Best of 2015 – „How France Will Bail Out Germany’s Merkel“

Nicht alle Leser gehen jeden Tag auf bto, was natürlich bedauerlich ist. Immerhin gibt es werktags zwei Beiträge zu aktuellen Themen aus der Wirtschaft. Deshalb zum Jahreswechsel eine kleine Auswahl der Highlights aus 2015. Bei der Sichtung habe ich festgestellt, wie zeitlos viele Beiträge sind. 

Dieser Beitrag erschien im November 2015 bei

Things are shifting quickly in Europe – and the Germans, especially Angela Merkel, will be noticing the full brunt of the changes very soon. In Germany’s place, France may be calling the shots.

That sounds very surprising, given the overall continued weakness of the French economy. In addition, President Hollande’s effort to build a war coalition against ISIS was coolly brushed off by Barack Obama during the Frenchman’s recent Washington visit.

And Hollande’s attempt a day after to convince Angela Merkel to pursue a much more muscular – read: military — policy was also met with limited success. Warm words of solidarity were essentially the only “harvest” Hollande received. Both the U.S. President and the German Chancellor remain unconvinced that a strategy that primarily rests on militarizing the conflict, rather than pursuing much better homegrown efforts for better integration of young Muslims, is the way to go.

Under those dismal circumstances, how is it then possible to argue that France may be calling the shots in Europe?

Here is how: Germany, under Angela Merkel’s tutelage, has essentially lost its claim to leadership. Her reaction to the refugee issue essentially put humanitarian impulses over the need to preserve internal European cohesion. If France and Poland jump ship, never mind the UK, by adamantly refusing to play by German concepts on refugees, what’s the net result for Germany and Europe? Proving that Germans are better people?

The intentions of Merkel’s no-holds-barred welcoming strategy may have been noble, but they were also mightily naïve. But the genius of the chain of events now unfolding is that, in the end, with critical help from Paris, Merkel may get out of the box into which she has put herself in.

As a matter of fact, while many Germans have often felt put off by France’s insistence of a far more sovereignty oriented policy approach, they may turn into fans – and beneficiaries — of French predilections for effectively closing Europe’s (external) borders.

France’s Prime Minister Manuel Valls took the first step when he explained that Europe could not take on any more refugees. Of course, the denial came fast. Only hours after the interview with French Premier Manuel Valls appeared in the German press, his office pointed to a translation error.

Supposedly, he did not ask for an immediate stop of uncontrolled immigration into the EU, he only made clear we cannot accept as many immigrants as in the past months. Evidently, publicly opposing the stance of Angela Merkel, Germanys chancellor for ten years, was not (yet!) appropriate.

Political reality vs. wishful thinking

The political reality is on the Frenchman’s side. The majority of European governments and populations oppose the German position in the refugee crisis. The sentiment in France has been all along, long before the attacks in Paris, that the German policy of welcoming all refugees was not only hugely naïve, but also as a danger for the whole European project.

Insisting on the opposite is what, within the time span of a few weeks, cost the German government and specifically the Chancellor, political dominance of the continent. That dominance had notably grown in the wake of the Eurozone crisis, owing to the pure financial and economical power of Germany.

However, Mrs. Merkel – who, along with her core team in the Chancellery, is cast by some as being more poll-driven than even Bill Clinton ever was — has painted herself in a corner. She took the initial reaction of Germans welcoming refugees at face value and steamed ahead.

Now that the sentiment has shifted markedly, she sees no escape. Stopping the uncontrolled inflow of refugees would lead to nasty pictures on TV of people camping at borders similar to the pictures the world has seen from Calais. The German public is not (yet) willing to stomach these.

Even worse from the point of view of Mrs. Merkel would be that any such stop would signal that she acknowledges to have failed with her policy approach. Admitting failure was never her strength. She rather prefers to stay on the wrong path with more force, hoping that circumstances will change in time.

One can certainly argue that she has acted resolutely, and lonely, quite regularly in key moments over the past ten years, be it with the hastened and not well-planned exit from nuclear energy – or in her choice of playing for time in the crisis for the common currency.

On both of those issues, however, the majority of the population basically stayed with her. That is very different on the refugee issue. The more Merkel finds herself in a corner, the more tenuous her own position becomes.

Ticking clock

Until now, she is uncontested in her own party and the opposition does not benefit from increased dissatisfaction of the public with Merkel’s handling of the refugee crisis. The right wing anti-immigration party AfD (Alternative for Germany) has only gained a few points in the polls.

But like a balloon bursting, once the pressure is too big and not deflated in an orderly manner, the political climate might change abruptly and lead to a drastic drop in support and a revolution of her own party. And the pressure is growing every day.

It is precisely here where the French president François Hollande might come to the rescue. Currently, his focus is still on mobilizing a military alliance to fight IS in Syria and beyond. Thankfully, it looks highly unlikely that western countries agree to deploy troops in the region.

Faced with a situation very soon where France finds it cannot do much more than it does today, bombing the ranks of IS with its air force, Hollande will need to make another attempt to demonstrate his qualifications as a strong leader – and rebuild a chance to win a second term amid disastrous polls in recent months.

Hollande will look for other areas to demonstrate to the public his leadership in the interest of France. Regaining the leadership role of key aspects of the European policy agenda is a very tempting opportunity. Nothing is a juicier target in that regard than standing up to the overbearing Germans and mobilizing the EU in an effort to defend the principles of free travel and joint decision making.

That would mean developing a European approach to the refugee crisis, which involves stricter border controls and a clear and strict cap for the number of refugees per year.

Win-win situation

Mrs. Merkel could not oppose such a directive from Europe. Better yet, she could use it as an excuse to implement the necessary political shift with regard to refugee policy in Germany. Faced with the threat of a dis-integrating union, she will have an excuse to step out of her corner.

And in doing so saving her chancellorship. The refrain will be this: I would have liked to stick to my policy, but the French didn’t let me…

France would regain the helm of European leadership. The political change would be profound. More government spending, more central bank intervention, more belief in the power of governments to manage the economy. Not a good outlook for the economic development of the region. But not the first time we have to pay a hefty price for the policy mistakes of Mrs. Merkel.

Perhaps the biggest irony of it all is this: With Hollande effectively “bailing out” Merkel, the Germans have no choice but to swallow the toad in terms of accepting that France will be less stability-oriented.

That’s a deal which even Wolfgang Schäuble, the stalwart German finance minister, would accept, given that he shares the French view on immigration.

And, equally magically, it would tie the hands of the German Social Democrats. While they want to stand up to the conservative CSU wanting to reign in rampant immigration, they have an ideologically and politically much harder time to do so when their ideological brethren from France, Hollande’s Socialist Party, is asking for the same outcome.

→  the Globalist: „How France Will Bail Out Germany’s Merkel“, 27. November 2015