Hollande’s Europe

Alphen, Netherlands.  20 May. “It is my responsibility as a leader of a founder member of the European Union...to pull Europe out of this torpor that has gripped it, and to reduce people’s disenchantment with it.  If Europe stays in the state it is in now, it could be the end of the project”.  Europe owes French President Francois Hollande a deep debt of gratitude.  His call for an “economic government” for the Eurozone with its own budget, the right to borrow, a harmonized tax system and a full-time president was the first really honest statement of intent by one of Europe’s big leaders. The federal cat is now out of the Euro bag.  President Hollande has also revealed for what it is the nonsense being peddled by those who argue that Britain’s relationship with much of the rest of Europe is about this EU or simply a matter of economics.  It is about Britain’s relationship with Hollande’s Europe, a future federalised EU vitally-needed to preserve the Euro.  As we approach Le Crunch is there any way a just balance can be found between Hollande’s and Cameron’s very different visions for Europe?

 

President Hollande faces three major roadblocks before he realises his “Europe”.  Berlin buys into much of what Hollande suggests, at least in theory.  However, Chancellor Merkel still believes she can prevent the British and French extremes from pulling the EU apart.  She is also fully aware that behind President Hollande’s call is not simply a vision of Europe long a dream of those on the Mitterand Left of French politics.  It also reflects a Paris desperate to get the German, Dutch and other northern Europeans to bear the burden for French public debt.  The German people will not accept debt mutualisation without fiscal and budgetary discipline and that means massive structural economic and political reforms.  That in effect is precisely what President Hollande is offering Berlin.

If Berlin accepts the offer then Eurozone governments will need first to overcome deep public dissatisfaction with both the EU and the political elite.  Recent Eurobarometer data demonstrates the gravity of the crisis.  Since 2008 trust in the EU has crashed from 20 to -29 polling points in Germany, 30 to -22 points in Italy, from 42 to -52 points in Spain, and from 50 to 6 points in Poland.  Critically, the polls have moved from 10 to -22 points in France, which is clearly of deep concern to President Hollande.  Not surprisingly support in Britain has shifted from a heady -13 to a relationship-busting -49.   It is unclear whether this data reflects dissatisfaction with the way the crisis has been handled or something deeper; that the European nation-state actually still matters to its citizens.

For David Cameron President Hollande’s timing could not have been worse, which may of course explain it.  The Hollande speech came a day after Cameron suffered the worst parliamentary revolt over Europe of any sitting prime minister.  Cameron is now in full EU crisis mode.  Hollande has also made it much harder for Cameron to negotiate a “new relationship” for Britain with the EU.  Indeed, implicit in President Hollande’s offer to Berlin is another mug's deal for London; even less influence for the same if not more massive cost.  This makes a mockery of London’s mantra that Britain’s relationship is not about to change fundamentally.  Even if London does precisely nothing Britain’s relationship with the EU will change fundamentally and not for the better. 

So can a “new relationship” be forged?  Cameron believes he has allies in both Berlin and The Hague.  However, they are inside the Euro and Britain is not.  With the best will in the world it is hard to see what deal could be struck amenable to a power centralising Eurozone and to a power repatriation-seeking Britain – one camp which wants a super-Brussels and one state that seeks a mini-Brussels.  Unless that is those EU member-states outside the Eurozone are firmly embedded in an EU-US Trade and Investment Partnership Agreement.  Such an agreement would be a real game-changer and which explains Cameron’s visit last week to Washington.   In effect a huge single market would balance a large currency union.  However, Cameron should not hold his breath.  One of my well-placed Washington sources tells me that the Obama Administration is only playing with this idea, it has little support in Congress and that part of the reason for floating this is to help Cameron see off his rebellious back-benchers.

Cameron, Hollande and Merkel should at least be given the chance to strike this new balance but they had better get on with it.  If not President Hollande is right – the EU and the Eurozone will become one and the same thing and those in the twilight zone between the Eurozone and an exit will find themselves in a strategic, political and economic no man’s land, which apparently is where the Obama administration now wants to cast Britain. So much for the Special Relationship! Why can Americans never 'get' Europe? 

In other words the Eurozone either integrates or disintegrates.  If the latter then the Euro fails and it is hasta la vista EU!

Je dois vous remercie, Monsieur le President!

