Wednesday, June 08, 2011

German-American relations and Chancellor Merkel's visit to Washington

President Obama had German Chancellor Angela Merkel as a visitor in Washington this week. And they got along well so far as we saw in public, even though Washington is unhappy that Berlin hasn't been more supportive on the Libya War. (Jeff Mason and Steve Holland, Obama presses Europe, pledges help for Greek crisis Reuters 06/07/2011; Germany’s Angela Merkel and President Obama on friendly terms during state visit Washington Post 06/07/2011; Roland Nelles, Angela Merkel bei Barack Obama: Die Chemie stimmt - ein bisschen Der Spiegel Online 07/06/2011) The Washington Post story cited there is a good example of how sad much of US foreign affairs reporting has become. The fifth and sixth paragraphs of that story read:

Why the big show of friendliness?

In other words, how’d the chancellor and the president become Angela and Barack?
I was surprised to see that Obama pledged US help for bailing out Greece. The Reuters story says, "Obama, whose political prospects have suffered from persistently high unemployment and ballooning U.S. debt, has pinpointed the euro zone crisis as one foreign "headwind" hitting the U.S. economy." In general, I think the US gives way too little foreign aid. What aid we do give is far too heavily weighted toward military aid. And a huge percentage of our aid goes to just two countries, Israel and Egypt. But Germany and France certainly have the resources to bail out Greece. And the private entities most likely to be compromised by a Greek default on its sovereign debt are German banks.

Obama endorsed the current German and French play-acting that Greece, Portugal and Ireland are going to all be able to meet their debt obligations without their debtors taking a "haircut," i.e., a writeoff of part of the debt, especially from Greece:

"I'm confident that Germany's leadership, along with other key actors in Europe, will help us arrive at a path for Greece to return to growth, for this debt to become more manageable," Obama said.

"But it's going to require some patience and some time. And we have pledged to cooperate fully in working through these issues, both on a bilateral basis but also through international and financial institutions like the IMF."
Although he hedged the public message a bit:

But his main message was aimed at EU countries -- and, by default, wealthy Germany -- to step up to help Athens.

"Other countries in the euro zone are going to have to provide them a backstop and support," he said. "And frankly, people who are holding Greek debt are going to have to make some decisions, working with the European countries in the euro zone, about how that debt is managed."
Merkel, for her part, play-acted that Germany was living up to its leadership obligations as a leading country in the EU:

"We've seen that the stability of the euro as a whole will also be influenced if one country is in trouble," she said. "So we do see clearly our European responsibility and we're shouldering that responsibility, together with the IMF."
Since it doesn't make obvious sense to me from the standpoint of immediate American interests, I assume it's some kind of payoff for Germany to do something else the Obama Administration wants them to do.

Or maybe it's the price of a political alibi for his failed gamble on the economy picking up if we just bailed Wall Street out of its immediate crisis in 2009: "With U.S. unemployment at 9.1 percent, Obama has blamed outside forces for impeding the economy, including high fuel prices, the earthquake in Japan and the euro zone crisis."

Greece's reckless borrowing and the bond speculation targeting it, Ireland, Portugal and Spain are causing high US unemployment? That's quite a stretch. And as a political slogan, a very long way from "Morning in America."

Reymer Klüver in Mehr deutsches Engagement, bitte! Süddeutsche Zeitung 08.06.2011 suggest that Obama was bargaining for more German troops in what the US considers international crisis zones and more financial aid to emerging Arab democracies. Obama has talked about the latter before, although it's not clear to me why the EU would be doing that when they aren't willing yet to do what needs to be done for the weaker EU countries under pressure from the bond speculators. Maybe this whole notion of the US giving money to Greece (for the benefit of German banks) and Germany giving more money to Arab countries is somehow more politically palatable for somebody?

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