Hard But Necessary: An Alliance Between Hollande And Merkel – Analysis

By Fatma Yilmaz Elmas

After the downfall of the Merk-kozy alliance, Europe is now the scene of a competition between Hollande and Merkel. A combination of Spain, Italy, and France has halted the Sarkozy and Merkel pact which has led the way in Europe since the global crisis began and is working to isolate Germany. So we are now in a period in which Europe is no longer just being shaken economically by the Euro crisis but is also facing an upheaval in its political balances.

Following the break up of the Merk-kozy alliance after the French presidential elections, Europe is now caught up in a new debate revolving around France and Germany.

François Holland, who has inherited the presidency of France from Sarkozy, is seeking to strengthen his hand amid the circumstances created by the euro crisis and also the pressure of the forthcoming general elections on the German Chancellor Merkel. There are those who take the view that he is enough of a realist to see the imbalance in Franco-German relations and is consequently determined to change the way things carry on in Europe, dragged forward under German influence. The decisions which emerged from the recent summit at Brussels were thus portrayed in newspaper headlines as a victory for Hollande who has lost faith in the German rescue package. But as time passes and the Summit decisions fall into perspective, it turns out that Europe is actually still much closer to Merkel’s call for collective responsibility. Merkel’s strategy of investment in long term gains seems to confirm the view that Hollande has been drawn into a commitment which has long been unpopular in France.

Consequently Europe today is the scene of a contest between Hollande and Merkel. The real problem is how this contest will affect the crisis of the euro and the course of European integration. Because the decisions coming out of Brussels, no matter which leader’s strategy has produced them, lack a good many details which need to be filled in. More than that, the intricate network of relationships and interests makes a Franco-German axis in support of European integration necessary even if it exerts a strain on the political and economic philosophies of the leaders.

The contest between Hollande and Merkel

The disruptive effects of the euro crisis have not just squeezed the economy of Europe. A period has opened which the political balance is starting to shift.

A group of three countries, Italy, Spain, and France, has now brought to an end the understanding between Sarkozy and Merkel which has dominated decision-t taking since the start of the crisis and is working to isolate Germany. Merkel insists that the way out of the crisis is higher saving and financial discipline but because of the Hollande presidency in France, she is now faced by an increasingly strong alliance which emphasizes growth and argues that debt in the eurozone should be handled collectively and which is supported by France. This alliance has also been partially articulated by the IMF in warnings it has made about the euro’s continued existence.

The decisions that emerged from the Brussels Summit at the end of June demonstrate that the alliance of Merkel’s opponents has the capacity to undermine confidence in the German rescue package. This is because the leaders have reached agreement on a package for economic growth and on finding funding of €120 billion to promote growth. The way has thus been opened up for banks to have access to EU bailout funds and it has been decided that the supervision of this process will be carried out by a mechanism of the European Central Bank.

Hollande came to power with “Change” as his slogan and together with Italy and Spain he carried out the negotiations in a firm manner, something which has been perceived as a political victory for Merkel’s opponents. There are those who believe that Hollande, whose acceptability ratings have increased since his election as president, is the one who determines this process. Indeed Professor Zaki Laidi of France believes that the election of Hollande has even stimulated a redefinition of European politics. In his view, virtually all European governments believe that Hollande will change the balance of power.

Belatedly, a change has begun in the management of the euro crisis. But it is debatable whether what has caused the change in Germany’s line is isolationist pressures as is being surmised. The German press has even begun to regard the concessions made by Merkel as an intelligent strategy of protecting long term gains. The view widely being taken immediately after the June summit was that the winner was the three allies led by France but as time passes the opposite view is also being heard more widely.

Guntram Wolff and Christian Ricken are just two of those who claim that although the summit may be being perceived as a defeat for Merkel, its practical results were actually in line with what she wanted. The success behind Merkel’s disguised defeat derivers from the fact that she got Hollande to accept the supervision mechanism which she regarded as a preondition. Merkel had already started before the summit to emphasize a political union in which Brussels would assume a greater role and had drawn attention to the importance of economic growth. A precondition for this request was that national banks should be supervised by a mechanism under the European Central Bank. Thus when the decision to establish this control mechanism was taken, Merkel who wants “a more integrated Europe under tighter central control”, scored a substantive success, one which made Hollande’s victory only symbolic. Because the decision relating to the handling of the euro crisis pleased the markets at least a little for the time being. It was not really an indication that Merkel had no alternative left against Hollande because he had got Italy and Spain on his side, but rather an initiative within her strategy of securing the implementation of the rescue package and keeping the euro zone going in the long run.

The role of the Franco-German Axis in the future of integration

Time will show who is in charge of the management of the euro-crisis. When the strategy is the work of Hollande or Merkel, there are very important details awaiting the leaders which have to be inserted into the packets of measure for economic growth. The events in the euro crisis which are going to decide the course of European integration make the existence of a Franco-German axis necessary, even if it exists in the context of a contest between them. During the history of European integration, forced couples have often played an important role. The tandem partnerships of Giscard d’Estaing and Helmut Schmidt and of François Mitterand and Helmut Kohl offer instances of this.

Douglas Webber even claims that Franco-German influence has emerged most strongly as far as European integration is concerned at those periods when the initial preferences of the two sides have been furthest apart. The debates on agricultural policies and monetary union are examples of this.

What’s more, Webber is not alone in his views. Hendriks and Morgan mention the contribution these two rivals have made to European integration in a book looking at the subject within the context of the Franco-German axis and does not skip the practical considerations. The contribution of these two arises from the fact that they perceive above all the fact that France can only maintain its international status by preserving its role in Europe, while Germany has won the confidence of the international community by restraining its national ambitions to within the framework of its commitment to European unification. This analysis lends support to those who regard Merkel’s approach as a pragmatic one.

To conclude, the management of the euro crisis seems to be determined by whether or not Hollande and Merkel will pursue their contest along the lines of their predecessors. It would seem that the future of the crisis and of European integration will be determined less by personal ambitions and philosophies and more by an interlocking network of relationships and advantages.

Fatma Yilmaz Elmas
USAK Center for EU Studies