Germany Makes Up With France After Putin's Actions Clear the Air

(Bloomberg) -- Angela Merkel and Francois Hollande have finally found that they get along.

The rapprochement is in large part thanks to President Vladimir Putin’s incursions into Ukraine and the joint French-German efforts to resolve the conflict, the officials said, asking not to be named discussing private matters. Bound by their statecraft in all-night peace talks in Minsk last month, Merkel and Hollande are also now in tune on Greece, on fighting terrorism and the need to combat anti-Semitism and racism. They even share a sense of dry, self-deprecating humor.
After publicly backing Hollande’s opponent for the French presidency, Merkel disagreed with France on the euro-area economy’s direction, Germany’s trade surplus and the merits of austerity. Now, almost three years after Hollande took office, the leaders have reconciled their differences, according to government officials in Paris and Berlin with direct knowledge of their interaction.

“Their politics isn’t driven by instinct or gut feeling, but rather by their pragmatic world view,” Stefan Seidendorf, deputy director of the German-French Institute in Ludwigsburg, Germany, said in a phone interview. As a result, he said, Merkel has come to appreciate that she can get along far better with Hollande than his predecessor, Nicolas Sarkozy, whose unsuccessful bid for a second term in 2012 she supported.

As the U.S and others look to Europe to meet challenges from the recovery to dealing with Russia, the new-found understanding between the heads of Europe’s two biggest economies -- one conservative, the other socialist -- is already helping close ranks and foster unity.

Sanctions Cost

Germany risked its status as Russia’s biggest European trading partner and pushed for sanctions that contributed to a plunge in exports there of 18 percent in 2014 compared with 2013, an industry body said last week. The drop in bilateral trade was worth more than 9 billion euros ($10 billion). France, under pressure from Europe and the U.S., put a 1.2 billion-euro contract to deliver warships to Russia on hold.

To be sure, Germany and France have diverged in recent years on everything from banking supervision to job creation, and differences in emphasis will always be apparent, all the more so since Hollande and Merkel belong to different European political families. Yet they were never estranged and relations were not as bad as they were portrayed, the officials said.

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The two leaders, born within one month of each other and now both 60, have been drawn closer together in recent weeks by their joint efforts to promote peace in Ukraine, on which they share the same analysis, according to the officials.

Locking Arms

They also rallied behind a common purpose after the Paris terror attacks shocked France in January. Walking arm in arm, Hollande and Merkel led a march against Islamist violence in Paris on Jan. 11 after terrorists killed 17 people at the Charlie Hebdo satirical magazine and a kosher grocery in the French capital. Hollande was moved by Merkel’s quick response and solidarity after the attacks, one of the officials said.

Both leaders drew the same conclusion from homeland threats and share a determination to combat rising racism, according to the German and French officials.

A month after the Paris attacks, Merkel and Hollande bonded again in joint trips to Kiev, Moscow and then Minsk, presenting a united front against Putin in an effort to halt escalating fighting between government forces and pro-Russian separatists in eastern Ukraine.

After arriving separately at the Belarussian capital’s airport, Hollande and Merkel met in her plane to discuss strategy, took the same car into town and walked in together for the peace talks with Putin and Ukrainian President Petro Poroshenko on Feb. 11 which ended after sunrise the next day.

Firm on Greece

“I want to thank Angela Merkel,” Hollande told reporters when the two met again for talks in Paris the following week. She “was the first European government head who said she would come to Paris” for the anti-terrorism march, underscoring “the exceptional quality of our relationship,” Hollande said.

More than a year into the biggest standoff with Russia since the Cold War, Merkel and Hollande may be hitting their stride as partners in a 28-nation European Union that’s perpetually at risk of discord on foreign and economic policy.

When Greek Prime Minister Alexis Tsipras’s government sought out France as an ally for its campaign to end the austerity program for which it mostly blames Germany, French leaders made it clear that they wouldn’t break ranks, a German government official said.

Merkel and Hollande presented a common line on Greece at their Paris press conference, and later that day euro-area finance minsters agreed to extend aid in return for a list of commitments from Tsipras’s government, easing the immediate standoff over financing Europe’s most indebted state.

Lightning Strike

There was less harmony when Hollande took office in May 2012 after defeating Sarkozy, Merkel’s political ally and partner in fighting to preserve the euro after the debt crisis spread from Greece in 2010.

Drenched from his inauguration parade down the Champs Elysees in an open-top limousine, Hollande’s plane was struck by lightning en route to Berlin, delaying by several hours his first meeting with Merkel.

After French voters elected Hollande on a platform of easing the fiscal austerity championed by Merkel to stem the debt crisis, clashes followed over joint euro-area debt issuance, Europe’s banking union and Merkel’s push to make European economies more competitive, aimed in part at France.

Merkel and Sarkozy were so close they were dubbed “Merkozy.” Nowadays, Merkel keeps Sarkozy at arm’s length. Last spring, she invited Hollande to her electoral district on the Baltic Sea, making him one of a select group of leaders including President George W. Bush to get a taste of the chancellor’s hospitality.

“Merkel has apparently learned her lesson after the failed TV appearance with Sarkozy during the last presidential campaign,” said Seidendorf of the German-French institute.

On the most glaring policy issue where they diverge, eliminating budget deficits, Merkel and Hollande have set aside their conflict on economic fundamentals and come to respect each other’s positions, one of the officials said. Germany balanced its budget last year, while the European Commission has given France until 2017 to bring its deficit down to 3 percent of gross domestic product, the euro-area limit.

“It’s not my place to make demands, because France has its own reform agenda,” Merkel said alongside Hollande in Paris on Feb. 20. “That’s a good thing, and it doesn’t require comments from Germany.”

To contact the reporters on this story: Arne Delfs in Berlin at adelfs@bloomberg.net; Helene Fouquet in Paris at hfouquet1@bloomberg.net

To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Tony Czuczka