Political and economic crises paralyze France and Germany

A question often asked by political and economic analysts: Why is the French and German economic engine that drives the European Union forward now on the verge of collapse? In the face of US President-elect Donald Trump, trade tensions with China, and internal unrest, the two largest countries in the European Union, Germany and France, stand at a crossroads. The former French president, Jacques Chirac, expressed it almost a quarter of a century ago, in one of his periodic meetings, Regarding the extent of the influence of these two countries: “When France and Germany advance, all of Europe advances, and when they do not advance, movement in it stops.”

France’s political crisis

Last Friday, French President Emmanuel Macron appointed a new prime minister, his loyal centrist ally, François Bayrou, who will become the fourth prime minister of France this year, and will face a daunting task, which is trying to create a stable government, after the collapse of the shortest administration in the country. The country since 1958, last week.

Meanwhile, France’s public sector deficit is on track to rise, exceeding 6.1% of GDP this year, more than double the eurozone maximum, as public debt stands at 110% of GDP and rising. This month, bond markets rated France as slightly less creditworthy than Greece.

In Germany, the divided center-left-led coalition in power for the past three years collapsed last month, under the weight of its ideological contradictions and the pressures of multiple crises stemming from the war between Russia and Ukraine.

German crisis

Whoever becomes chancellor, after the February 23 elections, will have to deal with the world’s largest performing economy, which suffers from high energy and labor costs, as well as bureaucracy, crumbling infrastructure and slow digital expansion. Its confrontation with its main trading partner, China, has dealt a blow to German exports, while paralyzing an auto industry that has become too slow to develop attractive electric vehicles and now faces the threat of wavering US tariffs under President-elect Donald Trump.

With France unable to hold new parliamentary elections until July, and the possibility of no new government in Germany until June, these political crises in these two most influential countries in the European Union will inevitably hinder the decision-making process in the European Union.

Paris and Berlin are seen as the main power axis in the European Union, driving policy and defining the main outlines of its agenda. With the two capitals unable to make major political decisions, due to their lack of strong governments, the Union may face months or more of “walking through the mud.”

The parallel economic and financial problems of the two economic powers will also burden the European Union. Some analysts believe that the bloc’s two largest economies, representing 41% of the gross domestic product of the 27-nation European Union, will contract economically in 2025.

The timing also seems worse than ever, as Europe faces the return of “America First” policies under Trump’s second presidency, with the crisis in German industry in particular. The question that arises is: How can France and Germany extricate themselves from the ongoing cycle of political and economic crises?

When the German government collapsed last month, observers were not so surprised by its collapse as they were that it had continued to function for such a long period. When Chancellor Olaf Scholz fired his stubborn finance minister, Christian Lindner, on November 6, due to a “bitter” budget dispute that lasted for months, he set off a series of events that optimists say give the country a vital opportunity for renewal.

Schulz said defiantly last Wednesday, raising some questions: “Do we dare to invest strongly in our future as a strong country?” Will we secure jobs and modernize our industry? “Are we guaranteed stable pensions, reliable health care and quality nursing care?”

Lindner’s dismissal left Germany with a tiny minority coalition of Social Democrats, led by Schulz, and environmental Greens capable of making only the most superficial policies. Schulz, who has been historically unpopular but is nonetheless running for re-election from his party, will likely face a vote of confidence. If Schulz loses the parliamentary vote, President Frank-Walter Steinmeier will dissolve parliament and Germany will officially embark on a very intense campaign, including the Christmas holidays.

A recent opinion poll showed that the center-right Christian Democratic Union and Christian Social Union received 31%, followed by the far-right Alternative for Germany party with 18%, the Social Democratic Party led by Schulz with 17%, and the Greens with 13%. Both the Free Democratic Party and the new left-conservative “Sarah Wagenknecht” coalition register about 5% of the minimum parliamentary representation.

Germany’s next leader, therefore, is Friedrich Merz, a long-time rival of his more moderate Christian Democrat colleague and former Chancellor, Angela Merkel. He was able to build a small fortune in business, especially in the German unit of the multinational investment company, BlackRock. But Merz, whose hot temper is said to have cooled slightly as he has aged, has pledged to pull Germany out of a deep economic recession, while taking a tougher line on defence, Russia and immigration.

Since Merz’s centre-right coalition, between the Christian Democratic Party and the Christian Social Union, assumes that he will come in first place, he has little chance of winning an absolute majority, because his choice of coalition partner would inevitably weaken his plans for economic reform. All major parties have ruled out cooperation with the far right.

“It seems that the current economic model in Germany, where the supply of cheap fossil fuels and the production of cars with combustion engines plays a central role, is outdated, but politicians rarely dare to say this publicly,” says Kai Arzheimer, a political scientist at the University of Mainz. “I’m at least skeptical that there will be a real fresh start in the near future.”

If the new government fails to turn things around quickly, it is the anti-immigration Alternative for Germany party, which is particularly supported by eastern voters, that will benefit the most.

Director of the Research Center of the Academy of Political Education in Bavaria, Ursula Münch, said, “With the possibility that the Social Democratic Party will become a partner with Merz, leading to the establishment of a centrist government, we may be disappointed, again and again,” but she added that the consensus The belief that Germany needs to address its weaknesses head-on could provide a convincing mandate to an outspoken chancellor with a sufficient majority. “This would make me quite confident that Germans can become more optimistic again and develop more confidence in democracy,” Münch believes. About the Guardian

. Paris and Berlin are seen as the EU’s main power axis, driving policy and defining its agenda.