05/15/2017 06:39 PM

Frenemy in the Making?

Merkel Views Macron with Skepticism and Hope

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Emmanuel Macron's victory in France has galvanized Germany's Social Democrats. But Merkel, too, is hopeful that the new French president will mark an improvement in Berlin-Paris relations. There are, however, plenty of potential conflicts looming.

History sometimes takes strange twists and turns. Three years ago, on a sweltering day in summer 2014, the telephone of German economist Henrik Enderlein rang. Enderlein is a professor at the Hertie School of Governance in Berlin and on the other end of the line was Jean Pisani-Ferry, an economist in Paris.

The caller wanted to know if Enderlein's university had a visiting professor spot for a young government adviser named Emmanuel Macron. Pisani-Ferry related to his German colleague that Macron had had a falling out with his boss, French President François Hollande, and was currently looking for a job.

Even then, Enderlein knew Macron well. He had exchanged several papers with Macron, a former banker, and had also spoken with him in Élysée Palace in Paris about the troubled relationship between France and Germany. Both Enderlein and Pisani-Ferry were certain that Macron had a bright future ahead.

Would European history have taken a different turn had Macron come to Berlin that summer?

Immersing oneself in such hypotheticals is always a fraught undertaking: Would Marine Le Pen have won the French presidential election? Or would François Fillon have managed to eke out a victory despite the many scandals associated with his candidacy?

But it is nevertheless an interesting discussion to have. In any case, Macron managed to patch up his relationship with Hollande before he could agree to a position in Berlin -- and an astounding political career took off.

The result is that a man has waltzed onto the European stage who is both an ally and an adversary to German Chancellor Angela Merkel. He wants to keep the European Union together, but he also stands in the way of Germany's vision for the bloc. When Macron's victory became clear a week ago on Sunday, Merkel's reaction was downright euphoric and she issued a congratulatory statement in both French and German.

An Expensive Friend?

But one day later, when the leadership of Merkel's Christian Democrats (CDU) gathered to discuss the election, Merkel was much more reserved. Macron could become an expensive friend. The chancellor knows that Macron envisions a different Europe than she does: one that is more proactive and exhibits more solidarity, but also an EU that gives Brussels greater powers. Merkel has long been content to steer the EU from Berlin. Now, though, Macron wants a European finance minister and a budget for the eurozone. He can even envision the issuing of joint debt. As such, Macron can be certain that he will have the support of German Social Democrats (SPD).

Merkel told CDU leaders last Monday that she wasn't going to change her approach just because France had a new president. A short time later, her spokesman issued a statement noting that the German government is not a supporter of Eurobonds.

On the other hand, Merkel doesn't want to make life difficult for the new president. Macron's election comes at a time when her own influence in Europe seems to be on the wane. At the height of the euro crisis, Merkel was the queen of Brussels. But then, huge numbers of refugees began arriving and the chancellor insisted on a policy of open borders -- against the will of most European politicians. Europe still hasn't recovered from the divisions caused by Merkel's approach.

That is one of the reasons that she needs Macron. Only with his help will she be able to heal the wounds caused by her refugee policies. If she is unable to win over the new occupant of Élysée, she would stand open to accusations that she has done more to pull Europe apart than to unite it. As such, her legacy is partially dependent on her relationship with Macron.

Election Fodder for Merkel's Competition

It is an interesting situation. The SPD is attempting to present itself as Macron's true ally and -- with German parliamentary elections looming on Sept. 24 -- seeking to awaken the kind of pro-EU enthusiasm on which Macron campaigned. German Foreign Minister Sigmar Gabriel, who led the SPD until January before handing the reins to former European Parliament President Martin Schulz, is seeking to portray Merkel and, especially, Finance Minister Wolfgang Schäuble, as heartless charlatans who are, with their frugality, driving voters into the hands of the right-wing populists.

Gabriel has authored a paper which calls for nothing less than a redefinition of the Franco-German relationship. It is wrong, Gabriel writes in the paper, "for some in Germany to pass judgment on what doesn't work because it doesn't appear compatible with their favorite financial and economic ideologies." Politics, writes Gabriel -- who, in addition to being foreign minister, is also Merkel's vice chancellor -- cannot be slave to "narrow-minded and uncaring national self-interest."

