LONDON – With Germany’s election over, Europe has reached the end of a season of continuous political upsets. It is now time for actions that adequately respond to the upheavals created by all these votes.

Frans Timmermans, the European Commission’s first vice president, last year described the state of Europe as “multi-crisis”: Brexit, refugees, “illiberal democracy” in Hungary and Poland, the still-unresolved euro crisis, and the geopolitical risks attributable to Donald Trump and Vladimir Putin. All are challenging the “European project” that began 60 years ago with the Treaty of Rome.

But crises invariably create opportunities. And last year’s multi-crisis has produced a convergence of opportunities. European leaders no longer have an excuse for inaction while they wait for voters’ next rebuff.

Economic reforms in France, German unease about refugees and the euro, new attitudes toward European integration in Brussels, and signs that Brexit will be delayed indefinitely or even completely averted: all have created new possibilities for taming the dangerous forces unleashed by last year’s populist revolts. But realizing these opportunities will require four simultaneous political and economic breakthroughs across Europe.

France must act on over-regulation and excessive public spending. Germany must rethink fiscal austerity and monetary dogma. Britain needs a turnabout on nationalism and immigration. And European Union officials must abandon their obsession with driving all member countries toward an “ever-closer union” that many of their citizens do not want.

Without simultaneous breakthroughs on all four fronts, it is hard to imagine progress on any of the separate aspects of the multi-crisis. For example, any easing of German-inspired austerity will require evidence of economic reform in France; but French reforms will succeed only if Germany agrees to more generous fiscal rules and supports monetary policies that benefit the eurozone’s weaker members.

Similarly, Brexit could be averted or indefinitely delayed if the EU offered an extension of the negotiating period beyond March 2019 and suggested some modest concessions on immigration and welfare payments. But European leaders would consider offering such concessions only if they saw clear evidence that British voters were changing their minds about leaving the EU.

Now consider the German voters who have turned against Chancellor Angela Merkel and her SPD coalition partners, mainly because they resent what they see as uncontrolled immigration and unjustified transfer payments to Greece. These voters will oppose the fiscal and monetary integration required to stabilize the eurozone if they think their money will be spent on subsidizing poor countries on Europe’s periphery that refuse to cooperate on refugees and fail to abide by EU laws.

The only way to convince German voters that their money will not be misdirected would be to create separate political institutions and a separate budget for the eurozone. This is the proposal advanced by French President Emmanuel Macron and supported in principle by Merkel. But plans for such a two-track Europe can advance only if Merkel can overcome German nationalists who want to break up the single currency, and only if Macron can silence integrationist zealots in Brussels who want to force all EU countries to join the eurozone.

At first sight, simultaneous progress on many fronts seems too much to hope for. After all, if the necessary breakthroughs in France, Germany, Britain, and Brussels were each a 50-50 coin-toss, the probability of all four coins landing “heads” would be only 6.25%.

Fortunately, there are at least two reasons for dismissing such apparently logical scepticism. First, the political and economic decisions that leaders across Europe now face are anything but independent. What happens in Paris, London, and Brussels will depend crucially on the government program that Merkel negotiates with her eventual coalition partners in Berlin. And Germany’s coalition agreement will, in turn, depend on Macron’s diplomatic skills in advocating a distinct politico-economic identity for the eurozone.

Equally important, the EU bureaucracy will have to embrace – enthusiastically – the concept of a two-track Europe. This means abandoning the assumption that all EU members are heading for the same destination, and an end to treating non-euro countries as second-class laggards (described condescendingly as “pre-ins”).

Now, suppose that EU leaders recognized that the only feasible way to maintain European stability and progress would be by adopting the two-track or “concentric circles” model, with a more politically integrated eurozone surrounded by a looser economic confederation of non-euro countries. Under these circumstances, Britain would be likely to change its mind about Brexit.

Failing that, Britain would spend several years in a transition limbo and would then almost certainly re-join Sweden, Denmark, Poland, Hungary, and the Czech Republic in the outer ring of EU countries that object to the pooling of sovereignty required by the euro. This outer orbit would also attract Norway and Switzerland through the irresistible pull of economic gravity.

This points to the second reason to believe that EU leaders could achieve simultaneous political and economic breakthroughs across Europe. The necessary decisions in Paris, Berlin, London, and Brussels are not just a random coin toss. There are strong incentives for voters and political leaders in all democratic countries to take decisions that support economic prosperity and political stability, once it becomes obvious that all the alternatives are economically damaging or politically dangerous.

