European Tribune - 50 years of French-German friendship

In this regard, France is the most worrying nation in Europe today. Germany needs a neighbour with a strong economy, not an inferiority complex. If "power" is a taboo concept in Germany, in France it is terms such as "German model", "competitiveness" and "globalisation".

Another point of view says that Germany is the most worrying nation in Europe today, because its export-economy model is based on beggaring its neighbours. That France (and other EZ countries) need a neighbour with less of a superiority complex, and a strong economy much more solidly based on domestic demand. In point of fact, the terms "German model", "competitiveness", and "globalisation" are not taboo in France, they are constantly repeated by the punditry and the politicians and magnified by the media (example, Hollande next to Merkel before "German youth" yesterday saying that France had a "competitiveness" problem that needed to be fixed).

But if "power" is a taboo term in Germany (I don't know, but haven't seen much reference to German debate around the concept) it's about time that changed. Germany is currently exercising exhorbitant power within the Eurozone, and refusing to recognize any problem other than "they're not doing their homework".

Sorry, but the current celebrations have no more serious basis as far as I can see than the old Merkozy circus.

Arnaud Leparmentier, in Suddeutsche Zeitung reposted in Le Monde, outlines some elements of German "hegemonism".

After giving the banking union and the competitiveness contracts as examples of Germany attempting to impose rules on others as long as they don't apply to Germany, he says:

Traité de l'Elysée : hégémonisme allemand | Le Monde		Elysée Treaty: German hegemonism | Le Monde
Second reproche, l'Allemagne interromprait brutalement les règles de l'Ordnungspolitik lorsque le jeu lui est défavorable. Ainsi en est-il de l'aéronautique et du spatial, où les compétences sont plus françaises et britanniques. La loi du marché aurait dû conduire à la concentration d'EADS dans ces deux pays, mais Angela Merkel, comme Gerhard Schröder, a voulu protéger les usines bavaroises et hambourgeoises. La chancelière a ainsi mis son veto au projet de fusion avec British Aerospace notamment par - osons le mot - protectionnisme allemand.		Second reproach, Germany brutally interrupts the rules of Ordnungspolitik when the game isn't in its favour. That's how it is in the aeronautics and space sector, where the French and British have greater competence. The law of the market should have led to EADS concentration in these two countries, but Angela Merkel, like Gerhard Schröder, wanted to protect the Bavarian and Hamburg factories. The chancellor thus vetoed the merger with British Aerospace notably out of -- let's dare use the term -- German protectionism.
Les Allemands sont moins performants en aéronautique, mais exigent, du fait de leur taille, la moitié du gâteau. Ce discours serait tenable s'il valait pour tous les secteurs. Ce n'est pas le cas, selon les Français, qui accusent les groups automobiles allemands, à commencer par Volkswagen, de vouloir " sortir du marché " le groupe Peugeot effectivement moribond.		Germans are less efficient in aeronautics, but require, based on their size, half the pie. This discourse would be tenable if it was true for all sectors. This is not the case, according to the French, who accuse the German automobile groups, starting with Volkswagen, of seeking to get the in fact moribond Peugeot group "out of the market".
L'Europe ne peut pas se construire sur le principe que les usines allemandes sont protégées, celles des autres soumises à la destruction créatrice du capitalisme. Faute de quoi, le principe même de l'union douanière sera remis en cause.		Europe cannot be built on the principle that German factories are protected, those of other countries subjected to the creative destruction of capitalism. Otherwise, the very principle of the customs union will be challenged.

Another aspect of German intransigence: determination to keep the euro high, even if the resulting terms of trade are disadvantageous to other EZ countries (one of France's "competitiveness" problems):

Jens Weidmann warns of a currency war

What do you expect? If you oppose lower interest rates, and asset purchase programmes, as Jens Weidmann has done, it should not come as a surprise that the ECB's monetary policies are now the hardest, relative to all the other major central banks. The Financial Times reports that Weidmann is now warning that the erosion of central bank independence would unleash a round of competitive devaluations. He said there have been several recent examples of an erosion of central bank independence, most notably in Hungary and now in Japan. Whether intended or not, one consequence is an increasing politicisation of the exchange rate, he said.

(Eurointelligence, daily briefing by e-mail)

One of the factors behind the Irish boom and bust which I don't often see referenced outside Ireland, is that the ECB insisted on maintaining low interest rates at the height of the Irish boom, when higher interest rates would have been much more appropriate and would have helped deflate the property bubble. This was done at the behest of the Germans, whose own economy was struggling to grow.

When you combine this with the complete failure of the EC ad ECB to regulate the Single Market in banking and financial services they were so actively foisting on the Irish authorities - so much so that the Irish regulator thought that his "light touch" approach was what the EU actually wanted - you have to assign at least some European (=German) co-responsibility for the Irish boom and crash which followed.

One doesn't have to deny the stupidity of the Irish Government's bank guarantee to also acknowledge that the Irish authorities thought they were doing European banks a favour by guaranteeing their heavy exposure to Irish banks and thus helping to prevent the Irish banking collapse from infecting European (mostly) banks more generally.

France is not the only country that views German hegemony with dread, particularly if the UK were to withdraw even further from the EU. But that is not to say that a Germany and allies versus the rest would be a balanced or productive re-alignment either.

