Europe Geopolitics – December 30, 2021

| December 30th, 2021

Today, we cover three topics that will continue to keep us busy in 2022 and beyond. The first one is the geopolitical relationship between the leading economic powers in Europe and Macron’s desire to reshape the EU according to his desire. In the UK, we take a look at political challenges that go well beyond COVID. In Germany, we comment on the decision of foreign minister Baerbock to skip the Chinese Olympics.

1.  EUROPEAN UNION

This section in today’s Europe Geopolitics newsletter is related to the discussion on economic issues threatening the euro area’s stability in our Europe Macro newsletter. The following two articles and comments provide the geopolitical background that will create headlines in 2022 and beyond.

1.1 Europe’s leading power: How Macron’s France is fundamentally changing the EU – Handelsblatt

[…] On 1 January, Paris will take over the rotating presidency of the EU Council. For President Emmanuel Macron, it is the European policy highlight of his term in office. Even if the French presidential election in April hangs over the six-month programme as a factor of uncertainty, Macron has a lot planned for the big stage in Brussels.

“We must move from a Europe that works together within our borders to a powerful Europe in the world,” Macron said when he presented his plans for the EU presidency in mid-December. Europe must become “fully sovereign”, he said. Macron has been working doggedly on this vision since his keynote speech on European unification at the Sorbonne University in Paris in September 2017.

“At first, he was not on the same wavelength as the political mood in Europe and especially the ideas in Berlin,” says Éric-André Martin, head of the Centre for Franco-German Relations at the Paris-based think tank Ifri. In the meantime, he says, the response has been much more positive.

“The moment is ripe,” Martin says of Macron’s agenda. In the euro crisis, Berlin temporarily enforced austerity policies in Europe. But Germany has never been the hegemon that some commentators thought they saw. Neither has the Federal Republic transferred its export-driven economic model based on wage restraint and budget surpluses to the EU, nor has it been able to push through far-reaching structural reforms in Southern Europe.

The political powerhouse of the community of states has clearly shifted to Paris in recent years. The French perspective now dominates the decisive economic and strategic debates.

Macron proposes new initiatives, Berlin reacts to them – and in the end the French position prevails on crucial points. European politics works according to this pattern. Take public finances, for example: For France, the debt pact no longer fits the times.

“We cannot pretend that nothing has happened” and “return to a budgetary framework that was created in the early 1990s”, Macron let the new German Chancellor Olaf Scholz know right at the start of his inaugural visit to Paris. In March, the French president is planning a special summit of heads of state and government at which a “new growth model” is to be defined.

Comment: Make no mistake, Macron has great plans for a France-led European Union. He will try (and likely succeed) to change the stability pact rules in France’s favour and fight Germany on nuclear energy. Remember, Germany is phasing out nuclear, France is getting 70% of its energy from nuclear and sensing a huge strategic advantage. 

And, in addition to this, with the United Kingdom gone, Macron now sees another opportunity to gain influence. According to Handelsblatt:

“But strategic mind games are no longer enough for Macron. “We must enter a more operational phase,” he demanded. The French head of state lists joint manoeuvres and more cooperation on armament projects as milestones. His claim to leadership stems from military realities: After Brexit, France is “the only serious military power in the EU”, says Wittig.”

France is also trying to turn the United Kingdom into an example. Brexit must turn into a disaster in order to prove that leaving the EU is a mistake. This brings us to the next article from the Spectator, which explains differences and what we need to expect going into 2022. 

1.2 France has the most to lose from Britain’s turn away from Europe – The Spectator

This article is tied to the article above as it covers France’s need to make an example out of the United Kingdom.

It was Napoleon who declared that ‘a state has the politics of its geography’. We do well to remember that in taking stock of European international relations as we speculate on a new year and beyond. By Europe is meant the European continent, ‘from the Atlantic to the Urals’, in de Gaulle’s words. Not the 27-member European Union, which Brussels linguistically and imperialistically conflates with the 44 sovereign states that the UN defines as Europe. 

Of those 44 states, four are still the European great powers, as they have been since at least 1870: Britain, Germany, France, and Russia. They are still the continent’s most populous, wealthiest (except Russia), and militarily prepared (except Germany). Over the longue durée their geostrategic positions have changed little, bar post-war Germany’s. So how might each of them evolve over the medium to long term?

