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America First, But Germany Second

Blog Marcel Fratzscher of March 17, 2017

If Trump wants a Europe that takes care of its own needs, he needs a strong partner in Berlin.

Donald Trump’s relationship with Angela Merkel has gotten off to a rocky start. Trump has, effectively, singled out Germany and its chancellor as his main nemesis in Europe. He has criticized her for her policy toward refugees, for an unfair trade policy, and for a lack of leadership in Europe. For its part, the German government, alongside many of its European peers, has criticized the Trump administration for what it sees as irresponsible populism, harmful protectionism, and for failing to step up to its global responsibilities.

The process of mending this seven-decade partnership should begin immediately, with a recognition that the two countries have more in common than Trump may realize. For starters, both of them, at least occasionally, feel exploited by their neighbors and the broader global order.

The U.S. and German governments have their conflicts, but, in fact, both find themselves facing the same leadership challenge. In an ever more unstable world, nations all over the globe have increasingly come to expect the United States to step in and solve their security, economic, and social challenges and conflicts. Similarly, European nations have come to expect Germany to step up and provide more leadership for the continent. Both the Trump administration and the Merkel government are fundamentally unhappy with these expectations and pressures. They feel that they alone cannot provide the leadership required to solve those challenges. And both even feel exploited by other nations trying to benefit without contributing their fair share.

America’s grievances come primarily from two arenas: security and trade. For decades, the United States has opted to spend billions of dollars each year on the so-called security umbrella, providing for the defense of countries from Europe to Asia. In doing so, it has ensured that these parts of the world have stayed, for the most part, relatively stable and up until recently did so with only occasional complaint. Today, however, the Trump administration regularly bemoans the failure of both European and Asian allies to pay their fair share for the cost of their defense. There’s some truth to these complaints: Even in Europe, in the Balkans in the 1990s, the United States had to intervene and provide security, as EU members were unable or unwilling to do so, while the unwillingness of most of the NATO alliance to spend their fair share on defense has become a regular source of frustration in Washington.

The United States had also, up until recently, been a free trade champion, touting the power of trade to enrich all parties and bind countries closer together. The Trump administration, however, has flipped the script, accusing other countries of both engaging in protectionist policies and signing a series of “bad deals” with the United States in order to gain an unfair advantage for their exports and their workers. Setting aside the question of how the United States has benefited from such deals, it is true that many countries have profited from America as the largest market in the world for their products. China and Germany, in particular, have the two largest bilateral trade surpluses with the United States.

But if the United States feels like its efforts at stabilization have recently been taken for granted, some in Germany feel similarly. Most of Germany’s resentment focuses on economics; it is by far the biggest net contributor to the EU budget and to the European Stability Mechanism, which provides loans to eurozone countries when they run into trouble. The country was the single biggest contributor to the rescue programs for Greece, Spain, Portugal, Ireland, and Cyprus during the eurozone crisis, contributing billions of dollars to low-interest loans. Without Germany’s economic and political stability, Europe, and the eurozone in particular, would have fared much worse during the crisis. Germany has implicitly and explicitly provided — or at the very least helped coordinate — guarantees of funds and thus stability for its neighbors.

There’s a reason that both the United States and Germany have spent big over the years on stabilization efforts, and it’s not because they are particularly altruistic nations. The two countries have been major beneficiaries of open markets and free trade. The United States enjoys the benefits of being able to finance its expenditures at record low costs due to the dollar’s role as the only truly global currency. Germany’s economic model based on strong exports has benefited from European integration and the single market; more than 60 percent of all German exports still go to Europe. The collapse of systematic banks or sovereign defaults in larger European countries would have major repercussions for the German economy, which, due to its openness, is highly dependent on its neighbors doing well. Germans thus benefit more than most Europeans from Europe’s common trade policy.

Nonetheless, there is a significant segment of the population in both countries that has begun to chafe at the burden of leadership — and it would behoove both Merkel and Trump to keep this in mind during their pivotal meeting on Friday. The central question for both the U.S. and German governments is how they can best deal with exploitation. Protectionism and a renationalization of politics and policymaking are the wrong way. Such policies will neither get other governments to step up and contribute more nor will they provide any advantages to the United States and to Germany. On the contrary, a political approach based on confrontation and polarization will hurt the two countries even more than it would others.

Merkel needs to convince President Trump that the partnership between Germany and the United States has been in both countries’ interest and that it would be foolish to destroy this relationship. She should, however, use her familiarity with free-riding lamentations to make the right kind of case to Trump.

Merkel should argue that it would be in Trump’s interest to strengthen European unity and the functioning of the European Union, not to weaken and undermine it. Only a successfully united and integrated Europe can feasibly step up and provide useful support to the United States, ranging from security to economic and financial stability. To put it another way, if the president’s goal is to solve the free-rider problem by diving Europe and trying to weaken Germany, his strategy will backfire. He needs a strong Germany that can provide leadership for Europe in order to have it contribute more. It is not a matter of a divided and distracted Europe not being willing to help the United States; it simply wouldn’t be able to.

On his end, Trump should keep in mind that while Germany is pivotal for providing such a strong and united Europe, there is popular resistance to it doing so, including among Germans. It’s true that Germany has by far the largest economy; is the most politically stable among Europe’s large countries; and is, in principle, ready to provide more leadership, including tentatively on issues of security. But leadership in Europe — a fractious continent with many different views and interests to satisfy — is not always a tempting prospect. It will prove all the more difficult to persuade the German population that leading Europe is both necessary and desirable if German efforts at European leadership are met with American accusations of arrogance and hegemony. Chancellor Merkel needs more support, not less, to solve Europe’s challenges and to take some of the burdens off the United States.

The best possible outcome of the meeting between Trump and Merkel this week will be that they agree on the need for cooperation and openness in their relationship, come away understanding that they face similar challenges, and agree that giving one another support is the best way to reach a mutually beneficial outcome. Europe and the United States will remain the most important economic and political partners in the world for years and decades to come; they can either do this the easy way — or the hard way.

The op-ed was first published on Foreign Policy on March 16, 2017.

Topics: Europe