Obama and Merkel The Trans-Atlantic Frenemies

By and Gabor Steingart in Washington

Part 2: Merkel's Failures in the Financial Crisis

Foreign policy experts with all the major German parties in Berlin want little to do with Pakistan, currently the hottest front in the battle against terror. "It is a war that we must win," Obama says. Merkel's tenor is a bit different: Germany, "together with its partners, will continue to support efforts to bring stability and prosperity to Pakistan." Ruprecht Polenz, also a member of Merkel's conservative Christian Democrats and the head of the German parliament's foreign affairs committee, is similarly cautious. One shouldn't "overestimate the possibilities of a country like Germany," he says.

US President Barack Obama and German Chancellor Angela Merkel at a NATO meeting in April.

US President Barack Obama and German Chancellor Angela Merkel at a NATO meeting in April.

In America's view, Germany is opening up its pocketbooks in an attempt to buy its way out of the responsibilities it should be sharing with other Western countries. For example, the German government recently approved €50 million for a trust fund to help build and train the Afghan army. German "checkbook diplomacy" is currently experiencing a renaissance, says Dan Hamilton, director of the Trans-Atlantic Center at Johns Hopkins University in Washington.

Nor can Obama hope for much help from Merkel in closing the controversial Guantanamo prison camp. Although the chancellor herself has called for the closing of the camp, her party colleague Wolfgang Schäuble, Germany's interior minister, is so far refusing to accept Guantanamo prisoners in Germany.

In the US government's view, Germany isn't being asked to take on any terrorists, but rather Uighur prisoners, a Muslim minority from China. According to the US assessment, the men do not pose any danger and they should be released from the prison. The US believes the prisoners would be persecuted back in China and officials in Washington are instead trying to find new homes for them. Munich is already home to a 500-strong community of Uighurs, people who would be willing to reintegrate the men from Guantanamo back into society. Many senior members of the Social Democrats support accepting these prisoners in Germany, but the chancellor has kept mum.

In the eyes of the Americans, though, Merkel's worst failure was during the early days of the financial crisis. The chancellor, a trained physicist, didn't initially see the crisis coming -- she spoke of a purely American matter and refused to undertake any coordinated measure to fight it. In the end, a European economic stimulus package came together, despite her earlier rejection of it. "Merkel appears not to understand the basic principles of economic policy," says influential financial expert Adam Posen of the Peterson Institute for International Economics in Washington.

Washington has not forgotten how she thwarted the US Treasury's attempts to solve the crisis within the forum of the G-20. The Chancellery instead used diplomatic channels to push for a meeting of G-8 states.

The thinking in Berlin was that Germany would have had more influence over G-8 decisions. And that would have meant that China, the world's third largest economy and the US's biggest creditor, would not have been involved. However, the US regarded Germany's stance as unacceptable both economically and politically. In the end Berlin had to back down.

Ever since, the Germans have been shown time and again that things can be done without them. It was the Americans and the British who were behind the push to triple the International Monetary Fund's lending capacity to $750 billion. The Germans, who had originally specified a lower figure, were persuaded to fall in line.

The IMF's executive board, on which Germany has a seat, didn't even get to meet to discuss the issue. It simply had to implement the decision made at the London G-20 summit. For the first time in the IMF's history huge sums could be doled out without obligations attached. In recent weeks credit lines worth billions of dollars have been granted to Poles, Mexicans and Colombians. A leading IMF employees said: "We have almost no control over how this money is used."

The fact that Germany is being left out of the loop has registered with Merkel. But she is maintaining her silence. She doesn't dare enter into conflict with a US president who is so popular in Germany.

This was made abundantly clear when it came to the bid to save Opel, the German subsidiary of now insolvent US carmaker General Motors. Only a low-ranking US government official was sent to the crisis talks in Berlin. The German participants were not sure if the Americans even wanted to sell Opel at all. In the end the chancellor had to call up Obama herself. In an interview with SPIEGEL this week Merkel noted somewhat snippily that: "There is certainly room for improvement on the American side."

However, these mutual irritations cannot be allowed to develop into a crisis. Obama and Merkel might make digs at one another but an open disagreement would not be in either country's interest. "Paris is no replacement for Berlin in the long-term," says Szabo of the Transatlantic Academy. "The Americans will need the Germans again in their dealings with Russia. After the German elections a new era will begin."

And that new era could well be marked by a state visit by Obama to Berlin. According to diplomatic sources, Nov. 9, the anniversary of the fall of the Berlin Wall, is being suggested as a suitable date.

Then, at the very latest, the German chancellor should be able to expect a few friendly words from the US president. Up to now the only member of the White House with a good word to say for Merkel has been the Deputy National Security Advisor Denis McDonough, who said Obama had "a lot of respect" for her.

Otherwise the US president is not the one doing the flattering at the moment. He is letting others flatter him.


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