France’s President Macron has long been an advocate of “Europe,” by which he mainly means the EU, achieving “strategic autonomy.” After the bust-ups of the last few months between the U.S. and its allies, the need for that autonomy is viewed in many European capitals as being much more pressing.
But how to achieve it?
Not the least of the problems associated with strategic autonomy is that it is likely to prove expensive. That could, embarrassingly, be very tricky for France (among others). It has an almost American-sized debt/GDP ratio of 117 percent (nearly twice the level provided for in the “rules-based” EU’s treaties, but never mind), no politically acceptable way of reducing it, and a presidential election coming up next year, which could possibly be won by the populist right RN.
All this has Berlin wondering how France, supposedly set to play a key role in Europe’s strategic autonomy, is going to pay for its share. Germany is traditionally one of the Eurozone’s small group of “frugals,” relatively fiscally restrained countries. It has a debt to GDP ratio of 62 to 63 percent. It currently spends a smaller percentage of GDP (an insultingly low 1.9 percent) than France (2.1 percent) on defense but is in the process of significantly boosting that number.
Henry Samuel in the Daily Telegraph:
Germany has exempted most defence spending from its limit on constitutional debt and plans to spend more than €500bn (£435bn) on defence between 2025 and 2029, raising the percentage of GDP to 3.5 per cent.
Germany has the financial firepower to do this, but France is, for want of a better word, stuck. The government (just) managed to pass a budget, but with parliament more or less deadlocked, and a presidential election due next year, there’s little appetite to restore the fiscal discipline that the country needs even before considering the cost of a military build-out. This has Berlin sufficiently worried that its governing coalition’s foreign minister, Johann Wadephul (a member of Chancellor Merz’s CDU) has been asking aloud how France is going to make the numbers work, something it cannot do without politically dangerous welfare cuts.
Given the upcoming election, the only plan that Paris appears to have is leveraging off the EU. The idea would be that the EU would tap the bond markets in its own right either to finance more generalized investment or at least expenditure on defense.
Germany will (quite rightly) not agree to that.
As the Telegraph’s Samuel explains:
Germany has rejected Mr Macron’s repeated calls for so-called eurobonds to boost investment across the bloc, fearing that common EU debt would lead to Germany subsidising EU member states with weaker finances. . . .
Mr Wadephul said Germany also opposed mutualising debt when it comes to defence spending, adding that Nato member states had last year agreed to reach the 5 per cent spending goal by their own efforts. . . .
“We are looking forward to and eagerly await another speech by the French president, I believe on the 27th of this month, where he will comment on strategic issues. . . .”
“Eagerly.”