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The French Dispatch: Ich liebe dich, moi non plus ​


How Strong is the Franco-German Bond?

Dear Readers,

In the wake of current geopolitical headwinds and economic uncertainty, France and Germany must strengthen their common vision and century-long relationship. Their shared history is enduring, nourished by their differences and fueled by their collective aspiration to forge a more united, resilient, and sovereign Europe. The Franco-German partnership is the pillar of Europe but faced with growing geopolitical risks and global economic and financial fragmentation, it must be rethought and consolidated. Because the Franco-German relationship was not first and foremost a tacit reflex. It began as an idea.

Since 1945, France and Germany have worked together to find the strength, the greatness of spirit to unite, to combine the strengths of both models through reconciliation and to firmly establish the Franco-German relationship as the beating heart of Europe. Motivated by their common desire for peace, France and Germany have been able to overcome the historic tensions that once characterized their special and, to some extent, unprecedented relationship.

Cornerstone to this unique relationship, the Elysée Treaty has just celebrated its sixtieth anniversary. Of these sixty years of cooperation, History can witness that its real strength lies in its unity. It is not an expression of unanimity or uniformity, to quote President Macron, but has proved to be a decisive instrument at the service of Europe. Particularly rich, the partnership has been structured around an effective policy of economic, political, cultural, scientific and technological integration. Its track record is tremendous. The creation of the cultural TV channel ARTE in 1992, the success of Airbus, which symbolizes like no other company the close Franco-German cooperation in industrial affairs, and the reinforcement of parliamentary cooperation through the Franco-German Parliamentary Assembly all are testament to this.

This unity, which appears to be so structuring and structured, has nonetheless recently been shaken up by drastic differences, real or alleged, particularly in foreign policy. Yet these differences must not fade the shared legacy, both countries’ pledge to make the impossible possible.

Europe’s fate in part relies on the effectiveness of this relationship. The political and economic toll of a split up would sound the death knell of the European dream. The fundamental question, then, is how France and Germany can get through this rough patch. In 1963, when France and Germany decided "to open wide the doors to a new future for Germany, for France, for Europe and consequently for the world", in the words of General de Gaulle, they renewed their dialogue, taking a crucial and symbolic step in the history of European integration. Because the most beautiful ideas are always the most vulnerable, it is now necessary to regenerate the Franco-German relationship, which must be nurtured and cultivated. Politicians and civil society must unite in a common effort of consultation and dialogue, synonymous with reason, discernment and wisdom, in order to regain mutual trust. The rekindling of the Franco-German spirit, synonymous with hope, courage and determination, is the only path through which the European promise can thrive.

Géraldine Amiel and Katharina Blumenfeld, Partners

Interview with Handelsblatt’s Paris correspondent Gregor Waschinski
A nuanced outlook on Franco-German relations

In the context of the EU's response to global challenges like climate change and digital transformation, how do Germany and France reconcile their respective national interests and strategies to achieve a cohesive approach?

The degree to which France and Germany are willing and able to reconcile their national interests and work on a common agenda depends really on the issue at hand. Let’s take the digital transformation: Berlin and Paris seem to be very much aligned when it comes to reining in big tech, protecting data and privacy as well as fostering European startups. For instance, they are the driving forces and biggest funders behind the European Tech Champions Initiative aimed at financing tech companies from European countries in their late-stage growth phase. However, the fight against climate change is a different story. While Germany and France both push for international efforts against global warming and are committed to meeting the EU targets to cut greenhouse gas emissions, they cannot agree on what green energy actually looks like. France wants to include nuclear power; Germany only accepts renewables (even if this means firing up coal plants). As long as the two leading economies at the heart of the EU don’t find a compromise on the controversial nuclear question, there won’t be a cohesive, effective and joint approach to build a carbon-free future.

With the rise of digitalization and technological advancements, how are Germany and France collaborating to foster innovation and develop a competitive edge in emerging sectors, such as artificial intelligence, and renewable energy?

Germany and France both realize the challenges and opportunities that new technologies present for their economic and industrial tissue. The idea is to support emerging sectors with subsidies and common European standards. However, this approach did not always work out in the past as subsidies did not always lead to efficient financing and overregulation hindered competitiveness. The next big chance to get it right is Artificial Intelligence, and Berlin and Paris are already planning a joint agenda. Members of the French and German government will come together for a retreat in October where the AI revolution will be center stage.