Merkel's people, by contrast, do not think that the Germans will vote for an SPD that is promising to distribute their money across Europe. As such, the correct approach to Macron, German Finance Minister Wolfgang Schäuble says in an interview with SPIEGEL, is "respect and reserve."

Macron is in Berlin to visit Merkel on Monday, just one day after his Sunday inauguration in Paris. The 39-year-old is bursting with confidence following his election victory, particularly following a campaign that completely changed France's political landscape. He is now in a position to push for his vision of Europe.

The greatest difference between his views and those in Berlin are to be found in economic policy. Macron would like to strengthen the currency union with a political component, including a European finance minister and a common EU budget that is controlled by a eurozone parliament. Such a framework would allow for individual eurozone member states to be assisted in the event of a crisis. "We must collectively recognize that the euro is incomplete and cannot last without major reforms," Macron said in a speech at Berlin's Humboldt University earlier this year.

Gabriel agrees. Last Thursday, four days after Macron's victory, the foreign minister presented a draft of a joint Franco-German agenda for Europe. It is called "Élysée 2.0: New Impulses for German-French Cooperation."

In addition to strengthening the eurozone, along with its own budget, the paper calls for joint German-French investments in research, transportation infrastructure and digital networks. One possible source of financing mentioned in the paper involves investing funds set aside to deal with nuclear waste. Gabriel also envisions closer cooperation in the field of foreign policy. He proposes, for example, a joint or rotating French-German commissioner on the European Commission. Collective German-French representation in other international bodies, such as the International Monetary Fund, is another idea to be considered, Gabriel writes, "as a precurser to Europe-wide representation."

Gabriel knows Macron from the time when they were both minister of the economy in their respective countries. At the time, they released a joint paper supporting a kind of European economic and social union. But the two are also bound by personal friendship. One week after the November 2015 terror attack in Paris, the Macrons invited Gabriel and his wife Anke for a meal at Restaurant La Rotonde.

Macron and Gabriel spoke frequently on the phone during the French presidential election campaign, with Gabriel asking his friend how he could be of assistance. Macron responded that too much support from Merkel's CDU could make things difficult for his campaign but criticism of Merkel and Finance Minister Schäuble was most welcome, particularly if it came from the German vice chancellor.

Macron is not as clumsy as ex-President Hollande, who relied on anti-German rhetoric during his campaign, only to have to patch things back together again once he was elected. When Macron gave his speech at Humboldt University in January, he mentioned a paper written by Schäuble in the 1990s in which he proposed the idea of a core Europe that would continually grow closer together. It was essentially Macron's way of paying homage to a German politician who many in France see as a ruthless proponent of austerity.

'France Has To Live Up to Its Own Obligations'

Macron is adept in the art of political dialogue. He wants to take German concerns seriously as a way of ensuring that Berlin returns the favor. "France has to live up to its own obligations if it wants to be respected in Europe," says Macron adviser Sylvie Goulard.

Merkel has been watching Macron for several years and the former presidential advisor was present at a number of meetings between the chancellor and Hollande. Normally, Merkel is rather skeptical of men who win over voters with flowery rhetoric free of concrete accomplishments -- which is partially a product of her own difficulties on the rhetorical front. But she respects the determination Macron has demonstrated in his climb to the top. In that respect, the new French president is more similar to the German chancellor than someone like the conservative French presidential candidate François Fillon, who the Chancellery had initially seen as the favorite.

Merkel believes that it will be easier to find commonalities with Macron when it comes to Russia policy than it would have been with the pro-Russian Fillon. Together with Hollande, Merkel created the so-called Normandy format, which is designed to prevent an escalation of the Ukraine conflict. During her recent visit with Putin in Sochi, the two agreed to continue the regular meetings of the group, which also includes Ukrainian President Petro Poroshenko, after the French presidential elections.

The agreement was not free of risk for Merkel. Had Marine Le Pen won in France, the Normandy format would have suddenly included a French president who has nothing but understanding for Russia's expansionary policies. And Merkel was annoyed by the fact that Putin had received Le Pen, head of the right-wing populist Front National, during the campaign. Not even Donald Trump had granted Le Pen that honor.

