‘Mercron’ pact seeks to reinvent eurozone

The challenge facing France and Germany is to capitalise on victories for pro-European governments without provoking a backlash in other EU states, writes Mark Leonard.

‘Mercron’ pact seeks to reinvent eurozone

Confidence has returned to Europe’s chancelleries just in the nick of time, what with US president Donald Trump due in Europe on Friday.

During the annus horribilis of 2016, many feared for the EU’s survival. But in 2017, there is renewed hope for the European project, owing to Emmanuel Macron’s election as president of France, and electoral defeats for far-right populists in the Netherlands, Austria, and Germany, as well as Mr Trump’s plunging popularity at home.

The recent ‘Mercron’ partnership between Mr Macron and German chancellor Angela Merkel has European policymakers talking excitedly about a reinvention of the eurozone.

There are now proposals for a shared eurozone budget and finance minister, and for an EU-level security union to tackle terrorism and strengthen border controls.

Moreover, the European Commission last month launched a new defence fund to close the gap between Europe’s aspiration to defend itself and its ability to do so. The hope is that 510m Europeans will no longer have to depend on 320m Americans for their security.

In the past, many EU member states complained that the “cold peace” between France and Germany hampered effective governance of the EU.

Today, those countries have expressed renewed faith in the ascendant Franco-German relationship, though if France and Germany fail to give others a stake in their success, many countries may end up with buyer’s remorse.

At the European Council on Foreign Relations’ annual council meeting in Berlin last month, 250 former and current prime ministers, foreign ministers, policymakers, and thinkers convened to discuss the state of European affairs.

Many were torn between excitement about a European relaunch and fear that the ‘Mercron’ arrangement will leave other member states behind.

For France and Germany, it is worth remembering that the ‘Merkozy’ era — when Ms Merkel and then French president Nicolas Sarkozy tried to forge an alliance — evoked hostility in other European capitals.

Other EU member states resented the exclusive role of France and Germany in developing EU- or eurozone-wide solutions, which were then presented as faits accomplis to the rest of the bloc.

In one notable example, Ms Merkel and Mr Sarkozy once held a summit to forge closer ties with Russia without bothering to consult or include the EU member states in Russia’s immediate proximity.

The challenge for France and Germany now is to capitalise on the recent victories for pro-European governments without provoking a backlash in the other EU member states.

However, this won’t be easy, not least because French and German leaders are torn between two competing visions of Europe’s future.

One vision favours a union of concentric circles, with a Franco-German-led eurozone at its core. This idea is appealing, at least on the surface, because it would allow the core countries to continue integrating, while leaving behind perceived troublemakers such as Poland and Hungary.

But this strategy, though meeting the need for deeper eurozone integration, would not address Europe’s longstanding divides between east and west, north and south, or centre and periphery.

Issues such as Russia, refugees, austerity, military action, and Brexit would continue to challenge European solidarity.

The second vision for Europe’s future emphasises coalitions among countries that are willing and able to work together.

In a largely intergovernmental EU, smaller coalitions could be an effective governance tool and mitigate the veto power that currently exists in formal EU meetings. They could even sign treaties to formalise their arrangements — such as the Schengen agreement on border-free travel.

Under a coalition model, country groupings might change, depending on the issue at hand, thereby allowing for more flexibility.

And, although Germany and France would probably be at the centre of many of these groupings, other countries could take the lead and share the limelight, making the EU re-launch less divisive.

For example, in an earlier era, Poland and Sweden spearheaded the EU’s “eastern partnership” strategy toward countries such as Ukraine.

The ‘Mercron’ partnership has a better chance of building goodwill within Europe than the ‘Merkozy’ partnership ever did.

For starters, the balance of power between France and Germany will probably now shift a bit toward the former, given that the French economy is strengthening, and will be positioned for renewed growth after Mr Macron’s promised reforms.

Moreover, owing to his knack for transcending traditional divides (which I previously described as the ‘Macron method’), Mr Macron might be able to build new, better relationships with member states that have not previously had close ties to France.

And, last but not least, Mr Macron has a huge store of soft power and political capital, similar to Barack Obama after grassroots enthusiasm brought him to power in the US in 2008.

At the same time, Germany is in a weaker position than it was during the ‘Merkozy’ era, which is good news for the Franco-German relationship.

The refugee crisis has rendered Germany a demandeur, rather than a supplier, of European public goods. And although Ms Merkel seems indispensable on the international scene, plenty of people in Germany are starting to plan for the end of her mandate.

Most important, Ms Merkel and Mr Macron both need the ‘Mercron’ partnership to work if they are to succeed in building a stronger Europe.

The Europe of the future must be capable of protecting its citizens from global threats; but to define those threats, it will have to consider all EU member states’ perspectives, not just France and Germany.

Fortunately, Ms Merkel and Mr Macron are both aware of the limitations of the ‘Merkozy’ tandem, and with the need to improve on the relationship Ms Merkel had with Mr Macron’s predecessor, François Hollande.

Above all, their realism about the bilateral relationship and its possibilities will be essential, because Europe’s most powerful asset has never been a detailed vision of the future, but rather its collective willingness to improve upon past failures.

If Mr Macron and Ms Merkel keep this historical perspective in mind, they can turn their relationship into a political marriage from which all of Europe will benefit. An exclusive partnership will breed more resentment than goodwill, and probably not survive for long.

Mark Leonard is director of the European Council on Foreign Relations.

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