The Nico and Angela show

WHEN DE GAULLE'S foreign minister asked him which officials France should dispatch to Brussels to staff the new European Commission, the general replied: “Send the most stupid.” Although these days France installs some of its best people in Brussels to watch what the EU gets up to, that condescending attitude has never entirely disappeared. If it had a choice, France would keep the commission firmly in its place and run the show with Germany as a sort of European G2, but enlargement of the EU to 27 countries got in the way. The euro crisis presents France with the best chance in decades to drag the EU back on track.

At the same time, though, the crisis has established a new German dominance in Europe. As the continent's biggest economy, Germany has set the terms of the various euro-zone rescues. Having largely absorbed east Germany since unification in 1990, it is looking for markets in the emerging economies. And, bit by bit, it is carving out a more assertive and independent role.

When Nicolas Sarkozy, France's president, meets Angela Merkel, Germany's chancellor, the atmosphere can be chilly. Ms Merkel has said she thinks she is “the most boring person Mr Sarkozy has ever met”. But what matters more is the unresolved combination of France's designs and Germany's power. Their difficult partnership weaves yet another strand into the drama of the euro, adding to the uncertain future of the EU itself.

The blues in Berlin

During the euro crisis Ms Merkel has often seemed torn, refusing such things as a concessionary interest rate for Greece, only to change her mind later. That partly reflects her temperament: cautious, tactical and naturally inclined towards the middle path between standing firm and coming to the rescue. But, to be fair to Ms Merkel, it is also because Germany itself is torn.

On the one hand, Germans know that their fate is still bound up with European integration, as it has been for the past 60 years. The country's pro-European finance minister, Wolfgang Schäuble, says that although Germans might be sceptical of the euro, they are not Eurosceptics. Opposition parties have criticised Ms Merkel for being too reluctant to save the euro zone. They have put forward bold plans, such as Eurobonds issued jointly by the entire euro zone, combined with a leap in fiscal integration. The opposition has been rewarded with a strong performance in regional elections. By contrast, Ms Merkel's party has suffered at the polls and her coalition partner, the more Eurosceptic Free Democratic Party, is on its knees.

Moreover, the German economy is intricately tied into the European economies around it: they are a source of parts and supplies for German industry, a place where German banks and insurers have invested their savings, and a market for German goods. A collapse of the euro or a chaotic default by a European government or bank that spread through the EU economy would be a terrible outcome for Germany.

On the other hand Germans also feel indignant. They think that at the time of monetary union they were conned with the false promise that the euro and the European Central Bank would be worthy of the mighty D-mark and its guardian, the Bundesbank. These were potent symbols of German nationhood. As Helmut Kohl, chancellor at the time, told the then French president, François Mitterrand: “The D-mark is our flag. It is the foundation of our post-war reconstruction. It is the essential part of our national pride; we don't have much else.”

The euro is no D-mark. Day after day German television and newspapers portray Europe as a threat to German prosperity. The “no bail-out” clause, designed to ensure that governments will not be held liable for other countries' debts, has been trampled underfoot. As the crisis has grown, the share of Germans who think the euro will be a long-term success has fallen from 78% in 2008 to 55% earlier this year. Ordinary Germans are asking if they should ship their savings to Switzerland.

And, in German eyes, the ECB is no Bundesbank. When the bank proposed to buy bonds of troubled governments in the open market, two Bundesbank vigilantes objected, arguing that the policy took the ECB across the threshold from monetary to fiscal policy. Having lost the argument, they resigned. At the end of last month the Bundestag passed a non-binding resolution against the ECB's financing the euro-zone rescue fund or continuing to buy bonds once the rescue fund can do so instead. Jörg Rocholl, dean of the ESMT business school in Berlin, talks of a “common feeling of betrayal” over the ECB.

When Germans look at Europe's periphery they see economies that partied when they should have been sobering up. After unification Germany put itself through economic boot camp. The unions agreed to lower pay rises. The government cut benefits, raised charges and made it harder for workers to claim disability allowances. Between 1994 and 2009 the country's unit labour costs fell by about 20% against the rest of the EU. But the adjustment was a hard slog. Jobs went abroad, where labour was cheaper, and unemployment rose to a peak of 12.1% in 2005. That same year the Social Democrat-led government of Gerhard Schröder paid the price at the polls, bringing Ms Merkel to power.

Yet, thanks to these efforts, Germans have enjoyed world-class economic performance over the past decade (see chart 3). No wonder, then, that they resent seeing the fruits of their own self-denial being used to pay for everyone else's self-indulgence. In any case, Germans have never quite got over the anxiety that they developed in those years of austerity. Whereas the rest of Europe looks at Germany and sees an economic powerhouse, many younger Germans doubt that they will live as well as their parents do, and fret that the social safety net will not be there when they need it.

There was a time when Germany bore its financial contributions to the EU with stoicism. Uwe Kitzinger, a British academic and former official in Brussels, called them “a form of delayed war reparations”. But now the country is making its anger felt.

“As the pivotal state in monetary union,” writes David Marsh, “Germany is becoming more self-centred but less sure-footed, more hectoring but more vulnerable.” Mr Schröder put down a marker back in 2000. At a summit in Nice he demanded that in ministerial votes on EU legislation Germany's large population should have a bigger say than other countries. Last year the Bruegel think-tank in Brussels published an essay entitled “Why Germany Fell out of Love with Europe”. And Jean-Claude Juncker, the prime minister of Luxembourg and head of the Eurogroup, in which the euro-zone's finance ministers meet, complained that the “Germans are losing sight of the European common good.”

