13th annual Municipal Finance Conference


13th annual Municipal Finance Conference


Sharper strategic thinking will help Germany mend fences with US

German Chancellor Angela Merkel and U.S. Secretary of State Antony Blinken hold a joint news conference at the Chancellery in Berlin, Germany June 23, 2021. Clemens Bilan/Pool via REUTERS
Editor's note:

After the hostility of the Trump administration, President Biden treats Germany as a peer nation, but whether Germany is able to live up to that billing remains to be seen, writes Constanze Stelzenmüller. This post originally appeared in the Financial Times.

It is a measure of the respect Chancellor Angela Merkel of Germany enjoys in this White House that she is the first European head of government to visit U.S. President Joe Biden this week. Merkel, the Western world’s longest-serving leader, is stepping down after the German elections in September, following 16 years in office.

Donald Trump, Biden’s predecessor, nursed an epic grudge against Merkel and Germany. Richard Grenell, his ambassador to Berlin, publicly courted her conservative foes. Merkel outlasted them both. Her trip to Washington is at once valedictory and a victory lap.

The Biden administration has been at pains to heal the rift. U.S. troop levels in Germany have been increased. Secretary of State Antony Blinken has said: “The U.S. has no better friend than Germany.” Overruling bipartisan opposition in Congress, the White House has even waived sanctions on the contentious Nord Stream 2 gas pipeline.

Nord Stream 2 bypasses the key gas route through Ukraine to connect Russia and Germany directly. Critics worry that it may undermine Ukraine’s security and open other central and eastern European countries to Kremlin bullying. Blinken pointedly told Der Spiegel magazine that “waivers can be rescinded.” The next congressionally mandated report on sanctions against the pipeline is due in mid-August.

Republican Senator Ted Cruz — a Trump loyalist and 2024 presidential hopeful — has expressed his disgust at the waiver by putting a blanket hold on Senate confirmation hearings for all pending political nominees. This includes key Europe policy and ambassador positions. They need to be filled for the transatlantic agenda sketched out at Biden’s June summit meetings in Europe to be turned into action.

Diplomatic negotiations will presumably produce a last-minute deal: a German promise to compensate Ukraine for lost gas transit fees, for example, or to fund its energy transition. If so, it will be past time.

True, the U.S. also buys fossil fuels from Russia. But Nord Stream 2 is economically unnecessary and has been politically toxic for Germany’s relations with its eastern neighbors, never mind the U.S. Congress. It distracts from the larger strategic issues that the U.S. and Europe must urgently tackle together.

In a military conflict, what Europe adds to U.S. might is respectable, but not essential: forward bases, specialized capabilities and the legitimacy provided by democratic allies. But in the long, hybrid struggle that looms with a China seeking to reshape the global order and a Russia ever alert for opportunities to assert itself, Europe’s commercial, technological and regulatory strengths are indispensable to the U.S. And Germany is Europe’s economic and political center of gravity, a fact not lost on the Biden administration — or on Russia and China.

The heads of Germany’s domestic and external intelligence services have warned of Russian and Chinese meddling “at levels not seen since the Cold War.” President Vladimir Putin of Russia published a manifesto in a German weekly in which he argued that Germany should decouple from the Western alliance. A fulsome column in the Chinese Communist Party’s Global Times praised Germany for its “attempt to get rid of U.S. interference.” Ransomware cyber attacks, often originating in Russia, are at an all-time high.

Whether all this is understood in Germany is less clear. Russia and China experts in German security ministries are certainly alarmed. So are a growing number of legislators. Merkel’s continued support for Nord Stream 2 is increasingly seen as a liability. Her attempt to restart EU-Russia summits was rebuffed, and the European Parliament refuses to ratify an EU-China investment agreement she negotiated.

Of Merkel’s three would-be successors, only the Greens’ Annalena Baerbock appears to have fully grasped what the downturn in Europe’s geopolitical climate requires of Germany. Yet her lack of experience has reduced her chances of winning.

The two others — the Christian Democrat Armin Laschet and the Social Democrat Olaf Scholz — have suggested that the pipeline could be turned off if Putin bullies Ukraine. But both are far more focused on fighting straw men of their own invention, such as the notion that the U.S. is trying to force Europe to “decouple” from China. In reality, it is China that is decoupling from the West.

Trump’s raging hostility forced Germany to examine the unhealthy aspects of its dependency on America. Biden, in contrast, treats Germany as a peer nation. It almost seems as though that is too much for Germans to handle.