Merz Wants a “Plaza Accord” for China. What He Revealed Is an Organizational Disease Many Big Companies Share
On June 19, after the EU summit in Brussels, German Chancellor Merz gave a speech proposing that the EU copy the 1985 Plaza Accord to deal with China. He claimed the renminbi is undervalued by 30% and called on the EU to take a hard line.
The idea didn’t come from nowhere. In January, a U.S. Treasury report had already labeled the renminbi “substantially undervalued” and pressed for it to appreciate. In March, the U.S. Treasury Secretary publicly called China’s currency “a problem for the Europeans.” By June, Merz simply picked up the thread at the summit.
The Plaza Accord is a heavyweight precedent. In 1985, to push down the yen, the U.S. summoned the finance ministers of Japan, Germany, Britain, and France to the Plaza Hotel in New York. Five countries sat down, talked, and signed. The yen soared afterward, and many people mark that moment as the start of Japan’s “lost three decades.”
Merz wants to put that same blade to China’s throat. But the plan exposes something far more interesting than “getting tough on China”: the organization proposing it has no ability to turn the plan into reality.
The Blade Can’t Be Swung
Start with the simplest comparison.
The 1985 Plaza Accord took five sovereign finance ministers sitting down at one table. What would it take for the EU to build a China version today? All 27 member states in unanimous agreement, plus a coordinated position with the United States. And the new trade tools, by Merz’s own account, won’t be ready until the EU summit in October.
The French themselves admit it’s hard to pull off. In February, a strategy body reporting directly to the French prime minister floated a similar plan, but the author of the report put it plainly: manipulating the euro down or forcing the renminbi up is even harder than imposing tariffs. French television noted at the time that the measure would be very hard to implement, because Europe would have to coordinate between Washington and Beijing.
So this is a blade that can’t be swung.
And even if it could, who would it cut? That’s a separate question. The China of 2026 is not the Japan of 1985. A clear-headed organization, before reaching for a strategic weapon, works out both sides of the ledger. If the renminbi really did appreciate sharply, would that genuinely suppress China’s exports, or would it hand the renminbi a historic boost in its standing on global capital markets? I’m not sure the people proposing this have done that math. And the fact that the outside world can’t be sure whether they’ve done it at all is telling in itself.
No One Can Say Who the Blade Speaks For
More damaging than whether the blade can be swung is another question: who does it actually speak for?
Merz’s proposal at the summit leaves enormous room for interpretation.
It could be Germany protecting itself. Among EU members, Germany’s manufacturing is the most exposed to Chinese competition. One report puts 70% of the EU’s competition-exposed manufacturing output inside Germany. Leaning on China brings Germany real, tangible gains.
It could be simple deference to the United States. Washington says something, and Brussels repeats it.
Or it could be nothing more than Merz blowing off steam at a summit, with no idea whether it lands.
The problem is that the receiving end can’t tell these possibilities apart. When you deal with the United States, the words of the president or the Treasury Secretary in public carry the weight of the state. But what does this line from Merz represent? Germany? The EU? Washington? No one can say, because the EU’s structure and decision-making offer no way to bring down the gavel, no way to pin the words into one firm, definite position.
If the receiving end can neither see who a signal speaks for nor tell whether it was thought through, then the signal carries no weight at the table. And once an organization’s signals lose their weight, what it loses is more than the ability to act. It loses the standing to be taken seriously as an opponent at all.
“Collective Action” That Tears Itself Apart
Go one layer deeper, and the blade carries an even larger problem buried inside it: the EU could never build a consensus around it, because inside the EU it creates clear winners and losers rather than a shared interest.
Forcing the renminbi up is powerful protection for German manufacturing. But what about the smaller states, the ones with little manufacturing that live off tourism and agricultural exports?
These countries aren’t competitors with China. They trade with it to mutual benefit. But a renminbi 30% higher means their cost of buying Chinese goods goes up. And the surge in Chinese tourists’ overseas spending power may be held back by Schengen visa rules before it ever shows up in these countries’ revenues (the EU and Schengen aren’t the same thing, but they overlap heavily). A double-edged blade becomes a one-sided economic loss, and these countries come out behind.
