France-Germany The New French Connection

The relationship between Angela Merkel and Francois Hollande got off to a rocky start. But the German and French political leaders have gradually reached a better understanding, restoring a sense of order and direction to the core of continental Europe.
Angie and Francois, friends at last.

Paris had seemed a significant choice.

When Greek’s new rock star finance minister, Yanis Varoufakis, chose the French capital for the first pit-stop on his whirlwind European tour last week, he may have hoped for more than a sympathetic ear for his leftist government's crusade to cut Greece’s debt and end punishing austerity.

After all, only a few years ago, French President Francois Hollande had seemed poised to become the European standard bearer for those who opposed austerity and Germany’s dominance in the euro crisis.

Yet, last week, while French government officials said they would support Greece in its attempts to get a better bailout deal, Mr. Varoufakis was told there was no way Paris would actually back a debt writedown.

And despite his warm reception of the Greek prime minister, Alexis Tsipras, the day before, Mr. Hollande minced no words on Thursday, saying that the European Central Bank’s decision to cut off Greek banks' access to funding in exchange for government bonds was "legitimate.”

“The French reaction to the Greek visitors was amazingly cautious,” said Jörg Haas, an economics expert at the Berlin office of the Jacques Delors Institute. It was clear, he said, that “France has no interest in a debt write off.”

In fact, after Mr. Varoufakis’ visit, his French counterpart, Michel Sapin, warned Greece against trying to drive a wedge between Paris against Berlin.

“There is no point in playing euro zone countries against each other, and especially not France and Germany” Mr. Sapin said. Any solution for Greece would “have to go through an agreement between France and Germany.”

It’s a sign that, while relations between Paris and Berlin certainly became frostier after Mr. Hollande’s election in 2012, and his center-left Parti Socialiste’s subsequent parliamentary victory, the French president has found a measure of common ground with Berlin these days.

That was also apparent by the fact that the two countries are combining efforts to find a joint solution to the conflict in Ukraine. On Friday, Ms. Merkel and Mr. Hollande travelled to Kiev and Moscow to try to broker a peace deal.

That trip followed similar visits to the region by the German foreign minister, Frank-Walter Steinmeier, and his French counterpart, Laurent Fabius.

The Germans are very interested in keeping the French on board. Olaf Boehnke, European Council on Foreign Relations

The countries are part of the so-called “Normandy Quartet,” along with Ukraine and Russia, which came together on the fringe of the 70th anniversary celebrations of the D-Day World War II landings last year.

“The Germans are very interested in keeping the French on board,” said Olaf Boehnke, head of the Berlin office of the European Council on Foreign Relations.

“Usually you had the French taking care of the Mediterranean and the Germans Eastern Europe, but that is too one-sided,” Mr. Boehnke said. He added that there is now a tacit agreement between Paris and Berlin that they will jointly address issues in their respective backyards.

“The Germans and the French know they have to work together; both sides have reached this conclusion,” said Céline-Agathe Caro, an analyst with the Konrad Adenauer Stiftung, a foundation with links to Ms. Merkel’s Christian Democrats.

Ms. Caro, a French national, said cooperation behind the scenes continued even when official relations between the two countries seemed to become frosty, through private contacts and exchanges of officials and ministers.

“Of course Germany and France are different countries and they don’t see everything in the same way,” she said. "But that is the same between all partners, and the French and Germans speak to each other openly.”




The Franco-German partnership that for decades has been at the heart of the Europe seemed to grow severely strained over recent years.

The alliance had allowed post-war Germany to come back into the international fold after its Nazi crimes and occupation of much of Europe.

In that post-war logic, France would take the lead politically while Germany was happy to be the economic backbone of a common market that became the European Union.


However, ever since German reunification in 1990, the relationship grew imbalanced. A bigger, more economically powerful Germany recovered from being “sick man of Europe,” amid the labor and welfare reforms spearheaded in the 2000s by former Chancellor Gerhard Schröder.

The country's export-lead economy surged ahead, helped by a stable euro and growing Asian demand for German cars, chemicals and machinery.

Paris had to stand by as Germany flexed its muscles, lead by the hugely popular Ms. Merkel, who has overseen growth and record low unemployment.

France has not been able to keep pace with the German juggernaut, and Ms. Merkel’s increasing political power in Europe wielded at the height of the euro crisis only seemed to further solidify Germany’s dominance.

