| Europe’s Vital French Connection PARIS – In the debates raging over the future of the European Union and the eurozone , Germany always takes center stage . It has the largest economy , accounting for 28 % of eurozone GDP and 25 % of the eurozone’s population . It is running a current-account surplus that is now larger than China’s – indeed , the largest in the world in absolute value . And , while weighted majorities can overrule it on some issues , everyone acknowledges that little can be done in the eurozone unless Germany agrees . But the emphasis on Germany , though justified , should not lead to an underestimation of France’s critical role . France not only accounts for roughly 22 % of eurozone GDP and 20 % of its population – behind only Germany – but also has the healthiest demography in the eurozone , whereas the German population is projected to decline over the next decade . At the same time , France’s critical role reflects more than its size . Indeed , in terms of influencing outcomes in Europe , France is as important as Germany , for three reasons . First , France is an indispensable link between southern and northern Europe at a time of growing economic and financial division between creditors and debtors ( a fissure that has begun to assume a cultural dimension ) . An active France can play a bridging role , leveraging its strong relationship with Germany ( a friendship that is a pillar of the EU ) and its proximity and cultural affinities to the Mediterranean . France is “ southern ” in its current-account deficit , but “ northern ” in its borrowing costs ( slightly above Germany’s ) , owing partly to inflows of capital fleeing the south , as well as to modest but positive economic growth . Moreover , there is no perceived “ re-denomination ” risk affecting French assets , given markets ’ confidence that France will retain the euro . So , while France faces huge economic challenges , its northern and southern features permit it to play a proactive role in the European project’s survival . French President François Hollande has already given a rather successful preview of this role , meeting German Chancellor Angela Merkel in Berlin on his first day in office , and , a month later , participating in a high-profile meeting with the Italian and Spanish prime ministers in Rome . Indeed , he took the lead in adding a “ growth pact ” to the “ stability pact ” that had been negotiated under Merkel’s leadership . Second , France , under its new center-left government , must demonstrate that the “ European model ” of a market economy coupled with strong social solidarity can be reformed and strengthened , rather than abandoned – not just in Europe’s more pragmatic north , but also in its more ideological south . French Socialists will not renounce their traditional commitments ; nor should they . But they now have the opportunity to contribute to the European model’s renewal . Under Hollande , France’s Socialists favor achieving that renewal through a process of social dialogue that convinces rather than imposes , that focuses both on revenue measures and on boosting government efficiency , and that may adopt some of northern Europe’s more successful “ flexicurity ” policies , which combine greater labor-market flexibility with strong social protection . The reforms should also introduce much greater individual choice , permitting solutions to retirement , education , health , and lifestyle issues that can be more easily tailored to citizens ’ specific circumstances and needs . The government of Hollande and Prime Minister Jean-Marc Ayrault has strong majorities at all executive and legislative levels , giving it a rare opportunity to act . If it can renew the European model at home , it will be able to project that success much more widely , particularly in southern Europe , in turn reinforcing confidence and belief in the EU , particularly among the young generation . The French center-left must lead in conceiving a vision for Europe in which solidarity and equity reinforce long-term economic strength . Finally , along with the United Kingdom among European countries , France retains more of a global role than Germany has yet acquired . While the United Nations Security Council is outdated in its structure , it still plays a crucial legitimizing role ; and France , not Germany , is a member . In many other international organizations as well , France punches above its weight . Similarly , while France exports much less than Germany outside the EU , many large French enterprises rival Germany’s in global reach and technical know-how . And French is still a global language . In other words , France not only is a link between Europe’s north and south , but also contributes substantially to linking Europe to the rest of the world . Europe needs a renewed vision and effective policies to realize that vision . France’s Socialist-Green government can play a critical unifying role as Europeans confront their biggest challenge in decades . Its success will be highly consequential – not least for the political debate that will inform the outcome of Germany’s elections in 2013. |