Macron’s Challenge for Europe

Philippe Legrain

French President Emmanuel Macron’s plan for reforming the European Union and the eurozone is highly ambitious, but credible – if Germany plays ball. But while Germany would be committing a monumental strategic blunder if it did not engage seriously with Macron’s proposals, its newly complicated domestic politics could get in the way.

PARIS – In an ambitious, visionary speech at the Sorbonne this week, French President Emmanuel Macron presented his plan for countering the tide of xenophobic nationalism in Europe. He wants to build a “sovereign, united, and democratic Europe,” where citizens again feel a sense of allegiance to the idea of Europe itself.

Macron’s speech was a welcome call to arms for a European Union that is confronting many crises and threats. But on the crucial and controversial question of fixing the eurozone, his proposals were disappointing. And he will have a hard time winning over his more cautious European counterparts, not least German Chancellor Angela Merkel, whose room for maneuver was crimped by her party’s poor showing in last weekend’s federal election.

Still, Macron made a powerful, positive case for a renewed EU. That EU embraces globalization and innovation, while also protecting Europeans, doing more to help them adapt to a changing world. It advances European interests and values in a world otherwise dominated by America and China. And it bolsters security at a time of increasing Russian revanchism, Islamist terrorism, and American disengagement under President Donald Trump.

Macron combined big ideas with many concrete proposals for closer cooperation on defense, migration, the environment, innovation, education, and much else. Better still, he outlined a political strategy for seeing his proposals through. Macron mused that, if he succeeds, a “Brexiting” Britain “may one day find its place again” in an overhauled EU, along with new members from the Western Balkans.

Under Macron’s plan, each EU member state would hold democratic conventions to debate citizens’ priorities. Their ideas would feed into a broader process involving the EU institutions and governments that want to overhaul Europe. Coalitions of willing governments would then integrate faster, with a revitalized Franco-German engine driving the process forward.

The ball is now in Germany’s court. Europe could very well succumb to nationalism if Macron’s plan fails. That would be devastating for Germany, a country whose economic success, political identity, and security are based on a strong, functioning EU.

Macron is the most pro-German French president imaginable, and he has boosted his credibility by pursuing difficult labor-market reforms and unveiling a Teutonically prudent budget. Germany would be committing a monumental strategic blunder if it did not engage seriously with his proposals.

Unfortunately, Germany’s domestic politics just got trickier. Macron had timed his speech to influence the post-election coalition negotiations there, with the hope that Merkel would use her fourth and likely final term to burnish her legacy by enacting bold European reforms. Macron was also counting on Merkel’s Christian Democratic Union (CDU) to maintain its grand coalition with the Social Democrats (SPD) and their leader, former European Parliament President Martin Schulz.

But German voters had other plans. The CDU and its Bavarian sister party, the Christian Social Union (CSU), lost support, and the SPD fared so poorly that it has decided to return to the opposition. At the same time, the far-right, anti-EU Alternative for Germany (AfD) stormed into the Bundestag with 13% of the vote, and has pledged to “hunt” Merkel down.

Merkel, now politically weakened, must try to cobble together an unruly coalition that includes both the Europhile Greens, who welcomed Macron’s speech, and the Euroskeptic Free Democrats (FDP), who were hostile to it. And while the AfD attacks her right flank, rivals within her own party will be jostling to succeed her. Against this backdrop, even small compromises will be politically fraught.

Macron’s eurozone-reform plans will be the biggest bone of contention. He wants to create a eurozone budget, funded by corporate-tax revenues. The joint budget, which would make investments and provide a cushion during economic downturns, would be overseen by a eurozone finance minister, who would answer to eurozone countries’ representatives in the European Parliament.

But Germany is skeptical of what it sees as a “transfer union,” in which its taxpayers would hand over cash to profligate countries that have failed to remodel their economies along German lines. Merkel would prefer a small common fund to help member-state governments enact difficult reforms, not a Keynesian fiscal stabilizer. And while Macron envisions a finance minister who would be a political counterpart to European Central Bank President Mario Draghi, Merkel would prefer that the role be limited to enforcing national fiscal discipline.

The danger now is that Macron will achieve only a token eurozone budget in exchange for even tighter controls on national budgets, which would prove economically harmful and politically poisonous. He would also miss his chance to enact the reforms that the eurozone actually needs. These include deeper financial-market integration; an easier process for writing down bank and government debts; greater fiscal flexibility; and more balanced economic-adjustment mechanisms.

Macron’s most promising idea is to “give Europe back to its citizens.” In my book European Spring, I argue that a flawed, technocratic EU needs bold leaders, political entrepreneurs, grassroots movements, and more experiments with deliberative democracy to deliver change. Macron has proposed all four.

Macron is right to point out that the EU bureaucracy often seems remote, uninspiring, and ineffectual; but he also rightly rejects referenda that polarize citizens over simplistic binary choices. The big, open democratic conventions that he has proposed for the first half of 2018 could inject fresh ideas into a stale debate, provide legitimacy for bold reforms, and put pressure on recalcitrant governments.

Conventions could also foster new political movements like Macron’s own La République En Marche !, which could bring fresh faces into politics, help to open up closed, corrupt party systems, and start to rebuild the public’s trust in politicians. They could also give Macron more leverage to push through his reforms, by running candidates in national and EU-wide elections.

Macron’s ambition is vast, if not overawing. But so are Europe’s challenges. Macron may be trying to achieve too much at once, but a more democratic, dynamic, and united EU is a prize worth fighting for. /project-syndicate