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How the EU can survive Brexit

There are tensions between Emmanuel Macron and Angela Merkel – but unless France and Germany can work together the bloc will fragment

 

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Britain’s departure from the European Union ends an arduous two years and ten months since 29 March 2017, when Theresa May’s government invoked Article 50 to give notice that it would withdraw. During that period Brexit has consumed time, energy and political capital in Brussels and other major European cities. Further negotiations with London will stretch on for years to come. But with Britain gone, European minds are turning to the other challenges facing the union. 

Within Europe, the refugee and euro crises, though less acute in 2019 than in previous years, still fester, and have the potential to poison relations among the member states. The continent’s economy needs to adapt to rapid technological change while finding ways of drastically curbing carbon emissions and overcoming worsening regional inequalities. Some of the EU’s own governments play fast and loose with the rule of law – most egregiously in the case of Viktor Orbán in Hungary. 

The wider world is also becoming more demanding. The EU is surrounded by strongman leaders who spurn its liberal internationalist values and disregard its preference for a rules-based order: Donald Trump, Vladimir Putin and Recep Tayyip Erdogan. The first two would happily watch the EU disintegrate. The EU also has to contend with the growing geopolitical and economic power of China, whose autocratic leader, Xi Jinping, professes respect for global trading rules but shares few European values.

The EU needs to develop a steely resilience. Part of this is a question of policy: it needs to create the conditions in which economies can innovate and grow, and be firmer with the governments of member states that do not respect the rule of law. It also needs to generate the political will to act as one on the defining geopolitical challenges of the age. 

The EU institutions often propose sensible policies and Ursula von der Leyen, the new European Commission president, has made an ambitious start, saying that she wants to run a more “geopolitical” commission. However, the key member states are unwilling to let EU institutions lead continental responses to the most pressing issues. 

The European Commission enjoyed a golden age in the time of Jacques Delors, who was president between 1985 and 1995. But the political climate is now more favourable to “inter-governmentalism”, whereby national capitals make big decisions rather than letting Brussels take charge.

Throughout the EU’s history, France and Germany have provided backbone and stability. There were periods of great amitié, during the leaderships of Charles de Gaulle and Konrad Adenauer (who coincided from 1959 to 1963), Georges Pompidou and Willy Brandt (1969-1974), Valéry Giscard d’Estaing and Helmut Schmidt (1974-1981), François Mitterrand and Helmut Kohl (1982-1995), and Jacques Chirac and Gerhard Schröder (1998-2005).

When the Paris-Berlin tandem succeeds, the formula has tended to be the same: because France and Germany have such divergent interests, are governed so differently and disagree on so many issues, they have known that if they can find a common approach it is likely to work, not only for them but for the EU. Traditionally, the two continue negotiating until they reach a compromise. 

The Maastricht Treaty – negotiated in 1991 – was in some respects the fruit of this formula. Mitterrand persuaded Kohl to accept economic and monetary union (EMU). Kohl made Mitterrand sign up to EMU on German terms, with an independent central bank, and also accept the ill-defined concept of political union. One element of this delicate compromise was France acquiescing in German reunification in 1990.

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But over the past 15 years the Franco-German tandem has become less steady and in some ways less influential following the EU enlargements that took place between 2004 and 2013, which brought in the central and east European countries and the Baltic states. There was also a problem of imbalance. With reunification in 1990 Germany became the much larger partner. So long as the French economy performed relatively well, the disparity between the countries was not too serious, but since 2005, and particularly since the euro crisis from 2010 on, Germany’s economy has powered ahead. During that time Angela Merkel became Europe’s pre-eminent leader, with her French counterparts either inconsistent (Nicolas Sarkozy) or relatively passive (François Hollande). 

In an increasingly lopsided relationship, German leaders started to lose respect for the French. The election of Macron to the French presidency in 2017 promised to rectify these imbalances. Yet his strategy of winning over the Germans by reforming the French economy has had mixed results. The French economy is doing better thanks to Macron’s reforms and Germany’s slowdown – France has recently had faster economic growth than Germany – but that has not led to increased German engagement on matters such as eurozone reform.

Differences of both substance and style  have contributed to the wobbles made by the tandem as the EU enters a post-Britain era. On substance, Germany is broadly happy with the way the EU and the eurozone work, and sees the risk rather than the opportunity of substantial reform. The euro has been good for the German economy and its export industries, keeping inflation low and limiting Germany’s obligations to support poorly performing southern European economies, such as Greece. 

