The German Chancellor Angela Merkel returns to Berlin with a bill her country must pay to the US. The check was handed over to her personally by the American President Donald Trump last Friday at the White House. In a very clear manner he estimated what Germany owes to NATO, and indirectly to the US.
As for the even more important issue, trade, he blatantly clarified that he sees it as a bilateral affair. In this way, Trump indirectly refused to acknowledge the role of the European Union as the exclusive and collective trade negotiator, acting for its 27+1 member states as a whole. He didn’t mention the EU by name not even once.
Open and free trade? No, just fairer
However, the full free trade fallout for Germany came at home, during last Friday’s G20 meeting in Baden-Baden, where a decades old tradition was broken in a 19 to 1 confrontation. The finance ministers and the central bankers of the 20 most important economies of the world, for the first time after many tens of years failed to vow their conviction to free and open trade. Wolfgang Schauble, the German minister of Finance and his 18 counterparts tried very hard, but failed to bend the resistance of Steven Mnuchin, the U.S. Treasury Secretary over this crucial topic.
The American minister before sitting for the conference had stated that he didn’t want to declare trade wars, but insisted that international trade had to become fairer. He didn’t explain in what way. This was a direct warning to China and Germany, the two countries which export more to the US. Schauble avoided retaliating by telling his US counterpart, that the German products are extremely competitive, and that’s why they easily penetrate the American markets. The German minister though, on many occasions, has not hesitated to throw such a upsetting comment, to the face of his European counterparts.
Coming back to Angela Merkel’s White House visit, she heard her host Donald Trump saying, “I am not isolationist but trade policies have to be fairer”. Obviously, Mnuchin had received the same very simple and clear instructions, when departing for Baden-Baden. The truth is that an attempt to implement these ‘simple and clear’ new policies is tantamount to a quasi-declaration of trade war. It also entails a complete reshuffling of the global economic scenery as we know it, after the fall of the communist Warsaw Pact.
Trump went even further and told Merkel that “Germany had done a much better job than the negotiators for the US and we have to even that out, not to win just want fairness”. Such plainness of language is characteristic of Trump. He speaks like writing a TV add scenario, to be understood at face value. With this statement, he has for one thing completely overlooked the role of the EU, in the trade negotiations between Europe and the US. By the same token indirectly he told his guest, that Germany is singlehanded running the EU. Secondly, he puts a terrifying question mark on the global trade system, as it functions under the rules of the World Trade Organization (WTO).
Mnuchin’s master voice
Mnuchin did exactly the same inflammatory remark, when he said in Baden- Baden that international trade has to be fairer. The US Secretary didn’t pause not even before using the phrase ‘trade wars’. Of course he added, he didn’t want to declare one. Nevertheless, the very use of the terrorizing phrase, even by denying he has the willingness to realize this dreadful threat, unlocked the possibility of it. Undeniably, the Americans know the meaning of what they say, and they say it directly so as their home audience understands it.
Some analysts allege that Trump himself and his administration attack the established internal and international order, having in mind primarily their home audience. The same line of thinking suggests that Trump in this way makes sure his followers hear what they want to hear, but in reality he doesn’t intend to realize the threats. They forget however that he has already killed the Trans-Pacific Partnership Agreement, having left key and close allies like Australia and Japan out in the cold. He has also questioned the North American Free Trade Association (NAFTA) with Canada and Mexico. Will he hesitate to do the same to Europe?
Ignoring the EU
In a way he answered that question last Friday, while delivering a joint Press conference with Merkel. He insisted on making references to the non existing possibility for a rearrangement of the bilateral US – German trade relations, sidestepping the reality that the EU-US trade affairs are a matter between Washington and Brussels. In this way, he brandishes the specter of the Germanic Europe and doesn’t recognize, God forbid, the role of the European Union. On the contrary Mike Pence, the US Vice-President, has visited the headquarters of the European Commission in Brussels and has pledged the American allegiance to the Union. If this is not a direct contradiction of strategies, then words have lost their meaning.
If one puts all that in the blender, one can arrive at the conclusion that Trump’s only worry is to continue appearing as implementing his electoral promises. Then he counts on reality, legal or otherwise, to straighten things up. This is exactly what he has being doing during the past weeks, with his infamous Travel Directives, which ban all the citizens of six (seven initially) mostly Muslim countries from entering the US.
Germany owes the US billions
When it comes to money though, he is much more specific. In a very clear manner he described the method he estimated what Germany owes to the US, through Berlin’s obligations to NATO. He said that all the NATO member states are obliged by the statutes of the Alliance to spend at least 2% of their GDP on defense. Germany’s defense spending has never reached this minimum limit. So the country has to now pay the residuals for all the years that NATO has been in existence that is since the early 1950s. In a characteristic monologue, Trump said, “Our NATO allies should pay their fair share for defense. Many nations owe vast amounts of money from past years and it is very unfair to the US and these nations should pay what they owe”.
In conclusion, Trump has opened two lists of duties for Germany to comply with. For one thing, the country has to cut down its exports to the US. Nobody knows though, how this can be done. Secondly, Berlin has to start paying the US what it owes to NATO. According to Trump, this is so because the US during all those tens of years had undertaken alone to cover the full costs of the Alliance, which effectively protected ‘scrounge’ Germany.
This said, one can easily conclude then, that Germany prospered just by being well protected by the US defense spending, against the threats of the old USSR, now Russia. So, Trump concluded that it’s time for the US to collect the owed ‘protection’ money. Everybody knows what the Mafia protection racket tradition of New York is, and Trump follows it comprehensively.