What are some successful examples of Franco-German companies that have effectively leveraged the strengths of both nations, and what lessons can other firms learn from their experiences?

The question for me would rather be if Franco-German companies truly exist. Even Airbus, which is usually presented as an example for French-German cooperation, is also partly owned by the Spanish – and at heart a multinational company with production sites in the US and in China.

1. France and Germany’s hearts beating to distinct rhythms

As 2023 marks the 60th anniversary of the Elysée Treaty, this year also raises fundamental questions about the solidity of the Franco-German bond. The Franco-German tandem has mastered past crises, but the current landscape presents distinct complexities and has brought longstanding differences to the surface. Space, defense, industrial policy, energy strategy, and unity against global challenges like China or American protectionism all expose varying and sometimes opposing responses from Paris and Berlin.

Space: Common goal, different paths

The delayed launch of Ariane 6, once-celebrated symbol of European cooperation in space, has raised concerns about the future of joint projects between France and Germany. Germany’s ambition for space independence has led to three startups inspired by the American "New Space" initiative. France has followed this example, albeit with a two-year delay. This divergence symbolizes both the desire for independence and the complexity of joint endeavours.

Energy: A nuclear discord

The Franco-German energy engine has come to a standstill, fuelled by the war in Ukraine, which has exposed major energy dependencies. Germany’s Energiewende strategy, based on renewables and coupled with gas, clashes with France's emphasis on nuclear power. This discord has spilled over into the European arena, setting two groups against each other: a "nuclear alliance" led by France and followed by several countries, and a coalition of "friends of renewables" led by Austria and supported by Germany and others, as member states pursue different approaches to decarbonization. The clash has paved the way for divergent views on critical European issues such as taxonomy, electricity market reform and the definition of green hydrogen.

Budgetary Rules: A Balancing Act

The "Schwarze null," or "zero public deficit," rule resonates in Germany, while France calls for the rewriting of budgetary criteria. The aftermath of COVID-19 and the Ukraine conflict has altered European state finances. France's advocacy for revised criteria irks German leaders. France’s minister of economy and finance, Bruno Le Maire, warns against automatic debt-reduction rules, citing economic risk of ignoring the sovereignty of individual member states. Whilst his German counterpart Christian Lindner demands stricter measures to guarantee fiscal discipline. As differences persist, finding middle ground remains pivotal for the Franco-German alliance and Europe as a whole, with the Enforcement of the Stability and Growth Pact to be reimposed at the start of 2024.

China: Balancing interests as challenges emerge

As US-China relations deteriorate, China is looking to strengthen ties with the EU, with a particular focus on Germany and France. While Germany's strong economic ties make it a natural ally, facilitating technology-oriented deals, French companies have pulled back due to political risks and human rights concerns, leading to a widening trade deficit. Notably, German exports to China account for 3% of its GDP, dwarfing France's 1%.

In navigating the US-China competition, France seeks to align itself with its American ally while avoiding escalation. France's China policy, unlike Germany's, lacks a defined guideline but seeks to preserve economic interests within broader European efforts to create new defense mechanisms.

By contrast, Germany is a major European investor in China and maintains a robust presence, particularly in sectors such as automotive and chemicals. Despite the complexities of the Xi era, China remains important to the German economy, with more than 5,000 German companies and one million employees operating in various sectors, including automotive and machinery.

Nevertheless, in July 2023, Germany presented its first China strategy, acknowledging Xi Jinping's transformative influence and its impact on German interests. As such, Berlin advocates a balanced strategy, promoting 'derisking' to diversify trading partners, while rejecting the concept of complete 'decoupling'.

Interview with Le Monde's Berlin correspondent Cécile Boutelet
A personal perspective on contrasting realities of both sides of the Rhine

What nuances distinguish the political scenes in Berlin and Paris?

What's striking about Berlin's political scene is how little respect politicians have for the city. The MPs, journalists and lobbyists who live and work there often mock and even despise Berlin, something that would be unthinkable in France. I quickly learned to distinguish between Berlin as a "city" and Berlin as a political and economic center.

