Parallel Universes in Paris and Berlin Is the Franco-German Axis Kaput?

The most recent European Union summit exposed deep differences between German Chancellor Angela Merkel and French President François Hollande. Berlin wants Brussels to be bestowed with greater power over national budgets and Paris is calling for an end to austerity. The dispute threatens to intensify the euro crisis.

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One of the age-old exercises in European politics is to transform even the most wonderful news into messages of discord. What is new is that the governments in Paris and Berlin are proving to be especially adept at this strange discipline.

It was last Thursday evening in the somber government building in Brussels. The leaders of the 27 European Union countries had just convened for a crisis summit when German Chancellor Angela Merkel surprised them with a novel proposal. What if everyone at the summit would fly to Oslo together in December to jointly accept the Nobel Peace Prize, as a sign of European unity?

The other European leaders' reactions were reserved. Italian Prime Minister Mario Monti said that it ought to be sufficient for the heads of the European Commission, European Council and European Parliament to make the trip. British Prime Minister David Cameron proposed sending a child from every member state to Oslo. Finally, though, the issue was decided when French President François Hollande rejected the idea of a joint trip altogether, when he said caustically: "I'm not an extra."

Europe's most powerful political team is unable to find a common denominator, from the question of who should be picking up prizes or, more tellingly, to the much broader issue of rescuing the euro. At the Brussels summit last week, Merkel and Hollande, after arguing for hours, agreed on a slim formulaic compromise on the banking union, while all other contentious issues remained unresolved.

Since the days of former German Chancellor Konrad Adenauer and former French President Charles de Gaulle, Germany and France have generally been run by politicians who placed more value on unity than their differences. The axis between former German Chancellor Helmut Schmidt and former French President Valéry d'Estaing axis proved to be just as resilient as the partnership between their successors, Helmut Kohl and Francois Mitterand.

Frosty Relations

Under Merkel and Hollande, however, the German-French partnership threatens to deteriorate into nothing but a façade. The two politicians, who hold the fate of the continent in their hands, greet each other politely with kisses on the cheek, and their respective public relations staffs extol their "professional" and "trusting" cooperation.

In truth, however, the relationship began on a cool note and has since slipped below the freezing point. Hollande doesn't want to forgive Merkel for having campaigned for his conservative opponent, former President Nicolas Sarkozy. Now the Chancellery suspects that Hollande is secretly planning a campaign for Merkel's challenger from the center-left Social Democratic Party (SPD), former Finance Minister Peer Steinbrück.

Mistrust shapes the relationship between Paris and Berlin, on issues ranging from future European bank regulation to the joint aerospace and defense group EADS and the future architecture of Europe. Hollande suspects that Berlin is using budget consolidation as an excuse to gain European dominance. Merkel notes with unease that Hollande is joining forces with Rome and Madrid to form a joint axis against Germany.

Last Monday, a joint interview with the French president at the Elysée Palace given to six European newspapers offered a sense of how deep the divide is. In the one-hour meeting, Hollande not only criticized German policies more sharply than he ever has before since taking office, but he also rebuffed Merkel's austerity course. "It is France's task to tirelessly tell our partners that there are alternatives to a policy of austerity," Hollande said.

His predecessor Sarkozy also had differences of opinion with Merkel. Nevertheless, the two leaders always managed to agree on a joint position prior to a summit. This has changed, with the two sides now intensifying rather than smoothing over their conflicts prior to meetings.

A Sour Note

When Hollande emerged from his car in front of the European Council building in Brussels on Thursday, he said venomously that Merkel is dragging her feet on European issues because, as everyone knows, she "has her own deadline, in September 2013," referring to the next federal election in Germany. Merkel had previously renewed her call in the German parliament, the Bundestag, for the EU's right to intervene in national budgets, an idea Paris decidedly rejects.

Then the two leaders met privately, hoping to find some common ground despite their differences. But it was clear to everyone who saw Merkel and Hollande marching from their conference room to the Council chamber that the meeting had ended on a sour note. The two politicians looked tense as they spoke with each other, talking so quickly that the interpreters could hardly keep up, with Merkel energetically shaking her head here and there. Only when they had reached the Council chamber did they suddenly put on smiles.

It's been going this way for months. They feign harmony in public, but in reality Merkel and Hollande are living in parallel universes. Their views of the world couldn't be more different.

Open Displeasure in Paris

In recent months, impatience with Germany has grown to open displeasure at the Elysée Palace. Hollande believes that the crisis can only be solved if Europe introduces shared liability for debts. His staff is constantly introducing new proposals that tend to differ in name only: euro bonds, euro bills, a debt repayment fund.

The French are also annoyed that Berlin is incessantly calling for strict budget controls while the continent slips into recession. Paris is critical of what it calls Germany's obsession with austerity, and it believes that cutting spending in a sagging economy is the wrong approach. "A fundamental discussion of this austerity policy is in the air throughout Europe," say officials at the Elysée.

Hollande accuses the Germans of having double standards. He argues that they are demanding a lot of other Europeans while unilaterally pursuing national interests, as was the case with aircraft maker EADS. The German-French group wanted to merge with the British defense contractor BAE, which would have created the world's largest aerospace company, but it would also have jeopardized jobs in Bavaria.

Hollande's supporters complain that Merkel vetoed the deal without explanation and without agreeing to new negotiations. They argue that by intervening, Merkel, who is always calling for more competitiveness and less government, is actually preventing the European defense industry from becoming more competitive.

Officials at Elysée Palance don't seem to understand their counterparts in the Chancellery and, conversely, Berlin is at odds with the new administration in Paris. The Germans had already lowered their expectations before Hollande came into office, and the relationship has steadily deteriorated since then.


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