Julian Lindley-French

Dambusters

Alphen, Netherlands. 17 May.  All of we Brits of a certain age remember the film.  Richard Todd  coolly leading his elite squadron of Lancaster bombers into attack the Mohne, Eder and Sorpe dams.  British stiff-upper lip and brilliant “bouncing bomb” technology combining against the backdrop of a stirring but peculiarly 1950s soundtrack to deal the Nazis a crippling blow.  Seventy years ago today the Dambusters of 617 Squadron undertook the actual “dams raid” and in spite of many politically correct attempts to ‘revise’ history the attack remains one of the most stunning precision air strikes in military history.

 

The facts alone speak for themselves.  Twenty-four year old Wing Commander Guy Gibson VC, DSO (Bar), DFC (Bar), RAF, a veteran of over 170 missions, led the 19 Lancaster Mark IIIs in his bomber G for George.  His ‘Lancs’ were armed with Professor Barnes Wallace’s amazing Upkeep ‘mine’which was designed to bounce across the lakes behind the German dams before rolling down the dam face and exploding.  Upkeep had been inspired by pebbles skipping across a pond. 

Early in the morning of 17 May the Mohne and Eder dams were breached and water catastrophically-flooded the Ruhr and Eder valleys.  Some 1600 people were killed and many factories were destroyed or damaged together with two hydro-electric plants.  Of the 133 airmen who took part in the raid 53 were killed.  This was World War Two – total war.

Strangely the raid has touched me personally.  A couple of years ago I had the honour to visit 617 “Dambusters” Squadron at RAF Lossiemouth in Scotland. Not only do I have a picture of me posing (no other word for it) in a 617 Squadron Tornado fighter-bomber but I recall the fascinating squadron museum.   Ironically, seventy years ago had I been sitting at this seat at around 0030 hours the 9 aircraft of Formation One would have roared over my house no more than 25 metres (80 feet) above my head.  The Dambusters flew over Alphen en route to the dams and the whole village was awakened by the low-flying cacophony of 36 Rolls-Royce Merlin engines.

Furthermore, Formation Three was comprised of two Lancasters which formed a mobile reserve one of which (S for Sugar) was shot up by German flak over Molenschot some five kilometres from here and then crashed onto the German airbase at Gilze-Rijen just up the road.  Earlier this year my wife and I visited the graves of Pilot Officer Lewis Burpee and his crew which are interred in the Bergen-op-Zoom British-Canadian Commonwealth War Grave. 

Although not connected with the dams raid three weeks ago my wife and I had the very real pleasure of lunch with Group Captain Steve Reeves and his wife Michelle at RAF Leeming.  This was following our discovery of another crash site close to our house where a Royal Canadian Air Force Halifax II (JD363) of 429 Squadron RCAF had crashed.  Piloted by Flight Sergeant Graham Howard the Halifax had crashed in October 1943 with the loss of all seven members of its Canadian and British crew.  The site at Bolk, Belgium has been both marked and preserved by local people and my wife and I had the honour to present my wife’s photograph of the monument to Group Captain Reeves at RAF Leeming.  What moved me to take this photograph back to Leeming was the fact that last year I had the honour to address senior RAF personnel at the base (and fly an RAF aircraft – yes, really!).  Movingly, I ate my meals in the same mess (dining room) as the men of JD363 shortly before they left on their final mission.

So what was the impact of the dams raid.  There have been many attempts to downplay the impact of the raid.  Certainly, the Germans moved quickly to repair the damage and by the following September the lakes were once again filling, although the dams never achieved full capacity until the following year.  However, slave labour had to be diverted from the building of the Atlantic Wall and this meant that by June 1944 and D-Day the defences were weaker than they should have been.  Moreover, the British had proven they could undertake precision strike missions and armed with new bombs designed by Barnes Wallace ‘617’ went onto destroy critical bridges and tunnels before sinking the German battleship “Tirpitz”.

Time of course moves on and this week I had the honour of leading a NATO-backed meeting at Wilton Park with my friends from the German armed forces, including the Luftwaffe.  That of course is the most important historical twist and I am sure the men of 617 Squadron would have heartily approved.

Good show, chaps!

“Apres nous le deluge”.   Now duty done it is back to bed - I have flu!

