A much blunter response still keeps coming from the German media, reflecting the official views that might be impolitic to air by the federal government. And this is the message: Germany will not pay for reforms individual countries have to do, and Germany won’t bear the financial burden of euro area reforms to bail out the countries that don’t want to do their job.
More controversially, though, Germany — running a huge trade surplus of nearly $300 billion — is allegedly refusing to rev up its economy to stabilize the monetary union. A stronger growth in Germany would raise the euro area’s aggregate demand and help other member countries to reduce unemployment and budget deficits.
These are the difficult issues facing the strained French-German relationship.
Investment thoughts
France and Germany have many things to talk about to set the monetary union on a firmer footing. That would be an important step toward an EU of lasting peace, increasing prosperity and, yes, solidarity to create a more cohesive social, economic and political entity.
That talk is off for now. France has to get next month a stable parliamentary majority to govern. Germans, for their part, have to get a new administration after next September’s elections.
President Trump is stepping into that sort of European inter-regnum. He would be well advised to invite the all-powerful German chancellor to the “long lunch” he has scheduled in Brussels with the French president.
That “long lunch” talk should be an opportunity for the U.S. president to review with France and Germany, the two leading military and political allies, acute security problems in Ukraine, the Balkans, Syria, Iraq, Afghanistan, North Africa, the Korean Peninsula and East China Sea. The president knows that China and Russia will also be the proverbial “elephants in the room.”
The good work done by the ECB and euro area governments in building up the ongoing economic recovery has staying power. It, therefore, amply deserves investors’ attention. The French and the Germans will come to terms and begin to work together. Experience has taught them that anything else would not serve their national interests.
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