government: Germany's new foreign minister, Heiko Maas of the Social Democrats (SPD), flew to Paris on the very same day he was sworn in. The chancellor is not wasting time, either. Less than two days after her fourth election to the chancellorship, she's in Paris.

Merkel has taken Finance Minister Olaf Scholz with her, because the two governments have a number of fiscal policy issues to discuss as a priority during the bilateral meeting. And Macron is likely to pay very close attention to whether the Christian Democrat (CDU) chancellor and her SPD finance minister have differing opinions on these issues.

Read also: Parliamentary president Schäuble opposes a 'United States of Europe'

Judging by what individual representatives of the CDU, its Bavarian sister party the Christian Social Union (CSU) and the SPD have said so far about Macron's reform ideas, the grand coalition partners have indeed taken different positions. Until now, Scholz has held back because he knows that within Germany he is expected to continue the solid (some say, stingy) financial policy of his CDU predecessor Wolfgang Schäuble.

However, other SPD politicians have been extremely enthusiastic about Macron's ideas. Former SPD leader Martin Schulz — who also previously served as European Parliament president — had made a positive German response to Macron's ideas a prerequisite for a new grand coalition. As recently as Wednesday, new top diplomat Maas said in Paris that he had come to "finally take the outstretched hand of Emmanuel Macron with his proposals for the renewal of Europe."

Read also: Macron pins pro-EU reforms success on 'Germany's ambitions' 

The French president's vision of Europe

Large sums at stake

But what is this all about? Macron is mainly proposing a large investment budget and a common finance minister for the eurozone. The CDU is critical of both. Merkel wants the main responsibility for fiscal policy to remain with individual member states. Shortly after she was sworn in, she said on the German television broadcaster ZDF: "What we don't want is to confuse liability and responsibility, so to speak, or simply to communitize national debts without becoming competitive. Our stance on this won't change." The great concern, to put it simply, is that Germany will have to pay for France and other countries without receiving anything in return.

Merkel was sharply criticized by the opposition parties, the pro-business Free Democrats (FDP) and the right-wing populist Alternative for Germany party (AfD), when she promised a higher German contribution to the EU budget. Economist Clemens Fuest, head of the Munich-based Ifo Institute, sees this as a carte blanche for financially weak EU countries to shift their burdens to Germany. "The biggest mistake is to stand up and say, ‘We want to pay more.'" This is "incredibly reckless and careless," says Fuest.

Daniel Caspary, chairman of the CDU/CSU parliamentary group in the European Parliament, believes, however, that Macron's reform proposals are not even particularly popular within France itself. On SWR radio, Caspary said: "When it comes down to money, even the French will be putting on the brakes." A tripling of the European budget, as demanded by Macron, is completely excessive, he said.

Read also: Is Macron Europe's new Merkel?

‘We are completely interdependent'

However, according to Caspary, the differences in opinion do not change the common goal of strengthening the European Union. A few days ago, Merkel complained that Europe was "too weak and too slow" in many areas. She wants to change that. She agrees with Macron that without him, without France, this is not possible. "I don't believe for a second that a European project can be successful without, or against Germany," Macron told the German daily Frankfurter Allgemeine Zeitung. "We are completely interdependent."

The fact that Germany and France will have to work together in the EU and find common positions is not because they are the two largest countries in the eurozone, says Stefan Seidendorf, deputy director of the Franco-German Institute in Ludwigsburg. He also does not believe that the two countries are necessarily best friends. But he thinks that the differences in perspective are an advantage for the EU: "The cooperation with France is particularly successful because France is traditionally the antithesis of Germany.” When Germany and France reach an agreement, this often leads to a "proxy compromise that is more or less acceptable to everyone else. That is the added value of this special relationship to this day, that they can reflect the many European conflicts in a Franco-German relationship, and that then a Franco-German compromise can also become a European one."

The only question is whether Germany and France respectively can still speak for other EU member states at all. The rise of right-wing populist and Euroskeptic parties almost everywhere in Europe, most recently in the parliamentary elections in Italy, should make all further attempts at European unity considerably more difficult. When it comes to migration, Merkel is so isolated in the EU that it is almost impossible for her to find allies for the "new start for Europe" that she wants. Paris is an easy stop on her journey regarding this matter. But after France, Merkel's next trip will be to Poland, and she is likely to be confronted with these divisive issues in Warsaw.

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