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The Enduring Relevance Of Strong Franco-German Relations

The EU remains a work in progress, especially with Britain's messy exit efforts. But if there's one constant, it's that Europe still needs France and Germany to be partners.

German, French and EU flags
German, French and EU flags
Dominique Moisi

-Analysis-

PARIS — As the United Kingdom chaotically prepares for Brexit, and while Italy and Poland continue to distance themselves from European values, the Franco-German partnership is — if only by default — increasingly indispensable. Because really, who else is there to rely upon? Spain has taken undeniable steps in the right direction, but it doesn't have the critical mass to make things happen, especially while it remains absorbed with the Catalan separatist problem. And the other European countries have neither the means nor the ambition to play a leading role. Nature abhors a vacuum. So does Europe.

But even though the relationship between Berlin and Paris is more essential than ever, it's also more fragile, given the weakening of power in both countries. For decades, the Franco-German pairing, supported by a spirit of reconciliation embodied in symbolic duos — Charles de Gaulle-Konrad Adenauer, Francois Mitterrand-Helmut Kohl — made Europe "work" and move forward. The other members of the Union could, from time to time, express their frustration in the face of what they sometimes considered to be a diktat. But economic growth, on the one hand, and the Soviet threat, on the other, encouraged them to overcome their mood swings.


Things began to change when Germany reunified, and when the Union began to expand. It's indeed easier for two countries to impose their views on a club of six to 15 members than on a group of 28 (soon to be 27) that has inherent difficulties creating a common culture. What's more, the balance of imbalance that existed between a more dynamic and economically prosperous Germany and a more politically and strategically central France had faded over the years. With the disappearance of the USSR and with their own peaceful reunification, the Germans felt that the "End of History," as announced by Francis Fukuyama, confirmed the relevance of their choices.


If economic power had become more important than military might, Berlin's "soft power," embodied by reassuring leaders and benefiting from their longevity in power, could only prevail over France's "hard power," embodied by presidents challenged by their electorate. This vision gradually changed from 9/11 onwards, but Germany did not draw all the budgetary consequences from the return of the "tragic of History."


Over the past few months, the Franco-German relationship has undergone upheavals. There was, first of all, hope it was for the better until fears it was for the worse started to rise. It's not that the two countries have moved away from one another. It's above all that they, first of all, haven't moved closer to one another and that they weakened politically on their own afterwards. Germany's unemployment rate, which still stands at around 3.4%, contrasts sharply with France's, which seems structurally fixed at around 9%.


As far as geopolitics are concerned, however, history — after ruling, it appeared, in Berlin's favor — now seems to shift towards Paris. Geopolitical considerations have regained their priority. Brilliant export figures and spectacular budget surpluses are not the answer to strategic challenges. At a time when America is combining a nationalist explosion and isolationist temptation, "Paris' cards' are probably more appropriate than Berlin's. France and Germany can speak with almost the same voice on defense or the European army, but in reality, their "cultures' in this respect remain profoundly different. France is suffering from no longer being a great nation while Germany still fears becoming, once again, a great power.

Can you be ambitious for Europe when you're challenged in your own country?

Today we are rediscovering, albeit under another form and wording, what once made a fundamental difference in the two countries' approaches towards Europe. For Paris, Europe was the card that allowed France to remain itself by other means. It was, in other words, a tool of power and influence. For Bonn, and later Berlin, Europe was, on the contrary, a tool of control, if not self-control, over Germany.


Overcoming this fundamental disparity in our respective approaches to Europe is made even more difficult by the weakening of the political elites in power on both sides of the Rhine. Angela Merkel is no longer what she was and Emmanuel Macron isn't perhaps becoming what we'd hoped he would be.

His surprise victory in 2017 seemed to signal a necessary rebalancing between the two countries. It's not that there was too much Germany. Rather, there wasn't enough France, and this may have been the case since at least 1995 and the end of the Mitterrand presidency. In the late 1980s, political scientist Pierre Hassner described the U.S./USSR relationship as a process of competitive decline between the two countries. One would be tempted to describe the current political relationship between France and Germany with the same wording. There is, however, one major difference. This is not a zero-sum game. Berlin's weakness is a handicap for Paris and vice versa.


The question for Emmanuel Macron and Angela Merkel is the following: Can you be ambitious for Europe, rallying a majority of citizens behind you, when you're strongly challenged in your own country?


Contrary to what one might think, the answer is "yes," inherently yes. Europeans may no longer like Europe, but they are nonetheless aware that, in an ever more dangerous world, they need it — provided they feel protected by it. It would be unfortunate if the 1990s dream of the "End of History" were to give way in 2019 to an "End of Hope". That, to put it in other words, would be the twilight of the European project.

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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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