Germany’s Great European Heist
Two seemingly reasonable principles guide German thinking about eurozone integration: responsibilities and control must be aligned; and legacy risks must be settled before any pooling of risks among euro members takes place. But what if France applied Germany’s approach to eurozone integration to the question of mutualizing defense commitments?
NEW YORK – Two mantras guide German thinking about eurozone integration: responsibilities and control must be aligned (so no mutualization of risk without shared jurisdiction); and legacy risks must be settled before any pooling of risks among euro members takes place. Since 2010, these two refrains have shaped the entire discussion of how to shore up the euro, and they largely account for the anemic progress being made on the creation of a European banking union. Germany is ready to embark on a common future, its leaders say, but only if Europe starts from a clean slate.
At first sight, that proposition seems reasonable enough. But to understand its full implications, try applying the same logic to another policy field: security and defense.
What if France applied Germany’s approach to eurozone integration to the question of mutualizing defense commitments? What if the French were to insist, as an absolute precondition for further security cooperation, that Germany not only increase its defense budget immediately, but also make good on its accumulated backlog in defense spending from recent decades?
Germany has not always been a free rider on other people’s defense spending. West Germany was a reliable player in NATO’s Cold War system of burden sharing, and the Bundeswehr in the 1980s was a capable force. For better or worse, it stood in the tradition of German armies since the Kaiserreich. National service was the norm. Defense spending ran at 3% of GDP.
Then came the fall of the Berlin Wall in 1989. Germany embraced the peace dividend with a vengeance. Reductions in Germany’s armed forces and disavowal of weapons of mass destruction were written into the treaties that reunified Germany. But demilitarization also reflected societal shifts. Something in the political culture of the Federal Republic had changed.
More and more young men chose civilian over military service. In 2011, conscription was suspended. As a practical matter, that decision probably should have come sooner. Today’s best-functioning militaries are professional, not conscripted. But, in Germany, no positive image of the Bundeswehr’s new role emerged from the end of the Cold War model. Morale and functional capacity collapsed along with spending.
At NATO meeting after NATO meeting, Germany would commit to spending 2% of its GDP on defense. It never delivered. Spending slumped toward 1% of GDP, with the majority going to salaries and pensions. The latest NATO data show German spending on defense equipment and on research and development running at only 0.17% of GDP in 2017, compared to 0.42% in France and 0.47% in the UK.
Germany’s dearth of military investment has created a daunting gap between its defense capacity and that of the rest of Europe. Only a fraction of Germany’s weapons and military vehicles are operational. On Europe’s eastern border, only nine of the 44 tanks promised for the Bundeswehr unit that is supposed to anchor NATO’s 5,000-strong rapid-reaction force in the Baltics next year are fit for use. The unit also lacks other equipment essential for the mission, such as tents, winter clothing, night vision equipment, and body armor.
For the German left, which opposes the use of hard power, there is no reason to lament this lack of resources. But the gutting of the Bundeswehr also disables Germany’s ability to exercise soft power. In 2014, Germany’s humanitarian team to deliver assistance to Ebola-stricken Liberia was stranded in the Canary Islands. The German Navy’s large supply ships – those most useful for refugee rescue operations in the Mediterranean – will be out of commission for 18 months, owing to a lack of spare parts.
If the Bundeswehr’s guns don’t work, its frigates are in dry dock, and its logistical capacity is zero; what other commitments might the French taxpayer be taking on? By agreeing, year after year, to the mutualization of defense costs, what sort of incentives is France providing to Germany to undertake reform?
If the French were to apply a simple spending rule, they would find that since 1990 they had cumulatively spent 30% of GDP more than Germany on defense. If what the Germans are most interested in is France’s nuclear deterrence, the costs over the same period total approximately 4.5-5 % of French GDP.
So the legacy issues are considerable. Furthermore, given Germany’s ingrained post-military habits, backsliding is to be expected. What is French President Emmanuel Macron to make of the German budget announced earlier this month, which shows a marginal increase in defense spending but not enough to meet the NATO target, let alone to close past deficits?
German Chancellor Angela Merkel’s new grand coalition government may not look like a reliable security partner, but does that mean France should hold out until Germany has made good on its legacy defense debt before considering defense investments and mutualization in Europe?
Europe’s need to develop a twenty-first century security strategy is urgent, not only because Donald Trump’s America is unreliable, but also because humanitarian emergencies demand it. It must develop a shared culture and build democratic governance to decide on the deployment of its defense forces. That will involve deep cultural and political adjustments on all sides. Both Germany’s habit of free riding and France’s tendency toward trigger-happy postcolonial forays will have to be debated.