Julian Lindley-French

Europe's Defence Double Dutch

Alphen, Netherlands. 10 May.  On this anniversary of the 1940 Nazi invasion of the Low Countries it is perhaps appropriate to consider the state of Europe’s defence. Two events highlighted the essential contradiction between resources and commitments that bedevils European defence.  On 29 April the French published their first defence review in over twenty years.  Full of Parisian sophistry it failed to address France’s essential dilemma; an inability to fund the defence influence ambitions France claims to still uphold.  Sounding more Napoleonic than Hollande-ic the review blustered “France’s destiny is to be a global nation and our duty is to guarantee not only our own security but that of our allies and partners”.  This is exactly the same kind of rhetoric that accompanied the 2010 British Strategic Defence and Security Review which said there would be no British “strategic shrinkage”... and then promptly shrank Britain.  The other event was the re-affirmation this week of the UK-Netherlands Amphibious Force in Rotterdam which I had the honour to attend.  What do these two events say about European defence?

 

Take France first.  With French public debt over 90% of GDP and likely to get worse how can France afford a military that both preserves an independent nuclear deterrent (which swallows up over 20% of the defence budget) and fund top-notch but highly-expensive deployable forces?  Even though critical capability gaps were exposed there can be no question that the success of the French military in Mali was as timely for the review as the 1982 British victory in the Falklands was for the then British military.  As such it demonstrated to reluctant politicians the value of projectable military power.  However, the French review also singularly failed to square France’s defence triangle and as such fudged France’s defence dilemma. 

The review claims to establish a “stable” defence budget of €31bn ($41bn) over six years.  In fact with defence cost inflation running as high as 10% per annum for some equipment the plan represents real-term cuts.  The review also hides the choice France has made to cut the kind of deployable forces that made Mali possible and rely instead on the panacea all European countries are reaching for these days, more “Special Forces”.  These forces are small but because they are supermen they are able to defeat any budget cut, anywhere, all of the time.

Now the UK-Netherlands Amphibious Force.  This has been in existence for some forty years and to all intents and purposes the Royal Dutch Marines are an integral part of the Royal Marines.  Moreover, whilst the Royal Marines were founded 350 years ago, the Dutch Marines were founded 349 years ago, which of course puts in historical perspective their ‘junior’ partner the US Marine Corps.  Indeed, the “Royals’ and the Royal Netherlands Marines first operated together back in 1704 to take Gibraltar.  This was after a brief period of turbulence in Anglo-Dutch relations back in the seventeenth century when the Royal Navy had to put the ever-uppity Dutch in their place. 

With this year the 525th anniversary of the Royal Netherlands Navy the poignancy of the moment will not have been lost on the Dutch Defence Minister Jeanne Hennis-Plasschaert. As she signed the accord on board His Netherlands Majesty’s Ship Johannes de Witt the British commando carrier HMS Bulwark sat alongside.  Next month the same Dutch Defence Minister will announce a new “Defence Vision”. Should that “vision” mark another defence cut then the political momentum critical to such defence partnerships will drain rapidly because the British will take that to mean the Dutch Marines will rarely if ever be deployed with their British brethren.

Why does this matter?  The French should in this day and age be able rely on their British counterparts to fill their gaps and the British should be able to rely on their Dutch counterparts to fill theirs.  Indeed, if European defence was properly built on the synergies the NATO Secretary-General is manfully promoting through “Smart Defence” then all Europeans could cut their forces knowing full well that the whole would be far greater than the sum of the parts. This would mean resources and commitments could be balanced by European military efficiency and effectiveness.  Sadly, that is not going to happen and the British and French militaries will continue to have a little bit of everything but not much of anything, whilst the Dutch military will have even less of the not very much it has now, however sophisticated the drafting of the “vision”.  In other words, if defence partnerships are not invested with trust and capability they die.

The logic of defence austerity is ever closer defence co-operation between European states, be it through NATO, the EU or via bilateral agreements.  However, the political divide in Europe over both the use and utility of force is reinforced by a contradiction; each time forces are cut the political momentum behind the value of co-operation dies too.

It is Europe’s defence double Dutch.

