When European Union leaders meet virtually for a summit Friday, a familiar duo will again grab the spotlight.
COVID-19, which has battered European economies, is also giving a new boost to Europe’s traditional economic engines, France and Germany, and possibly the so-far underwhelming relationship between their leaders.
German Chancellor Angela Merkel and French President Emmanuel Macron have found common cause in pushing for a massive coronavirus recovery plan for the 27-member bloc — one that flouts Germany’s traditional budgetary orthodoxy and puts Berlin at odds with other frugal states.
But whether the newfound unity opens a new chapter for the two countries to power other joint European initiatives is less certain. Key hurdles still face the coronavirus rescue package, framed in an $843 billion proposal of grants and loans the European Commission unveiled last month.
“I think we can look ahead to a big dogfight,” said Daniel Gros, director of the Brussels-based Centre for European Policy Studies, or CEPS, of the opposition facing the package.
Still, Gros added of member states, “They will have to come together — that’s quite clear.”
Germany’s EU presidency: Brexit and budget
Friday’s summit is a key marker in other ways. Next month, Europe’s biggest economic power, Germany, takes over the rotating six-month EU presidency that will also tackle thorny Brexit negotiations. On the menu, too, will be discussions about the bloc’s next seven-year budget running through 2027.
It comes as Merkel, the EU’s longest-serving leader, prepares to leave office next year.
Tara Varma, head of the European Council on Foreign Relations' Paris office, believes Merkel is looking toward her legacy.
"She knows she has a massive, critical role to play,” Varma said, particularly on establishing European health sovereignty, after the pandemic found the bloc heavily dependent on medical imports from China and India. “She sees the necessity for the EU to be able to protect itself and its citizens.”
But the immediate task Friday may be finding consensus on money.
Europe’s “Frugal Four,” who generally oppose big spending — Sweden, the Netherlands, Denmark and Austria — have reiterated their concerns about the commission’s COVID-19 bailout plan, aimed primarily at helping more economically strapped southern countries.
“How can it suddenly be responsible to spend €500billion [$562 billion] in borrowed money and to send the bill into the future?” they wrote in a letter published in the Financial Times this week, noting European taxpayers would have to shoulder the burden.
The four have instead called for loans, rather than grants that would not have to be paid back.
Germany has traditionally shared such spending concerns. But last month, Merkel joined Macron in proposing a $562 billion recovery plan for the bloc, which was rolled into the commission’s broader proposal.
Announcing it last month, Commission President Ursula von der Leyen — Merkel’s former defense minister — called the plan “Europe’s moment,” that would see the bloc recovering from the pandemic together, rather than “accepting a union of haves and have-nots.”
French Economy Minister Bruno Le Maire is offering a broader take.
“We are seeing a turning point in Franco-German relations,” Le Maire told Der Spiegel in an interview, sketching other areas for potential joint initiatives, including industrial projects.
Analyst Varma is also hopeful about a reboot.
“At the beginning of the relationship, there were expectations on both sides that weren’t met,” Varma said of Merkel and Macron, who took office in 2017.
Macron had big ideas for Europe; Merkel was weakened by a divided coalition.
“He was expecting her to meet him halfway and build this Franco-German moment,” Varma added. “And from the German side, there were different expectations.”
Old disagreements
Berlin has not shared Macron’s push for closer EU fiscal and defense integration. But this week, Bloomberg reported the two countries are now pushing for tighter European defense ties.
The call is backdropped by U.S. President Donald Trump's confirmation of plans to withdraw 9,500 American troops from Germany, which he has criticized for failing to spend enough on defense.
“Germany used to look at the U.S. and the transatlantic relationship for security issues,” Varma said. “And I think we’re seeing a shift here, too.”
“Germany is now coming to terms that it will need the EU to protect not only its economic interests but its security interests,” she said “which is a position France has been holding for a long time.”
But other analysts believe the current unity over the COVID-19 rescue package may be a one-off.
“Macron is overwhelmed by his domestic concerns,” said Gros of the CEPS policy center. “And Merkel knows there’s only so far she can take Germany along” in other EU areas.
John Springford, deputy director for the London-based Centre for European Reform policy institute, is similarly skeptical.
“There’s a realization she’s nearing the end of her term and wants to have been a chancellor that has made Europe stronger,” Springford said of Merkel.
“And so, there’s a kind of happy marriage of interests now between her and Macron," he added of the rescue fund, "which is why we’ve ended up with something that’s actually pretty ambitious.”
