Austerity rift chills French-German relations

German Chancellor Angela Merkel and French President Francois Hollande speak to the media following talks at the Chancellery hours after Hollande's inauguration in Paris on May 15, 2012 in Berlin, Germany.

The  relationship between France and Germany has been described as a bicycle or to be more precise, a bicycle made for two -- a tandem.

The two biggest economies in the eurozone need to cooperate closely, work together, and head in the same direction. But the Franco-German tandem is in trouble.

“The problem is that the French are not prepared to take the back seat and let Germany do the steering” says German analyst Heinz Schulte. “But Germany is the continent’s economic superpower and should take a leadership role without dominating its European partners. It should be in the driver’s seat.”

The French have become increasingly critical of Germany’s handling of the eurozone debt crisis and its insistence that debt-laden member states cut their public spending. A draft document from the French Socialist Party accused the German leader, Angela Merkel of “selfish intransigence.” The Socialist speaker of parliament called for a “confrontation” with Germany over austerity.

Laura Slimani, a Socialist Party activist, says the French government has every right to challenge Germany’s approach to the debt crisis. After all, says Slimani, this was why Francois Hollande was elected president a year ago -- to oppose what she calls this “disastrous policy” of austerity.

“The policy that is being pushed by Angela Merkel and conservatives in Europe leads to more unemployment, more debt and to people getting poorer and poorer especially in southern countries,” she says.

But Angela Merkel has lightened up. With her tacit approval, France and Spain have just been given two more years to get their budget deficits down to 3 percent. And Constanze Stelzenmueller of the German Marshall Fund for the U.S. in Berlin says Merkel hasn’t only been pushing for austerity.

“To be fair, she is most concerned about eurozone member countries reforming their economies, making their labor markets more flexible, in order to promote growth,” says Stelzenmueller. “Reform and  growth are exactly what France needs.”

French analyst Dominic Moisi sympathizes with the Germans. “Germany feels that France is not doing what it should be doing on the tandem, that is pedaling.” And he believes that the lack of co-operation between the two countries is helping to stall the eurozone economy.

“The tandem is working imperfectly," he says. “And so the European machine does not progress.”

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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