The German and French leaders tried to find common ground during a Hamburg retreat. But here are the key issues still dividing them.
HAMBURG — It’s no secret French President Emmanuel Macron and German Chancellor Olaf Scholz don’t get along particularly well. But during a two-day bilateral retreat in Scholz’s hometown of Hamburg, they tried to put on a show of unity.
Things could have gone better. During an hour-and-a-half boat tour of the Hamburg harbor, it rained. When the two leaders shared a meal of traditional north German Fischbrötchen, or pickled herring sandwiches, Macron looked like he wanted to gag.
In the end, the two leaders, who came to Hamburg with their cabinets to try to forge common positions on a host of issues, from defense to trade with China, announced no concrete progress. Except, that is, for a joint paper on cutting red tape in the EU (always a good one to take out of the desk drawer when you can’t agree on anything else).
Though the talks were overshadowed by the war in the Middle East, Scholz said the two countries face “very similar challenges” on a variety of issues — from economic growth and migration to containing the rise of the far right.
Macron also added a word of warning. “If France and Germany can’t get along,” he said, “Europe is at a standstill.”
Given the deep disagreements, it may be wise to get ready for more standstill.
Here are three key points of contention.
Energy subsidies
The EU is facing the fundamental challenge of bringing down high energy prices while transitioning to green energy but progress on this front is hindered by the fact that its two most important members can’t agree on how.
French officials argue that nuclear energy is green because it’s carbon-free. Therefore, the thinking goes, nuclear energy should be supported with financial incentives under a planned reform of the EU’s electricity market design.
Berlin is opposed. German officials fear that subsidies for French nuclear power would make investment in renewable energies like wind and solar — key to Germany’s green transition — less attractive. Germans also fear it would allow France to lower its energy prices (which are already lower than German energy prices), putting German companies at a disadvantage and perhaps spurring them to shift production across the Rhine.
The dispute is now coming to a head as an EU exemption, which currently allows Paris to sell energy from its nuclear power plants to French industries and consumers at a fixed cut-price rate set by the government, expires in 2025.
That’s why the French government is pulling all the stops to ensure that it can set prices for nuclear power under the EU’s proposed reform of its electricity markets, through the use of special state-backed investment schemes.
Macron said Tuesday that both sides were working to reach an agreement by the end of the month, ahead of the next EU summit in Brussels on October 26-27. “I think it would be a historic mistake to lose ourselves in short-term divisions because we prefer either renewables or nuclear power,” the president said.
Scholz also sought to project optimism: “Our very intensive discussions have already shown that we want to make progress together, and that we will.”
Defense
Paris and Berlin don’t see eye-to-eye on several matters of defense, especially regarding the role the U.S. should play in Europe’s security. Disagreements on European purchases of U.S. weapons were laid bare last month in this joint interview of French Armed Forces Minister Sebastien Lecornu and his German counterpart Boris Pistorius.
French President Emmanuel Macron has spoken out against a German-led initiative to buy air defense systems from Israel and the US for a project known as the European Sky Shield Initiative.
Instead, France has tried to convince European capitals to sign contracts with European companies, in the name of so-called “strategic autonomy” — meaning the bloc’s independence from foreign powers.
Tensions have also risen over the development of a joint Franco-German battle tank, known as the Main Ground Combat System. Although Lecornu and Pistorius have in recent weeks pledged to quickly move forward with the tank, rivalries between French and the German defense contractors have complicated the project.
A recent report by German newspaper Frankfurter Allgemeine Zeitung didn’t help ease those rivalries, raising some ire in Paris. “Neither German industry nor the armed forces are convinced by the idea that, as the manufacturer and user of the Mercedes S-class among tanks, they should now develop a premium product in cooperation with a Peugeot-level manufacturer,” the report said.
Chinese electric cars
Another bone of contention is the recent decision by the European Commission to launch an anti-subsidy investigation into Chinese electric vehicles.
Macron had pushed for such an investigation, arguing that the EU must protect itself against what he sees as unfair competition. Scholz, however, has expressed skepticism, saying he prefers “global competition” over a “protectionist way.”
Berlin’s main concern is that the probe could potentially escalate into a trade war with Beijing that would be particularly bad for German carmakers, which heavily rely on the Chinese market.
German Economy Minister Robert Habeck said late last month at a panel debate that the German car industry is “rightly afraid” of a potential Chinese retaliation. France, he added, has much less to lose in the event of a trade war as it sells a lot fewer cars in China. For that reason, he said, finding a common position is “very, very hard.”
Berlin and Paris “don’t actually agree on anything,” Habeck also said at another point last month.
Laura Kayali in Paris and Victor Jack in Brussels contributed reporting.
Source: Politico europe October10, 2023