Given the EU’s particular voting mechanism, how high would you really put the odds of a 2026 Plaza Accord passing?
This is where the EU’s deepest flaw as an organization shows. It struggles even to coordinate something as basic as collective action against an external rival, because the action itself splits it into a clearly benefiting side and an unmistakably losing one. The reason the EU’s signals carry so little weight traces back to exactly this: on many issues there is no single EU at all, only 27 separate abacuses, each clicking its own beads.
Maybe the Strength Is Fine. The Institutional Flaw Can’t Be Ignored
I have no interest in judging whether Europe still has real strength. Whether Europe is in decline is a debate that can run for a very long time, and it isn’t the point of this piece. As an organization design consultant, what I see is an institution severely constraining this organization’s ability to convert its strength into action.
Europe may well hold cards. But its institutions keep it from playing the cards in its hand. Decisions require unanimity, so any one country can lock the whole. There is no single, sole center of voice to the outside world, so the signals it sends can’t be taken seriously. Collective action touches divided internal interests, so coming apart is all but certain.
The proposal to run a Plaza Accord on China is less a card Europe is playing against China than a concentrated exposure of this organization’s dysfunction. It puts “can’t decide together, can’t send a serious signal, can’t act as one” on display, all three at once, fast and dense.
Your Company May Have the Same Flaw
This EU structure has a far more respectable name in corporate management: the consensus organization. And right now, it is being installed across countless companies as a piece of advanced management practice.
In a consensus-run professional services firm, every equity partner holds a real veto over major matters. In a strong-division, weak-headquarters group, headquarters nominally coordinates everything and in practice can’t move a single baron’s troops. In matrix reporting, every matter has two or three people with the power to say “no” and not one with the power to say “this is how it’s done, decided.” These arrangements each have their own origins and their own logic. They share one structural trait: the veto is dispersed, and the final call hangs in the air.
When the wind is at your back, you see no flaw in any of it. Every unit feels its interests are backstopped by a vote. Morale is high, talent stays, the organization looks flexible and dignified. In a growth era, this kind of organization often outruns rivals where headquarters rules alone. Business schools champion it, consulting firms install it, flagship companies show it off. It spreads not because people are foolish, but because in those years it genuinely works.
Its cost shows up only when the wind turns against you.
In the face of intensifying industry shakeouts, technological turnover, and price wars to the floor, the decisions an organization needs all share one trait: fast, and painful. Cut a business line, abandon a market, throw resources behind a single direction. A painful decision means someone is bound to lose, and in a consensus structure the losing side can always cast a veto. So every unit makes the choice that looks best for itself in the short run, protecting its own, blocking the collective action that runs against it. No one does wrong, no one acts in bad faith, everyone goes by the rules. And then the organization seizes up.
What makes it even more like Europe: changing the decision-making mechanism itself has to pass through that same mechanism. The loop closes completely. Reform proposals come up year after year, but changing the rules requires consensus, and the entrenched holders of the veto hold the very vote that decides whether reform lives or dies. For an organization like this, dysfunction is the symptom, and being unable to reform is the fate.
The Wind Is Turning
Europe’s predicament isn’t about whether it has strength. It’s that its institutions can only serve one particular wind.
With the wind behind you, growth covers everyone’s appetite, the pie keeps getting bigger, and no one has to be made worse off. Consensus rule even looks elegant in fair weather. It turns the division of power into a culture and dignity into an institution.
But the wind turns. When growth stalls, when outside pressure forces you to decide fast, decide as one, and decide with pain, the very system built for a tailwind becomes the thing that holds you back.
There is no simple good or bad in organizational structure. It has to fit the climate. Consensus structures look elegant in a tailwind; centralized structures come into their own in a headwind. The real risk for an organization is never that the original design was wrong. It’s that the wind changed and the design didn’t.
Turn and look at your own organization. Of the arrangements that look the most civilized, the most advanced, the ones written up most often as best practice, how many quietly assume the environment will never turn for the worse?
The blade Europe can’t swing, the books inside the EU that will never balance, may be closer to you than you think.
The wind is turning.