These issues are at the heart of developing a European sovereign, backed by democratic institutions and decision-making processes that enable the common use of force. But Europe cannot start from some imaginary tabula rasa. It must start from the place to which history has brought it. The quid pro quo that France should demand for cooperation on security policy is that Germany recognizes the same reality with regard to economic policy.
Here, too, the past must be taken as given. Starting positions are unequal and incentive structures are imperfect. But Europe must agree to move forward together nonetheless, or risk being torn apart.
Waiting for Germany
The European Union's political stagnation is becoming untenable in the face of mounting economic and geopolitical risks. French President Emmanuel Macron has signaled his willingness to pursue difficult EU-level reforms, so what is German Chancellor Angela Merkel is waiting for?
BERLIN – More than a decade after the 2008 financial crisis, the European Union is still stagnating politically. But the EU must be strengthened if the project of European integration is to succeed. Otherwise, the forces of the new nationalism will continue their assault on democracy, the rule of law, and the bloc’s other defining values.
The main reason that Europe remains at an impasse is Germany. For years after 2008, when the EU was confronting slow growth and mounting economic crises, Germany insisted that it could not move the European project forward alone, and that it would have to wait for France.
Then, in the spring of 2017, Emmanuel Macron was elected to the French presidency on the promise that he would push for EU-level reforms and modernize the French economy. But just when France was coming back on board, Germany was approaching its September 2017 general election, which resulted in significant losses for Chancellor Angela Merkel’s Christian Democratic Union and led to a months-long effort to form a new government.
In the same month that Germany voted, Macron delivered an impressive speech at the Sorbonne, in which he proposed specific reforms to stabilize the eurozone, create a common border-protection system, and establish a joint European defense initiative. At the time, Macron’s proposals received an icy response in Germany; seven months later, Germany still hasn’t offered any of its own.
Instead, Germany has remained silent on the question of Europe’s future, and has indicated that its primary concern is its own money. The bean counters in the Bundestag’s budget committee, it seems, have hijacked Germany’s European policy.
In the past, that policy was spearheaded by chancellors who understood the historic significance of European integration. Yet today, Merkel seems to have allowed the CDU’s backbenchers – and those of its Bavarian sister party, the Christian Social Union (CSU) – to shackle her in the lead-up to any negotiations over EU-level reforms.
Squandering the opportunity offered by Macron – which will not come again – would be the height of political folly and historical blindness. The transatlantic system’s two founding powers are in the process of bidding that system goodbye. The United Kingdom has opted to leave the EU, effective next spring. And the United States under President Donald Trump has questioned its transatlantic security guarantee and now is undermining the global trade system upon which Europe – and particularly Germany – has relied since the 1950s.
The threat of a Western denouement is shaking the economic and security pillars of European stability. China has emerged as a global power capable of pulling the world economy’s center of gravity away from the Atlantic and toward the Asia-Pacific region. Europeans now face the prospect of being left behind by both the US and China, not only geopolitically, but also in the key economic sector of the twenty-first century: artificial intelligence.
Europe also faces more immediate threats closer to home. Russian President Vladimir Putin is once again testing Eastern Europe’s borders by military means. Turkish President Recep Tayyip Erdoğan is taking his country further away from NATO and the West, while abandoning democracy and the rule of law. And the entire Middle East could slide into a prolonged crisis, fueling more migration to Europe.
The war in Syria shows just how weak Europe has become. Other than serving as a destination for refugees, the EU has become irrelevant in Syria. Worse still, those formulating Germany’s foreign policy seem to believe that there is no military solution there, and that only Russia can bring an end to the war.
This argument overlooks the fact that a military solution is now within Syrian President Bashar al-Assad’s grasp, thanks to the support he has received from Russia and Iran. It also overlooks the fact that Russia is in no position to stop the larger regional conflict, even if it wanted to. After all, Iran is not simply going to give up its land bridge to the Mediterranean Sea, and Israel is not going to accept the presence of Iranian Revolutionary Guards and missiles in Syria. In fact, the risk of a conflict between Israel and Iran in Syria and Lebanon now looms large.
These developments pose new challenges for Europe. On one hand, the EU needs to forestall a nuclear arms race in the region, not least by protecting the 2015 Iran nuclear deal, which Trump is now threatening to kill. On the other hand, the EU has an association agreement with – and historical responsibilities toward – Israel, so it cannot remain neutral or turn a blind eye to Iran’s hegemonic ambitions in the region.
