On December 23rd, 2021, Italian Prime Minister Mario Draghi and French President Emmanuel Macron published a tribune in the Financial Times, calling for reforms of the European Union’s (EU) fiscal rules. The tribune argues that the EU’s fiscal framework is too difficult to navigate and is hindering the EU’s economic growth. With the COVID-19 crisis came important emergency spending as well as the suspension of EU fiscal rules, which had previously required that public debt should be kept below 60% of the national GDP, and public deficits below 3%. According to the duo, this suspension allowed economic recovery by enabling fast governmental actions and flexibility in their maneuvers. Draghi and Macron argue that this example shows the possibilities for better economic growth for the EU if only the fiscal system were reformed and simplified.
The tribune reflects the real convergence of the two politician’s vision for Europe and the growing friendship between their two countries. In fact, two weeks before the tribune’s publication, Macron and Draghi signed in Rome the Quirinale Treaty, which strengthens cooperation on all levels between the two countries. “This contract of reinforced cooperation […] marks a historic moment in the relationship between our two countries,” said Draghi during the following press conference. Macron compared it to the Elysée Treaty signed between France and Germany in 1963, which started the singular Franco-German partnership.
These developments have taken place at an important time in European regional politics: German Chancellor Angela Merkel’s recent departure from office has left a power vacuum. On December 8th, Merkel passed the Chancellorship to her counterpart, Olaf Scholz, after 16 years at the head of Germany and, de facto, of Europe. What will a post-Merkel Europe look like? Will the newly-formed duo, Draghi and Macron, take up the torch?
Merkel’s Europe: 16 Years Focused on Stability and Consensus
At her last EU summit last October, Merkel encouraged the nations in attendance to respect all member states and their visions, while remaining aligned with the EU’s founding principles. These few words perfectly summarize Merkel’s vision of Europe: growing and advancing together. Since 2005, the EU has faced many crises and Merkel has successfully managed each of them, serving as a force for unity and stability.
Merkel had an anchored personal belief in the EU. She once declared that Europe was “a matter of the heart” – and it has to be if you are going to believe in the possibility of 27 countries agreeing on a greater ideal of solidarity and consensus, beyond national interests. This belief was upheld by a pragmatic realization that the very concept of the EU aligned with Germany’s national interests. “Germany will only do well if Europe does well,” she said back in 2020. The German economy has greatly benefited from the EU. Thanks to the free movement of labor, goods, and services, Germany earned an additional 86 billion euros per year.
Furthermore, she was a great diplomat, always prioritizing listening to all parties and reaching a middle ground. Often described as a woman of consensus, she consistently opposed the idea of pursuing a two-speed Europe, a concept especially encouraged by the French. They support the perspective that more “advanced” countries who share the same vision should leave aside slower, “Eurosceptic” nations – nations who systematically prioritize national interests over the EU’s and challenge the EU’s legitimacy and authority. Two reasons can explain Merkel’s stance on this topic.
Firstly, the German political system since WWII is such that it is close to impossible for a single party to win the majority in the Parliament and create a government by itself. In this vein, it is contrary to the French quasi-monarchical political system, founded on a very strong executive power embodied by the President. Merkel’s consensual stance on the international scene thus reflects her need to constantly compromise to successfully lead her coalition domestically. Secondly, Merkel was a real bridge between Eastern and Western Europe, especially in dealing with Eurosceptic countries such as Hungary and Poland. Born and raised in Eastern Germany, she fundamentally understood some of the Eastern states’ concerns and interests. Her departure could mean a schism within the EU between the East and the West.
Post-Merkel: a Divided EU Facing Existential Challenges
On the more negative side, Merkel has been accused of not really solving crises, but only managing them. Looking for consensus also meant slowness in reaching decisions, and even inaction, for example, in relation to the growing Russian threat over Europe.
She also made highly controversial decisions. A few months after announcing the decision to allow a million Syrian refugees to enter Germany, she advocated for and put in place a deal with Turkey, which consists of paying Turkey to take some refugees back. Similarly, the strict austerity measures of spending cuts and higher taxes that she imposed on Greece to solve their debt crisis have been heavily criticized. One result of these policies was the shrinking of Greece’s economy by 25%.
In any case, since Merkel’s departure, there has been a dire need for new leadership of the EU. Politically, economically, and socially weakened by Brexit and the COVID-19 crisis, the EU has to solve its slow economic growth and financial debt. Longer-term issues such as climate change mitigation and adaptation, welcoming migrants and refugees, and the rise of nationalism on European soil also threaten the institution.
However, the main challenge threatening the EU’s future is the growing fractures within. According to Catherine De Vries, Professor of European Politics at the Bocconi University, there is growing economic divergence between the South, notably Italy and Spain, which barely came out of their debt crises, and the North. In 2020, Italy’s GDP decrease was double Germany’s. Secondly, the divergence of the rule of law between the West and the East is also deeply concerning. The Polish and Hungarian governments have exploited the COVID crisis to accumulate more power and weaken institutions of liberal democracies. This is a symptom of the remaining cultural, historical, economic, and political fractures existing between the East and the West, dating back to the Cold War. Is there anyone who can bridge this gap after Merkel’s departure?
