Pressure on Berlin French finance minister: We need a European empire

European unity should be more than just a photo opportunity, France’s Finance Minister Bruno Le Maire said in an exclusive interview. But while France is more than willing, Germany remains reluctant.
Not going beyond holding hands.

It is all very well to express European unity during memorials for the fallen in past world wars. But genuine unity – political, financial and military – is still lacking inside the European Union, according to France's Finance Minister Bruno Le Maire. In an exclusive interview with Handelsblatt, he indicates that Paris is more than willing for more Europe and the ball is now in Berlin’s court.

The European Union should become “a peaceful empire” in order to stand up to China and the US, Le Maire argued. And although thanks to their wartime history, some Germans may find his talk of empire unattractive, Le Maire explains that, “I am using this phrase because, in tomorrow’s world, it’s going to be all about power ... technological power, economic, financial, monetary, cultural power – all will be decisive. Europe cannot be shy any longer about using its power.”

Le Maire won’t go as far as to say that German politicians have been two-faced about European unity. But he did set a small deadline: “We have talked about it for a long time. Now it’s time for decisions. And there will be decisions made on December 4, at the next meeting of the economy and finance ministers. I cannot imagine anything else.”

“Everybody knows it takes guts to stand in the way of Donald Trump’s administration,” Le Maire said. “The people of Europe have had enough of the babble from Brussels. They want to see action.”

Quelle: Bloomberg
Bruno Le Maire, getting pushy with the Germans.

America first, China second

One of the most striking recent examples where European power proved lacking was with the latest US sanctions on Iran. Despite promises to shield German and other European companies doing business in Iran and keep the so-called Iran deal from completely disintegrating, the EU has been unable to do much.

“We are withdrawing the Iranian banks from our network,” confirmed Gottfried Leibbrandt, CEO of Swift, the international payment network based in Belgium; he was speaking at the French-German Business Forum in Paris over the weekend. “Not all of them, but nearly all.”

This makes it very difficult for European companies to trade with Iranian counterparts. To resolve this Le Maire said Europe would push ahead with a Special Purpose Vehicle, a financial institution that allows European companies to trade with Iran, while protecting them from US sanctions. But this was about much more than Iran, he insisted: Europe could not have the US deciding where European companies could do business.

Geoffrey Roux de Bezieux, the chairman of MEDEF, a major French network of entrepreneurs in France, bemoaned the fact that the German government was not providing any solid answers to pro-European suggestions such as those advocated by Le Maire. China wanted to enter the EU market but made sure to protect itself and the US was also becoming more protectionist, he said. The EU needed to be stronger too.

Le Maire also agreed with American criticisms that Europe was “too timid” in defending itself against Chinese acquisition of its technology. Europe must cooperate with the United States to rein in Beijing’s trade policies, the minister said. Asymmetric market access, intellectual property abuses and state subsidies were particularly worrying, he said. Stricter regulations to examine foreign takeovers of European companies were an option to better protect domestic technologies, Le Maire said. A decision on such rules would come by December, he added.

Google tax

A so-called “digital tax” was another example where Europe should show unity to defend its sovereign powers. The measure, heavily supported by the European Commission and the French government, would tax the revenues of large digital companies. “Is it normal, when multinational companies use personal data and earn money without paying taxes? Why should value creation by using data be exempt from taxes whereas every backer and every small and medium-sized business pays them?” Le Maire said.

Sometimes called the “GAFA tax,” because of its impact on Google, Apple, Facebook and Amazon, the 3-percent levy has drawn lukewarm support from the German government and been opposed by German business groups. German Finance Minister Olaf Scholz also has his doubts, but he is open to supporting a digital sales tax starting in 2021, if industrialized countries cannot agree on a global, minimum corporate tax rate.

Strengthening the euro zone was another priority on Le Maire’s list to establish Europe as a global power. “If a new financial and economic crisis would erupt tomorrow and affect Europe, the euro zone would not be able to respond adequately,” he said. Establishing a common euro zone budget, which would support euro countries in times of crisis, is crucial to this, Le Maire said. “A euro zone budget is part of it because it would better align the economies and bring countries out of a crisis faster.”

But here, too, Germany has been dragging its feet, fearing a transfer of payments to economically weaker euro zone countries. A euro-zone unemployment insurance fund, proposed by Scholz, was quickly shot down by Economics Minister Peter Altmaier last month.

Without Germany’s support in all these issues, Le Maire will find it difficult to turn Europe into an “empire.” Franco-German agreement has been the engine of European integration and without it the continent is more impotent than powerful.

Thomas Hanke is Handelsblatt's correspondent in Paris and Tanja Kuchenbecker is a correspondent for Handelsblatt in France. This story was adapted in English for Handelsblatt Global. To contact the author: [email protected], [email protected]