Franco-German cultural differences complicate euro deal

22nd October 2011, Comments 0 comments

France and Germany's failure to reach a quick compromise to save the euro boils down to differing views on the independence of the European Central Bank and parliaments' say in major decisions, analysts said.

These differences resurface every time the European Union faces a crisis and can be traced back to historic differences and even the traumatic pasts of Europe's two leading economies.

Germany is reined in in its ability to act by a requirement to involve MPs in important decisions -- something Berlin argued Friday to explain why a second European summit on the eurozone's bailout fund was needed, just as the world was waiting for immediate action.

"The Bundestag (lower house of the German parliament) is still involved in decisions of foreign policy while (France's) Assemblee Nationale has a much more limited role," Claire Demesmay, a researcher for the German Society of Foreign Policy here, said.

French presidential powers also play a role, Stefan Seidendorf, of the Franco-German Institute in Ludwigsburg, said.

"In France, the president has some particular prerogatives with regard to foreign policy which allow him not to have to depend on parliament," he said.

Post-war France saw a quick succession of different governments, prompting changes to the constitution in 1958 under the Fifth Republic to strengthen the executive's powers at the expense of parliament's.

Meanwhile, in Germany the final years of the Weimar Republic which led to the rise of Hitler were marked by governments no longer formed through parliamentary means, but by presidential cabinets.

After 1945, Germany wanted to turn the page on a weak parliament.

This difference in deputies' powers set the pace for the building of Europe.

"One knew that it was necessary to give the Germans time, as was the case notably for the vote in the Bundestag on intervention in Afghanistan," Demesmay said.

"The problem now is that the markets want a rapid response and leadership."

Germany's Constitutional Court in September further strengthened the Bundestag's hand by stipulating the government must have the approval of parliament's budgetary committee before making any financial commitments on fighting the eurozone crisis.

While the French parliament ratified the beefed-up eurozone bailout fund without fuss, suspense or much media attention, the vote by the Bundestag three weeks later was anticipated with fear and closely watched globally.

Another major difference between Paris and Berlin, and a frequent cause of disagreement, is the independence of the European Central Bank in Frankfurt.

"It's the point Germany insisted on when the single currency was created," Demesmay said.

Its concern stems from the fear of seeing the central bank transformed into a money-printing machine which could lead to Germany's worst fear -- inflation.

The country is still haunted today by the hyper-inflation of 1923 which plunged the nation into poverty.

France, not having had the same historical experience, continues to want to involve the European Central Bank more in aid to countries riddled by debt.

This difference led last month to the resignation of the ECB's chief economist, Germany's Juergen Stark, who was critical of the bank's controversial programme of buying bonds of countries, such as Greece, who find themselves unable to drum up financing on the markets.

© 2011 AFP

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