In Macron, Germany sees an opportunity to aid France – and boost the EU

The new French president has made economic reform a top priority in his country – something that Germany has long demanded. Now Berlin is indicating a willingness to meet Macron in the middle, by using German resources to help his project.

There are few Europeans more hopeful over the election of Emmanuel Macron in France and its bearing on the European Union than those in the Pulse of Europe movement.

The group that has been leading weekly pro-EU rallies since last fall in a rare burst of Euro-optimism gathered, fittingly, outside the German chancellery Monday as President Macron arrived in Berlin for his first trip abroad. Many draped in EU flags, the group chanted “Jetzt auf geht's,” or “Europe, let's go!” as Macron headed to a meeting with German Chancellor Angela Merkel.

Mr. Macron’s victory on a decisively pro-European platform has turned him into a beacon to those wishing to move the EU beyond its Euroskeptic troubles. The 39-year-old former investment banker is seen as the best hope to strengthen France, and thus bring balance back to the Franco-German relationship that is so crucial to the project’s viability.

But if Europeans like Pulse of Europe activists are looking to him, there is also a shifting inward of gazes – nowhere more so than in Germany, which, as the powerhouse of Europe, has set the tone and the rules of the European playbook over the past decade. Since confidence in the EU has plummeted, Germany and France have spent much time in familiar roles: Germany as the responsible player and France as the pesky one, resistant to any reform proposal.

Now there is an opening.

While Macron promises to tackle unpopular reform at home, many Germans say they also need to meet him in the middle on economic matters, even if that puts Germany outside its comfort zone. “Both sides need to change in order for this relationship to be much more balanced in the future, and that is a learning process on the German side because for too long we have been very arrogant vis-à-vis France,” says Thorsten Benner, director of the Global Public Policy Institute in Berlin.

“Many treat France almost as if it were a basket case, where actually economically it has a lot of strengths,” from its banking industry to high productivity throughout many sectors, says Mr. Benner. “We need to adapt and see France with different eyes, and Macron can help.”

Bridging North and South

The Franco-German motor at the heart of the EU has started to sputter due to weaknesses in the French economy – which, in turn, has sparked clashes between the nations over deeply held views of how to move forward. While Germany, valuing savings and credit worthiness, runs an enormous surplus – Benner notes in a Foreign Affairs piece that the surplus is 35 billion euros with France alone – France’s economy has remained largely stagnant. That has translated into stubborn French unemployment rates of about 10 percent (up to 25 percent for youths) and greater Euroskepticism. While Germany underwent painful labor reform in the early 2000s, France has resisted deep structural reform, striking at attempts to loosen labor laws, with a preference on public spending.

Enter Macron. The new French president noted even before he launched his campaign that a bridge needed to be built to unite the “North” and “South” of Europe, with Germany leading the former and France considered the periphery of the latter. To meet German desires, Macron has promised to lower the deficit to 3 percent of the GDP, in part by cutting public spending and by making labor laws more flexible. But he has also said he wants Germany to assume more risk within the eurozone, such as with a joint eurozone budget for infrastructure and other projects that would entail deeper economic integration.

Before any of this, major challenges stand in the way.

Macron faces legislative elections next month where he will attempt to get a majority to push through his reform agenda. Germany holds national elections in September, when Ms. Merkel will seek a fourth term. While her Christian Democrats are polling on top, particularly after a decisive victory Sunday in Germany's most populous state of North Rhine-Westphalia, no major reforms are likely until at least the late fall.

Still, the two leaders are already signaling an understanding on the need to accommodate each other.

Merkel said yesterday that Germany depends on a “strong France,” while Macron attempted to ease German concerns that France will want Germany to pay more for EU troubles. Ahead of his trip Macron, who promised to draw on the strengths of the right and left, named Édouard Philippe, a conservative and German-speaker, as French prime minister.

Such signs have given new wind to pro-EU liberals like those forming Pulse of Europe, which began in November in Frankfurt after the shock of Brexit and the election of US President Donald Trump.

Soscha zu Eulenburg, a Pulse of Europe participant awaiting Macron’s visit in Berlin, says she has faith in a functional Franco-German relationship moving forward – and that Germany has a role to play. “Macron must succeed with his ideas, and we must help him in any way that we can,” she says.

'A game changer'

It’s not as easy as that, of course. Doubts hang over Macron.

Beyond his 66 percent victory over anti-EU candidate Marine Le Pen lies the fact that more than one-third of French voters didn’t vote in the runoff, or cast blank ballots. And Germans are still deeply skeptical about a French commitment to reform: the same process they underwent, loosening worker protection but shoring up their economic strength today. The mood is best illustrated with a Bild headline the day after French elections, which asked, “How much will Macron cost the Germans?”

This reflex has deep roots, and was encouraged during the eurocrisis by politicians who perpetuated a “morality tale” of the “virtuous Germans” against the “freespending Southerners,” mostly for political expedience, Benner says. The dynamics of the Greek crisis, in particular, hardened positions as Greek politicians tended to project blame squarely on Germany. This is where Macron could help shift perspectives.

“Macron can be a game changer,” says Benner, because he admits to the need to reform at home, which will benefit France and then the EU. “That might actually lead to a much more constructive engagement.”

He points to many hopeful signs, including recent statements by conservative Finance Minister Wolfgang Schäuble. A financial hardliner, Mr. Schäuble would be one of the least likely to support softening on France. But even he has shown flexibility – for example, telling Der Spiegel that Germany’s trade surplus is too high.

Franziska Brantner, a federal lawmaker from the Green party, says that Macron must be given space and patience to carry out reform that can ultimately bring Germans on board – and secure its own position. “Germany can be convinced to pay more if it sees itself as a beneficiary of reforms coming out of the national level too,” she says. “Germany might need the EU to help it out one day too.”

Indeed, many Germans might be convinced now simply because they find the alternatives so unpalatable. During the height of Europe’s sovereign debt crisis, strains on the EU were mounting but its viability was unquestioned. That all changed in 2016.

Maxim Nitsche, a dual French-German citizen and co-founder of educational mobile app MATH 42, says France must prepare to undo some regulations in the labor market, no matter how unpopular they will initially be domestically. Yet Germany and other EU countries must strike a compromise with France, particularly by being willing to spend more on joint-EU initiatives such as infrastructure and education.

“If we don’t want … a surging far-right movement, we have to do whatever we can to communicate and find purposeful solutions where all countries and their people are beneficiaries,” he says. “The rest of the world is going forward. We need to be willing to change too.”