Resistance is building up within Angela Merkel’s CDU party against Emmanuel Macron’s ideas for reforming the EU and the eurozone. Will the German chancellor be able to meet the French president at least halfway?
Which will be finished first: Europe’s post-Brexit reforms or Berlin’s rebuilt Prussian palace, rechristened the Humboldt Forum to not scare the neighbors? That was the thought on my mind as I watched German Chancellor Angela Merkel welcome French President Emmanuel Macron to the palace building site on Thursday to discuss Europe’s reform building site.
The Humboldt Forum is a €600 museum of world cultures, housed behind the historic facade of the kaiser’s palace, dynamited by the communists in 1950. It’s supposed to open next year but many Berliners are still in the dark about why it has been rebuilt at all. It’s a kind of field of dreams with Prussian eagles stuck on: if you build it, they will come.
So too Europe’s reform agenda, kicked off last September by Macron in a stirring speech at the Sorbonne in Paris. One of his dominant ideas is a radical integrationist push within the eurozone. Without a solidarity advance into the euro area from Europe’s prosperous countries, Macron argues, the continent’s unresolved problems can’t be solved and integration will come to a halt.
Seven months on, however, his ideas are evaporating.
Macron’s big ticket proposal – for a euro finance minister overseeing a common euro budget – has been knocked back by Berlin – and by northern European finance ministers. Undeterred, the French are pushing a eurozone investment budget and a crisis-era ESM bailout fund transformed into a permanent monetary fund.
The unofficial reaction in Berlin was cool while, for six months, Merkel kept Macron dangling as she fought an election then struggled to form a coalition. Now she is trying to meet him halfway, but even that could be wishful thinking if the MPs in her Christian Democratic Union (CDU) have their way.
Germany’s conservatives are traditionally allergic to any EU reform proposals that could be perceived as a shake-down of German taxpayers. It’s a prosperity chauvinism trap that has grown more dangerous since the euro crisis was framed here as a debt crisis caused by spendthrift countries.
Since then anything that looks like a “transfer union” is viewed with wariness and, in the CDU, the Macron reform proposals are perceived as one big, flashing “transfer union” sign.
Resistance among CDU MPs has only grown now that, in the Bundestag, they have the far-right Alternative für Deutschland (AfD) breathing down their necks, insisting that a euro budget would run contrary to German law. On the CDU right and into the AfD, Macron is viewed as some kind of sorcerer’s apprentice, using fancy rhetoric to hypnotize Germans and magic money out of their wallets to plug the holes in others’ budgets.
Squaring the Circle
Trapped between this German caution, even hostility, and Macron’s energetic ambition, is Angela Merkel. Trying to square this circle is the first challenge of her fourth term. But already it is looking like CDU 1 Macron 0.
Earlier this week, at a boisterous CDU parliamentary party meeting, Merkel earned applause when she made treaty change a pre-condition of a key Macron idea: transforming the ESM into a European monetary fund – a process that would take years.
Another neuralgic point for CDU MPs: a proposed common European deposit insurance. Germans are a nation of savers and fear being left to underwrite debts of more spendthrift eurozone countries. On Thursday Merkel said she backed the idea of common deposit insurance “not in the immediate, but the distant future”. Goodbye to that, so.
As Berlin picks apart Macron’s ideas one by one, it loads up the French president’s agenda with others. With Macron listening on Thursday, Merkel insisted the EU reform process must be broadened beyond economic and currency union to include a more coherent EU foreign policy and a joint EU asylum system. “We are bringing different solutions which, put together, will, I think lead to a good result,” she said.
Two days earlier, Macron had warned in the European parliament that the window of opportunity is closing to tackle the rising challenge of populism and nationalism in Europe. But in Berlin, conscious of CDU reform resistance, Macron started to use language more palatable to his host and her party. He called for greater EU “competitiveness” and euro reforms that balance solidarity among member states with countries’ self-responsibility.
The same balancing act, he said, would aid compromise in the banking union and sharing the asylum burden. “We need solidarity in a currency union, and cannot live without convergence between member states,” he said. “But it’s important not to talk about one instrument or another, what’s important is the political goal we want to achieve.”
He hasn’t given up yet but Macron realizes his hopes of Berlin backing his reforms faded with the departure of Martin Schulz. As leader of the center-left Social Democrats (SPD), Schulz was an enthusiastic Macron supporter who showed off in public about how often the two spoke by phone. But Schulz is now a backbencher and the most influential party figure now, SPD finance minister Olaf Scholz, is more equivocal on French reform proposals.
For Franco-German observers, the problem is over two capitals with contradictory approaches to the same goal: strengthening the EU and its shared currency. Paris hopes to restart the EU integration project with a show of solidarity, pushing ahead with a smaller group of willing eurozone allies. Berlin wants to tackle Europe’s competitiveness problem first and is determined to work with the entire EU, not just the euro or even smaller clubs.
After a series of invigorating and inspirational speeches, Macron has landed back in the inelegant political reality of European horse trading. But it remains to be seen if Angela Merkel is ready, willing, or able to tackle a German narrative of Europe, which knows the price of everything in EU but the value of nothing.
Like the Humboldt Forum in Berlin, an ambitious but unwieldy project of competing interests, Franco-German proposals for an EU reform agenda faces a central dilemma: how many concessions can a project withstand before it collapses into meaningless?