In Other News – A View from Abroad – 3/3/2023

A View from Abroad

Once a month, In Other News features a short op-ed heavily informed by the European perspective. We hope that these special monthly pieces will offer our readers an enriched understanding of global events and allow for a more robust international risk calculus.

The German-French relationship is still the beating heart of the European Union and it needs to stay healthy. In late January, 60 years after France and West Germany signed the Treaty at the Élysée, French and German heads of state again met in Paris to reconfirm their bilateral friendship. It’s more critical than ever that French President Macron and German Chancellor Scholz overlook their rocky start and present a united front against Russian aggression. The French-German relationship generally propels the EU, but since Brexit in 2020, this relationship has become even more important. When Germany and France are in alignment, the entire EU profits. But when they diverge, it threatens to grind the EU to a halt. Right now, there’s too much at stake for the EU to be anything less than fully functional.

Germany is the largest European country in terms of landmass, population, economy, and budget, but it sometimes appears to lack the self-confidence of France. Traditionally, within the EU, France took the lead on foreign policy and defense matters, while Germany, given its size, dynamism, and innovation, took the lead on economic matters and government financial policies. With the Russian invasion of Ukraine, however, this balance between Germany and France has shifted.

Under the heading of “Zeitenwende”, Scholtz decided to increase Germany’s defense budget above the NATO agreed level of 2% GDP, investing a total of 100 billion Euros in defense. Paris had hoped this money would help fund joint European defense industry projects, but instead the first German decisions point in a different direction. Indeed, in a move that disappointed France but is indicative of Germany’s security priorities, the Germans moved to purchase F 35’s fighter planes off the shelf from the United States and Arrow 3 missiles for air defense from Israel.

On the economic and government fronts, tensions between Paris and Berlin were visible in the energy dossier last year. The energy market price challenges resulting from cutting off Russian products led to substantive compensation packages, government subsidies and price ceilings in Germany. Only with great difficulty and strong French insistence were these translated on the European level. More generally, France wanted higher EU spending and EU-guaranteed national lending, while Germany, which would have to cover a relatively larger part of the cost, was more hesitant. Further, while France believes its focus on nuclear energy has been validated by current events, Germany persists in phasing-out nuclear energy.

Judging from the outcome document of the Élysée summit, however, discord and discussions are being set aside to ensure a joint vision for the future. And while coherence among EU members on investing in extra defense capabilities is self-evident and hardly original, there are some notable new initiatives that will require innovative solutions and collaboration between France and Germany. There’s fresh and increased security focus on both cyber and space – areas where buying products off the shelf is not feasible. The same applies to renewable energy initiatives, where bilateral investments in hydrogen, decarbonization, nuclear fusion and new battery technology will be necessary to translate the vision into reality.

Completing projects like the European Capital Market Union, the European Banking Union and enhancing the European Technology Champions Initiative are additional EU goals that will require support from both nations. Both Germany and France will be implemental for further institutional EU reform, by enhancing QMV voting, areas where no full unanimity is needed to make decisions, and modernization of EU electoral law provisions. Additionally, a joint investment in cultivating a younger generation of leaders, through the Génération Europe – Jeunes talents franco-allemands/Generation Europa: Deutsch-Französische Nachwuchskräfte initiative, shines in stark contrast to the UK’s decision after Brexit to no longer participate in EU student exchange program Erasmus.

These projects are promising and present areas of joint opportunity for the French and Germans. And if the two nations can continue to work through their areas of division, as demonstrated in more recent weeks, the EU will be all the stronger because of it. Needless to say, as the battle between Russia and Ukraine shows little sign of stopping, there’s no more important time for EU to be a strong and positive democratic global force.