Index of Frank's Diaries

I was glad to see that position (the Franco-German relationship works because it starts from so far apart and the two countries have decided that they need to reach a compromise nevertheless; if they ca nagree, the compromise will likely be tolerable to most other Europeans, not because they are less important, but because their own starting position is most often somewhere in-between), which I've oft repeated, being given such a prominent place in the FT's full page on the anniversary.

I'm reminded of a Lewis Black standup routine in which he described bipartisanship as a Republican standing up and saying, "I have a really bad idea!"  Followed by a Democrat standing up and saying, "And I can make it shittier!"

Perhaps historically true that the relationship has worked because of ideological balance and compromise, but it doesn't appear that way right now.

Be nice to America. Or we'll bring democracy to your country.

Bitterlich:

 If "power" is a taboo concept in Germany, in France it is terms such as "German model", "competitiveness" and "globalisation".

So much silliness in one sentence. Power as concept anathema to Germans? Tell that to unemployed Spaniards or shivering Greeks. Present EU austerity policy is all about German power projection. This is to laugh. And, if "German model" is looked upon with such disdain, is it something particularly French or, rather, something bourne of the natural scepticism one feels when one recalls the glorification of the "anglo-american model" a decade ago, or the "japanese model" a generation ago, both of which proved every bit of a bust as today's supposed "German model" will prove. And, as for competitiveness, who can forget that but 10 years ago, it was Germany the sick man of Europe, not the PIIGS. Of course, back then the ECB was charting a course in the sick man's interest, as it continues to do today: again, this is another aspect of German power projection.

The amount of bullshit in one sentence is breathtaking.

The Hun is always either at your throat or at your feet. Winston Churchill

More Bitterlich:

But the French solution, mutualising the debt, is no better.
 

As is usual for a member of the Germal political elite, he never really gets round to saying why this is so. (or, if they do, not ever in an economically literate way.)

The Hun is always either at your throat or at your feet. Winston Churchill

69 years ago, my father came back to France after 3 years as a prisoner of war, thanks to la Relève (1 PoW released for 3 qualified workers who accepted to go to Germany). He immediatly joined the French Résistance and fought the German army in the Alps. A few months later, my uncle was arrested by the Gestapo (he was secretary of the National Council of the Resistance) and sent to Dachau concentration camp.

Just a couple of years later, in spite of - and because of - what they had experienced, both of them were involved in the Frenco-German friendship movement that led to what we celebrate today. Indeed, in 1963 my uncle was the French Parliament reporter for the Elysée Treaty. And both of them remained strong supporters of the European Project until the end of their lives.

So, despite Merkozy and Merkollande, I still think it makes sense to celebrate the Franco-German friendship, and to wish it will last for many more decades.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

Jean Quatremer is far from being a cynical Eurosceptic, yet here's the close of his piece today in Libération (from his blog):

Des désaccords franco-allemand qui plombent l'Union - Coulisses de Bruxelles		Franco-German disagreements weigh the Union down - Brussels Backstage
Cette incapacité franco-allemande à trouver un compromis se traduit par une forte révision à la baisse des ambitions européennes. Plus question d'un budget conséquent, alors même que la crise de la zone euro a montré que les transferts financiers étaient une condition sine qua non de la survie de la monnaie unique, plus question de fédéralisme et de solidarité financière, alors que les marchés jugent ce saut nécessaire pour leur garantir la pérennité de l'euro. Ce coup de frein est pour le moins préoccupant, la crise étant loin d'être terminée, même si les menaces pesant directement sur la monnaie unique se sont dissipées grâce à l'action de la Banque centrale européenne (BCE) qui a annoncé, le 26 juillet, qu'elle était prête à « faire tout ce qui est nécessaire pour préserver l'euro ». Mais, comme le reconnaît l'un des membres du directoire, le Belge Peter Praet, la BCE n'a fait que « gagner du temps ». Un gel de l'intégration pour cause de désaccord franco-allemand ne peut que préparer la prochaine crise, avec les conséquences économiques et humaines désastreuses auxquelles on assiste, les déséquilibres de la zone euro, notamment sur le plan démocratique, étant loin d'être corrigés.		This Franco-German failure to find a compromise results in a strong downscaling of European ambitions. No question of a budget at the level of needs, even though the Eurozone crisis has shown that financial transfers are a sine que non for the survival of the single currency, no question of federalism and financial solidarity, though the markets consider this leap forward necessary to guarantee the perennity of the euro. This slowdown is to say the least worrisome, the crisis being far from over, even if the direct threats to the single currency have been dispersed by the action of the European Central Bank (ECB) which announced, July 26, that it was prepared to do everything necessary to defend the euro. But as one of the board members, the Belgian Peter Praet, recognizes, the ECB has only gained time. An integration freeze due to Franco-German disagreement can only prepare the next crisis, with the disastrous economic and human consequences that we are seeing -- the imbalances of the euro area, particularly concerning democracy, being far from being corrected.

as evidenced by the snazzy new layout of eurotrib.com ;)

Hey, Grandma Moses started late!

From this side of the pond, Germany and France look about as different as, say, Pennsylvania and Missouri.