Why the Franco-German engine that powered the EU is now almost kaput
As they confront a marauding Trump, trade tensions with China and their own upheavals, the bloc’s two biggest countries are at a crossroads
“When France and Germany advance, all Europe advances. When they don’t, it grinds to a halt” was how former French president Jacques Chirac put it almost a quarter of a century ago at one of the periodic love-ins between the EU’s two biggest member states.
So what would Chirac, who died in 2019, make of the current condition of the famed Franco-German engine which, since the bloc’s inception, has powered so much of the postwar European project? It looks not so much faltering as comprehensively bust.
Emmanuel Macron on Friday appointed a new prime minister, his loyal centrist ally François Bayrou, who becomes France’s fourth premier this year and will have the daunting task of trying to assemble a stable government after the collapse last week of the country’s shortest-lived administration since 1958.
Meanwhile France’s public-sector deficit is on track to exceed 6.1% of GDP this year, more than double the eurozone limit; public debt is 110% of GDP and rising; and the bond markets this month rated France as marginally less creditworthy than Greece.
In Germany, the fractious centre left-led coalition in power for the past three years collapsed last month under the weight of its own ideological contradictions and the pressure of multiple crises triggered by Russia’s full-scale invasion of Ukraine.
Whoever becomes chancellor after the 23 February elections will have to tackle the world’s worst-performing big economy beset by high energy and labour costs as well as bureaucracy, crumbling infrastructure and plodding digital expansion.
The slowdown with key trade partner China has also dealt a blow to German exports, a traditional strength, while the all-important car industry has been slow to develop attractive electric vehicles (EVs) and now faces the threat of swingeing US tariffs under Donald Trump.
With France unable to hold fresh parliamentary elections until July and Germany possibly without a new government until June, the political febrility at the top of the EU’s two most influential countries will inevitably hobble EU decision-making.
Paris and Berlin are seen as the EU’s core power axis, driving policy and defining the main contours of its agenda. With both capitals unable to make big policy decisions for want of strong, stable governments, the bloc faces potentially months in the mire.
The two powerhouses’ parallel economic and fiscal woes will also weigh heavily on the EU. Some analysts believe the bloc’s two largest economies – accounting for 41% of the 27-member EU’s entire GDP – would both contract economically in 2025.
The timing could not be worse, with Europe facing the return of America-first policies under Trump’s second presidency.
German industry (in particular) in crisis.
Quite how it came to this is not too hard to understand. Figuring out how France and Germany might be able to pull themselves out of their ongoing political and economic doom spirals, however, is not so easy.
When the German government imploded last month, observers were less surprised by its demise than astonished that it had limped on for so long.
When chancellor Olaf Scholz fired his obstreperous finance minister, Christian Lindner, on 6 November over a bitter months-long budget dispute, he set in motion a chain of events that optimists say give the country a vital shot at renewal.
“Do we dare to powerfully invest in our future as a strong country? Will we secure jobs and modernise our industry? Are we ensuring stable pensions, reliable healthcare and good nursing care?” a defiant Scholz said on Wednesday.
Lindner’s sacking left Germany with a rump minority alliance of Scholz’s Social Democrats (SPD) and the ecologist Greens capable of only the most perfunctory policy-making from now until a new government is in place.
On Monday, Scholz, historically unpopular but nonetheless standing as his party’s candidate for re-election, will face a confidence vote he has called to trigger the new election.
If Scholz loses the MPs’ ballot, President Frank-Walter Steinmeier will dissolve parliament and Germany will officially embark on an intensely truncated campaign broken up by the Christmas holidays.
A recent poll put the centre-right CDU/CSU on 31%, followed by the far-right Alternative for Germany (AfD) on 18%, Scholz’s SPD on 17% and the Greens on 13%. The FDP and new leftwing conservative Sahra Wagenknecht Alliance are both scoring right around the 5% threshold for parliamentary representation.
The smart money as Germany’s next leader is therefore on Friedrich Merz, a longtime rival of his more moderate fellow Christian Democrat Angela Merkel, whose 16-year tenure as chancellor largely left Merz in the political wilderness.
He used the time to build a small fortune in business, notably at the German unit of multinational investment firm BlackRock. Merz, whose notoriously hot temper has reputedly mellowed slightly with age, has vowed to pull Germany out of a deep economic slump while taking a harder line on defence, Russia and migration.
But because Merz’s centre-right CDU/CSU alliance, assuming it comes in first, has little chance of winning an absolute majority, its choice of coalition partner will inevitably water down his economic reform plans. All major parties have ruled out cooperating with the far right.
“Germany’s current economic model, in which the supply of cheap fossil fuels and the production of cars with combustion engines play a central role, seems outdated – but politicians rarely dare to say this openly,” said Kai Arzheimer, a political scientist at the University of Mainz. “I’m at least sceptical that there will be a genuine fresh start in the near future.”
(source: theguardian.com)
TANIKO Madagascar 