A Deep Frost in Franco-German Relations

Until Elections Do Us Part

By SPIEGEL

Progress in the European Union is stalled at the moment because France and Germany can't get along. Paris is hoping for a change of government in Berlin after elections this fall, but even that would do little to bridge growing differences between the countries.

The ambassadors who gathered in the library of the German Foreign Ministry the Thursday before last knew the situation was unusually serious. These diplomats are accustomed to seeing images of Chancellor Angela Merkel with a Hitler mustache drawn on her face, hearing vitriolic tirades about Germany's enforcement of austerity policies in Europe and experiencing tense diplomatic talks. For some time now, German diplomats have watched anti-German sentiment increase dramatically in many countries in the European Union.

Under these circumstances, the ambassadors who converged at the Foreign Ministry certainly didn't expect the meeting to be any kind of laid-back reunion, but what they encountered still caught them by surprise. Nikolaus Meyer-Landrut, Merkel's EU policy advisor, gave the diplomats an unvarnished picture of the Chancellery's concerns that matters may not improve any time soon. Merkel's advisor left the diplomats with a clear impression that the German government has given up hope of any appreciable progress in European policy before Germany's federal elections this September.

Officials in the Chancellery consider the culprit here to be neighboring France, the country that is meant to function together with Germany as the motor driving the EU as a whole. Paris, Meyer-Landrut said, isn't interested in reaching agreements with Germany on fundamental questions before September. The meaning behind his words was clear -- French President François Hollande is counting on the German elections putting a new government in place in Berlin, one he hopes will be more willing to compromise. Hollande no longer expects anything from the current German government.

Relations Worse than Pessimists Predicted

A year into Hollande's term, Franco-German relations are even worse than pessimists in both countries predicted. Berlin and Paris are at odds on almost every issue when it comes to tackling the current crisis, disagreeing on everything from a banking union to a bailout for Cyprus to eurobonds. It's common knowledge that nothing happens in the EU without these two neighbors agreeing on a course of action, yet they continue to block one another.

The issues at stake are not trivial ones. At the core of the Franco-German conflict is no less a matter than the question of how Europe can shake off the current crisis. Merkel is convinced this can only be achieved by implementing reforms -- austerity, liberalization of the labor market and restructuring of social welfare systems.

But Hollande is unwilling to let Germany impose its model on France. He fears the European recession will only worsen if Berlin succeeds in implementing its austerity plans. Since Hollande announced in March that France must reduce government spending, the faction within his party pushing for confrontation with Germany has gained traction.

Hollande believes his viewpoint is gaining traction around Europe to the point that Germany will eventually be under such pressure, it will no longer have any alternative to making concessions. He sees proof in an about-turn on the part of European Commission President José Manuel Barroso, who stated last week that although he believes the austerity polices are fundamentally correct, he also thinks they have reached their limits.

The political differences between Berlin and Paris are further exacerbated by personal antipathies. Chancellor Merkel and President Hollande have never warmed to one another. That in itself isn't necessarily a problem, since politicians can work together well without becoming instant friends. Helmut Kohl and François Mitterrand found common ground only with great effort, and Merkel's relationship with Hollande's conservative predecessor Nicolas Sarkozy got off to a rocky start as well. But at this point the mutual trust that once existed between France and Germany has been lost, and the chemistry between Merkel and Hollande is so poor that the two risk causing serious harm to the EU as a whole.

Willful Obstinacy

Some of this comes across as willful obstinacy. Hollande, for example, still hasn't forgiven the German chancellor for her failure to receive him in Berlin during his electoral campaign. He also makes no bones about how little connects him and Merkel.

Relations seemed to reach a nadir late last week after a draft policy paper introduced within Hollande's leftist Socialist Party got leaked to the French daily Le Monde. The paper threatened a "showdown" with the "chancellor of austerity" and derided Merkel's "selfish intransigence," saying her policy positions exclusively serve "the savings of depositors in Germany, the trade balance recorded in Berlin and her electoral future." The paper, drafted for a party conference on Europe in June, created a furor in France and Germany over the weekend. Bowing to pressure from the government in Paris, the Socialists apparently removed the most strongly worded and "stigmatizing" language ahead of the conference.

Even though the paper may reflect the president's privately held opinions, it was not clear whether he was aware of the exact wording in advance. The French satirical newspaper Le Canard Enchainéreported on Monday that one of Hollande's personal advisors had given the green light in advance, but when the attacks on Merkel caused a stir, Prime Minister Jean-Marc Ayrault sent out conciliatory tweets in German. On Wednesday, asked during a press conference with Italian Prime Minister Enrico Letta if he had been aware of the text, he responded by saying he was not the party leader and that the "text didn't need to incriminate a European leader to make a point."

Merkel, meanwhile, makes little effort to extend personal courtesies to her French counterpart. Two weeks ago, she invited euroskeptic British Prime Minister David Cameron and his family for an intimate tête-à-tête at her guest residence in Meseberg, northwest of Berlin. If Hollande had been hoping to receive a similar gesture of friendship, then his wait so far has been in vain.

Leaders Give Up on Franco-German Project

It seems both leaders have given up on the Franco-German project for the time being. The chancellor is frustrated that she is no longer able to influence French policy. Her suggestions found a willing listener in Sarkozy, but with Hollande they fall on deaf ears. Merkel is also annoyed with the constant calls for greater solidarity. From a German perspective, this amounts primarily to demands for more money -- from Berlin's coffers.

German Finance Minister Wolfgang Schäuble of Merkel's center-right Christian Democratic Union (CDU) is similarly dissatisfied with the discord between Berlin and Paris. At a meeting between CDU parliamentary representatives and their counterparts from the conservative French party Union for a Popular Movement (UMP), held at the Konrad Adenauer Foundation a few days ago, Schäuble acknowledged he has considerable differences of opinion with his French counterpart Pierre Moscovici.

