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Gabriel's 'very French idea' unlikely to fly

Tom Barfield · 4 Jun 2015, 17:46

Published: 04 Jun 2015 17:46 GMT+02:00

In an op-ed article published in several European newspapers, Vice-Chancellor and Economy Minister Sigmar Gabriel and his French counterpart Emmanuel Macron put forth a social-democratic wishlist for European reform.

The pair proposed warding off political division and economic instability in the eurozone by harmonizing wages, regulations and tax codes across countries using the single currency and giving the zone more of a common voice in European politics.

Further, the two ministers called for a common eurozone budget – long rejected by Germany – that could be used to lend money to struggling countries so as to avoid a repeat of the 'austerity trap' that has swallowed Greece.

"The first thing I thought was that it's a very French idea – more central planning, fewer rules, more political discretion," Professor Michael Wohlgemuth of think-tank Open Europe Berlin told The Local on Thursday.

"The solutions they suggest don't have anything to do with strengthening our economies. Leveling the playing field always sounds good, but what they really have is a very French idea of raising rivals' costs."

If the plans were implemented, he argues, they would do more to hold France's competitors within the eurozone back and allow the "uncompetitive" French social model to struggle onwards.

East and Germany reluctant

Such goals are unlikely to find majority support among eurozone countries, Wohlgemuth said, especially in the newer eastern members.

"The East wouldn't like to have harmonized corporate taxes, because that's where they can really compete with the western eurozone welfare states," he pointed out.

Meanwhile, the conservative-dominated German government remains reluctant to accept "mutualization of taxpayers' money" through a common eurozone budget.

"It's doubtful if some committees in Brussels could make better decisions than national governments" on where to spend the money, Wohlgemuth added.

No big impact

In fact, he suggests, the plans are more likely to be "addressing the social democrats in the ministers' home constituencies, saying 'we have some good ideas and the German-French tandem is still working" - in part as a reaction to the drive for reform coming out of the UK under Prime Minister David Cameron.

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"I don't think it will have a big impact in terms of national policy agendas – it's a contribution to the debate that will shape Europe, but nothing more imminent," Wohlgemuth concluded.

Wohlgemuth's criticisms of the plan were counterpointed by French star economist Thomas Piketty, who told The Local in France that the plans didn't go far enough to fix the eurozone.

"A popular majority in the eurozone should be able to choose the policy they want," Piketty said.

But that would require overturning some of the existing keystones of economic governance in the eurozone, including strict budgetary requirements and a requirement for unanimity on fiscal decision-making, Piketty added.

For more news from Germany, join us on Facebook and Twitter.

Tom Barfield (tom.barfield@thelocal.com)

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