Scholz, Draghi, and Macron: Three Front-Runners for a New European Leadership
Naturally, all eyes have been on Olaf Scholz, Merkel’s successor. At the head of a unique coalition of the center-left Social Democrats (SPD), the more conservative Free Democratic Party (FDP), and the Greens, Scholz met with Macron and other European leaders the day after his institution. Despite having formed a different coalition from Merkel’s, Sholz’s rise to power has been seen as a matter of continuity as he was finance minister in the previous government. Showing his willingness to pursue Merkel’s legacy, Scholz declared a few weeks ago: “German politics cannot stand at the side […], it has to take on a role of responsibility [in Europe].”
Germany remains by far the largest European economy, which legitimizes it as a leader of the EU. Yet Scholz’s first challenge is to solidify his coalition, described as a “traffic light” one, as it unites three parties with very different and sometimes opposing ideas. This domestic diplomatic maneuvering may take a toll on Scholz’s ability to allow Germany to continue to spearhead both the EU and the continent.
The second candidate is Emmanuel Macron, who took the EU’s rolling presidency at the beginning of January. President of France since May 2017, Macron is the most “ancient” of the three runners, despite being by far the youngest in age. Having formed a strong partnership – sometimes even called friendship – with Merkel since his election, Macron has a clear vision for Europe’s future and has been taking initiative to build it further. In addition to the common tribune with Draghi, Macron has been advocating for a European defense army, supported by Scholz, and other innovative proposals such as a common asylum policy or a digital tax.
Macron may share the common French vision that strengthening Europe as a whole could help France revive its own “glorious” past. On the topic of international affairs, Macron is known for taking a strong stance. This is a strategy to promote France as a strong and influential nation instead of a middle power that does not have much say in “the big leagues” of international powers. For example, he does not hesitate to confront China or the United States when he disagrees with their policies. However, he will not only need to prove his worth as president of the EU in the next few weeks but will also have the challenge of winning the French elections in April. Furthermore, despite being a major European power, France does not have the economic dominance of Germany.
Finally, Mario Draghi became the Italian Prime Minister about a year ago, in February 2021. Draghi certainly has experience of European institutions, as he was the President of the European Central Bank for eight years (2011 – 2019). He is well-known and admired by many European diplomats. Draghi has successfully brought stability to domestic affairs, managing the country as a technocrat rather than a politician. He has definitely pushed Italy back on the international scene as a major European power. However, Draghi also faces domestic challenges: he is now running for the Italian presidency, an important role which, however, would mean he would no longer manage day-to-day affairs.
While Scholz definitely intends to keep Germany as the EU leader, he is challenged by the rise of France and Italy within the EU.
Franco-Italian Friendship and Its Significance for EU’s Future
The friendship between Macron and Draghi has its roots in the weeks that preceded Merkel’s step down. Back in July 2021, when Macron welcomed the Italian president, Sergio Mattarella, at the Elysée, he acknowledged Italy as “a sister nation with which France has probably shared more than with any other [nation].” In December, there was a real breakthrough in Franco-Italian diplomacy: a partnership that has not been that close since 1945.
The Quirinale Treaty is a bilateral accord, often compared to the Franco-German Treaty signed in 1963, officially launching the Franco-German friendship. The Treaty effectively enhances cooperation between the two countries in international affairs as well as in all domestic areas (migration, economic, industrial, cultural, judicial, etc.) by establishing formal ties at different governmental levels. Its exact content is not known in detail and of little importance compared to its symbolic significance: France now has another official “friend” with whom it can shape Europe’s future.
Furthermore, the tribune published by the two politicians in the Financial Times is a first and demonstrates a common vision for Europe’s future. In fact, Macron and Draghi share many points of view. Both are former investment bankers and are pro-EU centrists advocating for a market-centered economy and a more nationally autonomous fiscal system. Essentially, their vision of Europe is a more agile, innovative, and bolder EU that could also address domestic problems. To achieve that vision, they are ready to leave behind the nations that do not currently share their vision or abide by the EU’s principles, such as Hungary and Poland.
Nevertheless, as long as it remains the first European economic power, Germany will also remain France’s priority, its first and foremost ally. While it is too early to really assess Scholz’s vision of Europe, he has certainly been very supportive of Macron and his policies. Much depends on the outcome of Macron’s EU presidency as well as the results of the French national elections in April. If Macron wins it, Europe could be led by a trio, with one of the three taking the lead at different moments over the next few years, depending on each leader’s state of domestic affairs.
More importantly, Macron and Draghi’s proposals mostly address the economic downturn that the pandemic caused in Europe. If the French economy is robust enough, the Quirinale Treaty could help Italy’s economy to develop more and thus address the economic divergence between the North and the South of the EU.
It is, however, not enough, and some countries remain on the margins, such as Spain or Greece. Furthermore, none of the three candidates have Merkel’s diplomatic and consensual skills, nor her intimate understanding of both Eastern and Western Europe. The two-speed Europe that Merkel has always opposed might very well become a reality only a few weeks after her departure.