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41. Ten urgent Franco-German issues for Europe

Author:
Joachim Bitterlich
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
Robert Schuman Foundation (RSF)
Abstract:
In recent years, political and economic upheavals have accelerated: the ongoing migration crisis, the spillover of the conflictual relationship between the United States and China, the global pandemic, the energy crisis, Russia’s military invasion of Ukraine and the conflict over Gaza following the terrorist attack by Hamas. Faced with this growing insecurity and volatility, the European Union has shown to be only partially united, or even convincing: in some respects, Europe seems to be rather more on the defensive. It is far from achieving its objective of being a global player on the same level as the United States or China on the international scale, and is unable to demonstrate a real strategy to tackle these accumulated challenges and, above all, to convince Europe’s populations. In the light of the electoral trends, we have been observing for some time in various Member States, the European elections in June 2024 may even further jeopardise the strength and prospects of the European Union, as well as its operational capacities. Under these conditions, how can we ensure its credibility and cohesion in a deeply troubled world? An ambitious programme of consolidation and reinsurance is a political necessity now more than ever. Such a programme, initiated by Paris and Berlin, should provide a common compass for the Union over the next five years. In my view this comprises 10 urgent inputs.
Topic:
Bilateral Relations, European Union, Interview, and Regional Politics
Political Geography:
Europe, France, and Germany

42. The France-Azerbaijan Relationship: Realities and Misunderstandings

Author:
Maxime Gauin
Publication Date:
01-2023
Content Type:
Journal Article
Journal:
Baku Dialogues
Institution:
ADA University
Abstract:
The bilateral crises of 2020 and 2022 between Paris and Baku have provoked more emotional reactions than either dispassionate analyses or detailed projects to attempt to lastingly resolve the issue. This is not to say that relations between Azerbaijan and France are anywhere near where they should be—far from it; but supporters of what the relationship has been and could be again, to say nothing of those seeking to understand its present or wanting to shape its future course in a more agreeable direction—in accordance with the national interests of both Baku and Paris—have been done a great disservice by those who, intentionally or not, distort or misinterpret the speeches and deeds of either state’s decisionmakers and influencers. The main aims of this essay are to explain the origins of the current problems and (this is inextricably linked) to challenge the misunderstandings, misconceptions, and myths accumulated on both sides. This makes it necessary to start by providing the necessary historical background, in part because a misleading version of this past is presented today. And this misdirection itself has become an obstacle for the restoration of mutual understanding, to say nothing of warm and friendly relations. The second part of the essay will examine more recent events (1988-2017). The third and final part is devoted to the contemporary period (the Macron era), with its missed opportunities, and to some discussion of possible ways to bring an end to this litany of errors.
Topic:
Foreign Policy, Diplomacy, and Bilateral Relations
Political Geography:
Europe, France, Azerbaijan, and South Caucasus

43. Is International Climate Finance Unfair and Inefficient?

Author:
Thibaud Voïta
Publication Date:
06-2023
Content Type:
Policy Brief
Institution:
Institut français des relations internationales (IFRI)
Abstract:
Finance is arguably the most sensitive climate negotiation topic. Different studies have shown that rich countries emit the majority of greenhouse gas (GHG) emissions, while the climate footprint of the poorest countries is much more limited. In addition, the countries that emit the less often turn out to be among the most vulnerable to climate change, with high needs in terms of adaptation finance. According to some analysis, the 46 least-developed countries suffer from a high risk of loss and damage, and the countries that are the least at risk are in Europe. Therefore, developing countries are demanding contributions from the developed world to address their climate finance needs (both in terms of mitigation and adaptation). These demands have been somehow met with a pledge made at COP 15 in 2009, where developed countries announced a yearly contribution of 100 billion dollars (USD) by 2020. However, this pledge has not been honored. Meanwhile, climate change is accelerating and, as a result, countries’ needs in terms of adaptation are increasing, as well as their loss and damage. The finance gap is widening and though the 100 USD billion pledge is expected to be achieved in 2023, analysis from the think tank Climate Policy Initiative (CPI) shows that it will not be enough to address the current needs. According to their analysis, the current flows need to be increased by at least 590% annually. This briefing will show that, in addition, climate finance is not accessible to the poorest and therefore increases inequalities and the exclusion of the most vulnerable countries. The Prime Minister of Barbados, Ms. Mia Motley, complains that the “international financial system […] is broken, outdated, infested with short-termism and downright unfair. In parallel, the multilateral climate finance governance is evolving: new multilateral banks and donors are gaining ground and could be the first step of a power shift in climate finance from Western countries to emerging economies. Meanwhile, the Bretton Woods institutions are being reformed, and new mechanisms may bring promising developments (e.g., under Article 6 of the Paris Agreement). The Paris Summit for a New Global Financial Pact on June 22-23, 2023 is an opportunity to address these issues, though it also risks highlighting the North-South tensions further.
Topic:
European Union, Climate Finance, Energy Transition, and Green Economy
Political Geography:
Africa, Europe, Asia, and France

