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France and Germany: Back in Business

The time to save the euro is running out, but there is one tentative flicker of hope beaming over the stormy scene: Germany and France seem to be working together again.

After Chancellor Merkel supported Sarkozy against Hollande in the French presidential race, relations between the two countries that historically run Europe were strained. But according to the Financial Times, the big two of Europe are back together:

Two months after a tense EU Summit in which Mr Hollande championed growth as an alternative to Ms Merkel’s mantra of austerity, the countries’ finance ministers on Monday announced a working group that would seek to forge joint positions ahead of meetings of EU finance ministers and summits of European leaders.

After hosting his French counterpart Pierre Moscovici in Berlin, Wolfgang Schäuble, German finance minister, said they had agreed to form the group to work on European banking union, fiscal integration, and growth and competitiveness issues.

This is depressing news for countries like Spain, Italy, the UK, and Poland, which hoped to take advantage of Franco-German discord to increase their own influence over European policy. But it could be a good sign for Europe as a whole. Only strong leadership can address the euro crisis. In Europe, that leadership historically comes when France and Germany are on the same page.

Franco-German cooperation is a necessary but not sufficient condition for Europe to address its current problems. That the two countries are working together is good. But it is far from clear that they will emerge with a workable answer for the biggest crisis in Europe in a generation. Germany and France have very different national interests, political cultures and economic instincts. Coordination between them is always hard and, arguably, one reason for Europe’s present difficulties is that the necessity for compromise between Paris and Berlin means that Europe can only proceed by half measures and baby steps at a time when something more radical is needed.

All that is true, and we don’t think Europe is anywhere near out of the woods. But nothing is possible without Merkel and Hollande working together. They seem to be trying, and that, so far as it goes, is good news.

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  • Corlyss

    “The time to save the euro is running out, but there is one tentative flicker of hope beaming over the stormy scene:”

    Right. How many time do we have to see this movie before we conclude this is just folks picking up ice off the Titanic decks to use in their drinks?

  • Kenny


    Grow up, kid.

    Look at the finances of the PIIGS.

    Look at their balance sheets, especially their liabilities.

    Look at their welfare state structure.

    And finally, look at the demographics of all of Europe.

    And after you do that with some degree of comprehension, then tell us just what it is you are hoping for, some type of fairy tale ending?

  • matt

    Europe has been on holiday for the past 2 months and not a thing has changed except for vague promises from the ECB. The results of the Troika review of Greece’s structural changes will not be revealed until late September, kicking the can further down the road.

    Spain has also been silent. QE is promised by the ECB, Fed, and the British Treasury. The European banks are overwhelmingly stuck with dodgy sovereign bonds.

    The road is approaching the cliff, and the can is so badly battered there’s not much left to kick anymore.

  • Jacksonian Libertarian

    They formed a committee, LOL. This isn’t evidence of decisive action, it’s evidence of politicians covering their [keisters].

  • Mahon

    You seem to think “saving the euro” would be a good thing in itself. But what is needed is a regime that encourages fiscal sanity, allows very different economies to return to growth in ways appropriate to each, and supports liberty and democracy in European polities. Whether this means saving the euro or destroying it is secondary, although it is hard to see how the euro can be “saved” without turning Europe into a German empire (with the French riding side-car). Which seems to be what the Eurocrats really want….

  • Lorenz Gude

    So Merkel’s and Hollande’s seconds have made nice. Ludwig Dehio’s theory that a series of continental powers have sought domination of Europe only to be frustrated by seapower – think Jolly Olde England – may be worth resurrecting even though his analysis stopped with 1945. Russia has tried since, but was stymied by those American cousins with their Blue Water Navy and ICBMs. The game is changing all the time but it certainly looks like Germany could achieve economic hegemony on the continent. But in the global game? China? The Anglosphere? Or perhaps all will fall before a resurgent Islamic colonialism?

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