With the exception of France and the UK (for now), the EU and its member states are decidedly unprepared for these risks. And that applies particularly to Germany, where the military has languished under years of austerity. The post-war US security guarantee allowed Germany to take a long break from thinking about strategic threats. But now that Trump has called into question America’s commitments to its allies, Germany can no longer count on such a favorable division of labor.
In financial matters, Germany regularly accuses other eurozone countries of not sticking to the rules and adhering to agreed austerity policies. In security matters, however, these accusations are coming back to haunt it. The era of free-riding is ending, and without the US, Germany’s only other source of defense is a stronger Europe, which certainly can’t be had for free.
Nobody expects Germany to adopt Macron’s proposals wholesale. But at a time when the foundations of the global order are shifting at Europe’s expense, marginal reforms will not suffice, and Germany has neither set out its own vision of a stronger Europe, nor shown a willingness to take action and make the necessary investments. Europe and the West need a Franco-German response equal to that once provided by François Mitterrand and Helmut Kohl, and by Charles de Gaulle and Konrad Adenauer before them. And they need it now. History will not stand still.
How Macron Can Unite Europe
Pushing for the creation of a fiscal union without a political union could forever block the road to European unification, and set the people of Europe against one another more than the euro ever did. If French President Emmanuel Macron really wants to unite Europe, he should focus on strengthening defense partnerships.
MUNICH – Emmanuel Macron’s victory in the French presidential election sent a wave of relief and euphoria across Europe. But now a reality check is in order, because we do not yet know how the new president intends to restore the French economy. The country suffers from an unemployment rate of nearly 10%, and its manufacturing sector is still operating 12% below its level before the 2008 global financial crisis.
Macron has indicated that he does not want to increase the retirement age, change the 35-hour workweek, or make it easier for firms to dismiss workers. At the same time, he wants northern eurozone countries to send money to southern countries, to protect French financial and economic markets in these regions.
This is an admittedly broad-brush portrayal of the program that got Macron elected, but it is nonetheless to the point. What else could he possibly mean when he calls for a newly created eurozone finance ministry that can accrue jointly guaranteed debt and collect its own taxes. What about when he asks for common eurozone deposit protection and unemployment insurance? The motive behind these ideas is all too obvious: support the domestic economy at others’ expense.
Macron also supports proposals for a new eurozone parliament, proclaiming a two-tier Europe. But that is simply a recipe for splitting up the European Union.
Turning the eurozone into a transfer union with its own parliament would only deepen the divide between the eurozone countries and the EU’s northern and eastern member states: Denmark, Sweden, Poland, the Czech Republic, Croatia, Hungary, Romania, and Bulgaria. Because most of those countries will not join a European transfer union, they would be cut off permanently. As Donald Tusk, the Polish President of the European Council, has wryly observed, we already had a two-tier Europe up until 1989, and we should not wish for a return to that arrangement.
German policymakers, for their part, could not easily help Macron bifurcate the EU even if they wanted to, because Germany’s constitution grants the Bundestag the inalienable authority to manage the country’s fiscal affairs. Even if every single member of the Bundestag agreed to transfer part of its fiscal sovereignty to a European-level institution, such a decision could still be made only through a formal referendum.
Germany’s powerful Constitutional Court has already made it clear that eurozone bailouts and other interventions represent the outer limits of what is possible under Germany’s Basic Law. The court may have deferred to the European Court of Justice on the question of the European Central Bank’s “outright monetary transactions” scheme; but it will not be able to do the same with respect to fiscal sovereignty, because the constitution is clear, and the ECJ has no standing to interpret German constitutional law.
That being said, it is important that European integration moves forward. There is still much work to do to improve the EU’s cross-border traffic routes, and to strengthen its security partnerships. Indeed, Europe should take a lesson from the wars of the twentieth century and do away with national armies altogether. Only then will Europe’s union for peace become a reality, and not just a platitude invoked by politicians.
During the post-war era, European heads of state drafted a treaty to establish a Western European defense community. But the proposal fell through in 1954, owing to a veto by France’s National Assembly, against the recommendation of Charles de Gaulle, the legendary post-war president. Later, the United Kingdom opposed a joint European military.
But the UK will no longer be a part of the EU, at least for the foreseeable future; and France has a young, dynamic new president. So it is time to try again. The German people can probably be persuaded to agree to this form of integration, in the same referendum that will have to be held, anyway, to approve Macron’s fiscal plans. The same can be said for the people of Eastern Europe.
