5 Reasons Macron and Merkel Aren’t Going to Save Europe

by Laurence Dorman

22 June 2017


“Britain is leaving the EU – just as Europe is on the up” was the title of an article recently published in the Guardian’s opinion pages. It’s not alone – a number of similar pieces have been found across the liberal mainstream press over the past few days. The song that centrist voices now sing together is one of a new dynamic in the EU thanks to a refreshed Franco-German partnership. Macron will ‘modernise’ France’s economy to bring it in line with the German government’s expectations in terms of fiscal policy, and Merkel will give ground and consider some of the new French president’s ambitious proposals for EU reform. Moreover, populisms have been dealt a blow across the continent, unemployment is coming down, and citizens report they are increasingly satisfied with the EU in surveys – Brexit couldn’t have come at a worse time.

While it’s true there is probably no possibility of a ‘good’ Brexit – especially now Theresa May has thrown away her credibility in plain view of Europe’s leaders – it’s hard to see how anyone with a more than superficial knowledge of the problems facing the EU could rubber-stamp a narrative that has it marching into a new era of prosperity thanks to Angela and Emmanuel. Here’s why.

1. Macron’s capacity to reform France is over-estimated.

Most of the French population were glad Macron won the recent election for the sole reason that it meant Le Pen hadn’t. In fact, Macron is the least voted-for president of the Fifth Republic, with even the presence of a fascist at the gates of power not being enough to motivate people to turn out and vote for him (25% abstained and 11% spoiled their ballots in a country where turnout is consistently high). Macron benefitted from a ‘republican barrage’; the fraction of the population that actually adheres to his project is small.

If he pushes through his reforms – white papers which already promise a further raid on workers’ rights and the welfare state – then he risks pushback from a not-insignificant part of the population that have already been resisting Hollande’s attempts to do the same. Macron would not be the first president to arrive in office with an ambitious set of reforms only to carry out little of what was planned.

2. Macron and Merkel don’t see eye to eye – and neither do their governments.

Negotiations between Paris and Berlin are not off to a smooth start. Macron has begun his presidency promising to “re-found Europe”, while Merkel’s position is that the EU just needs something of a push in the right direction.

This divergence of opinion is already becoming stark. Recently, the finance ministers of the two countries met in order to work on concrete proposals to further integration in the eurozone. Only it seems that German Finance Minister Wolfgang Schaüble already has quite a clear idea of what these proposals might look like, and none of them include “a common budget for the eurozone, voted by a eurozone parliament and executed by a eurozone finance minister” as promised in Macron’s manifesto. Merkel gave a tempered reaction to these ambitions herself at a meeting of German industry, where she made clear that while she was open to discussion and could see the need for change, it was unlikely she would support a move to mutualising state debt. German voters are very averse to the idea of somehow having to foot the bill for the debts of other member states, and Merkel has an election to win. That said, the fact that Germany runs a massive trade surplus while others operate sizeable trade deficits is due in no small part to the current setup of the eurozone. Schaüble, if he had his way, would prefer to found a sort of IMF for the eurozone that will take over budgetary oversight from the Commission, which he sees as too political. This is a clear push for less democracy, not more.

3. Europe’s leaders still don’t understand the problem.

Schaüble is not alone in being far off the mark when it comes to Europe’s problems. It’s clear there are undercurrents of opposing thought within European institutions, as evidenced by a paper recently published on ‘Harnessing Globalisation’ recognising that the fruits of globalisation have not been shared equally by the EU’s citizens. But the paper rapidly changed tack and said the problem is mostly one of image, going on to suggest only minor changes. In short, the EU’s ruling class remains resolutely neoliberal, which means keeping democracy subservient to markets through the power of the state.

4. Changing the status quo remain’s a difficult process.

In any case, changes of any description remain as difficult to implement as ever. Poland under the right-wing, homophobic Law and Justice party has little in common in terms of political ambitions with Portugal’s minority left-wing government, and yet any meaningful change would have to appeal to both of them, and indeed all the other members as well. A unanimous vote on any serious proposition is required.

5. None of the big problems are going away in the meantime.

The result is that huge problems are going unaddressed. Greece, though no longer making headlines so often, is still in the midst of a debt crisis that is entirely the product of wrong-headed economic policy. Italy too is in a very fragile state, with public debt standing at 132%, and there is no sign that it is being dealt with any more intelligently.

Where debt restructuring is required, a stop-gap solution has been put in place instead. Since 2015, the European Central Bank has pumped €60bn into the eurozone every month in an effort to keep it afloat. It has been unable to announce an end to the programme for fear of retribution from the markets, and this untenable situation could unravel very soon. If former Italian PM Matteo Renzi, who is trying to return to power, calls an election next year, his opposition the Five Star Movement (FSM) has a non-negligible chance of winning, and the FSM has proposed an in-out referendum on the euro. This would most certainly push the eurozone past breaking-point.

In light of the scale of these challenges and the current situation, it seems clear that Europe remains on the same trajectory as it has had for the past two decades: drifting towards disaster for want of clear consensus on where it should be headed. The lack of harmony visible even in the early stages of the Macron-Merkel relationship shows that if there is to be hope of saving anything, it shouldn’t be placed in them.

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