However, the French in general and Macron in particular consider such views complacent. They think the EU has never faced greater challenges and that it risks being squeezed between the US and China as they start to dominate the 21st century. In terms of style, Macron is a relatively new president whereas Merkel is coming towards the end of her long chancellorship. The French complain about Merkel’s lack of vision and her habit of acting ponderously when faced with decisions. Paris considers the German government weak, introspective and dysfunctional.  The French point, for example, to the recent ill-thought-through proposal by the German defence minister for a safe zone in northern Syria – on which neither they nor the German foreign ministry were consulted.

The Germans dislike Macron’s penchant for bold, dramatic interventions, thinking them grandiose but lacking in detail. In the final phase of her chancellorship, Merkel sees her historical legacy as being a leader who kept Europe together during a crisis-bound period. She worries that Macron’s bold but potentially divisive proposals – a eurozone budget, a multi-tier EU in which different member states integrate at different speeds, or further defence cooperation – undermine unity.

Yet all is not lost. France and Germany still work well together in many areas. They have more-or-less agreed on the EU’s responses on migration and refugees, on climate and Europe’s Green New Deal, on appointments to the key EU jobs (such as the presidencies of the Commission and the European Central Bank), on handling the Ukraine crisis through talks with the Ukrainian and Russian presidents, and on Brexit. 

In some areas where they have previously clashed, there are signs of at least partial convergence. Germans are starting to share French concerns about China’s strategic intentions and the need for more interventionist industrial policies. Meanwhile in January 2019 France and Germany signed the Treaty of Aachen, which commits the two countries to further cooperation on a range of issues from security to climate change. Merkel and Macron also held a joint summit with China’s Xi Jinping in Paris in March last year. There are glimpses of hope in an otherwise gloomy picture.

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Brexit makes Franco-German cooperation even more necessary – but also, in some ways, more difficult. The UK has acted as a kind of safety valve for the Franco-German relationship. When France got fed up with Germany on security issues, it could go and flirt with the UK. When Germany found France’s reticence towards free trade and EU enlargement a pain, it could talk to the British. Now each has little alternative to the other. 

Brexit also makes other member states more wary and resentful of Franco-German leadership. That in turn makes it harder for France and Germany to lead the EU, even when they agree.The European Commission will play a leading role in negotiating the future trade relationship between Britain and the EU, alongside France and Germany. But on the question of how to moderate the harmful geopolitical consequences of Brexit, Merkel and Macron will be pre-eminent, since they – unlike many other EU leaders – are accustomed to thinking about the bigger geopolitical picture. They understand why both Putin and Trump are so delighted by the disruption to European unity caused by Brexit.

The good news for those who hope for a close EU-UK security partnership is that Berlin and Paris think that the EU should create bespoke structures that keep the British involved in mutually relevant discussions – albeit ones that, on justice and home affairs, will require the UK to accept a strong role for the European Court of Justice. There is a fair chance that Boris Johnson’s government will ultimately agree to a moderately close security relationship, because of the potential benefits for the UK; few Brexiteers voted to leave the EU because they disliked the common foreign and security policy. But there is a risk that if the talks on the future trading relationship break down, the atmosphere will be so acrimonious that Britain’s leaders will spurn close security ties.

In several areas of security policy, officials may invent procedures that allow the British a voice in EU councils, though not a vote. However, senior figures I spoke with in both Paris and Berlin think that an additional format needs to be created at a high level, some new international institution independent of the EU. 

Macron and Merkel have both spoken of a European Security Council (ESC). From a French perspective, one perceived advantage of such an institution could be to involve the UK in discussions on the big issues facing Europe, such as Russia, China or the Middle East, and to help prevent it sliding further towards the US. In Berlin, some politicians have called for an ESC that would include Britain. But others say they would prefer to build on the existing informal “EU3” meetings of Britain, France and Germany. They argue a more formal ESC could rival or damage the EU’s institutions and irritate excluded member states.

Elsewhere, the biggest rift between France and Germany remains eurozone governance. Macron believes that in the long run a substantial eurozone budget is needed to provide support for members that face difficulties, as Greece and others did from 2010. 

Over the past couple of years Macron’s plan for a eurozone budget has been practically killed off by the Germans and their allies in the Dutch-led modern Hanseatic League – a group of northern, free-trading states who have stepped into part of the gap left by Britain. Without radical reform, argues Paris, the eurozone may not survive the next crisis. 

