Crisis in France and Germany has rebound effect on the EU
From Brussels, António Costas, president of the European Council, and Ursula von der Leyen, president of the European Commission, are worried about the near horizon for both France and Germany. Two essential partners in the 27-nation European club.
French President Emmanuel Macron has been proposing for months that the EU should have its own EU army, a kind of mini-NATO, and has repeatedly stated publicly that European countries should send troops to Ukraine to defend it from Putin and prevent it from losing 30 per cent of its territory.
Meanwhile German Chancellor Olaf Scholz, somewhat reluctant to send economic and military aid to Ukraine, has ended up convinced that if Ukraine falls into the hands of the Russian dictator, the Baltic states and most likely other Eastern European countries will follow.
But now everything is uncertain and Trump will return to the international stage from 20 January and his first pending issue is the Russian invasion of Ukraine. If France and Germany experience a major political shift, it is almost certain that support for Ukraine and the creation of a common European army will remain on the back burner.
Jorg Lau, editor of the weekly Die Zeit, analyses the situation, pointing out that Germany is in a ‘lamentable state’ and that this leaderless drift is disastrous for Europe.
In an article written for The Guardian, the German journalist refers to the early elections as a referendum on Scholz's failed coalition.
‘On the last day of Scholz's coalition government on which he lost the confidence vote, we saw in the Bundestag a session in which the German chancellor and his rivals hurled insults at each other in parliament,’ Lau said.
What comes next are elections on 23 February, and only a miracle can keep Scholz in government. So far, polls show Friedrich Merz, leader of the conservative opposition, as the likely next chancellor.
Who is Friedrich Merz? He belongs to the Christian Democratic Union, the same party as former chancellor Angela Merkel, but his background is more business than political.
In a sense he has a language somewhat akin to Trump's and talks of reviving Germany and giving it back the necessary verve to be Europe's powerhouse once again. The great locomotive of the EU.
Scholz and his Social Democratic Party, on the other hand, are held responsible by the polls for the failures of his three-party coalition, which has been unable to maintain a stable government with the Greens and the Free Democrats.
Merz became rich working as a lawyer and lobbyist. Before returning to politics, he was chairman of the supervisory board of the German subsidiary of BlackRock, the US investment firm.
It was only when Merkel was preparing to retire that Merz returned to politics. When he returned to the political scene in 2018, he promised that he could reduce the success of the far-right Alternative for Germany party, known by its German initials AfD, by moving his party further to the right on key issues such as immigration.
Precisely part of his discourse has focused on attacking migrants, especially refugees and asylum seekers. And, not infrequently, he has promised that, if he becomes chancellor, he will toughen up reception services.
He has also promised that Germany will spend more on its own defence and modernise its military at a time when the reintroduction of conscription is being debated.
Citizen disaffection
Germany's toughest battle in the upcoming general election will be against the growing popularity of the far right and National Socialism.
The economic situation does not help the more moderate political forces. Germany faces major economic problems: the International Monetary Fund ranked Germany as the worst performing economy in Europe with 0% growth this year and 0.8% by 2025.
Antonio Pedraza, president of the Financial Commission of the General Council of Economists (CGE), points out that the German economy is facing a series of problems with a negative trend. ‘With problems in consumption and domestic demand in free fall, as well as in its exports’.
‘The Teutonic country has been suffering from the collapse of the supply chain, the tap of low-cost Russian energy has been closed, to which are added the current problems of the Chinese economy; it is also immersed in an unprecedented real estate crisis and paying the toll of a weakening of its foreign trade, the exit of its large factory, in the face of lower global growth,’ according to Pedraza.
The Spanish economist points out that Germany's economic weakness is centred on industry, which has fallen by 12 percent in terms of production over the last five years.
‘This has no other cause than the weakening of its automobile sector, facing fierce competition on its own turf. These imports of Chinese vehicles into Europe increased by 37 per cent in 2023, something that continues to grow,’ he explained.
The Volkswagen crisis is the epitome of the crisis in which the German economy is mired: a couple of months ago, the carmaker announced through its works council chief, Daniela Cavallo, that it plans to close at least three plants in Germany.