Julian Lindley-French

The Peasant's Revolt

Wensleydale, Yorkshire. 6 May.  This is England red in tooth and claw. High up in the majestic Yorkshire hills I am but a flat-cap stone’s throw from my native Sheffield.  The sheep stand fast protecting their new-born lambs from the scything, sheeting and predatory rain.  This is a place of unforgiving beauty. It was much the same back in 1381 when Wat Tyler and Jack Straw led the Peasant’s Revolt.  Although the revolt failed disastrously it served as a stark warning to England’s ruling aristocracy that the feudal age must end.  With David Cameron surrounding himself with his Old Etonian ‘chums’ and Downing Street resembling ever more Monty Python’s Upper Class Twit of the Year sketch (“Vivian Smith-Smythe-Smith has an O-Level in Camel-Hygiene”) last week’s English local elections saw the peasant’s rise again as the United Kingdom Independence Party (UKIP) took an historic 25% of the vote.  

 

Speaking with locals in a Yorkshire pub (the Yorkshire National Security Council) the prevailing mood was one of anger.  Anger with an out-of-touch Westminster political elite deemed to have failed them and their country.  ‘Europe’ and immigration have become the twin metaphors for the out-of-touchness of this increasingly despised Westminster political class.  Indeed, immigration and ‘Europe’ are now hopelessly and irrevocably entangled in the English popular mind with both seen as politically toxic. And yet listening to Conservative, Labour and Liberal Democrat spin doctors it is as though nothing has happened.  

The three ‘established parties’ like to pretend that UKIP’s rise is merely a temporary political phenomenon, a protest driven by economic insecurity.   That is not the message I got.  The EU is now seen by much of England as a hostile force with Brussels the hated metaphor for foreign interference and Westminster its obedient poodle.  There is a profound and widespread sense that EU membership was an historic mistake for England that has generated huge cost for little benefit.  One suggested that the Scots would not be contemplating independence from the UK were it not for the undermining of the British state by ‘Brussels’.  Indeed, people see the EU creeping ever further into their lives and object to the false choice on offer from the elite between staying in an undemocratic EU and reforming it (which has over years proved impossible for the British) or leaving and facing more decline.  It is a choice seen as typical of the declinism inherent to the political class.

With limits on immigration from Bulgaria and Romania about to be lifted the fears of another surge from Eastern Europe is also very real so soon after the post-2004 immigration shock (as it is seen).  It would be easy to say this fear is closet racism and there is no doubt that some of the UKIP vote reflects that but by no means all.  A recent book, ‘The British Dream: Successes and Failure of Post-War Immigration” by David Goodhart, grandson of a former master of my Oxford college and fully paid-up member of the liberal London elite, reveals the extent to which that same elite ‘experimented’ on the English through immigration and their search for ‘diversity’…and the damage it has done to the social fabric of the country. 

None of my interlocutors I would describe as racist and all were willing to accept a reasonable level of immigration.  However, if my Yorkshire pub is any measure mass immigration is a source of social and cultural friction of such potency that it is changing England in particular in ways to which millions of ordinary English object.  They people I spoke to simply feel like so many English people – used, abused and ignored.

It is not the job of politicians to react to every populist urge.  However, Europe and EU immigration both speak to something much deeper; who governs Britain?  London or Brussels?  Equally, whether Britain remains in the EU or not balanced immigration is and will be a key to Britain’s competitiveness in the twenty-first century.  For the record, my pub friends all understood that. 

The tortured metaphors and double-speak of political correctness that have hitherto marked ‘the elite narrative’ (whatever that is) on both immigration and Europe must now end.  A sensible debate is urgently needed on both issues.  Indeed, the forthcoming and now unavoidable British referendum on EU membership will by definition pose the most fundamental question of all; do you want to scrap the British state?  For that is what more Europe will really mean and one cannot be part of the EU without accepting more Europe.

The political genie is out of the Westminster bottle and until the Establishment parties face up to the mess they have created UKIP will set the political agenda.

The peasants are indeed revolting…and long may it continue.

Julian Lindley-French-Smith-Smythe

 

Europe's Crumple Zone

Alphen, Netherlands, 26 April.  London in the spring sunshine feels like an episode of the X Files.  A strange bright, warm object appears in a rare clear, blue sky of which no-one can make sense.  On Wednesday I had the privilege of providing evidence to the House of Commons Defence Select Committee at its first meeting to consider the 2015 British Strategic Security and Defence Review alongside Lord Hennessy and Major-General Mungo Melvin.  Those of you sad enough to wish to see Friendly-Clinch with Battle Ensigns flying can go to http://www.parliament.tv Perhaps the most important contribution I made was to suggest to collected British politicians of all shades that whatever reforms are made to Britain’s strategic security and defence structures little will change unless the political class imposes effective oversight. 

