France's new-found admiration for Germany is hard to ignore but easy to understand, writes RUADHÁN Mac CORMAICin Paris
TO SOME ears, it has begun to sound like an obsession. Rarely has French president Nicolas Sarkozy made a set-piece speech in the past three months without at some point drawing an unflattering contrast between France’s halting economy and that of its runaway German neighbour. “I can understand the competitiveness gap between China, India and France, but I cannot understand the . . . gap between Germany and France,” he told workers at the Airbus plant near Toulouse last month.
In his televised new year address, he promised to protect French workers from outsourcing in 2011 “by harmonising our taxes with our German neighbours”. French ministers have followed their president’s lead, approvingly citing the German example on everything from balanced budgets and inward investment to VAT rates and universities.
Sarkozy put it most succinctly in December: “I admire the German model.” Until recently, he had a strange way of showing it. “France acts, while Germany thinks about it,” Sarkozy taunted Berlin at the end of 2008, as Chancellor Angela Merkel hesitated over a stimulus package while he – then holding the EU’s rotating presidency – shuttled between European capitals to co-ordinate a quick response to the financial crisis. A president who came to office pointedly praising the lessons not of Berlin but of London took satisfaction, in December 2009, in observing that the German recession was “twice as big as France’s”.
The economic trends seen in the year since Sarkozy made that remark help explain the shift in rhetoric from Paris. Whereas Germany’s economy was shrinking faster than France’s in 2009, it has since enjoyed an export-led surge that has pushed GDP growth to 3.7 per cent, compared to 1.5 per cent west of the Rhine. France’s loss of competitiveness to Germany has become more pronounced.
Paris has not balanced a budget in 35 years, and with concern rising that its cherished AAA credit rating may be in jeopardy, Berlin, with its budgetary prudence and strong industrial base, has become the benchmark.
There is nothing particularly new in French politicians warning that Germany is pulling ahead. “French presidents have been using the German example as a stick to prod France and to accelerate reform since the days of Georges Pompidou,” says Thomas Klau, head of the European Council on Foreign Relations’ Paris office. “The buzz-word in those days was ‘catch up with Germany’.”
Many elements of the German model as invoked by French ministers – labour market reform, changes to retirement systems and budgetary prudence – happen to be issues close to the ruling UMP’s heart. But is Sarkozy’s recent rhetoric purely tactical or suggestive of a deeper anxiety about France being left behind?
“I think there is a genuine worry that France might fall behind in a very significant way,” says Klau. “There is a genuine fascination with the fact that Germany, which seemed to be losing its competitiveness in the early years of the past decade, has regained it thanks to a socially extremely painful course of quite drastic reform.
“There is also a tactical side to it. By holding up Germany as an example and holding up the threat of France falling permanently behind, Sarkozy hopes to find it easier to muster support for further rounds of reform, which he knows are necessary.”
The euro zone debt crisis has highlighted a shift in the balance of power within the Franco- German pair, with Berlin’s clear dominance in the debates over rescue packages, sanctions for rule-breakers and now the “competitiveness pact” reminding Paris of the perennial link between economic and political clout. “The more France weakens economically, the bigger the gap grows between its political pretensions and its economic weight,” says Anne-Marie Le Gloannec, a specialist on Franco- German relations at Sciences Po in Paris. France’s concern that an enlarged EU of 27 states diminishes its influence has fed into anxieties, and partly explains why it is keen on integration within the smaller euro zone. As Le Gloannec says, newer member states such as Poland and Hungary have closer economic ties to Berlin than to Paris.
An intriguing subplot in the current Franco-German story is the uneasy relationship between president and chancellor. Sarkozy and Merkel do not get along particularly well, and neither came to power feeling any great affinity with the other’s country. “They’re like chalk and cheese,” says Le Gloannec. “One is ponderous, cool-headed, while the other is impulsive. They’re almost caricatures.”
Most agree that the vital partnership would run more smoothly if there was a rapport between the leaders – although even the best relationships between Helmut Kohl and François Mitterrand, for example – went through difficult periods. The resilience of the axis has been confirmed by close co-operation during the euro zone crisis, Klau believes.
“The dynamics of the Franco-German political machinery are strong enough for the partnership to continue to operate even when the two personalities at the top go through a rocky patch,” he says.