The Trans-Atlantic Take: Obama Victory to Further Euro-Crisis Clash with Berlin

A Commentary by Tyson Barker

The first administration of US President Barack Obama was heavily critical of Europe's hesitant approach to confronting the euro crisis. Things aren't likely to change in the second term. But there is hope that the White House will pivot back to Europe for a possible trans-Atlantic free trade agreement.

Merkel and Obama speak at the G20 summit in Nov. 2011: Obama defeated Republican challenger Mitt Romney on Tuesday. Zoom
AFP

Merkel and Obama speak at the G20 summit in Nov. 2011: Obama defeated Republican challenger Mitt Romney on Tuesday.

President Barack Obama's re-election, albeit a victory much narrower than in 2008, bodes for political consistency, at least in the near future. Second administrations are often about consolidating policies made during first terms; they prove moderating counterpoints to initial, ideologically charged initiatives. This was true for Ronald Reagan, Bill Clinton and George W. Bush. Obama will be no different.

Consistency will also mark the polarized domestic political climate that Obama will face. The hostility that he has confronted since the Tea Party wave of the 2010 mid-term election will most likely continue unabated. The return of a Republican House of Representatives means that wins at home and abroad will most likely be incremental and based on executive orders, regulations and interpretations of existing legislation, rather than the product of bold, new legislative initiatives.

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The recurrent meta-theme of the 2012 Obama campaign has been "balance." In his debates with Governor Mitt Romney, the president spoke of a balanced approach to governance. This will be particularly true of his domestic economic policy, a blend of expenditure and revenue adjustment that he believes necessary for tackling America's fiscal crisis and anemic economic growth. But it will also apply to his international approach, particularly regarding Europe.

President Obama's theme of balance will continue to clash with Chancellor Angela Merkel on euro-zone crisis management. For the Democrats, Europe has pursued a tin-eared draconian policy of cutting deeply in the euro-zone South. The result has been economic pain and political unrest with little prospect of near-term growth. This critique holds that the current institutional set-up within the euro zone robs governments in Greece, Spain and Italy of the policy tools necessary to animate their economies, put vast swaths of unemployed workers back to work, and, consequently, reignite growth. This stance sees the euro-zone crisis as vindication for the Troubled Asset Relief Program (TARP), the 2009 American Reconstruction and Recovery Act and the subsequent banking stress tests, and deep bank oversight. The Obama team views Europe's chronic tumult as a demonstration that government-centered policy, particularly demand- and employment-driven action, is key to preventing a vicious cycle of deteriorating public balance sheets through smaller tax bases, lower economic productivity and increased capital flight.

What Europe Says about Obama's Re-Election

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The Democratic Party platform states that under Obama, the US will "continue to be in frequent contact with our European allies to discuss best practices and share valuable lessons from our own experience reversing our economic downturn, helping them chart the best way forward." Translation: The second Obama administration wants a seat at the table and will side more with an approach that includes employment and demand-driven policies, especially for the young and those in southern euro-zone countries. Germany might expect President Obama to spend some of his political capital in Europe -- heavily rooted in his stratospheric popularity on the Continent -- to make a more public case for deeper, more resolute integration and coordinated fiscal expansion.

Potential Free-Trade Agreement

As a counterpoint to Obama's euro-crisis policy, Berlin will welcome the president's renewed commitment to trans-Atlantic trade and his continued interest in climate change. These will be the carrots of Obama's second term. Long a chancellery priority, a major trans-Atlantic trade agreement was a centerpiece of Merkel's speeches at the World Economic Forum annual meeting in Davos in 2011 and at the Atlantik-Brücke meeting in July 2012. His trade team has been quietly working out the details for a trans-Atlantic free trade agreement and will be interested in pursuing this in earnest in 2013. The wildcard in this action is Congress. Although many Republicans would agree to the merits of a deal that would relax the barriers of commerce between the US and Europe, their desire to prevent Obama from accumulating political "wins" could keep them from authorizing the administration to conduct wide-ranging treaty negotiations.

The Obama team is also committed to pursuing policies to mitigate climate change in a resolute, albeit low-key fashion. This includes regulation and programs such as trade financing and established tax credits that have allowed for state-based industries such as wind-turbine factories in Iowa and smart-grid technology development Virginia.

Certain defense and security policy trends are also likely to continue under a second Obama term. NATO will remain an alliance, but its operations will be constituted more in terms of pragmatic partnerships based on the assets that member-states are able and willing to contribute. The pivot to Asia that began under George W. Bush will continue and perhaps accelerate, as it will become an indelible part of Obama's legacy: the first "Pacific" president. Intervention fatigue is strong in the United States after the protracted conflicts in Iraq and Afghanistan. War weariness transcends both parties despite rhetorical attempts to create distinctions in the campaign, and Obama will remain reticent to commit to overseas military operations. And he will continue the heightened use of drone strikes in Pakistan and Yemen as an anti-terrorism tool. With overwhelming support from the American electorate (62 percent approve), such strikes will likely remain a mainstay of US counterterrorism policy.

Obama will continue his cerebral approach to Europe, drained of the sentimentality that has often been a hallmark of the relationship. But his engagement with the Continent will increase. By necessity, Germany will be his partner of first instance. It is unclear whether it would be his partner of choice.

Tyson Barker is director of trans-Atlantic relations at the Washington, DC-based Bertelsmann Foundation.

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