12 April 2018

Open Europe has today published a new briefing, ‘The rocky road ahead for the Franco-German reform drive.

The briefing argues that it is increasingly unlikely that Franco-German cooperation on EU reform  will live up to the high expectations that have developed since Macron’s election in June last year. Part of this is due to the lack of a coherent German response to the proposals delivered by France. But  smaller states have also grouped together in opposition to a new integrationist push led by the Franco-German duo – the so called Franco-German motor. Continued political instability in other parts of the EU, such as Italy, signals further stumbling blocks.

While there are few easy wins up for grabs, progress on a couple of key reforms remains likely. This briefing maps them out in detail. Where have Paris and Berlin found common positions, which proposals are backed by a majority of member states, and what reforms are off the table already?

 

Open Europe’s Policy Analyst, Leopold Traugott, said,

“Despite the pro-European rhetoric struck by Germany’s new government, its traditional EU reform red lines on key issues such as debt mutualisation haven’t moved much. Berlin wants and needs to work with Paris to get reforms going, but so far seems unwilling to commit to the compromises necessary to achieve  much of this.”

“Many of Macron’s most colourful ideas, such as installing a Eurozone finance minister or creating transnational lists for the European Parliament, are basically dead in the water. Berlin and other Nordic member states want to focus on bread-and-butter reforms instead, steps that are easy to implement and offer concrete benefits. At the same time,  Macron is now looking at European defence cooperation outside of the EU and its PESCO framework.”

“Macron has presented a coherent vision for Europe’s future, and laid bare the vacuum that currently exists in German political thinking. If Germany cannot reach a compromise with the most pro-European French President in decades, then with whom could it? If Macron fails, Euroscepticism in France and across Europe will only grow stronger.”

 

Key conclusions

  • It is increasingly unlikely that Franco-German cooperation will live up to the expectations that have developed since Macron’s election in June 2017. While some reforms are likely to materialise, there are few easy wins available.

 

  • Some of Macron’s reform proposals were dead on arrival in Berlin, or ran against the core interests of too many member states. His plans for a Eurozone finance minister, transnational lists and a smaller Commission are de facto off the table.

 

  • Other French proposal received general backing from both Berlin and the EU27 at large, yet entrenched differences over the details of their implementation mean that actual success is still far away. Particularly the push for a European Monetary Fund and the planned completion of the Banking Union suffer from this.

 

  • The idea of France and Germany moving ahead alone – for example by bilaterally harmonising their corporate tax rates – sounds promising but has pitfalls. Similar projects have been announced repeatedly in the past, yet rarely materialised. Still, if successful, this could deliver an important signal.

 

  • The easiest progress may be achievable on securing the EU’s external borders and improving migration management. Both French and German governments see the need for a beefed up Frontex. Austria’s EU presidency beginning in July 2018 will provide further backing. The key challenge will be to find sensible flanking measures.

 

  • Brexit is shifting the balance of power within the EU. The group of fiscally conservative, northern states traditionally led by the UK is left weakened, but is attempting to stand its ground against Franco-German hegemony. This further limits the scope of action for Paris and Berlin.
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