Macron: Germany is competitive thanks to eurozone weaknesses

German Chancellor Angela Merkel (L) and French President Emmanuel Macron (R) arrives to attend a Franco-German joint cabinet meeting at the Elysee Palace. Paris, 13 July. [Julien de Rosa/EPA]

Ahead of Thursday’s (13 July) Franco-German Ministerial Council, Friday’s Bastille Day celebrations and Donald Trump’s visit to Paris, President Emmanuel Macron spoke to EURACTIV’s partner Ouest-France about Europe’s future, and France’s relations with the US.

What is your view of Europe?

Europe is already a multi-speed construction. Accepting the status quo would mean accepting an increasingly bureaucratic Europe that cannot explain to the citizens where it wants to lead them and works more like a machine than a unifying force. My obsession is to bring Europe back to its roots: the European project was founded on the promise of peace, progress, prosperity.

Today we need a project that can renew this promise: a Europe with the power to inspire, a process of democratic conventions that I want to launch next winter, based on the subjects of culture and education, a Europe that protects its citizens from globalisation and offers a new model for society and economic growth. At some point, we will need treaty change because this Europe is incomplete. The question is not if these changes are needed but when and how to make them happen.

You are in favour of a president of the eurozone. Would they have final oversight of our national budget choices?

I want the eurozone to be more coherent, with more convergence. It does not work well because it feeds divergences. Those that were already in debt have found themselves with bigger debts. Those that were already competitive have become even more so.

There are winners: Germany is one of them because it has been able to make reforms, and I salute the efforts it has made. But Germany also benefits from the failures of the eurozone. This situation is not healthy because it is not sustainable.

You mean the competitive distortions…

This is not about mutualising past debts but about bringing together convergence and solidarity within the eurozone and the European Union and establishing more powerful solidarity mechanisms in the future. That’s the key to a sustainable EU.

France’s national unity would not survive long if there were no transfers from the Île-de-France to the rural departments. In order to do this, we need a budget, a government that decides how it is allocated and a level of democratic control that does not exist today.

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Should we criticise Germany for being a high-performing economy or rather create the conditions in which the rest of Europe can become competitive?

I have never criticised Germany for being competitive. But part of Germany’s competitiveness is due to the malfunctioning of the eurozone and the weakness of its other economies. Because competitiveness is a relative concept: countries measure their competitiveness in relation to their neighbours.

Germany carried out formidable reforms; it has a solid economy but some demographic weaknesses, economic and trade imbalances with its neighbours and a shared responsibility to give the eurozone the future it deserves. It has to move, just like France has to move.

What should Germany do?

It should push for a relaunch of public and private investment in Europe. I have no lessons to hand out but we have to find the right macroeconomic scenario. I have also been struck by just how conscious the chancellor is of the fact that Germany’s success depends on the success of Europe.

Germany will only take France seriously if it carries out significant reforms. What tokens of confidence are you able to give Germany today?

I do not think in terms of tokens that I have to give to this or that partner. I think in terms of the efficiency and credibility of our country. By implementing our campaign promises without delay, I think we are meeting our obligations. France has to reform its economy to make it more dynamic. We have the double-edged challenge of competitiveness and equality.

Is this the aim of your labour law?

The labour market reform, which we will complete before the end of the summer – never has a government carried out such an ambitious reform so quickly – will give our economy more flexibility and bring real vitality to the social dialogue. It is a pragmatic reform that does not undermine rights but gives, at the right level, real substance to the social dialogue.

The reform of unemployment insurance and professional training will then help us get away from the logic of insurance, which is no longer able to respond to the challenges of our economy, which is too passive in the indemnities it provides for the unemployed and leaves many people completely outside the system. This reform will bring new security to individuals who decide to change careers and will allow people to retrain at any stage in their life.

When?

