Leading together or opposing each other? Germany, France and the European banking union

Schild, Joachim (2015) Leading together or opposing each other? Germany, France and the European banking union. [Conference Proceedings] (Submitted)

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Abstract

Introduction: Many observers consider the steps taken towards a European banking union since 2012 as the most important instance of deepening European economic integration since the Maastricht Treaty and the start of the European Monetary Union (EMU). In the past, France and Germany played a leading role in setting the agenda for and paving the way towards EMU (Schönfelder/Thiel 1996; Mazzucelli 1997; Dyson/Featherstone 1999). The dominant scholarly explanation of the move towards EMU is an intergovernmental one, albeit with diverging interpretations as to the underlying rationale based on either geopolitical (Baun 1996) or mainly economic motives (Moravcsik 1998). In the case of EMU, Franco-German bilateralism “operated as the inner link within the wider EMU negotiations. (…) Political leadership from Kohl and Mitterrand acted as the vital animating and organizing force behind the EMU negotiations, assisted by Delors in oiling the wheels of the process” (Dyson/Featherstone 1999: 757-58). A similar pattern of Franco-German leadership gradually emerged in critical phases of the Eurozone’s crisis. After a hesitant start in 2010, France and Germany took center stage in the EU’s dealings with the existential crisis of the euro area and its common currency thanks to high frequency bilateral contacts, common proposals and a systematic and high level bilateral preparation of important European summits (Schild 2011; 2013; Jamet et al. 2013). This “Merkozy” phase of very intensive bilateral consultations and cooperation between chancellor Merkel and president Sarkozy ended – at least temporarily – with the election of the new French president François Hollande in May 2012. This was exactly the time when the European Council meeting of 29 June 2012 started the EU’s decision-making process leading to a banking union. In how far, then, can an intergovernmental explanation based on the role of Germany and France as key actors in this play account for the establishment of a banking union’s basic pillars between 2012 and 2014? And to what extent, if any, did the two core members of the EMU exert a common political leadership in bringing about a European banking union? In order to provide some answers to these questions, this paper proceeds as follows. First, we lay out our understanding of a (Franco-German) leadership role inside the European Union. Then we sketch the basic preferences of Germany and France with regard to a number of core issues that sparked controversies in the negotiations on a European banking union. Finally, we trace the process of negotiations, concentrating on how France and Germany dealt with their divergences and distributive conflicts and asking in how far Franco-German bilateralism played a helpful role in setting the agenda, in moving the process down the road, and in bringing about the crucial final compromises.

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