Newly re-elected French president Emmanuel Macron (pictured) didn’t waste much time before going to Berlin to visit his German counterpart, Chancellor Olaf Scholz. The visit dovetailed with the 77th anniversary of the end of World War II in Europe, and reflects a longstanding tradition between German and French heads of state to visit each other’s country shortly after being elected, writes Colin Stevens.
While the occasion marks the continuity of tradition, it comes at a time of profound change for Europe. The bloc is not only dealing with Vladimir Putin’s war of aggression in Ukraine, but is also facing the sting of rising inflation and the prospect of a Eurozone recession. Confronted by this series of challenges, will the Franco-German axis, which for over 60 years has been the motor of Europe, manage to survive these crises unchanged?
Between past and present
Both Macron and Scholz took the occasion to reflect on the past as well as the present situation in Ukraine, with the German chancellor emphasizing that “Ukraine will prevail. Freedom and security will win the day—just as freedom and security triumphed over oppression, violence and dictatorship 77 years ago”. Solidarity with Ukraine certainly loomed large at the bilateral summit which marked Emmanuel Macron’s first foreign trip following his re-election, but the meeting also touched upon several high priority topics for Europe, from energy, to difficulties implementing the Brexit protocol, and treaty reform.
But the meeting also offered a glimpse into what the future likely holds for the Franco-German relationship. Traditionally, the partnership between the two countries has been one of equals, yet with Angela Merkel’s retirement, the balance of power may be shifting. Despite a bruising election campaign at home, Macron appeared self-assured during the visit in his role as the more senior statesman, while Scholz appeared uncomfortable, perhaps in light of unrelenting criticism over his reticence to send weapons to Ukraine and block energy imports from Russia. Moreover, Macron appears ever-more determined to plough forward with his ambitious agenda to reform Europe, carving out a more important solo role for France and positioning himself as the EU’s most powerful leader.
A new phase of economic competition
The reasons to believe the Franco-German relationship may be heading for a rebalancing are, as always in that relationship, not solely tied to politics but also to hard economics. As rising inflation and stagnating growth currently grip the Eurozone, both countries could soon find themselves competing to escape the looming prospects of a recession. Indeed, we are already witnessing the first signs of a new phase of economic competition between French and German companies, with firms from both countries jostling for position in markets that present attractive prospects for growth.
One of the main markets that promises growth and solid environmental credentials is the production of clean cars. While the automobile industry and manufacturing have historically been Germany’s forte, Macron has unveiled plans to challenge this dominance by making France the continent’s top producer of clean cars. Currently, Renault –France’s leading firm in the automobile industry – is projected to be second only to Volkswagen in the global production of electric vehicles by 2025. This, however, was not enough to satisfy the Elysée’s ambitions, with Macron pledging last October another €4 billion to push the Renault group into first place.
Another market segment that both countries are keeping an eye on is the insurance and reinsurance sector, which is becoming increasingly important in Europe’s efforts to mitigate against the devastating effects of climate change. While Europeans are historically underinsured against natural disasters, the increased frequency of floods and wildfires has prompted an increased demand for insurance and reinsurance premiums and an expansion of the entire industry. In the especially fast-growing reinsurance sector, Germany currently has the upper hand. Two out of the world’s top 3 reinsurance companies are German, with only one French company in the top 10. French firms are however starting to challenge this dominance, as seen by French insurance firm Covéa’s recent move to buy the world’s 12th biggest reinsurer – Partner Re – in a $9 billion deal that was given the green light by the European Commission last month. It is likely to be the first of many such smart investments by French companies in a market that is filled with potential.
Alongside these signs that French firms are increasingly moving into promising sectors where German companies already have a strong foothold, another clue that the relationship’s role as Europe’s backbone may be changing comes from Macron’s determination to craft new partnerships in the bloc without Berlin’s involvement. Most recently, the French president has pursued stronger relations with his Italian neighbours by signing with PM Mario Draghi the so-called Quirinal Treaty in November of last year. The ambitious document echoes the 1963 Elysée Treaty, which inaugurated the season of economic and political dominance enjoyed by the Franco-German alliance in Europe. If the Quirinal Treaty proves even half as successful, it might signal a decisive southward shift in the EU’s axis of power.
Up until recently, the EU’s main power dynamics seemed to be unshakable, with France and Germany leading the pack. But certainties in Europe’s geopolitical scene seem to be a thing of the past. Faced with several concurrent crises, the relationship between Paris and Berlin may too be floundering. In his second term in office, Macron appears determined to mark his legacy by reforming the EU and, in his quest to do so, is looking for allies in European capitals other than Berlin. Alongside economic incentives for greater competition between German and French firms, the political dynamics seem to suggest that this longstanding geopolitical relationship may be heading into a new phase.