Moreover, the world is changing. German trade has been shifting away from the euro zone. In 1999 German exports to Portugal, Ireland, Spain and Greece totalled €30 billion, a multiple of those to China, just €6 billion. By last year exports to China, worth €53 billion, exceeded those to the four peripheral economies. Goldman Sachs, a bank, reckons that China is poised to match France as Germany's biggest trading partner.

And Germany, too, is changing. Its controversial decision not to join France and Britain in the NATO campaign against Libya's Muammar Qaddafi represented what Constanze Stelzenmüller, of the German Marshall Fund, calls “a loosening of the ties”. NATO, she says, is no longer bound by the “unifying energy of the Russian threat”.

Reflecting on Germany's strife over the euro and its refusal to fight in Libya, Hans Kundnani, editorial director of the European Council on Foreign Relations, recently argued in the Washington Quarterly that “Germany's economy is too big for any of its neighbours, such as France, to challenge…but not big enough for Germany to exercise hegemony.” This, he concluded, is an economic statement of the “German question” that tormented Europe for 75 years after German unification in 1871.

The most likely answer to that question today is compromise. Germany is not about to walk away from Europe, nor to let the euro fail. But Germany's price will be a rescue in which it will be explicitly seeking to put its own interests above all others. What does that mean for France?

The pressure in Paris

Thanks above all to De Gaulle, France has been fabulously successful in Europe. Having been defeated and occupied by Germany, France was humiliated and neglected by America and Britain. In 1954 Eisenhower called the French “a helpless, hopeless mass of protoplasm”. But armed with the general's brilliant combination of cunning and self-belief, France made itself indispensable to the construction of Europe. It then used that status to tame the German threat, to project French power in the world and to get the EU to pay for its own expensive farm subsidies.

But that policy has run its course. A senior French politician says that today's Franco-German coalition “is fragile and public opinion is hostile”. In French eyes today's EU suffers from three flaws. First, the commission and the ECB have too much scope to act independently of governments. Second, the British-backed policy of enlargement has gradually changed the character of the union, making it harder for French views to prevail and over-emphasising open markets. And third, taking Mr Kundnani's German question, France needs to renew its deal with Germany.

The euro crisis offers a tantalising chance to do so. Because the euro will need more and better governance, France has an opportunity to sideline the commission by creating new institutions controlled by governments. If decisions can be taken by the 17 members of the euro zone, rather than the 27 of the EU, then the restored Franco-German duo might take charge.

France has already made progress. Throughout the euro crisis Mr Sarkozy has appeared alongside Ms Merkel at Franco-German summits to set policy for the entire euro zone. His reward was that the euro zone will have two summits a year and its own secretariat. Germany has seemed willing to fall in with the French preference for an intergovernmental “Europe des patries”.

Germany still needs France to get things done in Europe. If Paris and Berlin can agree on a policy then most of the other countries will rally round

Yet even if the other 25 countries in the EU are ready to go along with this, France faces a huge obstacle. To be an equal partner, it has to be a plausible match for German power. “Ideas can come from France only if it is economically strong,” says André Sapir, of the Bruegel think-tank. France's military force helps, but the economy lets it down. Moody's and Standard & Poor's have both warned that they might cut their rating of French government debt, alarming the government in Paris.

The economy's problems run deep. French industrial exports have fallen from 55% of Germany's in 2000 to around 40% now. Fewer than a third of France's industrial companies spend money on R&D, compared with almost half in Germany. And although France's government finances are fairly healthy compared with those of many other rich countries, the markets doubt the country's long-run capacity to pay its way.

Demography is on France's side: its population is growing, whereas Germany has one of the EU's lowest fertility rates. Yet the trajectory of government borrowing raises concerns, given that in 1980 France's debt was only 20% of GDP (see chart 4). The public sector's share of the economy is already greater than Sweden's, which limits the scope for tax increases. Mr Sarkozy's government reformed pensions last year, the first increase in working time in France since the second world war. However, the change put the minimum retirement age back by only two years, to 62, and it met with huge resistance. The Socialists are promising to reverse it if they win the presidential election next year.

Jean Pisani-Ferry, a director at the Bruegel think-tank, points out that the French are ambivalent. Although they are creditors, the media have covered the Greek crisis very differently from the German ones, emphasising the suffering of ordinary people. “The French see a magnified version of their own failings,” he says.

Explore our interactive guide to Europe's troubled economies

Germany still needs France to get things done in Europe. If Paris and Berlin can agree on a policy then most of the other countries will rally round. But in the recent summit talks over a euro rescue, France gave way to German demands—notably that the ECB should not lend to the rescue fund. The risk for France is of becoming a foil for Germany rather than a genuine partner.

In the 1990s France qualified for monetary union by clinging doggedly on to the strong franc, even as others devalued. Some of those who run France readily acknowledge that they need a similar act of will today. “Politicians have not told the French people the truth,” says Bruno Le Maire, the French agriculture minister. “We said there was no need to change. It's false…France has to accept the world as it is…We have to give Germany the idea that we can succeed with the market, not with a protected Europe.”