After cheering Emmanuel Macron’s win over his far-right rival in the French presidential election, a row has broken out within German Chancellor Angela Merkel’s coalition government over how to respond to his calls for closer European integration.
Foreign Minister Sigmar Gabriel of the centre-left Social Democrats (SPD) accused his cabinet colleague, Finance Minister Wolfgang Schäuble, of trying to “torpedo” Macron’s European reform plans for political reasons ahead of Germany’s national election in September.
He was reacting to comments from Schäuble suggesting that Macron’s idea to create a budget and a finance minister for the eurozone were unrealistic because they would require politically thorny changes to the EU treaty.
German fears of “transfer union”
The jousting comes a week before Macron is expected to travel to Berlin to meet Merkel. He will be sworn in on Sunday (14 May), after soundly defeating National Front leader Marine Le Pen, who had threatened to take France out of the EU and the euro.
The 39-year-old Macron has promised to reinvigorate the Franco-German relationship and press ahead with closer integration after a decade of economic and political crises and Britain’s decision last year to leave the EU.
His ideas have been embraced by the SPD. But conservatives around Merkel, fearful the eurozone could develop into a “transfer union” in which Germany is asked to pay for struggling states that resist reforms, are pushing back.
Gabriel, who worked closely with Macron on ideas for European reforms when both were economy ministers, accused Schäuble in Berlin’s Tagesspiegel of fanning fears about the Frenchman’s plans for “tactical electoral purposes”.
His party colleague Martin Schulz, who will challenge Merkel in the German election, backed Macron’s idea to create a budget for the eurozone to fund investments.
The German finance minister is a longtime advocate of closer eurozone integration, including controversial proposals to introduce a new super-Commissioner with powers to oversee national budgets. The idea of creating a eurozone parliament has also been repeatedly brought up by Schäuble, who says countries using the euro should be able to cooperate more closely on matters relevant to the single currency.
But Schäuble reiterated in a speech to students in the eastern city of Frankfurt-Oder that such a step was impossible without treaty change, a cumbersome multi-year process requiring referendums in some member states.
Instead, he has proposed turning the eurozone’s ESM bailout fund into a European monetary fund.
People in Macron’s team and some senior EU officials reject Schäuble’s contention that treaty change would be needed, pointing to the intergovernmental agreement between 19 euro members that established the ESM.
No “big bazookas”
Macron has said his priority this year will be to implement economic reforms at home and his aides say he has no plans to begin a potentially contentious discussion with Berlin on eurozone reform before a new German government is in place.
“I expect him to be quite open with Merkel about what he wants to do but also mindful that the election puts the chancellor in a difficult position. He won’t be putting big bazookas on the table,” one person close to Macron told Reuters.
Instead, the source stated, Macron could discuss with Merkel the idea of setting up Franco-German working groups in the coming months in areas where there is an appetite for cooperation, including security and defence, energy and taxation.
Macron’s eagerness to seek a dialogue with Berlin on Europe hasn’t stopped German politicians from criticising his ideas.
Christian Lindner, the leader of the liberal Free Democrats (FDP), a potential coalition partner for Merkel if she beats Schulz in September, told the Frankfurter Allgemeine Zeitung (FAZ) on Wednesday (10 May) that he expected an “uncomfortable” discussion with Macron on Europe.
“He is for an EU in which responsibilities are standardised and blurred,” Lindner said, accusing the SPD of conspiring with Macron to promote higher government debt.
The criticism has also flowed in the other direction.
Top Macron adviser Jean-Pisani Ferry said last week that Germany’s “obsession” with the idea that other European countries want its money had clouded its view on the need for closer eurozone integration.
Several countries have expressed support for a special eurozone budget. Germany, France and others support this idea, according to European diplomats.
Herman Van Rompuy, the former president of the European Council first floated the idea in his Issues Paper on Completing the Economic and Monetary Union in June 2012.
Discussions have advanced on the types of revenue and expenditure this budget would cover, with the aim of creating a tool for macroeconomic financial intervention against "asymmetric shocks".
But it is still unclear how this budget would interact with the current EU budget and what place it would occupy within the EU's institutional architecture.
- 10 May: Commission reflection paper on harnessing globalisation.
- 31 May: Commission reflection paper on deepening the economic and monetary union.