This is the point that French voters arguably reached in April when they elected Macron, and a similar turning point is rapidly approaching in Britain, as the risks and contradictions of Brexit become ever clearer. All that remains is for Germany to recognize that its prosperity and security depends on a more integrated eurozone inside a more flexible EU.

PARIS – In an ambitious, visionary speech at the Sorbonne this week, French President Emmanuel Macron presented his plan for countering the tide of xenophobic nationalism in Europe. He wants to build a “sovereign, united, and democratic Europe,” where citizens again feel a sense of allegiance to the idea of Europe itself.

Macron’s speech was a welcome call to arms for a European Union that is confronting many crises and threats. But on the crucial and controversial question of fixing the eurozone, his proposals were disappointing. And he will have a hard time winning over his more cautious European counterparts, not least German Chancellor Angela Merkel, whose room for maneuver was crimped by her party’s poor showing in last weekend’s federal election.

Still, Macron made a powerful, positive case for a renewed EU. That EU embraces globalization and innovation, while also protecting Europeans, doing more to help them adapt to a changing world. It advances European interests and values in a world otherwise dominated by America and China. And it bolsters security at a time of increasing Russian revanchism, Islamist terrorism, and American disengagement under President Donald Trump.

Macron combined big ideas with many concrete proposals for closer cooperation on defense, migration, the environment, innovation, education, and much else. Better still, he outlined a political strategy for seeing his proposals through. Macron mused that, if he succeeds, a “Brexiting” Britain “may one day find its place again” in an overhauled EU, along with new members from the Western Balkans.

Under Macron’s plan, each EU member state would hold democratic conventions to debate citizens’ priorities. Their ideas would feed into a broader process involving the EU institutions and governments that want to overhaul Europe. Coalitions of willing governments would then integrate faster, with a revitalized Franco-German engine driving the process forward.

The ball is now in Germany’s court. Europe could very well succumb to nationalism if Macron’s plan fails. That would be devastating for Germany, a country whose economic success, political identity, and security are based on a strong, functioning EU.

Macron is the most pro-German French president imaginable, and he has boosted his credibility by pursuing difficult labor-market reforms and unveiling a Teutonically prudent budget. Germany would be committing a monumental strategic blunder if it did not engage seriously with his proposals.

Unfortunately, Germany’s domestic politics just got trickier. Macron had timed his speech to influence the post-election coalition negotiations there, with the hope that Merkel would use her fourth and likely final term to burnish her legacy by enacting bold European reforms. Macron was also counting on Merkel’s Christian Democratic Union (CDU) to maintain its grand coalition with the Social Democrats (SPD) and their leader, former European Parliament President Martin Schulz.

But German voters had other plans. The CDU and its Bavarian sister party, the Christian Social Union (CSU), lost support, and the SPD fared so poorly that it has decided to return to the opposition. At the same time, the far-right, anti-EU Alternative for Germany (AfD) stormed into the Bundestag with 13% of the vote, and has pledged to “hunt” Merkel down.

Merkel, now politically weakened, must try to cobble together an unruly coalition that includes both the Europhile Greens, who welcomed Macron’s speech, and the Euroskeptic Free Democrats (FDP), who were hostile to it. And while the AfD attacks her right flank, rivals within her own party will be jostling to succeed her. Against this backdrop, even small compromises will be politically fraught.

Macron’s eurozone-reform plans will be the biggest bone of contention. He wants to create a eurozone budget, funded by corporate-tax revenues. The joint budget, which would make investments and provide a cushion during economic downturns, would be overseen by a eurozone finance minister, who would answer to eurozone countries’ representatives in the European Parliament.

But Germany is skeptical of what it sees as a “transfer union,” in which its taxpayers would hand over cash to profligate countries that have failed to remodel their economies along German lines. Merkel would prefer a small common fund to help member-state governments enact difficult reforms, not a Keynesian fiscal stabilizer. And while Macron envisions a finance minister who would be a political counterpart to European Central Bank President Mario Draghi, Merkel would prefer that the role be limited to enforcing national fiscal discipline.

The danger now is that Macron will achieve only a token eurozone budget in exchange for even tighter controls on national budgets, which would prove economically harmful and politically poisonous. He would also miss his chance to enact the reforms that the eurozone actually needs. These include deeper financial-market integration; an easier process for writing down bank and government debts; greater fiscal flexibility; and more balanced economic-adjustment mechanisms.