 

However, Britain’s strategic future is not the purpose of this missive.  Rather it is a comment made by an old university friend over lunch in the City, London’s financial powerhouse.  He suggested that the Eurozone crisis was still in what he called the “crumple zone”, i.e. that part of the car designed to implode on impact to protect the occupants.  In other words the crash is still happening.

This week a six-page European Commission memorandum was leaked which revealed concerns that a Financial Transaction Tax (FTT) would not only drive up costs of government borrowing across Europe but damage the all-important bond markets.  As the FTT is an ever-so-thinly-veiled attempt to get the British to pay for the failed political experiment that is the Euro it is causing both alarm and irritation in London.  Even if Britain excuses itself from this tax firms based in Britain would be badly affected by it and one of the first laws of economics is that there is no such thing as a free tax.  So why are they doing it?

One has only to look at the figures to see why those few Eurozone countries paying for the Eurozone disaster want to spread the costs as widely as possible.  The Eurozone faces a perfect storm that will take at least a decade of pain to resolve.  It is a storm caused by the coming together of fragile banks in need of bail outs and governments that cannot pay for themselves due to debt interest and deficits and bond markets.   The markets are only willing to lend because the European Central Bank is either transferring tax income from the wealthier Eurozone states to the poorer, or simply printing money and damn the long-term growth and inflation consequences.

Take Greece.  Total Eurozone exposure to Greek debt is about €300 billion ($390bn) or some 3% of Eurozone GDP.  German exposure to Greece alone is approaching 5% of GDP.  Six Eurozone states have now sought bailouts with Slovenia about to follow when it is politically appropriate for their banking crisis to be publicly declared.  As each crisis unfolds foreign investors are pulling out their money forcing the ECB to plug the gap by impoverishing the northern, western European taxpayer.

Economic theory suggests all six debtors should leave the Euro, devalue and thus regain competitiveness.  However, in so doing the already immense social pain being suffered will only deepen (Spain’s unemployment rate yesterday reached 27.16%). Moreover, even if only Cyprus, Greece, Ireland, Portugal and Spain pulled out the costs of transitional arrangements could be as high as €1.2 trillion ($1.6tr) or 15% of Eurozone GDP.  That increases to around 20% of Eurozone GDP when the likely additional bank bailouts are factored in.

Consequently, and here’s the rub, Germany is likely to see its national debt increase from 81% in 2011 to around 100% in 2014-15.  German banks alone would need an injection of €500 billion ($600bn) if the Euro fails due to their exposure to toxic debt, threatening the loss of Germany’s AAA credit rating.  However, go the other way towards banking and fiscal union and that would cost €300-€400 billion ($390-$520tr) with Germany bearing at least 30%.  Therefore, post-German elections in September some form of debt mutualisation is inevitable which will push German interest rate costs up by €15 billion ($19bn) per annum.  Indeed, simply holding the resources of the poorer EU states at their current levels to pay for welfare is likely to require transfers from north to south of €250 billion ($325bn) per annum.

Which brings me back to Britain.  The Brits are also sort of broke, with the British national debt likely to peak at around 85% 2017-2018.  However, debt is relative and British debt compares with Japan at 194% and Italy over 100%.  Moreover, Britain’s national debt is only 30% of that between 1920 and 1960.  More importantly 70% of British debt is held in the UK, whereas with the notable exception of Italy, up to 100% of southern European debt is held by flight-risk foreigners.  In other words the British enjoy more flexibility than any Eurozone country, unless that is they are suckered into paying for the Euro-disaster.

The future?  In the long run Germany will consolidate its position as Europe’s strongest economic power, but the crown it wears will be hollow given the constraints imposed on it by Eurozone debt.  Britain will remain and strengthen its position as Europe’s second biggest economy and strongest military power.  Critically, damaged by the crisis and enmeshed in  ever-expanding, growth and competitive-killing Brussels regulation both will decline in relative terms against North America and Asia-Pacific. 

As for long-runs John Maynard Keynes was right; we are all dead.  A crumple zone indeed. On that happy note...