44. High-Intensity Warfare: What Challenges for the French Armed Forces?

Author:
Élie Tenenbaum
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
The new French Military Programming Law for 2024-2030 resolutely commits the French armed forces to the path of high intensity. However, this term continues to be the subject of debate and confusion within the defense community. To better understand its scope and implications for France, we need to offer a strict definition of the notion. In military terms, high intensity refers first and foremost to a type of engagement deploying a high level of kinetic energy within a limited space and duration. Added to this energy factor is the level of technological sophistication of equipment (capital intensity) and the lethality resulting from these two elements. A concept of high capability intensity is thus emerging, based on the triptych energy-technology-lethality. This capability intensity must be distinguished from the political intensity, or virulence, of an armed conflict, which depends above all on the interests at stake. When the stakes are very high for one of the parties, the conflict takes on the aspects of a major war, in which its very survival is at stake. Conversely, when real but non-existential interests are at stake, the result is limited war. While military history offers examples of conflicts combining high political and military intensity, it has also recorded cases of limited wars involving high capability intensity. It is this configuration that seems most relevant to France, where, in principle, the nuclear deterrent protects against any threat to the nation’s vital interests. This then opens up a wide range of scenarios that fall short of vital interests but lie beyond the capability and operational horizons of the last three decades, which have been characterized above all by crisis management and on which the current format of the French armed forces has been constructed. Strategic solidarity within the framework of the Atlantic Alliance or defense agreements, confrontation with a large or medium-sized power in peripheral areas, confrontation with a “proxy” third-party actor supported by a powerful state, or confrontation in isolated common spaces (the high seas, exo-atmospheric space, cyberspace, the seabed, etc.) are all hypothetical scenarios that would fall within the scope of high capability intensity. With this in mind, the French armed forces must be prepared to operate in high-intensity environments. Missions in these environments will be characterized by two major factors. The first is high attrition owing to the lethality of a battlefield marked by quantity. To cope with this, we will need to rethink the trade-offs between volume (equipment, ammunition, etc.) and survivability. The second factor is the adversary’s contestation of the commons (air, sea, cyber, information), which will call into question all the elements of military superiority in the Western war model. As a result, operating in the high-intensity arena means giving priority once again to missions of environmental superiority, in order to regain a freedom of action that will be increasingly challenged. For their part, ground forces will no longer be able to take joint support for granted and will need to regain autonomy of maneuver in order to contribute to multi-domain action. High-intensity warfare is therefore an important prospect for the French armed forces, and one that cannot be brushed aside on the grounds that France has a permanent deterrent. The advent of an unstable world marked by multidirectional strategic competition calls for a thorough reconsideration of the conventional formats and missions of the French armed forces, if decision-makers are to retain their freedom of action on the strategic scale.
Topic:
Security, Armed Forces, Army, Military, and High-Intensity Warfare
Political Geography:
Europe and France

