Germany has just constituted its new government at a time when France, which inherits the European Union presidency, is going to enter into its electoral campaign. During that, the sanitary crisis doesn’t know any rest but the economy is giving rebound signs much more significant, notably in France, than it was expected and dreaded a year ago. There are, without any doubts, the supporting measures decided to cope with the consequences of the pandemic which have been adopted at the European level and in every country, which are at the origin of these results. The coordination of the decisions of the Members-States and the euro existence have plaid a decisive role. That has secured the financial stability and has allowed, thanks to the European Central Bank action, to giving to these support plans exceptional financing conditions.
Each achieved step in the European project accomplishment has been the fruit of the strong cooperation between France and Germany. It was a necessary condition, if not an enough one, of the euro creation. That cooperation has allowed the solving of the two major financial crises which had affected the world economy in 2007-2008 and the euro-zone countries in 2012. During the sanitary crisis, budget rules have been suspended and a rebound plan dedicated to support employment and enterprises, and whose financing has been shared, has been approved, then again, thanks to the common support of France and Germany. So, the new political context, created by the last German elections and which could be affected by the coming electoral agenda in France, will be determining regarding the next steps of the European project to be defined and approved.
The new German government has been constituted thanks to an unprecedented coalition between social-democrats, liberals and ecologists. Its program wants to be the reflection of “the diversity of the German society”, according to the agreement terms, which results from a “diversified and modern” immigration and also from the reunification between the West and the East. The internal unity remains to be achieved because it still carries the deep differences which were reigning in the two States political and social systems thirty years ago. But that has not impeached Berlin to give itself as an objective to go to a European federal State.
In France, the debate is still acute between on one side the populist parties, from the right as from the left, which propose the come back to a national sovereignty and which openly condemn the euro, made responsible of the deficits and the unemployment, and facing them, the traditional parties which affirm themselves as deeply pro-Europeans. To the difference of the 2017 election, the risk that the extremists win is very low if we believe polls opinions but as for any election, uncertainness will prevails until the results. The French presidency of the European Union, in this context, will meet a lot of obstacles to accomplish some significant advances and even to be at the origin of new projects, when real disagreements are unavoidable with the German coalition government, disagreements it will sooner or later needed to solve.
The first one is about the reform of the Financial Stability Pact. It has been shelved to answer the sanitary crisis requirements. But Berlin has already announced that it expected that new rules had to be fixed to come into application in 2023. The comeback to a 60% of GDP indebtedness level at that date and even in some years from now is quite unrealistic regarding France which will carry at the end of this year a near 114% level. But the rhythm of the reduction of the budget deficits will necessarily be part of the debate and the two countries will have a lot of difficulties to find an agreement, without which the update of the common rules in the euro zone and their adoption by the State-members are impossible.
The ecologic transition and the considerations about the European energy policy, included in the coalition program also include important factors of divergence. To the difference of the budget rules, whose application is spread during some time, the European regulation France is asking for its reform, has an immediate impact on household and enterprises natural gas and electricity bills. The German energy policy has been a failure. The abandon of nuclear power has generated, as a consequence, a higher recourse to coal and to Russian natural gas, which in the same time increase greenhouse gas emissions and geopolitical tensions as the current debate about North Stream 2 shows it. The announcement, inscribed in the program of the coalition to bring forward the exit from coal “ideally” in 2030 is not credible and is a testimony of the disagreements between the parties. Regarding renewable, their inability to satisfy demand has been proved this autumn.
Their intermittent character has provoked, along with an increased recourse to fossil fuels, a high increase of power prices which has affected the neighboring countries. Their development encounters with a strong local opposition to the construction of new high-voltage lines which are necessary to furnish the southern regions which are highly power consuming when wind farms are implanted in the Northern regions. But Brussels, under Berlin pressure, and that would not change in the coming months, continues to reject any reform of the power pricing regulation which is unfavorable to France. It also refuses the inscription of nuclear power among the investments which can benefit from the Green Plan, which would allow to offering favorable financing conditions. So disagreements between Paris and Berlin there too are able to create tensions at the European level.
Immigration and the entrance rules in Europe will also be the purpose of tough discussions. That issue will have an important place in the two French electoral campaigns, the presidential one and the legislative which will follow it. The two countries have very divergent positions. The new German government has made of it a major issue in its program and considers that the country needs more immigration and that it has succeeded in the integration of these who arrived into the country. In France, it is the opposite. Even if the proposals of the populist candidates will not be followed by the next French leaders, these ones cannot ignore the place that issue has occupied in the debate and the general public opinion feeling, which means that, as the exact opposite of the German demands, France will look for, in Brussels, a toughening of the Schengen rules and increased restrictions on foreign workers arrival on its territory.
The major contribution the decisions taken at the European level have brought to lessen the economic consequences of the sanitary crisis, as the creation of the euro which has allowed that a financial crisis has not been added to it, would ideally reinforce the support of the people to the European project and allow to go through new steps. But the reform of the financial stability rules, the adoption of a new energy policy and the dispositions regarding immigration, and the list is not an exhaustive one, form many substantial diverging points between Paris and Berlin which are able to block these progresses.
So we must hope that the German political leaders who have proved they have a large ability to flexibility when the purpose was to form a large coalition, will know to showing the same pragmatism and shrewdness when they will have to solve these essential issues which are directly concerning all the Europeans.
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