When I first arrived, Berlin was described as a "poor but sexy" city, something you'd never say about major metropolises like Paris or London, which generate a very large share of national wealth and enjoy great prestige in the country. Berlin, on the other hand, is only a political capital; it's not where all the power is concentrated. In Germany, economic power is distributed among a few large industrial regions in the west and south. Political power is not exercised, as it is in France, by people who have largely graduated from the grandes écoles of Paris. Nor is the cultural scene centralized in one place. As a result, there is much less "starification" of cultural and political figures than in France.

In Germany, these three powers are first and foremost rooted at the regional level, which is also the first place where citizens identify themselves. To understand the country as a journalist, I've learned to leave Berlin behind and observe these different places where power resides, especially by visiting companies outside the big cities, which means a lot of travelling and observation. You're very short-sighted if you stay in Berlin.

How do entrepreneurial mindsets and start-up initiatives align in France and Germany, and how could they come together to foster innovation?

The two countries have different methods, each with good results. In recent years, France has had a very proactive policy, with the French Tech initiative, largely supported by the public investment bank, bpi. Germany has traditionally been more critical of public support, relying instead on the market and individual initiative to generate innovation, although things are changing in Berlin too. From Germany, I have watched with great interest the development of Munich's startup scene, which has produced very promising startups such as Celonis, a "decacorn" specialising in corporate data, and Isar Aerospace in the space sector. The founders of these companies come from the Technical University of Munich, which has opened an incubator for deep-tech startups thanks to the support of the Quandt family. This Stanford-like public-private model is being replicated elsewhere in Germany. I believe that the French approach of political support and the German approach of private initiative can work together to bring European innovation to the commercial stage more quickly. This seems necessary in the current context of extreme competition from China and the US.

In practice, cultural exchange already takes place in companies that are increasingly Europeanized or internationalized. Engineering careers take place in several European countries. Politicians in Europe need to understand that these sometimes temporary migrations are an asset on which to build.

How do socialization methods differ between the Germans and the French?

There's obviously a big gap between France and Germany when it comes to women working and raising children. As French people, we're closer to the old East German model: we think it's perfectly normal to go back to work early and full-time after the birth of a child. There's nothing wrong with putting the child in a state crèche or nursery. We don't think the child will suffer - quite the opposite. A woman will feel equally valued for her work and her family, and for her ability to reconcile the two. Having had three children in Germany, I was often surprised by the disbelief when I said I was working full-time. Things are changing in Germany, and I'm meeting a lot of extraordinary women in the tech world who are also demanding to be able to do both and choose their own priorities.

What do you miss most?

I think I really liked the French tradition of dinner parties. These are very formal, coded meals, which take place in people's homes, where a tradition of conversation is nurtured. Political and cultural topics are often discussed. I have fond memories of my student dinners during my studies in Strasbourg, where we exercised our oratory skills in passionate discussions. It took me a long time to realize that this was a very French specificity. In Germany, I learned to appreciate other, perhaps less elitist forms of sociability. I'm also always fascinated to see how Germans are able to organize themselves into associations or collectives to work together on a common interest. We see this in sport, in environmental commitment, in welcoming refugees or in business, with the Betriebsräte, linked or not to a trade union. Social dialogue and its capacity for inclusion in the service of a concrete objective seem to me to be one of the great strengths of German civil society.

2. Franco-German Relations
what’s next?

Franco-German relations have cooled in recent months. With differing views on global issues and President Macron's state visit delayed due to nationwide strikes, a fresh start is needed to fully unlock the potential of the Elysée Treaty, which marked its 60th anniversary in January. The appointment of Stephan Steinlein as Germany's new ambassador to France is a promising development. A seasoned expert on France who held the post before reunification, Steinlein faces the considerable challenge of revitalising Franco-German relations despite their divergent trajectories. His first task is likely to involve rescheduling Macron's postponed state visit to Germany.

Attracting investments: A necessary compromise

Ich liebe dich, moi non plus? Beneath the glossy image of historic Franco-German friendship lies a more traditional relationship of competition and rivalry, highlighted by recent hurdles in the international arena. When France and Germany present a united front on the world stage, such as in their joint efforts to promote a coherent European response to the US anti-inflation bill, they are simultaneously engaged in fierce competition to attract investment to their respective countries.

