2018: The year the European Union stands and delivers?

After a year of challenges from the populist far right, Europe looks set for an opportunity to reform. French President Emmanuel Macron and German Chancellor Angela Merkel – if she can assemble a coalition – may not get a better chance.

At this time last year, the Dutch, French, and Germans were heading toward elections whose stakes were no less than the endurance of the European Union.

The postwar project did more than survive the far-right rebellion of 2017: The victory in May of French President Emmanuel Macron over the Euroskeptic Marine Le Pen gave the bloc a decisive boost.

And while Germany currently faces uncertainty as Chancellor Angela Merkel seeks to build a “grand coalition” between her center-right party and the center-left – a deal that could still break down before it is endorsed Sunday – the prospect of another Merkel term looks to be increasing after months of political limbo.

Both leaders face competing expectations between what the world demands of them and what their domestic audiences want. But if a “grand coalition” is formed in Germany, allowing Ms. Merkel and Mr. Macron to renew the Franco-German partnership that is at the heart of the bloc, many see an opening to act on reforms to deepen the integration of the EU – now that eurozone economies are taking off after the debt crisis, and citizen optimism in the European project is at its highest in years.

“This is the moment. There is not going to be another moment coming like this any time soon,” says Jan Techau, director of the Europe program at the German Marshall Fund of the US in Berlin. “It is now delivery time. Some people say it’s the last hurrah of mainstream politics. If they can’t deliver now, on social reform, on protecting voters and giving them a sense of being protected, the real populist moment could come, and not just some failed Le Pen revolution.”

Europe on the rebound?

“Europe is back,” Macron declared last week on a trip to China as negotiations were underway in Germany. In many ways it is this kind of pro-EU stance, with its roots in his campaign, that accounts for some of the mood shift across Europe. Macron gave a major policy speech in September outlining his vision for the future of Europe, including a more integrated eurozone.

Sébastien Maillard, director of the Jacques Delors Institute in Paris, calls him “the most proud European we’ve ever had in the Fifth Republic.” Still, says Mr. Maillard, it won’t amount to much without a German party that supports him, since “you can’t do Europe all by yourself,” he says. “There has to be this year a new and clear, concrete European outcome. And that historically requires, and still does require, a strong Franco-German engine.”

The coalition talks between Merkel’s Christian Democrats (CDU) and the Social Democrats (SPD) is Merkel's second attempt, after failing the first time to score a deal with the Greens and Free Democrats. But this time, EU reform is a much higher priority in the talks, due to SPD leader and former EU Parliament President Martin Schulz's role in them.

In the 28-page document that outlines a future government in Berlin, the first three pages are dedicated to European reform. Merkel hailed a “new dawn for Europe.” That benefits Macron, as it aligns more closely with his reform agenda.

But Josef Janning, head of the European Council on Foreign Relations Berlin office, says that alignment would only go so far when it comes to risk and burden sharing. Germany's proposals include better tools for staving off financial crises in the eurozone and a bigger German contribution to the EU budget. But Macron has been pushing for greater financial harmonization and integration, beyond that which Germany may be comfortable with.

“Macron was thinking about a new founding of Europe. That is not the spirit of the prospective grand coalition in Berlin,” Mr. Janning says. Still, he says, it represents a “strong rhetorical commitment to Europe and to Franco-German cooperation.”

Moves toward further integration could backfire among Euroskeptic publics, but the reforms come at an optimistic time. According to a Eurobarometer poll published in December, 74 percent in the eurozone support the currency, its highest level since 2004. Forty percent of EU members say they have a positive image of the bloc (37 percent feel neutral). That number jumped to 75 percent in a different poll where respondents were only given a choice between negative or positive. One of the most positive views comes from the Netherlands, the first country last year to face a potential populist surge under Geert Wilders, who ended up polling lower than expected in March 2017.

That support doesn’t surprise Amsterdam resident Paul Van Der Ploeg. “The populists are shouting very loud and the media is paying a lot of attention,” he says. “But at the end the silent majority are quite happy and optimistic.”

'Something you want to live in'

Macron and Germany’s next chancellor face huge challenges in Europe, from the separatist movement in Spain's Catalonia and Italian elections slated for March that could show a further fraying of mainstream politics, to the continued Brexit negotiations and Poland and like-minded allies in the east who have butted heads with the EU over refugees and the rule of law.

German and French leadership also faces an uncomfortable dichotomy. If the liberal world, dismayed by Brexit and President Trump’s election in the US, looks to the young Macron and the steady hand of Merkel to uphold its values, the two face different expectations at home.

The case and point is the coalition negotiations underway. If a “grand coalition” is the most pro-EU scenario, it’s not necessarily what Germans want. The youth wing of the SPD, for example, went on a canvasing tour over the weekend against a Merkel-led coalition so the party, which fared its worst since 1949, can return to its leftist roots.

Macron also faces skepticism at home. So far street protests have not undermined his labor reforms, despite attempts by the hard-line CGT union, France’s biggest, to stop him. Still, union boss Philippe Martinez says that amid high abstention and fear of the far right, Macron’s victory was not a resounding endorsement of his agenda that ensures success ahead. Macron has been under fire in recent weeks, including from former allies, for a hard stance on migrants. “We consider he was elected by default, not because people really wanted him,” he says.

There is a parallel in EU attitudes. Many citizens are not impassioned defenders, but in a troubled time, with Trump, Brexit, North Korea, and Russia rumbling, they see the bloc as the less risky option. Macron is trying to change that with a series of constituent meetings to put energy behind the idea of Europe, says Maillard, which he aims to take around the continent. “Macron is doing all he can to make Europe not just something you have to live with, but make it something that you want to live in,” he says.

He may have more space to reinforce that message, as 2018 sees a respite – if not a complete one – from Euroskeptic candidates. Janning says Europe needs to take back the narrative to restore citizen confidence.

“People don’t know what to think anymore, with all of the talk of populists who have rather successfully confused people into thinking they have to decide whether they are European or national,” he says. “They don’t have to. ... The EU was not created to compete with member states but to complement member states.”