Eroding Franco-German Bonds Tensions Flare ahead of Merkel-Sarkozy Meeting

French President Nicolas Sarkozy is in Berlin on Friday for talks with Chancellor Merkel. And there is plenty to talk about. From the euro to North Africa and nuclear power, the list of differences between the two leaders is growing. Diplomats have sounded the alarm.

The Franco-German relationship has suffered this year.

The Franco-German relationship has suffered this year.

By in Berlin

French President Nicolas Sarkozy received German Chancellor Angela Merkel in Deauville with pronounced cordiality. Just before the G-8 summit was set to begin in the French seaside resort, the Frenchman took the German leader aside, and the two were photographed chatting amiably with each other. The appealing images went over well in German government circles. The message was clear: The recent friction in Franco-German relations was a thing of the past.

That was at the end of May.

Just a few weeks later, though, it seems as though the difficulties in the relationship aren't quite resolved after all. On Wednesday, just two days prior to Merkel's reception of the French president in Berlin on Friday, the French ambassador to Germany, Maurice Gourdault-Montagne, painted a gloomier picture of the current relationship. The timing was hardly a coincidence. Indeed, it was likely a message to the Chancellery.

Gourdault-Montagne told a small group of German journalists that France is concerned that Berlin pays too little attention to its ties with Paris. In particular, the country is unhappy about the relative paucity of one-on-one meetings between the French and German leaders -- fewer, Gourdault-Montagne pointedly said, than in the past under Merkel's predecessor Gerhard Schröder.

The ambassador specifically noted that Merkel's meeting with Sarkozy on Friday morning in Berlin is the first face-to-face meeting between the two leaders in seven months. It is widely known that Merkel and Sarkozy have very different personalities. The chancellor is reserved and cautious, while the president is impulsive and -- similar to former German Chancellor Gerhard Schröder -- often unpredictable. According to the ambassador, the two leaders are different "but each respects the other's national leadership skills."

The status report culminated with an appeal: "We need more Germany."

Sarkozy Wants Compromise on Aid for Greece

Particularly this month. There are, to be sure, several important issues on the agenda of the meeting at the Chancellery, but none is quite as important as the new aid package for Greece. Berlin is pushing hard for the participation of private lenders in any such package, but skepticism in Paris is significant -- and so far, no compromise has been reached.

European leaders are scheduled to meet in Brussels at the end of next week. Ahead of that meeting, however, it is becoming increasingly clear in Berlin that a quick agreement on Greece may not be in the offing. It cannot be ruled out that only the basic framework of an agreement will be reached before the summer parliamentary recess with a final decision having to wait until September.

The need for a second, significant bailout package for Greece is no longer a matter of debate. It has become clear that Athens will not be able to return to the international financial markets by 2012 as originally hoped and that it will likely need an additional €120 billion to keep it solvent until 2014.

The idea of a debt haircut, however, which would involve private investors renouncing portions of their claims, has not been well received in Paris. Some French banks hold significant amounts of Greek debt and the country's financial industry is concerned about the necessity of large write-downs. As if to underline such concerns, on Wednesday the ratings agency Moody's said it would review three major French banks -- BNP Paribas, Societe Generale and Credit Agricole -- for possible downgrade as a result of their exposure to Greek debt.

Faltering Stability

In remarks at an international conference on agriculture in Paris on Thursday, Sarkozy warned that European leaders would have to reach a compromise in order to guarantee the stability of the euro.

That stability has been faltering this week. Protests in Greece have made the markets uneasy, as has the inability of the government of Prime Minister Giorgios Papandreou to push through a new austerity package -- a necessary condition for the disbursement of the next tranche of aid money from the first €110 billion aid package passed last year. The International Monetary Fund (IMF), which is a major participant in that aid package, did, however, indicate this week that it is prepared to make the next payout.

Still, Greece isn't the only problem facing the Franco-German relationship. The two countries have diverged significantly in their policies on pro-democracy movements in North Africa, particularly in Libya. Berlin was unimpressed with the speed and vehemence Sarkozy displayed in pushing for a military intervention in the country and Merkel's government ultimately vetoed the United Nations Security Council resolution authorizing military force against troops loyal to Libyan autocrat Moammar Gadhafi. Berlin was also unpleasantly surprised by Sarkozy's early recognition of the rebel council in the Libyan city of Benghazi.

Differences on Energy

The French see such German concerns as water under the bridge. After all, German Foreign Minister Guido Westerwelle, in Benghazi earlier this month, also recognized the rebel council -- a move which, according to the French ambassador, has placed the two countries "on an equal footing once again." Westerwelle has also been invited to meet with his French counterpart Alain Juppé in his native Bordeaux soon.

Still, the Berlin-Paris clash has left a bitter aftertaste. As have differences between the two countries when it comes to nuclear power. In Deauville, Merkel's rapid nuclear phase-out program -- pushed through in the wake of the nuclear accident at the Fukushima power plant in Japan -- was not met with a positive response. Paris is particularly concerned about the consequences for climate protection and energy prices. Although Merkel's coup, reminiscent of Sarkozy in terms of the tempo with which she changed course, is seen as a domestic matter in Berlin, the French ambassador suggested that Paris would prefer a European energy policy.

But in recent months, it has become clear that such close coordination between Berlin and Paris has become a thing of the past. For now, at least. "This state must be achieved once again," the French ambassador said on Wednesday. The Friday visit could be a start.

Translated from the German by Christopher Sultan


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