Relations deteriorated after Ms. Merkel openly supported Mr. Hollande’s opponent, the center-right former president, Nicolas Sarkozy, in the 2012 election. In turn, Mr. Hollande’s campaign was vociferously anti-Merkel.

He pledged to lead the charge against austerity and for a pro-spending growth strategy, and said he would renegotiate the fiscal treaty, the agreement pushed through by Ms. Merkel to enforce rigid budgetary discipline on other countries in the euro currency.

Unemployment Rate-01


For Germany, its new-found position at the helm of Europe has been uncomfortable, and the country grew deeply unpopular in euro periphery countries, despite being the biggest contributor to the bailouts that helped stave off the collapse of the common currency.

But fears of German “hegemony” seem to have lost currency after the European Central Bank last month ignored German opposition to and moved ahead with plans to begin massive purchases of sovereign and private bonds.

France’s president has since also backed off of his strong anti-austerity -- and implicitly anti-German -- stance, narrowing his distance to Ms. Merkel.

“One can see that Hollande's rhetoric has changed a lot, and it is much closer to Germany’s, which also reflects realism,"said Mr. Haas. "He has seen that everything cannot happen that he promised in his election campaign.”

“Mr. Hollande was expected at the beginning to take up this fight against Merkel and Germany, but he never delivered on the home front,” argued Mr. Boehnke.

After a disappointing first few years in office and major losses for his party in regional elections last March, Mr. Hollande made a U-turn, appointing a more centrist government under Prime Minister Manuel Valls.

A new economics minister, 37-year-old Emmanuel Macron, has embarked on a program of reforms, opposed vehemently by left-wingers in his party.

In October the government presented a plan to cut €50 billion in public spending over the next three years -- music to German ears.

A reform bill, which is making its way through the French parliament, will also liberalize the legal profession and allow more shops to open on Sundays, a move opposed by trade unions.

The controversial 75 percent “super tax” on the very rich, which famously caused actor Gerard Depardieu to decamp to Moscow, is also being dumped.

“France knows it has to implement reforms,” Ms. Caro said. “It is not easy, however. France needs time but something is being done.”

At a meeting between the German and French finance and economy ministers in Berlin late last year, Mr. Macron said the Franco-German relationship had suffered from “insufficient reforms on our side for the last 20 years.”

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At the same time, France has been given some leeway to find a path back to growth. Last year, for example, Paris said it wouldn’t reach the E.U. limit of 3 percent for budget deficits until 2017 but would have a deficit of around 4 percent for the next few years.

While this did not go down well in Berlin or in Brussels, since France had already been granted several delays, Paris' draft budget for 2015 was not rejected by the European Commission.

Despite the frustrations, Mr. Hollande has successfully played off the threat posed by the country's surging right-wing populists, the Front National, to persuade France's neighbors to give the country some breathing space.

“There is always the background that one does not want to make life too difficult for Hollande, that France is in a process of reform and that punishing it could be counterproductive,” said Mr. Haas.

The Front National won 25 percent of the vote in European Parliament elections last May, while Mr. Hollande’s Parti Socialiste won just 14 percent.

With presidential elections set for 2017, there is a real danger that the Front National leader, Marine le Pen, could win the powerful French presidency. That could deal a death blow to the European project.

In interviews, Ms. Le Pen, the daughter of French nationalist Jean-Marie le Pen, has said she wants to take France out of the euro and has blamed Germany austerity for much of her country's economic plight.



Mr. Hollande has two years to turn things around to avert a transfer of power to Ms. Le Pen.

His deft handling of the Paris terror attacks last month saw his popularity start to climb, from 13 percent last year to 22 percent last week.

But further gains will be an uphill battle in France.

“Success breeds success, and that is the challenge for Hollande,” Ms. Caro said. “He has two years to reduce unemployment and create more growth, and that is what he will be judged on.”

There is already a glimmer of hope. On Sunday, Mr. Hollande's Socialists won a by-election for the parliamentary seat vacated by France's European commissioner, Pierre Moscovici. Significantly, in the second run-off round of the vote, the party beat the Front National's candidate. It was the first such win by the party since Mr. Hollande took power in 2012.

Siobhán Dowling is an editor with Handelsblatt Global Edition in Berlin and covers European politics. To contact the author: [email protected]