Macron’s most promising idea is to “give Europe back to its citizens.” In my book European Spring, I argue that a flawed, technocratic EU needs bold leaders, political entrepreneurs, grassroots movements, and more experiments with deliberative democracy to deliver change. Macron has proposed all four.

Macron is right to point out that the EU bureaucracy often seems remote, uninspiring, and ineffectual; but he also rightly rejects referenda that polarize citizens over simplistic binary choices. The big, open democratic conventions that he has proposed for the first half of 2018 could inject fresh ideas into a stale debate, provide legitimacy for bold reforms, and put pressure on recalcitrant governments.

Conventions could also foster new political movements like Macron’s own La République En Marche !, which could bring fresh faces into politics, help to open up closed, corrupt party systems, and start to rebuild the public’s trust in politicians. They could also give Macron more leverage to push through his reforms, by running candidates in national and EU-wide elections.

Macron’s ambition is vast, if not overawing. But so are Europe’s challenges. Macron may be trying to achieve too much at once, but a more democratic, dynamic, and united EU is a prize worth fighting for.

BERKELEY – With Emmanuel Macron’s victory in the French presidential election, and Angela Merkel’s Christian Democratic Union enjoying a comfortable lead in opinion polls ahead of Germany’s general election on September 24, a window has opened for eurozone reform. The euro has always been a Franco-German project. With a dynamic new leader in one country and a fresh popular mandate in the other, there is now an opportunity for France and Germany to correct their creation’s worst flaws.

But the two sides remain deeply divided. Macron, in long-standing French tradition, insists that the monetary union suffers from too little centralization. The eurozone, he argues, needs its own finance minister and its own parliament. It needs a budget in the hundreds of billions of euros to underwrite investment projects and augment spending in countries with high unemployment.

Merkel, on the other hand, views the monetary union’s problem as one of too much centralization and too little national responsibility. She worries that a large eurozone budget wouldn’t be spent responsibly. While not opposed to a eurozone finance minister, she does not envision that official possessing expansive powers.

But there is a narrow path forward that should be acceptable to both sides. It starts with completing the banking union. Europe now has a single supervisor in the European Central Bank, but it lacks a common deposit insurance scheme, which German officials oppose on the grounds that there has been inadequate risk reduction in the European banking system. In other words, they worry that the fees levied on German banks will be used to pay off depositors in other countries.

The solution lies in bulletproofing the banks by strictly applying the demanding capital standards of Basel III and limiting concentrated holdings of government bonds. The paradox here is that European regulators, including German regulators, have in fact been arguing for looser application of those regulations in negotiations with the United States. In doing so, they have been arguing against their own best interests.

Next, Europe needs to transform the European Stability Mechanism, its proto-rescue fund, into a true European Monetary Fund (EMF). Its resources could be augmented by increasing governments’ capital subscriptions and expanding its ability to borrow. Decision-making could be streamlined by moving from the current unanimity rule to qualified majority voting.

The EMF could then take the place of the ECB and the European Commission in negotiating the terms of financing programs with governments. The final decision of whether to extend an emergency loan would no longer fall to heads of state in all-night talks. Rather, it would be taken by a board made up of eurozone representatives, including from civil society, nominated by the European Council and confirmed by the European Parliament, giving the process a legitimacy it currently lacks.

But Germany will agree only if it sees steps limiting the likelihood of expensive intervention. This brings us to the vexed question of fiscal policy. It is past time to abandon the fiction that the ultimate source of fiscal discipline is a set of strictly enforced EU rules. Taxation and public spending remain sensitive national prerogatives, rendering outside oversight ineffectual. Assigning oversight to the European Commission in Brussels promises, inevitably, not discipline but a dangerous populist backlash.

The alternative is to return control of fiscal policy to national governments, abandoning the pretense that policy can be regimented by EU rules. Governments could then make their own decisions; if they make bad decisions, they will have to restructure their debts. Adopting a European debt-restructuring mechanism would help to avoid the worst fallout. Any adverse consequences would no longer spread to other countries, because their banks would no longer hold concentrations of government bonds. They would not bankrupt the EMF, which would be able to lend only in cases of illiquidity, not insolvency.