Germany blames Paris for Europe's standstill, seeing France's lack of willingness to undertake reforms as the issue at the core of the euro crisis. Officials at the Chancellery believe France must implement fundamental reforms along the lines of those Germany undertook with former Chancellor Gerhard Schröder's Agenda 2010 program -- which made painful cuts to longterm unemployment benefits and reduced unit labor costs among other things to make the country more competitive -- and that there is not much time left to do so.

Germany and France initially wanted to use this period of relative calm in the euro crisis to advance important reforms, and to take an important step toward a common economic and monetary policy at the EU summit this June. Now it's unlikely they will manage even a tiny step.

Bickering over Money

The two nations' disputes always seem to be about money. It was Germany that last year suggested pooling funds within the euro zone through a special joint euro-zone budget, but now the country has given up on the idea again. Merkel had used the initiative in an effort to prevent a renewed discussion about eurobonds at the time. The chancellor initially proposed a figure in the low billions that would go to support, for example, universities in highly indebted euro zone countries. She saw this as a sign of solidarity.

But the idea didn't go far enough for France and the Southern European members of the monetary union, who would prefer a euro-zone budget of over €100 billion that would also fund economic stimulus programs. This counterproposal only served to reinforce Germany's preconceptions about the French. The proposed project won't play a role at the summit this June.

A proposed banking union, which France has pushed for, is likewise failing to move forward. Berlin insists such a union would require amendments to EU treaties, a step Paris opposes. German Finance Minister Schäuble has based Germany's position on the new functions the euro zone states want to transfer to the European Central Bank (ECB). If the ECB takes over responsibility for regulating banks, Schäuble argues, shifting that authority from a national to a European level should be backed up legally by a treaty. Otherwise, national courts -- especially the German Constitutional Court -- could overturn the new rules. France and other countries want to avoid amending the treaties, a burdensome process they say would take too much time.

Nor is the debate concerning eurobonds over. France favors these joint government bonds, for which all euro zone members would share liability, but Germany strongly opposes the idea.

A Tense Fued

At the German Savings Banks Conference last Thursday, Merkel brought up another source of tension within the euro zone, describing the predicament the ECB faces. "When it comes to Germany, most likely the best course of action would be for the ECB to raise interest rates somewhat," the chancellor said, referring to her country's comparatively robust economy. At the same time, she explained, the ECB needs to make more liquidity available for countries that are not doing as well -- in other words, it needs to lower interest rates.

What many people took as interference in the ECB's autonomy actually serves to describe precisely the European dilemma as a whole -- the euro zone is divided not only on the question of what approach to take in tackling the crisis, but also in terms of each country's economic situation.

At this point relations between Berlin and Paris are so tensethat anything has the potential to turn into another battlefield in the feud. A joint Franco-German exhibition of German art currently being staged at the Louvre, for example, met with criticism in German newspapers, which accused the exhibition of reviving old anti-German clichés. Meanwhile, the German government fails to understand one of the steps France wants to take to fight its debt crisis: the closure of its symbolically important and long-standing cultural center in Berlin, the Maison de France.

France's sensitivity also has to do with its continuing weak economy, which is damaging its self-image as an important nation. Additionally, many in France believe that Germany, with its high trade surpluses, is not only benefiting from the crisis, but in fact bears some of the responsibility for it. And France isn't willing to take orders from the same entity that landed it in this situation.

The French government also suspects Germany of taking secret pleasure in its neighbor's current weakness. Leaders in Paris expected Merkel to vigorously refute any talk within her coalition of France as a crisis case, but the chancellor has kept quiet.

France fosters an image of Germany as the bad guy that is only interested in obtaining advantages for itself. "To do politics, you need an enemy, and if that enemy is Germany, that doesn't bother me,"Le Monde quoted one leading member of the country's Socialist party as saying.

Demonstrative Disinterest

Meanwhile, France has started showing demonstrative disinterest in European matters. Hollande sent only a low-ranking official without the authority to make decisions to a meeting of negotiators representing euro-zone country leaders last Thursday, an event that ended without results.

Participants in that gathering did little more than express previously established positions. The German representatives refused to discuss the possibility of more money for the countries in crisis. "They had euro signs in their eyes," one participant complained afterward. It was clear to all involved where France's sympathies lay.

Hollande hopes Germany's upcoming elections will bring about a new government that will be more open to his suggestions. Paris knows an electoral victory for a coalition of Germany's Social Democratic Party (SPD) and Green Party is unlikely as things stand now, but believes a grand coalition of the center-left SPD and center-right CDU would be beneficial for France.

There France may be mistaken. Yes, the SPD might well take a friendlier approach toward Paris. Frank-Walter Steinmeier, the party's parliamentary group leader, has said it isn't good "to keep speaking in catchphrases, saying what deadbeats the French are." The Social Democrats are also unlikely to push for austerity as fiercely as the current government has.

At its heart, though, the SPD's position on these issues differs little from Merkel's. When the crisis hit Cyprus, it was primarily Germany's Social Democrats who warned against using German funds to help Russian oligarchs. Similarly, eurobonds as Hollande envisions them will find few supporters among SPD leaders. The SPD also considers reforms in France inevitable, just as Merkel does. "France is in the same situation we faced in 2001," Steinmeier believes.

Hollande will have a chance to find out personally what issues separate German Social Democrats from French Socialists when he speaks at the SPD's 150th anniversary celebration in Leipzig on May 23. Hollande also may find he doesn't enjoy the company at the podium so much -- he's scheduled to appear side by side with Merkel.