45. How to Meet the Industrial Challenge of Electric Mobility in France and in Europe

Author:
Marc-Antoine Eyl-Mazzega, Diana-Paula Gherasim, Clémentine Vannier, and Adam Contu
Publication Date:
11-2023
Content Type:
Working Paper
Institution:
Institut français des relations internationales (IFRI)
Abstract:
How to Meet the Industrial Challenge of Electric Mobility in France and in Europe Notes de l'Ifri, November 2023 The deployment at scale of electric mobility in France and in Europe withholds significant industrial, societal, geopolitical, and financial challenges, against the backdrop of strategic dependencies along the value chain of the electric vehicle (EV). A certain lack of vision of the value chain as a whole, of the needs and objectives at each stage, and of how to ensure consistency and follow-up over time adds up to the concerns of industry players, who not only need to catch up from a technology point of view, but also to innovate, to secure the value chains, the workforce, the supply in low-carbon affordable energy and to scale up production and recycling capacities. Gigafactories are a major industrial step forward but should not obscure the complex and much broader nature of the battery value chain, and more generally of EVs’ value chain. This note summarizes the key findings of Ifri’s extensive study with the same name and its ten key recommendations for overcoming the industrial challenges of electric mobility deployment in France and Europe: Developing a holistic approach to the supply of critical raw materials, focusing on five key areas: domestic extraction, refining, mining diplomacy and environmental, social and governance (ESG) standards and recycling. Ensuring the stable and competitive supply of low-carbon electricity. Building integrated partnerships with European players at all stages of the EV value chain, with a view in particular to rapidly securing a certain number of cathode and anode active material (CAM and AAM) and precursor cathode active material (PCAM) production capacities, and supporting innovation in battery chemistry, which is the only way for Europeans to distinguish themselves from China. Planning in order to acquire an integrated mastery of the value chain, to develop the skills and train the workforce. Moderating the demand in critical raw materials as a key to resilience, as alternative means of transport, fewer car sales and smaller batteries, contribute to reduce the future increase in raw material needs. Re-imagining mobility to make it more sustainable, accessible, and fair. Setting up and calibrating a support system for the deployment of the different stages of the electric mobility value chain in France, whose cost to the national budget could be in the region of €8-9 billion a year, over the next few years. Protecting industries from unfair and less virtuous practices. Exploiting the growth of electric mobility to strengthen the integration of variable renewable energies into power systems. Ensuring that the European Union (EU) has the appropriate resources to meet the multiple industrial and technological challenges linked to EVs in the context of polycrises. Only some of these have been covered in this study, as EVs cannot be reduced to batteries alone, and involve many other key equipment and issues, hence the need to have an EV based approach, as opposed to one centered around battery-cells.
Topic:
Mobility, Transportation, Energy, Electric Vehicles, Energy Transition, and Greenhouse Gas
Political Geography:
Europe, France, and Global Focus

46. The Cyclical Behaviour of Government Spending for Social Protection: Is the OECD Methodology Robust?

Author:
Aleksandr Arsenev, Philipp Heimberger, and Torben Schütz
Publication Date:
12-2023
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
Spending elasticities measure the reaction of different government spending components to the business cycle. They are important inputs for fiscal forecasts, and they are particularly relevant in the context of European Union (EU) fiscal rules, as elasticity estimates enter the estimation of fiscal space. This paper analyses the sensitivity of the estimation method used by the Organisation for Economic Co-operation and Development (OECD) and the European Commission to obtain government spending elasticities by focusing on 11 EU countries in the 1995-2020 period. Our results suggest that spending elasticities are sensitive to small variations in data and model specification. For most EU countries, we reject the assumption that only unemployment spending responds to cyclical variations. While unemployment spending is indeed a major driver of counter-cyclical social spending, other categories of social spending also show signs of responding to the business cycle.
Topic:
Budget, European Union, Finance, Macroeconomics, Public Debt, Social Spending, Public Spending, and Fiscal Deficit
Political Geography:
Europe, Greece, France, Poland, Germany, Denmark, Romania, Spain, Italy, Sweden, Austria, and Czechia

47. Franco-German leadership in European security: Engine in reverse gear?

Author:
Iro Särkkä and Minna Ålander
Publication Date:
11-2023
Content Type:
Policy Brief
Institution:
Finnish Institute of International Affairs (FIIA)
Abstract:
Germany and France led the European response to Russia’s first war in Ukraine following the annexation of Crimea in 2014. The legacy of the failed Minsk process weighed on their ability to change course in 2022, as the required response went beyond economic sanctions and diplomatic negotiations. In both the French and the German case, there is a mismatch between self-perception and external expectations. France lacks the economic and military resources to substantiate its great-power identity, while Germany’s selective leadership is not on a par with its economic weight. As a result, neither French President Emmanuel Macron nor German Chancellor Olaf Scholz were able to provide convincing leadership in the initial stages of Russia’s second war in Ukraine in 2022. While the Franco-German reconciliation has historically constituted the core of European integration, their response to Russia’s war of aggression and its wider implications in Europe has made it clear that the Franco-German engine is struggling to provide coherent and effective wartime leadership. The two countries should not only acknowledge the enduring central role of the transatlantic link for European security, but also enhance cooperation with groups of smaller countries – and consider following their lead, too.
Topic:
Security, Defense Policy, NATO, Leadership, and Russia-Ukraine War
Political Geography:
Russia, Europe, Ukraine, France, and Germany

