Germany takes cover from Trump in Eurozone and decides to pay for it

After the calamitous G7 Summit of Quebec, last week, the six world leaders stood by their joint Communiqué, although Donald Trump withdrew his support from it. Foto: Bundesregierung/Denzel

Nobody in Germany doubts it any more that Donald Trump’s America is not a friendly country and market any more, or a guarantor of European security, as was the case for the last 70 years after WWII. To ward off any confusion about that, the German ambassador to the US made a clear statement. Peter Wittig, speaking to the prestigious business news group ‘Handelsblatt Global’ said “The US government is saying goodbye to the post-war tradition of the West as a community of like-minded nations.” He also added that the world is changing dramatically after Trump was sworn in as President of the US.

Chancellor Angel Merkel has understood that since her first visit to the White House in March 2017. On 20 March 2017, the European Sting wrote in the first paragraph of its leading article, “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 (Trump) estimated what Germany owes to NATO, and indirectly to the US.”

An equally aggressive statement was aired then in their common Press conference about trade. The ‘America first’ President went even further and told Merkel that “Germany had done a much better job than the (trade) negotiators for the US and we have to even that out, not to win just want fairness”. Trump clearly meant the US is to further punish the imports of German products.

Targeting the automotive sector

For very good reasons then, Berlin expects soon an American move in the automotive sector, punishing the imports of cars and tracks. Such a hostile action can cut down Germany’s GDP by a noticeable fraction, given the importance of this sector in the economy. At the G7 Summit of Quebec, Canada, things became even more hostile. Trump tweeted his withdrawal from the leaders’ final communiqué he had just signed, while flying to Singapore for the historic meeting with the North Korean leader Kim Jong-un.

The reason for this new full U-turn in Trump’s attitude was, in the face of it, a negative comment by Canada’s Prime Minister Justin Pierre Trudeau. Trump said he reacted to a Trudeau comment about the recent US tariffs on imports of steel and aluminum. Apart from this though, the US President  clearly wanted to undermine both the very institution of the G7 and the gathering of the six western leaders.

Undermining global institutions

He characteristically delayed his arrival and also rushed to leave, after he threw some very negative comments about the world order to the six leaders regarding trade and international relations. His intentions were clearly to discredit the role of the G7, after having directly defamed the World Trade Organization.

Not to forget, the US under Trump doubts and even disgraces the role of the very United Nations. It’s as if Trump wants to tell the world, those international organizations do not anymore play a role. So, they do not bound the US in her international actions and reactions.

Germany got the message

For very good reasons then, Angela Merkel, after coming back from Canada, rushed to tell her compatriots that their country has to change the way it sees the world. She hurried to appear at a TV show on Sunday, just after touching down from the Canada flight. In an obvious negative mood about Germany’s relations with the US and the country’s position in the now unraveling Western alliance, she said “We won’t let ourselves be pushed around time and again. We will act.” She added “First, there is loyalty to our own nation, but secondly, there should be loyalty to the European Union.” What else could have stated she, after having heard Trump saying “might double down on import tariffs by hitting the sensitive auto industry”.

Under normal conditions, devotion to one’s country and for a German leader the loyalty to European Union do not need to be reminded. Merkel, however, stressed that together with airing a resounding decision to react to the American aggressiveness. For that though, she needs the European Union or more precisely France. In short, Germany recognizes there is no other place to take cover from the American bombs than in Eurozone. But Macron holds the key to this bunker.

Taking cover in the EU

This brings us to what Emmanuel Macron, the President of France did in the calamitous Quebec G7 Summit or what he had to say about it. For one thing, Macron had a long exclusive meeting with Trump, that no one else from the other five leaders had the opportunity to share (Germany’s Angela Merkel, Britain’s Theresa May, Canada’s Justin Trudeau, Japan’s Abe Shinzo and Italy’s Giuseppe Conte).

According to Reuters, “When the two leaders finally met late in the day, Macron was first to reach out to shake Trump’s hand and the last to let go, gripping it so tight his fingers left white marks – a reprise of the long, exaggerated handshake that marked the first meeting between the two leaders last year”. Macron doesn’t hide or rather, advertises his special relation with the Trump, along with France’s strong relationship with the US.

Macron’s conditions

It’s even more interesting to observe what Macron had to say about Trump after the G7. “I want to say sometimes we disagree, but we share I’d say common concerns and common values and we share the willingness to deliver results together.” Compare this statement with what Merkel had to tell her compatriots after returning from Canada. More or less she estimates that the West as a political alliance doesn’t exist anymore and doesn’t play the role it had after WWII. America is not an ally ready to protect Europe in the same manner as it would protect the American soil; not any more.

Merkel rightfully sees global disarray and Germany has to re-position herself, hopefully in the closest possible association with France; of course in the context of the Eurozone. Actually, there is no other secure ‘lebensraum’ for Berlin to direct its formidable export machine. Mind you, exports are the lifeline of Germany and the country needs lots of them in order to safeguard her well-being.

Berlin decides to pay

However, Macron loudly and decisively accused Germany of ‘fetishism of surpluses’. He pointed to Merkel that Germany’s trade surpluses are the deficits of others and he concluded this arrangement cannot continue. That’s why he has proposed deep reforms in the Eurozone and the EU. He demands the creation of a European Ministry of Finance with macro-economically important resources and a common euro area guarantee scheme of bank deposits.

Until last week, Berlin had been decisively opposing both options, fearing they lead to sharing the debts of the ‘lazy’ Southerners, including the French. Last week, though, Merkel broke this barricade and appeared ready to negotiate both Macron ideas. It seems the harder the US pusses Germany around, the more Berlin is ready to negotiate with Paris, about how much Germany must pay to keep Eurozone running and buy German.

In any case, this is going to be a long hot summer during which Germany has to find a way to recycle her surpluses. And this has to be done in a politically acceptable manner without and within the country, given the adverse conditions all over Europe and more specifically in Italy and elsewhere in the South.

 

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