By Lili Bayer
At Geopolitical Futures, we have discussed extensively the fragmentation and weakening of the European Union. We have written about the goals of the eurozone’s largest economy, Germany, and about the serious challenges facing economies in the south, particularly Italy. But the most important relationship that underpins the European Union and shapes the continent’s future is the one between France and Germany.
On the surface, the Franco-German alliance is regarded as stable and has persisted for over half a century. However, the balance of power between France and Germany has not been static since West German Chancellor Konrad Adenauer and French President Charles de Gaulle began shaping their countries’ post-war alliance. The fall of the Soviet Union and diverging economic models have strained the relationship. As the European Union weakens under the pressure of economic and migration issues, German and French interests are growing even further apart, threatening to undermine the basis of their partnership. The deteriorating alliance between the two countries will play a significant role in further undermining the cohesion of Europe.
Diverging Economic Models
Over the past several decades, France and Germany have independently developed distinct and divergent economic models. As a result, the two countries have had different — and at times clashing — economic priorities. Germany has an export-based economic model that relies heavily on the country’s manufacturing sector. In 2014, Germany exported 45.7 percent of the goods and services it produced, according to the World Bank. Germany is the largest economy in the eurozone and enjoys low unemployment rates. The country’s debt levels are relatively low: according to the European Commission, gross public debt equaled about 71.6 percent of GDP last year, compared to a eurozone average of 93.5 percent. The country’s dependency on exports, however, makes it vulnerable to external shocks. China’s slowdown and the global exporting crisis are already being felt in Germany, as export and import levels have both fallen. The German economic model, however, is most dependent on continued access to eurozone markets: about a third of German exports went to eurozone countries in 2014. Germany benefits greatly from the single currency because eurozone members cannot devalue their currencies to make German exports less competitive.
France’s economic model is much less dependent on exports. According to the World Bank, in 2014, the country’s exports equaled only 28.7 percent of GDP, meaning that France’s economy is nearly half as dependent on exports as the German economy. In fact, U.N. Comtrade data shows that France’s trade deficit with Germany — its largest trading partner — was over $19 billion in 2014. France is also more indebted than Germany, with Eurostat data showing that gross public debt is the equivalent of 96.2 percent of GDP. At the same time, France is suffering from economic malaise. According to Eurostat, unemployment in France in 2015 was about 10.5 percent, compared to merely 4.8 percent in Germany. While the current government has introduced some reforms, France’s employers are still facing rigid labor regulations, and red tape remains a challenge for the business community.
France and Germany’s diverging economic models and challenges translate into distinct policy priorities when it comes to both fiscal and monetary issues. As a result, the two countries have different interests when it comes the eurozone, and these diverging approaches are undermining their partnership. Since the onset of Europe’s economic crisis, France has been forced to cut billions of dollars worth of spending in order to comply with European fiscal regulations. Decision-makers in Paris repeatedly clashed with Berlin and Brussels over austerity measures and budget deficit levels, leading French Prime Minister Manuel Valls to publicly warn the EU in 2014 to “be careful how you talk to the countries in the south, and be careful how you to talk to France.” Right now, France, along with some other eurozone countries, is vying for more budget flexibility, arguing that it must boost security spending. This is causing friction with Germany, which is the main proponent of fiscal responsibility among EU members. On the one hand, the German and French economies are heavily interlinked. On the other hand, divergent economic structures and problems are leading to significant policy disagreements. As the European Union’s fragmentation deepens, these differences will only become sharper.
Historical Significance of the Alliance
France has always had a complex rivalry with the other dominant powers on the European continent. In the 17th and 18th centuries, one of France’s chief rivals was the Habsburgs. Following the rise of Prussia and, in 1871, the unification of Germany, it was Germany that became France’s primary rival and security concern. The end of World War II changed this dynamic.