[…] Apart from the two world wars and the forty-year European communities interlude from 1973, London prioritised its global interests. After Brexit, and boosted by a vengeful European Union still intent on ensuring Brexit does not succeed, Britain is ever more forced into the ‘splendid isolation’ from the continent that was a cornerstone of her diplomacy, and deeply regretted by many European nations. Britain remains one of the world’s most powerful states, and arguably for the first time in her peacetime history the most powerful in Western Europe. The EU, famously described by the former Belgian foreign minister as ‘an economic giant, a political dwarf, and a military worm’ may come to regret its vindictive stance should severe tension or even conflict blight the European continent.

For much of the post-war era West Germany was a compliant power committed to the Western Alliance and to playing a subservient role in a French designed and controlled European community. Nobel prizewinning François Mauriac sardonically captured France’s ambivalence to Germany:

‘We love Germany so much, we are glad there are two of them.’

Since reunification German economic and political power has continued to rise and nonchalantly drift towards greater independence, much to France’s chagrin. Historian Tony Judt playfully summarised the German-French relationship as:

‘You pretend not to be powerful and we’ll pretend not to notice’.

[…] The one European power with the most to lose from Britain turning its gaze from the European continent is France. Irony indeed, given Emmanuel Macron’s five-year anti-Brexit vendetta, further encouraging London’s pivot overseas. Post-Brexit France is now unable, when French interests so demand, to side with Britain against Germany to get her way. She is more alone in managing a gently rising Germany than for years. 

One can expect Emmanuel Macron, if re-elected, to seek further ropes to keep Gulliver down. Every time Germany appears to raise herself, France comes in with more European federalism, of which the Maastricht ploy post reunification is the most instructive. With France obsessed with declinism – notably in relation to Germany – a Paris push for greater EU integration to further restrict German sovereignty is already taking shape. Only a few weeks ago, Emmanuel Macron called for greater EU federalism. More recently, Macron and Italian prime minister Mario Draghi – former European Central Bank president – published an article in the Financial Times calling for the EU to do away with the German inspired shibboleths of its old stability pact requiring budget deficits of no more than three per cent and national debt to GDP under 60 per cent. The incoming German administration is fast learning the tactless pressure associated with Macron diplomacy. The question remains as to whether Berlin will wish to toe the French line.

2.  UNITED KINGDOM

2.1 Boris Johnson’s difficult year is nothing compared with what’s coming next – The Telegraph

[…] He arrived into office on a sweeping personal mandate and finally got Britain out of the EU. Only then to find himself having to grapple with a global pandemic that took Britain’s economy down and almost took him out in the process as well. There was sympathy for him, as there was for political leaders across most of the world’s democracies. While events deal a bad hand to all human aspirations, this was an especially bad one. Still, the strong Conservative lead in the opinion polls suggested the public were supportive of the Government, if not indulgent.

Then all that began to change. Over the past few months, unforced errors began to occur. Some of these would have been relatively mundane in a normal season. Staffing problems at Number 10 kept occurring. The circle around the Prime Minister appeared to be cliquey, self-assured, hermetically-sealed from serious criticism and too often simply wrong.

The revenges came when news started to eke out that these lords over the country at Number 10 had not been capable of sticking to lockdown standards that they had insisted the rest of us follow.

The British public do not like this. We do not like hypocrisy. Nor do we do like unfairness. The thought that while the occupants of No 10 were having wine and cheese evenings, the rest of the country were forbidden from even saying goodbye to our loved ones, caused a fury that cut through. For the first time since he became Labour leader, the unimpressive and bland Keir Starmer started to overtake Mr Johnson in the opinion polls.

[…] Because it is a grim fact that the impact of the past two years has in many ways not yet been felt. With the Prime Minister’s refusal to install further lockdown measures over the omicron variant, it looks like he has finally had a long-overdue realisation about Covid. This is that while coronavirus is deadly for a tiny percentage of the population – largely those who are obese and have underlying health conditions – for the majority of us it is a harmless if unpleasant virus.

[…] Yet the rest of the country cannot afford this. We are entering 2022 with a range of tax hikes. The Conservatives are playing the old Gordon Brown trick of raising National Insurance and hoping that nobody notices they have hiked taxes. They are also raising business rates at the precise moment that businesses in this country need a break, not greater punishment.

This and much more is already having effects that are being passed on to the consumer. Already many of us have seen our energy costs surge. Gas bills and others over this winter have put a squeeze on many households, and it looks as though energy bills are going to keep rising this year. In part, as a consequence of the Johnson Government’s desire to put going Green before keeping warm. The Green agenda (which has somehow emerged as about the only flagship obsession of this Government) could easily come back and bite it as consumers blame ministers for pushing up the cost of living.

