Europe provides France with a power channel and a protection, but France must modernize in order to play a role in reforming the European Union.
Building Europe has been the only factor of continuity in France’s foreign policy since the 4th Republic [1946-1958]. General de Gaulle hastened the establishment of the Common Market and officialized reconciliation with Germany. Georges Pompidou launched the first extension of Europe when the United Kingdom joined. Valéry Giscard d’Estaing created the écu and the currency snake with Helmut Schmidt. François Mitterrand presided over the Single European Act and then the creation of the euro.
Jacques Chirac concluded the highly controversial Treaty of Nice. Nicolas Sarkozy piloted management of the euro crisis with Angela Merkel.
After François Hollande’s vain attempt to re-negotiate the stability pact, Emmanuel Macron pleaded for reform of the European Union, which has taken form with the recovery plan.
This permanent European axis has gone hand in hand with growing reservations, symbolized in the rejection of the proposal for a Constitution by the 2005 referendum. Commitment to Europe used to be a French passion; it has become an affair of interests.
In France, just as in the rest of the European Union, hostility towards European integration has become one of the warhorses of both right- and left-wing populism. But, as in Greece, Spain and Italy, people have voted against leaving the EU and/or the euro.
Of course, there is no doubt that the EU is costly for French public finances, which everyone knows are in a critical state. In 2020, France is the second highest contributor to the EU providing 15.6% of its resources, behind Germany (20.6%) and ahead of Italy (11.6%). But apart from payments received in return – essential for the food production sector – France’s membership of the EU gives it some major advantages.
Being part of the euro zone and under the ECB umbrella enables it to obtain finance at negative interest rates – much lower than those it could access on a national level – at a time when public debt is soaring to 117% of GDP at the end of 2020. The single European market is the main outlet for French exports (59% in 2019), even though market share has fallen sharply to 8.5% as compared to 12% in 2000 (22.5% for Germany and12.7% for the Netherlands). In the service sector, French market share is at 11.3%, powered by tourism with 70 million out of its 89 million international visitors coming from Europe before the epidemic. In higher education, France has the most students (44,000) in the Erasmus scheme, ahead of Germany (41,000) and Spain (40,000), yet it receives only 29,000 European students, a long way behind Spain (48,000), Germany (34,000) and the United Kingdom (32,000), because of the lack of English courses and accommodation. Strasbourg remains the seat of the European Parliament, and several front line European agencies are located in France, including the European Securities and Markets Authority.
As a final point, Europe is a very valuable channel that provides France with power and diplomatic influence.
France’s investment in Europe is therefore beneficial and rational. Disaffection, though, is only too real, and is derived from a twofold difficulty in dealing with the new situation in the 21st century.
Firstly, in the 2000s, France took a sudden step back by refusing to adapt its business and social model to the introduction of the euro, to extension of the EU and to globalization. Secondly, the EU, founded on law and the market, turned out to be incapable of reforming itself – in terms of power – in order to protect its nations and their citizens from the numerous crises that arose: the 2008 crash, destabilization of the euro, Jihadist attacks, waves of immigration, the predatory policies of China – with regard to markets, companies and assets – and the expansionist policies of Russia and Turkey. Instead of presenting a united front, it was divided by Brexit, by economic divergences between the north and south of the euro zone, and by opposition between the north and east over the rule of law and illiberal democracy.
It did however take moves – belated but real – when under pressure from these crises. The 2008 crash and the euro crisis gave rise to a monetary union with the transformation of the ECB into a last resort lender and the emergence of mechanisms for financial solidarity. The epidemic has given birth to an economic union with a 750 billion euro recovery plan.
The greatest unknown is France. Its modernization is the key to stabilizing the euro zone, to reforming the EU and to creating an autonomous Europe, for which it is the driving force. But this has never seemed so far off because, at the present time, Emmanuel Macron and his government have lost control of the Covid-19 epidemic, of economic recovery, and of maintenance of order and public safety.
(Column published in Le Figaro,19th October 2020)