48. Privilege, Economy and State in Old Regime France: An Interview with Lewis Wade

Author:
Tehreem Husain and Lewis Wade
Publication Date:
12-2023
Content Type:
Commentary and Analysis
Institution:
The Toynbee Prize Foundation
Abstract:
Dr. Lewis Wade’s new book Privilege, Economy and State in Old Regime France: Marine Insurance, War and the Atlantic Empire under Louis XIV (Boydell and Brewer, 2023) closely analyses the rise and fall of Louis XIV's marine insurance institutions in Paris, which were central to the French monarchy's efforts to stimulate commerce, colonial enterprise and economic growth. The book discusses two leading ministers, Jean-Baptiste Colbert and his son, the Marquis de Seignelay who both recognised that marine insurance was crucial for protecting commercial investment in French maritime endeavours. While Colbert looked to private enterprise to lure capital away from passive investments in state debt towards the marine insurance industry. Seignelay, by contrast, leveraged the tools of privilege on which the French economy was built by creating the first chartered company in the history of marine insurance. The book discusses in detail the overarching system of risk management that lay at the heart of absolutism itself. I was delighted to interview Dr. Wade to dig deeper into his book.
Topic:
History, Economy, Economic Growth, State, Interview, and Capital
Political Geography:
Europe and France

49. Energy, Inflation and Market Power: Excess Pass-Through in France

Author:
Axelle Arquie and Malte Thie
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
We explore how, in the French manufacturing sector, producer prices vary with market power during a severe episode of energy price hikes (between January 2020 and December 2022). Our work provides micro-level empirical evidence in favor of a role for firms' market power in explaining inflation. Using a rich dataset on French manufacturing firms' balance sheets, we first estimate markups at the firm-level, and aggregate them at the sectoral level. We then study the response of the producer price index (PPI) to a change in spot energy prices, depending on average market power within sectors. We show that in sectors with higher markups, prices increase relatively more: in the least competitive sector, firms pass through over 115% of the energy shock, implying an excess pass-through of more than 15 percentage points. In addition, we analyze in greater detail the mechanisms that might be behind our results: we discard the possibility that the pricing behavior might be driven by a "liquidity buffer rationale", implying that the excess pass-through we identify is detrimental to consumers.
Topic:
Markets, Inflation, Manufacturing, Energy, and Markups
Political Geography:
Europe and France

50. Securing Foreign Markets: Exports, Relational Specificity and New Investment Locations

Author:
Giorgia Giovannetti, Gianluca Santoni, and Giulio Vannelli
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
In this article we examine how the need to secure profit streams from exports has affected the location choice of new foreign investments by French manufacturing firms. Motivated by the observation that most firms entering a new foreign country do not establish a production unit there or decrease their exports, we develop a simple theoretical framework to guide our analysis and provide empirical evidence to support this “market securing” mechanism. Our results confirm that companies tend to locate new investments in countries that account for a larger share of their past exports; allowing for better monitoring of the foreign market, the investment prevents the disruption of the relationship, whose impact on profits would be more detrimental in the case of more important foreign partners. A 10 percent increase in bilateral exports increases the probability of investing by 3.4 percent. Consistent with our mechanism, given the same volume of exports, firms prefer countries that purchase goods with higher relational specificity as finding new buyers for these goods would imply higher costs if the relationship was broken.Exporting at least one good with relational specificity above the 75th percentile increases the probability of investing by 2.2 times compared to exporting more generic goods (below the 50th percentile).
Topic:
Markets, Foreign Direct Investment, Investment, Exports, and Manufacturing
Political Geography:
Europe and France