At the time, an economically devastated, recently liberated France had three objectives when it came to Germany. First, Paris aimed to keep Germany permanently weak, so it would not pose a security threat to France once again. The division of Germany into four occupation zones following the war, and the creation in 1949 of the Federal Republic of Germany (West Germany), thus benefited France. Nevertheless, France’s second goal was to ensure Germany’s economic recovery, since French policy-makers understood that this was necessary in order for Europe to also recover. Third, France feared that Soviet influence may reach its borders, and thus maintaining West Germany’s ties with Western powers became a priority.
West Germany’s three primary aims in the early post-war years were promoting economic reconstruction and development, becoming a fully sovereign, internationally-accepted entity and limiting the Soviet threat. West German strategists saw a strong alliance with France, as well as with the U.S. and NATO, as useful tactics for achieving economic growth, international acceptance and a way to deter the Soviets.
Both France and West Germany regarded European integration projects as a tool for achieving these goals, but for very different reasons. The first step towards European integration was the European Coal and Steel Community (ECSC), a project proposed in 1950 that put the coal and steel sectors under the direction of a joint body called the High Authority. As historian Tony Judt pointed out, with the return of Alsace-Lorraine to France after World War I, the country’s steel industry doubled in size. Nevertheless, it was still dependent on coke and coal imports from German territory. The ECSC was a largely geopolitical maneuver for France to ensure that Germany did not have exclusive control over its vital resources. As French Foreign Minister Robert Schuman wrote in his proposal for the ECSC, pooling coal and steel production would make war between France and Germany “not merely unthinkable, but materially impossible.” Despite the loss of exclusive control over coal resources, participation in this early project for Germany was mainly an effort to become a stronger Western ally and to win a place as a recognized international player.
More efforts to promote European integration on the economic front followed and both France and Germany used the process to pursue their strategic goals. When the Rome Treaty was signed in 1957, the European Economic Community (EEC) was formed and its Council of Ministers approved proposals based on majority voting. In 1966, however, under strong pressure from France, this was amended, and the EEC moved to a system whereby ministers of all countries had to reach a unanimous agreement in order for proposals to pass. This move laid the groundwork for the paralysis in European Union decision-making that we are seeing today, as individual countries threaten to veto key initiatives. For France, pushing for veto power in the EEC highlighted its need to undermine potential domination of European institutions by other powers. In the early years of the French-German alliance, therefore, France was a dynamic force working effectively to shape integration initiatives to suit its own strategic goals.
With the fall of the Soviet Union, the relationship between France and Germany once again changed. The alliance that emerged in the 1950s was not a partnership between Paris and Berlin, but rather between Paris and Bonn. The reunification of Germany transformed the basic tenants of the alliance. With the collapse of the Soviet Union, one of the chief motivators compelling French-German relations forward — and driving Bonn’s decision to pursue Western integration — was gone. By the 1990s, Germany had already achieved its goal of becoming a recognized and accepted international player. Of course, this does not mean that French and German decision-makers no longer saw the value in the alliance, but simply that some of the underlying geopolitical imperatives for the partnership were no longer relevant for strategists on both sides.
Moreover, for the first time since World War II, France faced a strong, united power in the middle of Europe. The reunification of Germany meant that Paris’ post-war goal of maintaining a politically weak Germany would be nearly impossible to achieve. At the same time, the end of the Cold War heralded an era where the economic, rather than security, element of the French-German relationship came to the fore. These economic interests remain the primary focus of their alliance today, and the main point of conflict.
When presenting a bipartisan report on the erosion of France’s influence in Brussels earlier this month, Pierre Lequiller, a French member of parliament, underlined that “the other capitals do not trust France’s economic and budgetary position.” The report’s co-author, member of parliament Christophe Caresche, went as far as publicly saying, “the quality of debate between France and Germany is severely degraded.” France is a formidable military power and the second largest economy in the eurozone, but there is a growing understanding among decision-makers that France’s position in Europe is shifting. This ongoing transformation is in large part a result of the country’s declining relationship with Germany, which wants to see a stronger and more cohesive EU for the sake of its own economic interests. Although the French-German alliance will likely persevere in the long run, it will take on a much weaker form and this will ultimately intensify Europe’s fragmentation.