 

Julian Lindley-French

At the Tip of the Spear

A Royal Navy warship at Sea. 22 April.  Exercise Joint Warrior 2013.  This is certainly Europe’s, and possibly the world’s biggest maritime amphibious military exercise this year, and I am having the pleasure to observe and be sea-sick all over it.  Led by the Royal Navy and 3 Commando Brigade the exercise involves some forty ships from fifteen nations with over forty thousand personnel as part of a Response Force Task Group (RFTG) designed in military-speak for ‘theatre entry’ from the sea.  This is Britain’s global reach maritime amphibious spear-tip which will soon be strengthened immeasurably with the commissioning of the two aircraft carriers HMS Queen Elizabeth and HMS Prince of Wales.   The force affords London reach, flexibility and political discretion during crises that only the Americans can match.  What key lessons have I learnt from the exercise, not just for the British but all Western states grappling with defence strategy, austerity and affordability?

Core Message: Britain’s 2015 Strategic Security and Defence Review (SDSR) will fail unless London properly balances ambition, resources and commitments.  To that end the defence review must look upward and outward at the world and down and dirty into the services to drive efficiencies.  Above all it must have the ambition to answer the seminal question at the very heart of Britain’s strategic defence dilemma: what role does Britain seek to play in the world, why and with whom?  

1.       The People Lessons: The quality of personnel is quite simply outstanding.  Indeed, for all the impressive capability of the ships and aircraft on display it is the people that are the real spear-tip.  Sadly, too many British personnel to whom I speak often with many years outstanding service tell me they will soon leave because changing tax and pension rules effectively make it impossible for them to stay beyond forty. 

2.       The ‘Harmony’ Lessons: The Royal Navy ‘harmony’ rule is that personnel must be on duty 220 days deployed per annum, the Army 166 and the RAF 140 even though all three services are in harm’s way in Afghanistan.  On the face of it this apparent imbalance undermines the ability of Britain’s armed forces to deliver the same with less through deeper synergies.

3.       The Leadership and Command Lessons: The endemic tribalism at the higher levels of all three services must be ended.  Indeed, tribalism is doing real damage to the case for national investment in the armed forces.  The British military will need to radically rethink the way it does business across the security and defence piece.  Britain’s military leaders must demonstrate to both their political masters and the taxpayer they understand that.  Critically, no single service will be able to ‘own’ the five domains of twenty-first century military effectiveness – land, sea, air, cyber and space.  The new Joint Force Command (JFC) is a start but it goes nowhere far enough and at the very least must have high-level representation from all three services.  A first step would be for the service chiefs to properly support the Joint Expeditionary Force with the RFTG as its realisation. 

4.       Lessons for the Defence Review:  The 2010 SDSR was what one senior figure called a “spreadsheet review”, where balancing the books came well before a coherent military capability. Whilst those involved understood this requirement and accepted capability “holidays” there was apparently very little linkage between cost-cutting and the ‘faux strategy’ trumpeted by government.  Whilst the British government was essentially correct to close a 2010 funding gap of some £38bn pounds the 2010 defence review signally failed to align resources and commitments.

Next Steps: It is critical that London remains the alternative (to the Americans) coalition force generator and leader of choice as this ‘buys’ London influence in both capitals and institutions far beyond the simply military domain.  However, London’s systemic short-termism is undermining Britain’s ability to influence key allies and institutions, not least Washington.  This is not just important for the British but also for NATO and the EU.  One Dutch officer admitted to me that neither the Royal Netherlands Navy nor the Royal Netherlands Marine Corps would exist but for their British counterparts. 

The Royal Navy’s motto is; if you want peace, prepare for war. Thankfully, Britain today does not have to prepare for war.  However, in a world full of friction if Britain is to help prevent conflict injurious to its national interests it must think and act strategically.  Therefore, SDSR 2015 must finally look beyond Afghanistan and not simply re-fight it better.  Indeed, the switch from so-called campaigning to contingency operations will make the 2015 review as close to a grand strategic year zero as Britain has known for a century.  It is an opportunity to be seized not squandered. 

Let me conclude by thanking the Commodore commanding the exercise together with his staff.  My sincere thanks are also offered to the captains and crews of respectively HMS Bulwark, HNLMS Rotterdam and HMS Westminster and 3 Commando Brigade, for their kind hospitality and for clearing up after me.