Cavallo warned the automaker's 120,000 workers that hard times are coming with job cuts, wage reductions and plant closures in order to ‘survive’ in the face of foreign competition.
Chinese electric car production is stifling the once mighty European carmakers, with the German industry leading the way. In fact, the EU announced additional tariffs on Chinese car imports of between 17.4% and 37.6% in an attempt to cushion the blow from foreign competition.
Volkswagen controls its namesake brand, as well as Audi, Porsche, Seat, Škoda and others. An Audi factory in Belgium is being considered for closure, which would be its first closure outside Germany in forty years.
Germans, too, view the immediate future with unease. They feel impacted by the sanctions war against Russia and, with their cheap gas no longer available, there is a lack of competitiveness in a number of industries.
In this respect, Lau points out that the conservative Christian Democrats, who have governed for sixteen years, must accept some responsibility for the sorry state Germany is in.
For the German journalist, the far right and far left parties are leading a ‘backlash’ against support for the Ukrainian war effort. ‘The far-right AfD wants to stop the arms deliveries and concede victory to Putin; in the polls they are 18% ahead of Scholz's SPD’.
France a debacle foretold
Nor does France have a better outlook: the IMF forecasts a GDP of 1.1% this year and by 2025, economic performance is affected by the domestic political situation.
A loss of competitiveness, constant struggles with trade unions and a pension programme that continues to put pressure on public finances are the three headaches for current president Emmanuel Macron, whose government is beset by the far right and the ultra-left.
Nothing goes right for Macron: on 7 July he lost the legislative elections, cornered by the overwhelming success of the far-right Marine Le Pen and the coalition formed by the left and ultra-left parties that are trying to prevent, at all costs, the far-right from ending up in the Elysée Palace.
The elections in post-pandemic Europe are worryingly reflecting a punishment vote against the ruling party and have shown a worrying loss of the centre; meanwhile, the younger voters of the so-called Generation Z are radically swinging either to the far right or to the ultra-left.
Le Pen in particular is on the prowl: the lawmaker has already set a date for Macron's downfall in 2025. The prime minister, Michel Barnier, has not lasted more than three months, and Macron has seen both political extremes agree in the National Assembly to topple Barnier.
He has just appointed the centrist, Francois Bayrou, as the new prime minister. He is a well-known politician and founder and leader of the Democratic Movement (MoDem) who served as education minister from 1993 to 1997.
For CNN, Rob Picheta and Chris Liakos, point out the immediate challenges: ‘Trying to pass a budget in a sharply divided parliament, where Macron faces fairly stiff opposition from both the left and far-right blocs’.
Macron is seeking a tax increase of almost 60 billion euros next year, but the National Assembly has stalled his budget aspirations.
Already in November, the Elysée had to give up on an increase in electricity taxes that would give the government an extra 3 billion euros in tax revenue. It is now up to Prime Minister Bayrou to come up with a new budget.
Barnier's proposed financing bill, which led to his downfall, aimed to reduce the country's budget deficit to 5% next year, according to government estimates.
Some of the measures are highly unpopular with opposition parties, such as delaying the equalisation of pension increases with inflation.
France's current political crisis was triggered when Macron called early parliamentary elections for July, a vote that resulted in a divided parliament that left the president's centrist lawmakers utterly outnumbered by blocs on the left and far right.
The far-right Marine Le Pen continues to declare left and right that she is ready to govern France; to stop unemployment and recover the economy; and to stop economic and military support for the Kiev government. ‘We will make peace with Putin’.
Le Pen recently told Le Parisien that she is preparing for early presidential elections because ‘Macron is already a political corpse’.
The fragility of the economy and the bleak outlook on the nearest horizon are two entirely negative factors for Macronism, which is also highly unpopular among the middle and lower classes and in the poverty belts of Paris and other major French cities.
The coming year does not look good for either Germany or France; both countries could see the fall of their respective leaders and give way to governments that are opposed to continuing to support Ukraine and more inclined to restore ties with Putin's Russia. Two governments that, moreover, could put aside the interests of the European Union to look after their own.