Ihe current crises are shaking up the German economic model : deprived of cheap Russian gas, industry, the engine of this exporting country, finds itself in difficulty. Dependence on China for essential raw materials and technologies reveals the fragility of the economy in a context of geopolitical crisis. Moreover, the global race for subsidies is shaking belief in an economic model based on rules and an open market.
All of this has implications for Germany’s relations with France and the European Union (EU). Although pursuing similar objectives – to make their respective economies more resilient and to decarbonize them while preserving their competitiveness – the two countries diverge on the way forward to achieve them. France is traditionally more inclined to protectionist economic policies than its neighbor across the Rhine. Interventionist industrial policy is seen as a way to strengthen the competitiveness of specific sectors, while Germany, because of its ordoliberal heritage, sees industrial policy rather dimly.
In response to the current crisis, France is aiming for a risk mitigation strategy known as “import substitution”, which consists, in order to ensure its independence, in ceasing to import essential technologies at low cost and in producing them in Europe for a higher cost. The European Commission follows this logic in the field of green technologies with the recent Net Zero Industry Act.
National interests
But President Macron’s call for the implementation of a Buy European Act in response to the American Inflation Reduction Act has so far come up against Chancellor Scholz’s refusal. This is not surprising: the Germans consider that, in a market economy, risk mitigation is above all the business of companies called upon to diversify their value creation chains to avoid unilateral dependencies, and not within the jurisdiction of the state. Here, Germany is betting particularly on the conclusion of new trade agreements with politically reliable states, such as those of Mercosur.
Berlin has, however, taken a few steps towards Paris on another subject: the idea of European sovereignty advocated by Emmanuel Macron is now finding a more attentive ear. Both countries are in favor of strengthening the EU’s foreign and defense policy and adopting qualified majority voting. But when it comes to materializing, the respective interests take over. Thus, coordination efforts aimed at the standardization of military equipment have hitherto come up against the interests of industrial companies on both sides of the Rhine.
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