All this is going on in a global economy now once again staring at the risk of inflation. And with a British economy in which young people continue to be priced out of a housing market that has not just failed to keep supply up with demand, but which successive governments have consistently allowed to soar out of their sight.

Given this array of problems, the Prime Minister undoubtedly did the right thing in refusing to put England through another lockdown. The First Ministers in Scotland and Wales look increasingly ridiculous as they insist that you cannot go into an office but you can go to the pub. But the devolved assemblies were always like this. Intent on doing anything not just to demonstrate “safety-ism” but content in the knowledge that the dread “Westminster” would cover them.

[…] There is plenty for the Prime Minister to do. He needs to sort out the operation in Number 10, professionalise it and stop the chumocracy. He needs to stand up to the madder excesses of the radical Left in education and the civil service. Most of all, he needs to get Britain going again. His instincts have always been good, yet his time in office so far has been a rollercoaster. Maybe he is incapable of change. Perhaps he thinks the chaos suits him. But we will all be the poorer for it if he fails to stop the rollercoaster, and rise to the solemn and serious task we elected him to perform.

Comment: Douglas Murray hits the nail on the head. The problems Boris Johnson needs to address are huge and often related to each other. This goes far beyond COVID as it includes high taxes, high inflation, the negative side effects of which come with BoE rate hikes, social issues, and much more. 

Nonetheless, these challenges are also opportunities to repair his reputation as we discussed in recent newsletters. Johnson is far from gone and politicians in the EU are facing similar problems to those outlined above, perhaps even more problematic in certain countries.

3.  GERMANY

3.1 Faeser and Baerbock will not travel to the Olympic Games – Frankfurter Allgemeine

The Federal Minister of the Interior and the Federal Minister of Foreign Affairs will not travel to the Winter Olympics in China. Interior Minister Nancy Faeser (SPD), who is responsible for sports, has “decided for herself not to travel to Beijing, if only for pandemic reasons”, said a spokesperson in Berlin on Wednesday. Several partner countries, above all the United States, had previously announced a diplomatic boycott of the Games because of political differences with China.

A Foreign Office spokeswoman quoted Foreign Minister Annalena Baerbock (Greens) as saying, “I am a big sports fan, but I will definitely not be going to the Olympics at this time. That was not usual for foreign ministers in the past either.”

Whether Chancellor Olaf Scholz (SPD) will visit the sports event in the People’s Republic in February was still unclear on Wednesday. Vice-government spokesman Wolfgang Büchner referred to ongoing coordination processes with EU partners.

Minister Baerbock takes a tougher stance against China on human rights issues than the previous federal government. The USA, Australia, Great Britain and Canada had already announced a diplomatic boycott of the Games in February. This means that athletes from these countries will be able to participate in the Games, but that no politicians will travel to visit.

There is debate within the EU about the sense of a diplomatic boycott. France’s President Emmanuel Macron, for example, has stated that he does not consider such an approach to be very effective.

Comment: There are a few things to unpack here. First of all, Faeser is using the pandemic as an excuse not to go to China – boring. Baerbock isn’t going either. This makes headlines as she is Germany’s foreign minister known for a tougher stance on China. Yet, it is totally common for foreign ministers to not attend the Olympics. So, this too, isn’t hurting China.

The only thing that could hurt China – at least when it comes to PR – is Chancellor Scholz not going. It’s unclear what he will decide. What is certain, however, is that he has a much better relationship with China, having made clear that he is looking to continue Merkel’s China approach. This means avoiding any (real) discussion regarding human rights to prevent China from crushing the German export industry. 

Additionally, there is another name in Berlin making Baerbock’s job more difficult: Jens Plötner.

According to Focus Online, “Plötner was Political Director at the Federal Foreign Office for the past two years. The list of his responsibilities is impressive. Namely:    

Common Foreign and Security Policy, European Security and Defence Policy, Armed Forces Operations, NATO, OSCE, relations with the USA, Canada, Russia, Central, Eastern and South-Eastern Europe, Turkey, the EFTA states as well as the Council of Europe.

Plötner will be Scholz’s foreign and security advisor. Which is bad news for Baerbock. The Chancellor seems determined to exercise his foreign policy guideline competence. “