Washington Is Asked to Hold the European Union Together

Dr Ivanovitch - MSI Global
Dr. Michael Ivanovitch

One of Germany’s influential (conservative, and government-friendly) daily newspapers ran a headline last Tuesday that the French President Emmanuel Macron wanted to play the “EU’s first violin.”

That says volumes about the French-German reconciliation, and the myth of the two-countries’ engine of the “European project,” a sort of mission impossible to transform a customs union into an irrevocable European super-state with all the economic, political, social and defense attributes.

Why the alarm? The answer is: A change of guard in Berlin.

Having served as German chancellor since November 2005, Angela Merkel is stepping down. Next September elections seem likely to lead to a weak showing of the right-of-center CDU/CSU union. Apart from that, the powerful Bavarian Christian Social Union (CSU) feels angry for having been shunted aside in favor of an apparently uninspiring CDU (Christian Democratic Union) candidate to run the country’s next government.

That’s now opening the way to the Green Party, advocating radical environmental policies that are worrying the political establishment and Germany’s business leaders.

Germany wants closer U.S. ties

Fear and confusion, to leave it at that, have now engulfed an erstwhile self-confident and domineering German political class that sees Macron as an ambitious upstart ready to take over with a European agenda Berlin had eagerly and promptly dismissed out of hand.

Those fears are not unreasonable. The EU -- and the long-suppressed crisis in French-German relations – have already moved center stage in the French election process, leading up to (the second round of) the presidential contest in early May 2022.

Macron’s approval rating currently hovers around 38%. He is strongly challenged by Marine Le Pen, the leader of the rightwing National Rally. The polls show Le Pen -- an outspoken critic of the EU and of the German domination of EU policies -- beating Macron in the first round of presidential elections scheduled for late April 2022.

Germany fears that the looming clash between Macron and Le Pen will bring the “German question” into French elections. In addition to aggravating an already strained bilateral relationship, that would also compromise Berlin’s ability to stay on top of the European economic, political and security affairs.

Hence the call to Washington directly, or through the NATO military and political alliance.

The German Greens, for example, would completely turn over Germany’s foreign policy to the U.S. They see that as a safest choice for neutralizing French calls for “European sovereignty,” a code word for refusing to follow American party lines.

The German Socialist Party would do the same thing. Looking for possibilities to stay in power in some coalition with the Greens, the beleaguered Socialists want “NATO’s stronger political muscle.”

Washington’s help is also needed in dealing with Hungary and Poland -- countries EU politicians call “illiberal democracies” -- and with Russia-fearing Baltic states. Similarly, Berlin wants to work closely with the U.S. on issues concerning Russia, China and “Eastern partnerships” in the post-Soviet space.

Ever vigilant about their export business, closer relations with Washington may also bring a pass for Germany’s excessive and systematic trade surpluses with the U.S. In the first quarter of this year, German exports to the U.S. were double the amount of German imports from America – with a net trade income that could reach nearly $70 billion for all of 2021.

Washington should be careful here: Any such concession on German trade would imply acceptance of EU’s trade surpluses with the U.S., which currently account for about one-third of America’s trade gap.

A stalled European project

But the icing on the cake for Berlin would be Germany’s privileged role in U.S. foreign policies.

That is what Angela Merkel called for in her recent statements that Washington should let Germany lead with its input concerning Russia, supposedly because Germany had better knowledge and experience in dealing with Moscow.

Germany seems to be winning that argument. In spite of dire warnings from East Europeans and Baltic States, Washington did an embarrassing U-turn by withdrawing its opposition to the Nord Stream 2 gas pipeline from Russia to Germany.

After a period of unusual tensions with Washington, Berlin, it seems, is back as America’s best and most reliable global partner.

France is watching all that, but its politicians are too preoccupied with local and regional elections to wade into European and world politics. The French media, however, understand what is happening. They are venting their German vitriol, accusing the French politicians of illusions, or worse, about the German partnership. And the worst is yet to come in the run-up to next year’s presidential elections.

It seems that President Joe Biden will have an “interesting” session with his EU allies and NATO partners on June 14-15. But all he can do is tell the Europeans to calm down and stay together for the sake of a strong trans-Atlantic community.

By comparison, Biden’s meeting with Russia’s President Vladimir Putin in Geneva, Switzerland, on June 16 looks like a pleasant walk around Lake Léman. The two men are old acquaintances, their meeting agenda has been fully aired by their sherpas, and both of them have national interests that transcend Europe’s centuries old hatreds and enmities.

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*Dr. Michael Ivanovitch is an independent analyst focusing on world economy, geopolitics and investment strategy. He served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia Business School.