These ideas will horrify dedicated euro-federalists. One bone they can be thrown is a pilot unemployment insurance fund amounting to, say, 1% of eurozone GDP. This would be analogous to US arrangements under which the federal government provides partial funding for state-administered unemployment insurance. And it would give the eurozone finance minister something to do. If the initial modest program was shown to work, it could be scaled up.

But German politicians are aware that unemployment is 2.5 times higher in France than at home, raising the danger that transfers would all go one way. That’s why such proposals are contingent on structural reforms that reduce unemployment where it is high and increase the flexibility of labor and product markets.

This is essentially the bargain Macron has offered Merkel. To paraphrase, “I’ll undertake deep structural reforms if you agree to modest steps in the direction of fiscal federalism, completing the banking union, and creating a European Monetary Fund.”

No one on either side of the Rhine will regard this bargain as perfect. But with the euro in the balance, the perfect should not be allowed to become the enemy of the good.

BERLIN – The French presidential and legislative elections earlier this year have instilled new hope in the European integration project, by raising the prospect of deeper Franco-German cooperation. And yet some forms of cooperation, not least shared-liability schemes, would be a mistake. As long as member states have sovereignty over fiscal and economic policymaking, France and Germany should focus their efforts on making the eurozone itself more resilient.

French President Emmanuel Macron has started to pursue urgently needed reforms to boost economic growth, and it is crucial that he succeeds in this effort. France is suffering from high structural unemployment and low potential growth, and its public finances are unsustainable in the medium term. Improving this state of affairs will require factor- and product-market reforms, together with deep reductions in public-sector deficits.

From France’s standpoint, there is no better time than now to implement economic reforms. Although the eurozone is showing signs of a solid economic recovery, the European Central Bank is feeling increasing pressure to taper its ultra-expansionary monetary policies. Macron’s government thus has no time to lose, especially given that economic reforms can take time to deliver results, and the next elections are always just around the corner.

In light of this small window of opportunity, the last thing France needs is more joint investment schemes, as some have proposed. Economic growth requires not just capital investments, but also a business environment where innovation is encouraged and rewarded. And at any rate, it wouldn’t make sense for France to rely on other member states for investments. How can France claim to have restored its past grandeur if it is asking for Germany’s help?

Beyond implementing domestic reforms, France can still work with Germany to send a powerful message in support of European integration. But as both countries seek areas where they can cooperate, they must be careful to avoid policies that would threaten the eurozone’s long-term stability.

Unfortunately, some proposals currently being discussed would do precisely that. For example, establishing a shared eurozone-level budget or unemployment-insurance regime would, at this stage, sow the seeds of future conflicts. It is inconceivable that national policymakers, seeing to their countries’ own interests, would prevent these arrangements from mutating into permanent asymmetric transfer schemes.

To avoid distributional conflicts that would only poison the European project, any institutional reform that is proposed in the name of Franco-German cooperation should have to pass a strict sustainability test. European policymakers must ensure that there is congruence between the power to make decisions and the liabilities associated with any decisions that are made. It would be naive to think that member states will not offload the costs of their choices onto other member states if given the chance.

And besides, there are many other areas where France and Germany can strengthen cooperation and give new momentum to European integration. To determine where to focus their efforts, French and German leaders should keep three related principles in mind. First, any joint endeavor must respect diversity. The central strength of the European project is that it unites its member states in pursuit of peace and prosperity. But this requires a rich reservoir of ideas, not a single, unified approach.

The second principle is subsidiarity, which holds that decision-making should be decentralized whenever possible. This ensures that local and regional preferences are considered alongside the effects of eurozone-wide harmonization and economies of scale.

The last principle is congruity, to ensure that decision-makers are accountable for the outcomes of their decisions. This means that as long as European electorates insist on retaining sovereignty over fiscal and economic policymaking, shared liability will be a pipe dream.

With these principles in mind, France and Germany could take joint action on a variety of issues, such as climate change, the refugee crisis, and counter-terrorism. Coordinating efforts on these fronts would revitalize the integration process and contribute to Europe’s long-term stability and prosperity.

On economic policy, France and Germany should look for ways to fortify the eurozone and complete the single market. The privilege that government debt enjoys under current banking regulations should be eliminated, and an independent banking regulator, separate from the European Central Bank, should be established within the eurozone. Beyond that, it is time to start phasing in a viable sovereign-insolvency scheme for the bloc.

