Merkel unenthusiastic about Macron’s reform proposals

When France was the “hereditary enemy” of imperial Germany, no visitor from Paris would have dared crossed the kaiser’s threshold in Berlin.

On Thursday, nearly a century after the kaiser fled into exile, chancellor Angela Merkel gave President Emmanuel Macron a personal tour of Berlin’s rebuilt Prussian palace set to open next year as a €600 million museum of world cultures, the “Humboldt Forum”.

The building site was a fitting backdrop for their meeting, as pressure grows for the scaffolding to come down on Franco-German reform plans before the June European Council meeting. But with two main contractors, and dozens of rebellious subcontractors, it remains unclear what, if anything, will be left of the ambitious blueprint Macron presented last September at the Sorbonne.

Like the Humboldt Forum itself, an ambitious but unwieldy project of competing interests, the Franco-German reform project faces a central dilemma: how many concessions can a project withstand before it collapses into meaninglessness?

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Macron’s big ticket proposal – for a euro finance minister overseeing a common euro budget – has been knocked back by Berlin, and by northern European finance ministers, including Paschal Donohoe.

Undeterred, the French are pushing a euro zone investment budget and a crisis-era European Stability Mechanism (ESM) bailout fund transformed into a permanent monetary fund.

After keeping Macron waiting for six months while she struggled to form a coalition, efforts by Merkel to meet him even halfway could fall foul of MPs in her Christian Democratic Union (CDU).

German taxpayers

They are traditionally allergic to any EU reform proposals that could be perceived as a shakedown of German taxpayers.

This wariness of the Macron reform ideas has been hardened by the entry to the Bundestag of the far-right Alternative für Deutschland (AfD), which insists ambitious ideas like a euro budget would run contrary to German law.

Earlier this week, at a boisterous CDU parliamentary party meeting, Merkel drew applause when she made treaty change a pre-condition of transforming the ESM into a European monetary fund – a process that would take years.

Another neuralgic point for CDU MPs: a proposed common European deposit insurance. Germany is a nation of savers and they fear being left to underwrite debts of more spendthrift neighbours. On Thursday, Merkel said she backed the idea of a common deposit insurance “not in the immediate, but the distant future”.

Despite rejecting one Macron idea after another, Germany does not see itself as a reform brake. Instead, with Macron listening on Thursday, Merkel insisted the EU reform process must be broadened beyond economic and currency union to include a more coherent EU foreign policy and a joint EU asylum system.

“We are bringing different solutions which, put together, will, I think lead to a good result,” she said.

Two days ago, Macron warned in the European Parliament that the window of opportunity was closing to tackle the rising challenge of populism and nationalism in Europe.

Balancing act

But in Berlin, conscious of CDU reform resistance, Macron echoed his host’s call for greater EU “competitiveness” and euro reforms that balance solidarity among member states with countries’ self-responsibility.

The same balancing act, he said, would aid compromise in the banking union and sharing the asylum burden.

“We need solidarity in a currency union, and cannot live without convergence between member states,” he said. “But it’s important not to talk about one instrument or another, what’s important is the political goal we want to achieve.”

Macron’s hopes of Berlin backing his reforms faded with the departure of Martin Schulz as leader of the centre-left Social Democrats (SPD). Schulz was an enthusiastic Macron supporter but the most influential figure party figure now, SPD finance minister Olaf Scholz, is more equivocal on French reform proposals.

For Franco-German observers, the two capitals have adopted contradictory approaches to the same goal – strengthening the euro zone – making it difficult to meet in the middle.

“Macron wants to strengthen the euro zone from within, through solidarity, while Germany pushes more control of member states,” said Dr Claire Demesmay, Franco-German expert at the German Council on Foreign Relations (DGAP) in Berlin.

“Macron wants to move ahead in a smaller group, the euro zone, while Germany’s goal is to hold the entire EU together. That makes compromise difficult.”