This second pillar of the reform will be negotiated this autumn and winter, with a law by the beginning of 2018. And the third pillar is pensions reform, the broad lines of which will be presented to the parliament in the first semester of 2018. This will help us escape from the corporate model – we currently have 37 different pension systems! – and establish something much stronger and more stable.

To this I would add the reform of the education system, which needs to be better adapted to our needs and give more to those that need it most. This is the combination of reforms that will allow France to enter the economy of innovation, knowledge and skills.

Thursday (13 July) is the Franco-German Council of Ministers. Can we expect progress on all these subjects?

This is my first Franco-German Council, the only one before the German elections, and I want, along with Chancellor Merkel, to build ambitious and concrete projects with a clear aim. We will reopen 1,200 bilingual classes and improve the position of German in our education system. The teaching of German will reach hitherto unseen levels.

Germany is also ready to commit to teaching the French language. We will define a cultural and educational agenda for the coming months.

A kind of cultural Erasmus?

For this autumn, yes, we will prepare an Erasmus scheme for culture and learning. Erasmus is the very essence of the Europe that unites people and it is exactly what we need.

What about the Posted Workers Directive?

In Europe, we must have protection and ambition. We will talk about the reform of this directive, I will spend part of the summer visiting our partners and Germany is standing by us in this battle. Thursday’s Council is an opportunity to highlight this unity.

But they are blocking it!

There have been misunderstandings. We have set ourselves the objective of finding common ground by the end of August and in the autumn we will elaborate on the detail with a common proposal to the Estonian presidency.

Have you made any investment decisions?

Yes, particularly in digital, with an investment fund of €1bn. We have launched calls for projects, along with the Germans, to attract researchers as part of the “Make our planet great again” initiative. And also with the launch of a joint programme on nanotechnologies and batteries.

You talk a lot about the environment. But haven’t there been backward steps on endocrine disruptors?

We cannot force our decision on anyone else. Nicolas Hulot fought for an ambitious vision on endocrine disruptors in Europe. We did not have a majority. Should we have said the compromise was then worthless?

The agreement reached is better than the current situation, thanks to the actions of France. It allows us to ban harmful or risky substances. It extends the list of substances that are covered and commits us to a joint research programme. So we supported it in the interest of the French people. But we always said we would go further, with a revision clause and complementary national measures.

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And what about the Financial Transaction Tax?

The French Financial Transaction Tax (FTT) was adopted by the previous parliamentary majority, in a demagogic way, covering day trading, and knowing full well that it was impracticable. If you impose such a tax on your own, you will not have any financial transactions left to tax! There are no French companies left headquartered in France! On a European level, I said I would take the issue as far as I could. I have not changed my mind on this.

At the same time, we need a system that gives Britain access to our financial markets after Brexit. Otherwise companies will start operating from London, which will use fiscal dumping to poach business from the EU’s financial hubs. I want the FTT. I want the FTT to be applied in a coherent space, to be effective and meaningful.

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Can Europe still count on the United States?

We need the United States. The US has signalled its disagreement on the climate. I regret this, I am fighting it with all my strength. I will do everything I can to convince the cities, federal states and American business community to follow us. The Americans will de facto be in the Paris Agreement, whether the federal state wants it or not, thanks to this strong local mobilisation.

We have different views on trade. Protectionist tendencies are making a comeback in the US. I hope we can defend free and fair trade. Protectionism is a mistake, it is the twin brother of nationalism, and that leads to war. We disagree but we can find common ground to fight unacceptable practices such as dumping.

Another common space is defence and security.

Yes, we have one essential point of convergence: the fight against terrorism and the protection of our vital interests. Whether this is in the Middle East or in Africa, our cooperation with the United States is exemplary. They are our first partners in terms of intelligence, military cooperation, the joint fight against terrorism. It is also a historic partnership.

That is why I invited Donald Trump for the 14 July celebrations, to celebrate the fact that American troops fought side-by-side with us 100 years ago, to pay homage to them and celebrate a relationship that is vitally important for our security.

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