Europe’s Hard-Core Problem

Harold James

With populism endemic in its periphery, the European Union is clearly in a period of deep uncertainty. If EU leaders are ever going to right the ship, they will need to identify the root cause of today's instability, which is not so much about economics or immigration as it is about de facto Franco-German leadership.

PRINCETON – President Emmanuel Macron’s election in France and the likely continuation of Angela Merkel’s chancellorship in Germany are dramatically at odds with developments in the rest of Europe, which has become increasingly unstable and unpredictable. One wonders if the European Union’s hard Franco-German core is becoming too hard for the rest of the bloc. If so, those who dream of “ever closer” European integration may have to settle for a modestly enlarged Franco-German axis.

Europe today is being torn apart by centrifugal forces, including Catalonia’s secessionist movement and the more muted push for autonomy in the Italian regions of Lombardy and Veneto. Right-wing populism is in power in Hungary and Poland, and may now be resurgent in Austria, too. Left-wing populists govern in Greece, and centrist populism seems to be coming to the Czech Republic, where the mogul Andrej Babiš is on track to be the country’s next prime minister.

Obviously, the EU is producing a bitter backlash from voters across the political spectrum, as the name of Babiš’s triumphant party, “Action of Dissatisfied Citizens,” would suggest. But what is not obvious is the root cause of that dissatisfaction.

It is often said that populism is an inevitable response from globalization’s victims. But this claim is belied by strong economic performance in the Czech Republic, Hungary, and Poland. And it doesn’t explain why the Catalan crisis erupted just as Spain was staging a strong economic recovery, or why Greece remains vulnerable. Meanwhile, another favorite culprit, refugee inflows, has a compelling alibi: there are actually very few asylum-seekers in the countries spearheading attacks on the EU’s migration policies.

To identify the root of European discontent, we need to examine the long-held expectation that leadership in Europe must always come from the Franco-German partnership, which was the primary driver of European integration for decades. In the post-war period, French President Charles de Gaulle worked closely with West German Chancellor Konrad Adenauer, and this carried through until the 1990s, when François Mitterrand and Helmut Kohl forged a close friendship.

Owing to this history, it was long assumed that if France and Germany agree on something, the rest of Europe should simply fall into line. But during the eurozone debt crisis, which began in late 2009, power started to shift away from France, and toward Germany, and many in Europe began to regard both as bullies. In opinion surveys, French and Germans now rank low in other Europeans’ assessments of trustworthiness.

Merkel, to be sure, has been polarizing. Before September 2015, many Europeans believed her to be too devoted to an austerity regime that had intensified the euro crisis. Then, she led Europe’s humanitarian response to the refugee crisis, earning praise from former critics but condemnation by populists and other anti-EU nationalists, particularly in the United Kingdom, France, and Central Europe. Now, populists blame her for not just refugees, but for terrorism, too.

Similarly, Macron has not done himself any favors in Central and Eastern Europe. His criticism of the Posted Workers Directive – which allows workers from the region to undercut Western European wages and avoid payroll taxes – has made him as much a villain as Merkel in some countries.

During the euro crisis, many Greek, Italian, and Spanish politicians saw France as a counterweight to Germany. They thought that France could temper Germany’s austerity push and advocate for higher public-sector investments. But this was an illusion, and a misreading of France’s role in the Franco-German partnership. According to the traditional division of labor, France provides security and the means for Europe to project power abroad; and Germany oversees finance and economics at home.

When Europe was confronted with a security challenge after Russia’s 2014 annexation of Crimea, the Franco-German engine ran rather efficiently. But the EU’s critics do not like the idea of coordinated foreign policies any more than they liked the idea of fiscal and monetary discipline being imposed in the middle of a recession.

Still, even as the Franco-German partnership has drawn fire, it has also gained salience, owing to the UK’s decision to leave the EU. Before the 2016 Brexit referendum, many on the EU’s periphery saw the UK as a barrier to French dirigisme and German power grabs. Now, the UK is at the mercy of Germany and France as it negotiates its exit.

The press photographs of British Prime Minister Theresa May’s visit to Brussels on October 20 were telling, because they recalled the moment when, at an EU summit in November 2011, Merkel and former French President Nicolas Sarkozy rolled their eyes at Italian Prime Minister Silvio Berlusconi. Within a couple of weeks, Berlusconi was out of government.

Looking forward, France and Germany urgently need to develop a shared vision that transcends their own national politics and embraces genuine EU-level reform. There is already some agreement on the need for defense coordination and tax harmonization. But that is not enough. France and Germany still need to address many questions with respect to fiscal centralization, sovereign-debt restructuring, and other fundamental issues.

And regardless of whether France and Germany agree on any given issue, all policy areas need to be opened up to a bargaining process that includes all other EU member states. The rest of Europe needs to feel as though it has a seat at the table. This could be accomplished with EU-level candidate lists for the European Parliament, as Macron recently proposed; or with formal mechanisms to engage Europe’s regions and cities, so that the European Council is not reserved exclusively for member states.

Ultimately, the EU can still develop, but only if it frees itself from narrow French and German priorities. What Europe needs now is not a hard core, but a hard think./project-syndicate