Angela Merkel’s interview last week-end, in the Frankfurter Allgemeine Zeitung, doesn’t not really change the usual German answer on the renewal of European institutions. Her responses remain at odds to Macron’s proposals.
The main difference between France and Germany on the European question is that France thinks that there is an advantage in explicitly coordinating economic policies. A budget can and must do that. This implies a significant intervention capacity which can
be measured by several points of GDP as it has been stressed by Macron and Sarkozy before him.
On the German side, co-ordination is implicit if one respects the defined rules, in particular those which could be taken in the case of a help from the EMF (European Monetary Fund which would take over the European Stability Mechanism. It would be different from the IMF which has a too friendly approach to the Greek debt restructuring). In other words, the adjustment mechanism requires respect for the “right rules” (budgetary austerity) and therefore deeply reducing the need for state intervention.
The coordination advocated by France is the vision of risk sharing within a political entity (the Euro Area) while the German option is that of not sharing the risk because if everyone behaves “in the right way” no country has a risk to share. Continue reading