The Franco-German relationship is often viewed as one of the key drivers of EU decision-making. But what impact does cooperation between France and Germany actually have on EU politics? Based on a new study of Economic and Monetary Union reforms negotiated between 2010 and 2015, Hanno Degner illustrates that the two countries exert influence by controlling the agenda and brokering compromises, but not by dictating reforms.
The current absence of Franco-German leadership in the European Union, despite President Macron’s continuous efforts to re-start the ‘engine’, is widely regarded as a major reason for the stagnation in various EU policy areas from the Eurozone over migration policy to a European digital tax.
Academic experts and journalists indeed regularly ascribe substantive importance to the Franco-German couple for pushing European integration forward. Other observers, however, remain more sceptical about the impact of coordinated activities of the two major EU governments. There are even those who criticiseintense Franco-German cooperation because of its alleged undemocratic foundations.
What is the effect of Franco-German cooperation on EU politics? In a recent study, I (along with my co-author Dirk Leuffen) have assessed new data gathered by the EMU Choices project which shows that France and Germany together affect European integration by controlling the agenda and brokering compromises, but not by dictating reforms. Franco-German support for Economic and Monetary Union (EMU) reform proposals is a necessary, but not a sufficient condition for their eventual adoption as EU policies.
Counter-intuitively, the Franco-German ‘engine’ works best when the two governments initially disagree on the substance of reform proposals. Empirical research shows that in both day-to-day European politics and at EU summits, such disagreements are the rule rather than the exception. This also holds for the 47 contested issues covered by our dataset on EMU reforms during the Eurozone crisis.
On a 0 to 100 scale, the average distance of France and Germany at the outset of the negotiations on, for instance, the European Stability Mechanism, the Fiscal Compact or the Banking Union was 66.6. In contrast, the distances between France and the Southern member states and (inversely) Germany and the Northern member states were significantly smaller. Interestingly, the ultimate negotiation outcomes were almost equally distant from both Germany (47.0) and France (43.6). In other words, neither country was particularly successful in the negotiations on these 47 issues.
Figure 1: Average distances of France and Germany to selected countries on 47 contested EMU reform issues (2010-2015)
Note: Average Distances of France and Germany to Spain, Italy, Portugal, Finland, Netherlands, Great Britain, Poland and the ultimate negotiation outcome of 47 contested EMU Reform issues, 2010-2015. Minimum distance = 0, maximum distance = 100.
When France and Germany hold extreme positions and represent larger groups or camps of member states (e.g. ‘North’ vs. ‘South’), pre-cooked France-German compromises are most likely to be successful at the European level. During the Eurozone Crisis, but especially in the Merkozy period between 2010 and 2012, Franco-German cooperation facilitated the adoption of purely intergovernmental policies like the ESM or the Fiscal Compact, but also played an important role for policies like the legislative Six-Pack on economic governance or the complementary Two-Pack. Here, the Franco-German couple undercut the Commission’s role as the agenda-setter on EU legislation by dominating the preparatory Task Force on Economic Governance under the chairmanship of then-European Council President Herman van Rompuy.
Figure 2: Franco-German initiative that is likely to be adopted by the EU-28 (stylised)
Note: FRA-GER = Joint Franco-German proposal, S1-S5 = other member states.
By contrast, joint Franco-German opposition leads to the elimination of issues from the EU negotiation agenda. This narrows the choice set for the other member states; their actual influence on Eurozone reforms was therefore higher than the comparatively low bargaining success on the 47 issues discussed above suggest.
For instance, at the outset of the Eurozone crisis Germany and France prevented any form of debt restructuring for Greece until late 2011 and did not include it in the European Financial Stability Facility agreement, either. This mirrors the preferences of the heavily exposed French and German banking sectors at that time. With their Deauville Declaration of October 2010, France and Germany also eliminated Eurobonds from the official EU negotiation agenda. The same accounts for similar proposals on, for instance, a European Debt Agency or Blue Bonds. In the Banking Union negotiations, Germany managed to eliminate far-reaching plans for a European Deposit Insurance Scheme (EDIS) in 2013. A watered-down version of the EDIS is still pending due to the country’s lasting opposition to it.
However, the negative power of the Franco-German couple to veto proposals running contrary to their preferences does not translate into an unrestrained positive capacity to determine EMU reforms as a Franco-German directoire. For example, when the two countries called for the suspension of Council voting rights for countries in breach of the EU’s fiscal rules in late 2010, they faced strong opposition from the other member states and the Commission. Euro Group President Jean-Claude Juncker flatly ruled out the possibility that the treaties would ever be changed in such a way – and they weren’t. The Financial Transaction Tax provides another example of the inability of the Franco-German couple to dictate EMU reforms. Despite continuous efforts of the two countries from June 2010 until recently to introduce this tax, lasting opposition from the other member states has prevented this so far.
In sum, initial disagreements between France and Germany facilitate rather than prevent EMU reforms, when the two major EU countries act as an inner negotiation core for the Eurozone-19 or the EU-28. The current stagnation in European integration is thus not primarily due to diverging French and German preferences. It rather results from political instability in Germany, undermining its capacity and willingness to engage in intense bilateral negotiations with France at a time where acute crisis pressure is absent.
For more information, see the author’s accompanying paper in European Union Politics (co-authored with Dirk Leuffen)