Europe bands together and pulls apart

France today recalled its ambassador to Italy after the populist government in Rome publicly aligned itself with the protesters attempting to topple President Emmanuel Macron.

Catch up quick:

• Luigi Di Maio, Italy’s deputy prime minister and leader of the Five Star movement, met Tuesday with leaders of the gilets jaunes (yellow vests), praising them and declaring “the wind of change has crossed the Alps.”
• The French response was swift and furious. It culminated in today’s announcement and a statement lamenting “a serious situation which is raising questions about the Italian government’s intentions towards France.”

Between the lines:

• Constanze Stelzenmüller of Brookings says the Italians have a “genuinely divergent view” about the future of Europe, “but also a disruptive intent. They’re also very close to the Russians and are disruptive on things like sanctions as well. In my view, they’re out to make trouble.”
• Erik Brattbergof Carnegie points to “a bigger rift taking place across Europe — not just Italy but also Hungary, Poland — with populists wanting not necessarily to destroy the European Union, but to change it” in fundamental ways.

The big picture: On the other side of those battle lines stand the multilateralist powers, France and Germany. Macron and German Chancellor Angela Merkel heralded a “new chapter” in relations and pledged to tie themselves and Europe ever closer together last month as they signed a (mostly symbolic) treaty.

• Yes, but: France today backeda review that could threaten the controversial Nord Stream 2 pipeline, which would deliver Russian gas to Germany. Macron also canceled a trip to the Munich Security Conference to focus on domestic concerns.
• There are big divides on more fundamental issues,like the pace of European integration. Thus, Macron and Merkel tend to make bold statements on the areas they do agree — the “European army,” for example — and in so doing “create false expectations and unnecessary suspicions” elsewhere in Europe, Brattberg says.

Why it matters: Europe faces massive challenges in the economy, in security and in identity. Shocks to the system like Brexit make them more urgent still. Those challenges aren’t just dividing nationalists and multilateralists — cracks are showing within the opposing camps.

 
• European Champions vs. China

Chinese President Xi Jinping has “China 2025.” Now Peter Altmaier, Germany’s economy minister, has introduced “National Industrial Strategy 2030.”

The backdrop:

• European regulators yesterday blocked a mega rail mergerbetween Germany’s Siemens and France’s Alstom despite strong support for the deal from leaders in Berlin and Paris who said it was necessary to fight off competition from China’s state-owned rail giant, CRCC.
• Regulators said the deal would give the new giant a near-monopoly in European markets, where CRCC isn’t even a major player at present. However, critics say European “champions” are needed to compete globally in the coming decades.

As the FT’s Ben Hall framed things on the World Weekly podcast: “[Altmaier] warned Germany and Europe risked being mere bystanders in the next industrial revolution unless states were able to protect technologically important companies or subsidize research and innovation. But is this protectionism in a 21st century high-tech disguise?”

• One of Altmaier’s proposals— a state investment fund to block takeovers of critical tech companies — “goes against many of the principals Germany has espoused up until now: a completely open free-market economy,” the FT’s Guy Chazan in Berlin pointed out on the podcast.
• German political and business leaderswere stunned by the 2016 purchase of German robotics firm Kuka by a Chinese company, Chazan said. They’re also “absolutely paranoid about losing their global leadership in cars” as the market shifts toward electric vehicles. Thus, Altmaier is calling for a major battery cell factory in Europe.
• Altmaier’s fear:Europe, the “development laboratory of the world,” will become the “workbench of our competitors.”

What to watch: Axios Future Editor Steve LeVine points out that just as this debate is taking place, European antitrust regulators are taking aim at American tech giants, most notably Facebook. “Here you have the tension — between the antitrust impulse and the champions impulse,” he says.

 
• EU and what army?

President Trump erupted in November over what he called a “very insulting” proposal from Macron for a “real European army.”

Between the lines: When it comes to the EU army, or calls from Merkel and Macron for greater “strategic autonomy” in response to an unpredictable U.S., many in Europe are on Trump’s side.

I sat down with Latvian Foreign Minister Edgars Rinkēvičsyesterday in Washington, and he told me that “very dangerous rhetoric” is “fueling this sense that something is changing fundamentally.”

• “Let’s face it. The United States plays an extremely important role in European security — through NATO, through the decades-long presence of its military on European soil — even more after Crimea and Ukraine.”
• “Of course that kind of rhetoric … on both sides of the Atlantic — ‘well, you are not spending enough,’ and all the issues that are related to the trade — do complicate relations. But I wouldn’t say those relations are changing in a way that one can already say, ‘We can’t rely anymore on the United States and now we need a European army.’
• Not only would a European army be virtually impossible for practical reasons, Rinkēvičs argued, “There would be very legitimate questions from the United States: ‘If you need your own army … then we can go home.’ That’s exactly what we don’t want.”

Why it matters: Rinkēvičs said he’s confident Latvia doesn’t face “immediate military risks or threats” from Russia, largely because there are now NATO troops on the ground, but the Baltics are not “somewhere in the Middle of Europe where the notion of invasion is just a fairytale.”

Between the lines: Stelzenmüller says there is genuine momentum in Europe on collective defense, and areas in which it makes sense: crisis response, humanitarian aid, cybersecurity. She says the “European army” rhetoric “suggests a capability and intent” far beyond reality and is “part of their attempt to respond to their voters’ concerns about Trump.”

 
• Europe’s future on the ballot

Today’s flare-up between France and Italy was a preview of the European parliamentary elections, coming up in May.

Célia Belin, a former French diplomat now at Brookings, says, “For the first time, [those elections] will be fought on European issues, not on national issues,” and Macron and the Italian populists “represent two pure versions of what’s going to be offered.”

• Belin argues that Europe is “now entering a phase where the political fight is in Brussels. It is now a place where you have parties and platforms, and the direction might shift very much if a new party wins.”
• That’s driven in part by geopolitical factors — an assertive Russia, trade wars, immigration — that demand European, not national, answers.

Between the lines: Belin says that on issues like those, nationalists around the continent “have common values but not common policies.” As recent twists in France-German relations show, though, the same could be said of the multilateralists.

• The nationalists have stopped talking about leaving the EU, and are focusing on changing it. “I think Brexit probably was the best vaccination against any future exits,” Rinkēvičs told me.

Πηγή: axios.com