By pursuing true political integration based on a common army and security partnership for the entire EU, Macron can guarantee his place in the history books. To achieve this goal, however, he will have to break from the precedent set by his predecessors, who always categorically ruled out a political union. And he will have to acknowledge Germany’s concerns that by establishing a fiscal union now, Europe would lose the opportunity to pursue a political union in the future.
Combining Europe’s military forces under a joint command is the only way forward. Creating a fiscal union without a political union would forever block the road to European unification, and set the people of Europe against one another more than the euro ever did. No one who wants to build a union for peace can afford to permit, much less encourage, that outcome.
Can France and Germany Come Together?
The crisis in Catalonia and the resilience of European populists have made a well-functioning Franco-German partnership more important than ever. But if the European project is going to have any chance of surviving, the gap between German prudence and French audacity will have to be bridged.
PARIS – Seven months ago, when Marine Le Pen of the far-right National Front had a chance of winning the French presidency, Germany feared for France’s future. But after Germany’s federal election in September, France has not been particularly afraid for its neighbor. The extreme-right Alternative für Deutschland (AfD), for all its gains, is not about to come to power. Germany, after all, is not Austria.
Nevertheless, French and German elites have found a common cause for concern: Germany may be unable to seize the exceptional opportunity created by French President Emmanuel Macron’s victory. Before, the problem was not that Germany was too strong, but that France was too weak. Now the problem is not that France is too ambitious for Europe, but that Germany is not ambitious enough.
For years, Germans complained that France was incapable of domestic reform, and that the French did not understand the meaning of “federalism” in the context of the European Union. Against that backdrop, Macron took the stage, presenting himself as an activist philosopher-president. He is a disciple of the French philosopher Paul Ricœur, and speaks of “European sovereignty” in the same way that German philosopher Jürgen Habermas speaks of “European citizenship.”
It will be difficult to strike a harmonious balance between a French president at the dawn of his power and German Chancellor Angela Merkel, who seems to be in the twilight of hers. Above all, it will require Germany to match France’s new audacity.
Of course, Germany’s suspicion of greater risk-sharing in the eurozone, which Macron’s EU reform agenda seems to imply, is understandable. For Germans, that sounds like an updated version of the old EU mantra: “Germany will pay.” But the enthusiasm gap between the two governments need not be an unbridgeable abyss.
Le Pen often quipped during the French presidential campaign that, “Whatever the election results, France will be governed by a woman: It will be either me or the chancellor of Germany.” The line was witty and provocative; but it was also wrong. Today, Le Pen is well on her way to being a mere detail of history. And while Merkel is still the wise statesperson to whom much of Europe looks for leadership, she is no longer in a position to set the EU’s agenda unilaterally.
Clearly, French and German politics are on different emotional trajectories. Germany is more or less satisfied with itself and its place in the world. Merkel’s decision to open the country’s borders at the height of the refugee crisis surely cost her previous coalition votes in September’s election. But, on the whole, Germans remain unwilling to change a European status quo that has proved highly successful for their country.
France, by contrast, feels that change must come now or never. If France and Europe wait until tomorrow to do what should have been done today, then all will have already been lost. From France’s perspective, history seems to be accelerating. The United Kingdom is currently negotiating the terms of its withdrawal from the EU; Catalonia’s regional parliament has just declared independence from Spain; and populism is resurgent in Central and Eastern Europe.
If France wants to remain relevant in Europe, it must use the current moment to reform itself. And if the EU wants to remain relevant in the world, especially now that America has lost its way, it needs to put European integration back on track.
The gap between France and Germany is largest when it comes to defense and security, owing to a deep cultural divide between the two countries. To be sure, most French and German citizens identify as European, as opposed to UK citizens, who identify as British – or even as English, Irish, Scottish, or Welsh. This is why German and French critiques of the EU generally focus on the bloc’s performance, whereas the British often strike at the European project itself.
But when it comes to security and defense, these affinities are reversed: France and Britain are very likeminded, while Germany, owing to its history, has long shied away from martial pursuits of any kind.
Of course, there are many differences between Britain and France with respect to how they engage with the United States and NATO. The UK is naturally closer to NATO than France is. But the UK, mortified by US President Donald Trump, has also grown more distant from the US, while France, under Macron, has grown somewhat closer. Unlike Macron, British Prime Minister Theresa May is not convinced that she can charm Trump.
The Franco-German partnership has long been the pillar of EU stability. And given the deepening crisis in Catalonia and the resilience of European populists, the bilateral relationship is more important than ever.
