Commentary: Paris May Not Toast Schroder For Long

Within 72 hours of Germany's elections, Chancellor-elect Gerhard Schroder lunched in Paris with French President Jacques Chirac. The Sept. 30 meeting in the Elysee Palace was Schroder's first postelection tete-a-tete with a foreign leader. The two men vowed to energize the once tight-knit Franco-German political and economic alliance, a cornerstone of the European Union. Schroder, 54, wanted to reassure Chirac that a more powerful Germany--run by a post-World War II generation--won't ditch the tandem.

But don't be fooled by the bonhomie at the Elysee. Conflicts are likely to multiply because Germany won't be as pliant a neighbor as it has been for 50 years. Outgoing Chancellor Helmut Kohl, 68, was the last German leader willing to rule humbly in acknowledgment of the country's wartime guilt. "Germany will pursue its interests from now on without any complexes," says French Foreign Minister Hubert Vedrine.

France's relationship with Germany has eroded steadily since German unification in 1990. With Kohl gone, says Dominique Moisi, deputy director of the French Institute for International Relations in Paris, "what the French most fear is another country in Europe that could behave as [selfishly as] France does."

SHIFTING ALLIANCES. In the future, Europe will be driven by alliances that vary according to the issue. While France and Germany may squabble about control of the European Central Bank, they may join forces on unemployment or immigration policies. Schroder and Chirac, for instance, back a new triumvirate of Britain, France, and Germany as a motor of European integration.

Kohl battled the French behind closed doors and compromised; Schroder will be more open and less conciliatory. Rebuilding eastern Germany, winning in global markets, and creating German jobs have pushed aside priorities such as binding Germany tightly into a united Europe. While Germany is focused on practical issues such as getting back more of its $20 billion annual contribution to the EU, France is fixated on grandiose ideas. "What [we] are most concerned about is finding a common vision for Europe," says a French official.

Germany's pragmatic tilt will steepen under Schroder, especially if he builds the strong partnership with Britain he seems to desire. In a move that would have been unthinkable a decade ago, Daimler Benz Aerospace and British Aerospace PLC are negotiating to merge their defense businesses, leaving France's state-owned Aerospatiale out in the cold. "In the past, Germany always played the French card. [Now] the whole agenda is much more Anglo-Saxon," says Heinz Schulte, editor of a Bonn-based defense newsletter.

SHOCK WAVES. Distaste for Anglo-Saxon-style capitalism is far deeper in France than in Germany. While France's statist tradition has slowed its companies' adjustment to global markets, the Germans are accelerating their drive to become more competitive. The alliance forged in July between the London and Frankfurt stock exchanges, for example, sent shock waves through Paris, as did the Daimler Benz-Chrysler Corp. merger. "The nonsense about a special relationship with France doesn't match the real world," says Schulte.

The days when France could pursue La Gloire, its idea of national glory, while a rich Germany bankrolled European Union handouts to farmers and industry, are long gone. But France and Germany remain united in a Europewide struggle to stay competitive and rein in burdensome social safety nets without sparking civil disorder.

Before it's here, it's on the Bloomberg Terminal.