Julian Lindley-French

 

Euro-Realism: A British-German Axis?

Alphen, Netherlands. 15 April.  Former German Chancellor Gerhard Schroeder once said, “They have it wrong if they ask if Schroeder favours Britain over France or France over Britain.  Schroeder favours Germany”.  Watching David Cameron with family enjoying a German weekend break with Angela Merkel one could be forgiven for thinking all is well in the British-German relationship.  And yet for all the well-publicised frictions it is equally clear that Cameron and Merkel get on.  It is also clear that the two countries need and will need each other.  Is this the beginning of a British-German axis?

 

There is after all much to unite Britain and Germany.  According to the CIA World Factbook (it must be true then) Britain and Germany are the two biggest EU countries with the two largest economies by purchasing power parity.  Germany is Europe’s economic leader whilst Britain remains (just) Europe’s military leader.  The two countries also share a surprisingly close strategic relationship on a whole raft of issues not least the two most pressing; the lack of fiscal resources and the need for Europe to become competitive.

Furthermore, Cameron and Merkel are natural political allies.  They are both moderate conservatives committed to the control of public spending through strong austerity programmes which is rejected by France and many other EU countries.  Merkel has a strong sense of history and respects the role played by Britain in both World War Two and the Cold War.  Indeed, she believes fervently that EU influence and legitimacy without Britain would be dangerously weakened. 

The weekend’s photo opportunities also sent a strong political message to France’s President Hollande that Berlin has options.  The Franco-German axis long the core pillar of the European project is not what it was.  Perhaps in the week Margaret Thatcher died Cameron and Merkel were also sending a message about the importance of personal chemistry between leaders implicitly recalling the Reagan-Thatcher years. 

Berlin also seems to have grasped another reality missed by many commentators.  However it is dressed up come the German elections in September if Merkel is to save the Euro thereafter some form of debt mutualisation will be necessary.  This could cost Germany over time some 10% of its GDP if France goes over the edge of the fiscal-debt cliff where it is headed.  Equally, for all its current travails Britain does not face the growth-destroying consequences of the coming decade of Eurozone debt mutualisation/restructuring and can and is competitively devaluing the pound. 

That’s the good news; here’s the euro-realism.  There was a paradox in the Cameron-Merkel speak that emerged from the weekend that also highlights the very deep structural divisions between Britain and Germany over Europe.  Yes they both talked of reforming the EU and yes both suggested there would be need for treaty change.  However, what Cameron seeks is the partial deconstruction of the EU. He is particularly keen to put the European Commission back in a box in which its ‘competences’ are both defined and finite.  Merkel, on the other hand, is desperate to avoid any suggestion (as some are implying) that the EU is fast becoming the “Fourth Reich”.  She thus needs Brussels, and in particular the Commission, to legitimise much-needed German leadership and thus wants more ‘Europe’ not less.  In other words, Cameron and Merkel may appear to agree but in fact are fundamentally opposed on the key issue of more or less Europe.  This is something which will become all too apparent in the year ahead and which will test the Cameron-Merkel relationship sorely.

Cameron said last week that the support of the British people for the EU is “wafer thin”.  He was being polite.  The moment Merkel moves to deepen integration the bottom is likely to fall out of pro-EU arguments in a Britain that already suffers a huge trade deficit with the EU, even as it enjoys a trade surplus with the rest of the world.

Therefore, in the coming test it is vital that Berlin and London somehow find projects on which to work closely together.  Critically, they must emphasise those areas of shared and pragmatic NATIONAL interest both in Europe and the wider world.  That will take confidence-building in each other, which was after all the purpose of this weekend’s visit.  What can Britain do now to reciprocate?  Cameron must come out unequivocally against growing anti-German sentiment in Europe.  Attack Berlin for policy mistakes by all means (that is democracy) but any parallel drawn between today’s Germany and the Nazis is offensive and must be confronted.

Why Britain?  A senior German once told me that the only ordinary state-to-state relationship Germany enjoys with any European state is that with Britain.  Every other relationship still somehow suffers from guilt on one side and fear on the other.  With Britain it was different, he said, “...because we bombed you and you bombed us!”

So, no British-German axis but Britain and Germany will need each other.

Julian Lindley-French