Waiting for Merkron: The Franco-German Relationship and Eurozone Reform after the Elections. College of Europe Policy Brief #8.17, October 2017

Deters, Henning and Schoeller, Magnus G. (2017) Waiting for Merkron: The Franco-German Relationship and Eurozone Reform after the Elections. College of Europe Policy Brief #8.17, October 2017. [Policy Paper]

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Abstract

Executive Summary. France and Germany have fundamentally different interests concerning the Eurozone. Contrary to prevailing sentiment, the recent elections in both countries will therefore not necessarily reignite the Franco-German motor to bring about the pending Eurozone reform. > Although Merkel did not refuse Macron’s recent Euro reform plans, the ostensible agreement is owed to the fact that both sides mean different things when referring to an EU Finance Minister or a fiscal capacity to stabilize Eurozone economies. > Disagreement extends to strengthening the Eurozone’s social dimension and the revived idea of a European unemployment protection scheme. By contrast, France and Germany agree on protecting their labour markets. > Macron frames problems in innovative ways and exhibits a cooperative style. Despite differences, a renewed tandem may therefore be able to reform the Eurozone if certain conditions are met: External drivers, such as, the ‘refugee crisis’ and security concerns may facilitate cross-sectoral package deals; at the EU level, a rekindling of the Euro crisis could increase pressure on the tandem to make concessions; domestically, reform may be required as a continued ‘muddling through’ could further strengthen right-wing populists. > Not in the least, any Franco-German entente will need to respect the preferences of other member states, promote the Eurozone’s social dimension, and strengthen its democratic legitimation.

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