French President Macron headed to Berlin to hold talks with German Chancellor Angela Merkel on April 19 to address reforms in the European Union’s economic and finance policies. While the pair has much in common when it comes to external policy, it’s far more complicated to reach compromise in domestic affairs and to prepare a roadmap for a new Europe.
Eurozone Reform
In his speeches, including the latest one in Strasbourg, Monsieur Macron has repeatedly highlighted the pressing need to fortify the Eurozone against unforeseen financial crises by transforming the European Stability Mechanism (ESM), the Eurozone’s permanent bailout fund, into a European Monetary Fund (EMF) by analogy with the IMF, which could tackle a member-state’s debt problems and other financial issues before they affect other EU nations.
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His views, however, were widely criticized by the German Christian Social Union (CSU), the Bavarian sister party to Merkel’s Christian Democratic Union (CDU), which strongly opposes the French president’s idea of creating a regional version of the IMF. Frau Merkel backed her party’s stance, explaining that it would have to be transformed through treaty change – a long and complicated process. The German side has also voiced concern that such a plan would make wealthier nations liable for the debts of poorer states.
Still No Compromise
Berlin has made it clear that it does not approve of Macron’s idea of creating a Eurozone budget, as well as an EU finance minister, with the CSU warning that it is essential that the EU summit in June agrees on a budget for the entire 28-nation bloc before they start to discuss a budget for the Eurozone, because member-states will have to pay more after the UK withdraws. Merkel, however, announced that Germany would make “independent contributions” to the European budget, and described the creation of a banking union as the most relevant issue in the context of Economic and Monetary Union.
"By June, we will have found joint solutions with France," Merkel said, adding that Berlin and Paris will assemble a "strong reform package."
At the same time, the German Social Democratic Party (SPD) signaled Berlin’s willingness to back efforts to transform the ESM into EMF, welcoming the suggestions that Macron made in Strasbourg.