Put bluntly, Macron and Merkel represent European liberal democracy, based on reason and openness, in contrast to the populist vision represented by Hungarian Prime Minister Viktor Orbán and de facto Polish leader Jarosław Kaczyński. With recent elections in Austria and the Czech Republic moving Central Europe toward what might be called an Austro-Hungarian populist empire, Germany has as much at stake in successful EU reform as France does. The ball, as the Americans say, is in Merkel’s court.
Jean-Claude Juncker’s Dangerous Defense Strategy
Post-mortems of this year’s Munich Security Conference amounted to something of an indictment of the increasingly rudderless global order. The one big idea – European Commission President Jean-Claude Juncker’s call to shift authority over foreign and defense policymaking in the EU from the member states to the Commission – is a very bad one.
MADRID – These days, there are just three events that bring together all of the main actors in international politics: the annual General Debate of the United Nations General Assembly, G20 summits, and the Munich Security Conference. That makes it all the more disappointing that the latest MSC, which took place in mid-February, brought only one big idea – and not a good one.
The MSC has long been a place not just to see and be seen, but also to hear and be heard. Yet, at this year’s meeting, what was not said seemed to speak louder than what was. Post-mortems of the gathering amounted to something of an indictment of the increasingly rudderless global order. Observers largely focused on how little in the way of new ideas or innovative solutions there was, despite much handwringing about the state of the world.
This stands in stark contrast to years past. In 2015, the MSC helped to generate momentum for the subsequent deal on Iran’s nuclear program. Last year, it was at the MSC that key members of US President Donald Trump’s administration first met their global counterparts. In 2007, Russian President Vladimir Putin famously used the MSC to present his stark worldview, in a speech that presaged Russia’s interventions in Georgia and Ukraine.
At this year’s conference, the one big idea was European Commission President Jean-Claude Juncker’s call to shift authority over foreign and defense policymaking in the European Union from the member states to the Commission. But, while Juncker is right to assert that the EU should take steps to ensure that it can act effectively in world politics, his approach is deeply flawed.
To assume a leading role in the world, the EU needs a culture and incentives that support genuine cohesion and cooperative action. Rather than take the time to achieve that, Juncker wants to take a short cut, arguing that, when it comes to foreign and defense policies, the EU cannot be required always to achieve unanimity.
And yet the EU is founded on an agreement that, in exchange for membership, states relinquish a certain degree of sovereignty in some areas. But foreign and defense policy are areas where states are supposed to retain authority. Flippantly attempting to change that bargain eschews political realities and threatens to set the European project on a dangerous course.
Juncker’s proposal at the MSC echoes similar recommendations on the single market, which he floated in his 2017 State of the Union address. Both are part of a broader effort to shift power from the European Council to the Commission – an effort that Juncker buttressed by recently appointing his Svengali, Martin Selmayr, as the Commission’s secretary-general, the body’s top civil-service job.
Now, Selmayr – who, as Juncker’s chief of staff, has been compared to figures like Machiavelli and Rasputin – will have far greater influence, including over the selection of a new Commission president next year. The way the appointment was carried out – shrouded in secrecy, in order to avoid the involvement of member states – should do more than raise eyebrows.
But such machinations are merely a symptom of a deeper problem with Juncker’s approach. The problem is not that his approach may succeed – a functioning United States of Europe would achieve a lot – but rather that it cannot. Europeans are simply not prepared to cede more sovereignty to the EU.
Since the global financial crisis erupted a decade ago, Europe has been firmly in inter-governmental mode. The last thing it needs is another grand-sounding scheme that it is not in a position to carry out. Between the Economic and Monetary Union, the Banking Union, and the Energy Union – each of which was launched with great fanfare and is now adrift – the EU already has plenty of those.
Rather than politely applauding castles in the sky, EU officials and member governments need to work, with a frank and realistic mindset, to build consensus on foreign and security issues. This means not changing the rules at the top, but rather building cohesion from below.
To ensure that this effort does not end up being dragged out interminably, as so many EU discussions do, we should begin with concrete objectives. The Permanent Structured Cooperation in the field of defense – agreed by the European Council last December – is a good place to start, with countries increasing, for example, joint strategic planning at the European level. Inspired by German Chancellor Angela Merkel’s recent proposal to tie EU funding to the acceptance of migrants, member states should also work to create stronger incentives for cooperation.
There is no question that it is difficult for 27 sovereign countries to act as one. But, as tempting as it may be, trying to paper over differences or avoid dissent – let alone destroying the compact at the core of the European project – will not make matters any easier. The only way to get where Europe needs to go is through a realistic and gradual effort to build unity. For Europe, it is this that should be the key lesson of the MSC.