German Chancellor Angela Merkel and French President Emmanuel Macron address one another as "lieber Emmanuel" and "chere Angela." They appear friendly — two leaders who trust one another. But they also don't mince words on issues they don't agree on. Both know that Europe won't move forward without close Franco-German coordination. And that's why Merkel and Macron are still seeking compromise when it comes to European Union economic and finance policy.

Eurozone reform

Macron wants to fortify the eurozone against unexpected financial crises, and is demanding a roadmap for step-by-step progress. Germany's new government, meanwhile, is pushing for a "new era for Europe" and has even declared a readiness to contribute more to the EU budget.

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Nevertheless, Berlin is largely skeptical of what Macron is selling. Opponents argue the French president's plans are not in Germany's interest as they force the German taxpayer to foot the bill for other countries. A "transfer union" is not compatible with Germany's constitution, they say, adding that it contradicts the voters' will as well as that of many northern states in the eurozone.

If they shared a budget, the eurozone states could counter economic crises and plan future investments, Macron says. It is still unclear who would fill the coffers.

Macron has also repeatedly mentioned creating the post of eurozone finance minister. "We are opposed to an EU finance minister," said Alexander Dobrindt, a senior politician of the conservative Christian Social Union (CSU), Bavarian sister party to Merkel's Christian Democrats (CDU), following Macron's speech in Strasbourg earlier this week. Before you can even start discussing a budget for the eurozone, he added, the EU summit in June must agree on a budget for the entire bloc — members will be paying more once the UK leaves.

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Macron is pushing for an expanded European banking union that includes a deposit insurance scheme to protect European small savers. Here, too, Germany is hesitant. Just last month, the country's new finance minister, center-left Social Democrat Olaf Scholz, praised Macron's plans. This month, he hinted that the insurance scheme isn't about to be realized in the near future. First, he said, European banks must reduce their risks and get rid of their bad loans — a position held previously by his conservative predecessor, Wolfgang Schäuble.

Is compromise possible?

While Macron can present a relatively unified front in France with regard to his EU proposals, Merkel must always bear in mind her government coalition partners and their positions — her own CDU and the generally more conservative CSU are the main critics in this case, arguing the reforms are not in "Germany's interest." They also fear strengthening the opposition — the far-right populist Alternative for Germany (AfD) and the neoliberal Free Democrats (FDP) are even more strongly opposed to a transfer union.

Germany can also point a finger at other northern European countries less than enthused about Macron's plans. The Netherlands and Finland, for example, refuse to take on more financial responsibility for southern EU nations, a region for which France is widely regarded as the advocate.

Merkel has stated an EU reform encompasses much more than reforming the eurozone. "By June, we will have found joint solutions with France," she said, adding the two countries will come up with a "strong package."

A closer relationship

Franco-German ties are close, but plans are to deepen them even further. The Elysee Treaty signed in 1963 by then-French President Charles de Gaulle and West German Chancellor Konrad Adenauer was a milestone in relations between the two countries — a sign of friendship between former arch enemies. The treaty called for regular consultations between France and West Germany as well as a youth exchange program that more than 8 million young people have enjoyed so far.

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A renewed Elysee Treaty 55 years later is currently being drawn up and could be ready for signing later this year. It foresees closer cooperation on border areas and in education. Put another way, a return to the interrelations between French and German citizens that de Gaulle and Adenauer helped to foster all those decades ago.