All of these initiatives could be implemented simultaneously with domestic reforms in France. But there is a risk that they will take a back seat to other proposals, such as shared-liability schemes. To avoid this pitfall, policymakers should consider the roots of the eurozone’s low growth potential, which is not a result of insufficient solidarity, but of individual member states abnegating their national responsibilities. Rather than provide a cure for these problems, shared liability would make them worse.

Proponents believe that more shared liability could pave the way for individual responsibility. But that is an illusion. Once in place, a shared liability scheme would reduce the incentives to deliver on structural reforms. And among German voters, nothing could undermine support for the European project more than yet another set of broken promises.

BRUSSELS – There is no doubt about it: the outcome of Germany’s recent federal election is as important as it is remarkable. The parties that have dominated German politics for years – the Social Democrats (SPD) and the Christian Democratic Union (CDU), plus its Bavarian sister party, the Christian Social Union (CSU) – all lost support at the ballot box.

The CDU/CSU and SPD’s inward-looking election campaigns were astonishingly parochial. The most widely discussed topics included a proposed diesel ban, tax policies, rental fees, and internal security issues. Yes, these are relevant matters for German voters. But when it came to the most pressing challenges confronting the European Union and the eurozone, Germany’s mainstream parties were largely silent.

Those challenges are manifold. The United Kingdom is negotiating its exit from the EU, and there is deep uncertainty as to what the future UK-EU relationship will look like. The EU desperately needs to prevent a further decline of democracy and the rule of law in Poland and Hungary. It has yet to develop a long-term solution to the migration and refugee crisis. And it must confront the security challenges stemming from terrorism, a revanchist Russia, and a rudderless America under President Donald Trump. At the same time, while the eurozone is finally showing signs of growth, its recovery still must be stabilized.

How these issues are (or are not) addressed will define the future of Europe, and Germany’s position in it. Mainstream German leaders should have discussed them more broadly as they campaigned in TV studios, convention halls, classrooms, and on city streets. Indeed, the two big parties’ failure to do so helps to explain why they lost support. By patching up small problems and avoiding the big issues, the CDU/CSU and SPD created a vacuum. And populist nationalists from the far-right Alternative for Germany (AfD) were happy to fill it, capturing 13% of the vote.

To sideline these illiberal elements, Europe will have to deliver on meaningful reforms. And the only way to do that is for those in Europe who still stand for liberal democracy to join forces.

When the German election result was reported, many analysts were quick to conclude that it represented a damaging blow to French President Emmanuel Macron and his plan to reinvigorate the European project. But I disagree with that assessment. Lest we forget, it was the CDU’s German Minister of Finance Wolfgang Schäuble who blocked most of the proposed eurozone reforms over the past decade.

Another way of looking at the German election outcome, then, is as an opportunity for a new beginning. An end to the CDU-SPD “grand coalition” could mean an end to political stagnation not just in Germany, but at the European level, too.

Germany’s post-election coalition negotiations are now underway, and, with the SDP determined not to join the government, the most likely result is a “Jamaica” alliance (named for the colors of that country’s flag), comprising the CDU, the Free Democrats (FDP), and the Greens. Germany’s next government, one hopes, will include pro-European politicians with fresh ideas and a willingness to push for European-level reforms, possibly along the lines of what Macron has proposed. In that case, a new crop of leaders could be a driving force shaping Germany’s role in Europe for years to come.

Like Macron, the FDP aims to make Europe more democratic: it supports transnational candidate lists for EU-level elections; and it wants to bring European citizens closer together with democratic conventions in member states. The FDP is also pushing for common European rules on migration, and for a shared border and coast guard. And it supports the establishment of a European FBI to coordinate the fight against terrorism.

The FDP’s leader, Christian Lindner, is right to say that the rules of the EU Stability and Growth Pact must be respected, and that spending taxpayers’ money without proper budgetary accountability will only nourish populist and nationalist forces such as AfD. Fortunately, in this respect, his outlook does not conflict with Macron’s. Both agree that Europe needs better governance, based on a combination of consistently applied fiscal rules and growth-enhancing investments.

This is a decisive moment for Europe. We Europeans need to find solutions to shared problems, and we need Germany and France to lead the way. The French-German axis that drove European integration forward in the past must do so again. I am confident that a new coalition government in Germany will be able to work with France to build a closer political and economic union. Making the EU more democratic is the only way to push back the nationalist tide that the European project was meant to prevent.