Europe awoke yesterday to the news that a pre-dawn deal had been reached to save the euro and, crucially, that it commanded the confidence of international markets. However great your reservations about the relative power of the markets, the ratings agencies and national governments, the credibility accorded to this agreement suggests that it has at least a chance to stick.
The secret appeared to lie in the reluctant acceptance by the northern Europeans not only that they would have to contribute more to bailing out improvident southerners, but that national economies would be more closely aligned. That will require more information to be exchanged, more levers operated from outside, and a diminution, in direct proportion to economic weakness, of sovereignty. Saving the euro does not come cheap.
If indeed this week's meetings mark the turning point, however, this does not mean that Europe's difficulties are at an end. Nor will they stop at the side-effects from the "two-speed" union that could result from a more tightly bound eurozone. They will be of a more profound and more lasting nature – connected less with the exigencies of either the EU or the eurozone than with the real, live continent of Europe itself, and the Franco-German alliance at its heart.
That alliance – the flagship and embodiment of post-war reconciliation – has been the key to Europe's stability for more than 60 years. It survived the Cold War, the dramatic end of that division, and 20 more years besides. Lauded as the continent's economic dynamo, it could claim a good part of the responsibility for Europe's peace and rising prosperity.
As the crisis in the eurozone has worn on, however, the relationship, long regarded as immutable, has begun to look distinctly frayed. This has little or nothing to do with the obvious personal differences between today's French and German leaders. It is true that the backgrounds of Angela Merkel and Nicolas Sarkozy could hardly be more different: Merkel – daughter of a Protestant pastor, child of the East, almost the personification of Germany's divided past; and Sarkozy – privileged son of an exiled Hungarian aristocrat. True, too, that their appearance (Gallic against Nordic), and manner (showy and expansive against functional and stolid) hardly suggest compatibility.
But in the time they have led their respective governments, it has been evident that as much unites them as divides them. Philosophically, they share a centre-right view of politics; their social compass – where they place the benefits and liabilities of the free market – is set at a similar point. And, as the crisis took hold, they both invested enormous amounts of time and personal capital in bilateral talks and meetings. The air corridor between Paris and Berlin can rarely have been busier than in recent months. It would be fair to say that no two individuals could have tried harder than they have to create an impression of concord, even if that was driven by a shared fear that the European project could founder on their watch.
Even their considerable efforts, though, failed to conceal very real cracks. One of the most telling, and the one that caused something akin to panic in both capitals, was the rumour that France might lose its AAA financial rating, even as Germany kept its. In the event, this was avoided, and the risk may vanish permanently if the eurozone deal is made to stick. That the downgrading of France was in the air, however, was no fantasy, nor was it malevolent. It reflected the two countries' relative economic performance and their banks' relative exposure to risk.
From a common state of low growth a decade ago (condemned by credit-swollen Britain at the time as stagnation), Germany has fostered quality manufacturing, improved productivity, slowed pay rises, curbed the welfare state and benefited from something of an export boom. France, even though Sarkozy harboured similar ambitions, has been less successful in realising them.
It is not impossible that France could move to the left, or see a strengthened far right, or both, in presidential elections next year. It is hard to imagine Germany doing the same. In France, the euro crisis and its associated effects has brought out an egalitarian instinct and the quest for social justice. In Germany, it has accentuated a natural frugality and brought a latent sense of national self-righteousness to the surface.
It would be simplistic to say that, in response to the crisis, Germany has become more northern and France more southern, but at a popular level the two countries have diverged noticeably in the extent to which they have blamed Greece. Not so many years ago, Germans would have been hesitant to criticise a fellow European. But the animus towards Greece in private conversations as well as at public forums has been venomous, underpinned by a fierce sense of national identity and statehood.
Policy priorities, too, have started to diverge. Germany and France both separated themselves from Britain over Iraq, leaving Britain and the "new" Europeans to follow the United States. Recent months have seen Britain and France joining forces to intervene in Libya, with Germany standing aside. In the throes of a military reform which will bring in a professional army, Germany appears to see its national interest less and less in behaving as the best team player around. Merkel's decision to abandon nuclear power – a move that was more electioneering than principled and infuriated France – can be seen in a similar light.
Some of these shifts may reflect the declining weight of the immediate post-war generation in German politics. Defeat and atonement loom less large than they once did. But many, if not all, can be attributed in one way or another to reunification, which made Germany the most populous country in the EU, placed Berlin once again at the centre of German national consciousness and prompted another re-evaluation of the past, conjuring up nostalgia for the heritage of Prussia.
With the Arab Spring, meanwhile, France finds its attention yanked to the south and to its past – glorious and inglorious – in the Maghreb. The Libyan operation, which followed a renewal of defence co-operation with Britain, hints at a new French foreign policy direction that treats Germany less as a privileged ally than a neighbour – and vice versa, as German national confidence grows.
Against this backdrop, the obstacles France and Germany have encountered in their efforts to save the euro appear less as problems specific to the eurozone than as symptoms of something much larger. That something is nothing less than the outline of a new political configuration of Europe, with a stronger, more Prussian Germany and a more Latin France increasingly defining the continent, whatever the single currency's fate.Reuse content