Since coming to power in 2017, President Macron has been actively working to rejuvenate France's industrial production, which has been in decline since the 1980s. This reindustrialisation effort has been highlighted as a key economic strategy to strengthen sovereignty and competitiveness in the face of global challenges. To reinforce attractiveness, a key lever of reindustrialisation, President Macron and the French government have implemented structural reforms and overhauled France's fiscal and regulatory framework - the France 2030 investment programme is a testament to this will.

You need two to tango. Germany is resolutely advancing its investment appeal, notably through “The Silicon Saxony”, Europe’s leading microelectronics hub, backed by excellent infrastructure and strategic European positioning. Furthermore, the country's most recent endeavour, the "KI-Park" project in Heilbronn, supported by a two-billion-euro investment from the Dieter-Schwarz-Stiftung, will create Europe's largest center for Artificial Intelligence by 2027, exemplifying Germany's ambitious vision. Aligned with the Zeitenwende, Germany is massively supporting foreign companies, which has enabled recent record investments from Intel (biggest foreign investment in Germany in history worth €30 billion including €10 billion in subsidies from the German government) or TSMC (Germany will contribute up to €5 billion for the building of the €11 billion chip plant). In this regard, France, while progressing, offers relatively lower financial support (France will provide €2.9 billion in state aid to STMicroelectronics and GlobalFoundries for their megafab in France).

European Commission election: striking a balance

Another turning point for the future of the Franco-German relationship is likely to be the 2024 European elections, where the future of the European Commission is also at stake. European political parties will need to decide before next year’s elections whether to run candidates for the EU’s top executive role, known as the Spitzenkandidaten process. In 2019, European leaders scuppered the process by appointing Ursula von der Leyen, who was not invested by any party back then. The EU Commission leader has not yet decided whether she will be a candidate for her own succession, but she definitely can count on the support of German Chancellor Olaf Scholz. Commissioner von der Leyen has proved fit for the job and a great ally to France as for when she joined President Macron, per his invitation, for the first visit of China since the outbreak of the Covid pandemic.

At the same time, competition for the top-notch job is fierce, and France benefits from having one of the most powerful political figures at the European stage with European Commissioner for the Internal Market Thierry Breton. His shadow definitely looms over the EU top executive role, and France would be competing with Germany once again.

3. Franco-German partnership, beyond words

The Franco-German bond was not built in a day. The direction and strength of this bond have been fuelled by the quest for a common vision, reinforced and sealed by shared economic and social projects.

The signing of the Elysée Treaty on January 22, 1963, marked a turning point, sealing a renewed friendship between the two nations after centuries of rivalry and hostility. Above all, it establishes an unprecedented framework for cooperation that goes beyond the mere stage of economic alliance - as set out by the Treaty of Rome - to extend cooperation to foreign affairs, security, youth, and culture policies. The treaty becomes the symbol of Franco-German reconciliation.

This political will to strengthen Franco-German relationship is gradually being shared by businesses and opinion leaders. Strong Franco-German cooperation has flourished in the economic sphere, fostering thriving investment on both sides of the Rhine. In 2022, France experienced an influx of direct investment unrivalled by any other European nation. In total, around 3,000 German companies have created jobs for 325,000 people in France. Conversely, more than 5,700 French companies have established a presence throughout the Federal Republic, employing more than 400,000 people.

The Franco-German meetings in Evian, created in 1992, are part of this. Each year, the highest officials and business leaders of the two countries meet to discuss topics of common interest to businesses in both countries and to address the challenges of European development, including the euro, governance, European enlargement and Franco-German relations. The presence of the French and German heads of government, as well as the ambassadors of both countries, undoubtedly underlines the economic importance of Franco-German cooperation for both countries and for European integration.

The Aix-la-Chapelle Treaty of 2019 enriches the Franco-German relationship by proposing a series of concrete and unique initiatives aimed at bringing these two nations closer together. By establishing a Franco-German parliamentary assembly composed of 50 elected officials from each country, this treaty significantly strengthens parliamentary exchanges. In this context, it also invites ministers from both sides of the Rhine to participate in the Council of Ministers of the other nation, as demonstrated by the recent participation of Minister Baerbock in Paris in May.

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