A Wait and See Approach

Merkel doesn't want to make Macron's life unnecessarily difficult. It would only help the SPD if voters got the impression that the young French president's idealism was being shattered by the hard-heartedness of the German chancellor. It seems more advantageous to the chancellor to take Macron by the hand and lead him to the path of realism.

Speaking to CDU leaders last Monday, Merkel said that it was good news that Macron had been elected. But she said she first wanted to wait and see exactly what he was planning to do. Participants at the meeting understood the statement as a clear step away from the SPD. Preliminary gifts of the kind being demanded by Gabriel are not something she wants to be a part of.

Fully 64 percent of Germans are opposed to allowing Paris to take on more debt than allowed by EU rules. Even a majority of SPD supporters reject the idea. But the chancellor still doesn't want to be overly firm with France -- that wouldn't be looked kindly upon in Europe or at home. "The tone we adopt with France will be important," says one source in the Chancellery.

Neither Merkel nor Finance Minister Schäuble rule out the appointment of a European finance minister. But "the person would of course also have to be able to enforce European budget rules so that they are adhered to by all," Schäuble says. Thus far, though, it was often the French who rejected extensive intrusions on national sovereignty.

Ultimately, Merkel believes, the degree of cooperation between Berlin and Paris will depend largely on Macron. If he is able to improve the French economy and adhere to European stability criteria, then she is prepared to make concessions. "If Macron delivers, it will be easier for us to give him something," says one person in Merkel's circle.

The new French president has many allies in Europe, which is another reason the chancellor is eager to avoid open conflict. "Macron stands where I stand," says Matteo Renzi, the former and perhaps future prime minister of Italy. A few days ago, Renzi met with his buddy Barack Obama in Milan. Together, they made the spontaneous decision to call Macron. Once Renzi had the Frenchman on the line, he said: "This is the assistant to Barack Obama. I'll put you through."

In addition to Italy, countries like Spain, Portugal and Greece will try to get Macron on their side. The idea of increasing investments by way of a eurozone budget is music to their ears. And even further to the north, austerity is falling out of favor. "Insisting on the very last cent of the stability pact as poverty spreads across parts of Europe -- that shouldn't be our position," says Jean Asselborn, the long-time foreign minister of Luxembourg.

European Commission President Jean-Claude Juncker is also supportive of much of what Macron is planning. And the two know each other well. Even before Juncker had officially taken office, he and Macron had breakfast together on the terrace of a hotel in Brussels. "I am more than open to what Mr. Macron says, in part because I said the same things three years ago," Juncker said recently in Berlin.

Europe's Greatest Opportunity in Years?

It could be that Macron's election is the greatest opportunity presented to Europe in years. Europe needs a new beginning. That which long made Europe successful -- an economic alliance without real political power -- has become a problem.

The EU has 27 commissioners, with one responsible for fisheries while another focuses on agriculture. Indeed, competencies are so fragmented that armies of bureaucrats are necessary to prevent one commissioner from intruding on the portfolio of another. But one thing the eurozone doesn't yet have is a finance minister.

Instead of a prime minister, two presidents exist side-by-side, though neither has control of European troops nor can they lower taxes or take on debt. The EU invokes its social values but it can do nothing when the economy booms in one region while another is swallowed up by poverty.

The currency union needs an economic and a financial government. In principle, everyone agrees. But how exactly should that look?

The Germans want an agency that is primarily responsible for ensuring that nobody takes on too much debt. The French envision more of a European social security office that aligns living conditions across the continent.

Could both exist concurrently? Macron says they could. He has promised reform, he wants to impose discipline on both France and Europe -- and he wants to spend money on helping those in need in Europe.

Most of all, however -- and this is perhaps his greatest difference from Angela Merkel -- he wants to move away from the trivialities of European crisis management. In his Humboldt University speech, Macron quoted the legendary European Commission President Jacques Delors. He once said that Europe needs both a vision and a screwdriver. "Unfortunately, we currently have a lot of screwdrivers," said Macron. "But we are still lacking a vision."


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