But Merkel’s government regards such talk as alarmist. Senior figures in Berlin said they would take French ideas more seriously if France could get its own borrowing under control, instead of increasing its public debt and breaching EU budget rules. Despite some signs of a debate in Germany on loosening certain fiscal regulations (such as the infamous “debt brake” limiting new borrowing), Merkel’s Christian Democratic Union remains strongly opposed to radical reform and German public opinion remains firm in its opposition to establishing some sort of redistributive transfer union within the eurozone.


The stars are not wanted now: the UK’s flag is removed from the Council of the European Union in Brussels, 31 January

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But there are major tensions in at least four other crucial areas of EU policy. The first is the EU-US trade war. Trump has slapped steel and aluminium tariffs on imports from the EU. Macron believes that the best way to reverse the tariffs is to stand firm against him. German leaders, however, are fearful that Trump may enact his threat to put tariffs on European car exports, and would willingly seek a compromise. Thus Germany is keen to move ahead with an EU-US trade deal, possibly including agriculture. But that would be anathema to France and its farmers. 

There are similar tensions over France’s enthusiasm for taxing America’s tech giants (Facebook, Google, Amazon and the rest), with Berlin much warier of upsetting Washington on digital taxes.

A second set of disagreements concerns EU enlargement. In November 2019 France vetoed the start of EU accession talks with North Macedonia and Albania. Seen from Berlin, which considers the Balkans strategically important, this was all about Macron’s fear of Marine Le Pen exploiting the unpopularity of EU enlargement during the next presidential election. But the French argued – as they have often done over the past 30 years – that too much enlargement weakens the EU’s cohesion and institutions. They will agree to opening accession talks only if the EU reforms its enlargement process – a demand to which Germany, other member states and the commission may well grudgingly accede.

France’s new policy towards Russia also frustrates Germany. In a speech to French diplomats in August 2019, Macron said that he wanted to bring Russia in from the cold to help tackle international problems such as Syria and Islamist terrorism, and to prevent it from falling irreversibly into China’s orbit. 

Germany was annoyed with Macron for acting unilaterally. One senior foreign policy official in Berlin told me that he learned about the French initiative from Finnish officials – who had themselves heard about it from the Russians. As far as Germany is concerned, Russia can only begin ending its isolation by helping to broker peace in Ukraine and showing respect for international law.

In defence, the fourth area of disagreement, France and Germany start with diametrically opposed perspectives but sometimes end up working together. France, like the UK, has a strategic culture that is relaxed about deploying force outside Europe. German views on the use of force, however, are constrained by history. Thus when the EU’s role in defence is discussed, Germany often favours tinkering with existing institutions or creating new procedures. It likes to support initiatives that all or nearly all member states will join, such as the “permanent structured cooperation” or Pesco, a grouping of countries that allows members to pursue defence projects together. 

France, on the other hand, favours schemes that could facilitate Europeans acting militarily with real force – such as the 14-country European Intervention Initiative, an idea of Macron’s that aims to foster a common strategic culture (and which includes the UK). When Macron said in November 2019 that Nato was “brain-dead”, and that he was unsure whether its members would automatically defend each other, as the alliance’s Article 5 required them to do, he caused consternation in Berlin.

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As it enters a new phase of its history the EU can achieve very little unless France and Germany work together. Despite the angst that has crept into the relationship, each generation of leaders in Paris and Berlin learns this truth. 

What, then, to do? Macron needs to become a better diplomat. He would stand a greater chance of implementing his ideas if he found the time to consult and convince Germany and others before launching them. He should not undermine Nato’s credibility by publicly questioning the commitment to mutual self-defence contained in Article 5. Nor should he make overtures to Russia unless it shows greater respect for international law. As for enlargement, Macron should be willing to compromise on what he can get in return for lifting his veto on further accession talks.

But Germany needs to be less complacent about some of the threats to the EU and its currency. A continuation of the present policies could lead to them being weakened, or worse. It should accept that in the eurozone the price of leadership and success is some degree of responsibility for the welfare of less prosperous members. 

In return it is entitled to expect EU mechanisms that compel “problem” countries to manage their economies better. As for European security, Berlin should be willing to contribute more, rather than take a free ride from others.

Much will depend on the leadership of France and Germany. Macron and Merkel are still capable of working together effectively, and she is likely to remain in office well into 2021. Potentially, their skill-sets can be very complementary: he brings vision, bold ideas and youthful energy; she offers calm, experience and a spirit of compromise. Brexit has given the European project a reality check. It’s time for the Big Two to resolve their differences and raise their game.

Charles Grant is director of the Centre for European Reform

This article appears in the 07 February 2020 issue of the New Statesman, Europe after Brexit