Second Workshop on German-American Relations

On March 11, 2005 the West European Studies program of the Woodrow Wilson Center, in conjunction with Atlantik-Brücke of Berlin, the oldest German organization devoted to cultivating positive relations with the United States, hosted a workshop on German-American Relations.

The workshop, held at the Woodrow Wilson Center in Washington, DC, brought together a delegation of Germans, including members of the Bundestag, business leaders, government officials, and journalists to meet with a comparable group of Americans. American and German experts and policymakers led three sessions focusing on domestic politics in the two countries, foreign policy issues in the Middle East and the Gulf region, issues of German-American concern relating to trade, developmental assistance, and the environment, and an assessment of the future prospects for improved German-American relations.

Session 1: Foreign Policy – Middle East – Iraq – Iran

The conference's first American presenter, a Middle East expert, spoke on Israel-Palestine, Lebanon, and U.S. relations with Saudi Arabia. He acknowledged positive developments marked by European-American cooperation, but warned of looming potential disagreements as these processes unfolded.

The speaker saw much potential for transatlantic disagreements over Israel and Palestine, even as developments, such as the democratic election of Palestinian leader Mahmoud Abbas, Prime Minister Ariel Sharon's firm pledge to disengage from Gaza, and the Bush administration's new serious commitment to engaging in the peace process, are apparently cause for "cautious optimism." However, the expert warned, appearances can be deceiving. He predicted that the appearance of progress will continue to exist for the next seven months. But afterwards, structural problems will reappear, as President Mahmoud Abbas, becoming the legitimate Palestinian interlocutor without whom Sharon claimed he would not negotiate, will push for a permanent status agreement, which Sharon will try to avoid.

The Europeans and Palestinians believe the peace process will be based on the offers left on the table during the last negotiations under the Clinton administration: namely starting negotiations with pre-1967 borders, an undivided and shared Jerusalem as capital of both lands, and right-of-return for Palestinian refugees. Many in Europe assume that these are terms found in the Road Map, an assumption the presenter characterized as "seriously misplaced." Instead, Sharon, supported by Bush, has made it clear that he will never consent to the division of Jerusalem, and certainly would not accept pre-1967 borders. And although the Palestinian state must be contiguous to be viable, he will offer 80-85% of the West Bank, with no connection to East Jerusalem, leading to the reemergence of an impasse, followed by American-European tensions.

Cooperation between Europe and the United States on Lebanon and Syria seems to be at an upturn. This collaboration, which the expert called the result of a "diplomatic perfect storm," with Bush administration neocons working in concert with a motivated France to achieve UN Security Council Resolution 1559, is threatened by the step that follows after Syria leaves Lebanon. Europe and the United States disagree over the role of Hezbollah, seen by Washington as a terror group more capable than and with a past nearly as bloody as al-Qaeda, and by Europe, and especially France, as a powerful political operator in Lebanon, providing needed social services and holding more seats in parliament than any other party. The speaker contended that if the international community is determined to push Syria out of Lebanon, there must be a serious plan for dealing with Hezbollah. He suggested creating a Lebanese government that would include Hezbollah, a course of action he admitted the Bush administration was not willing to pursue at this time, but which would make Hezbollah choose between being a Lebanese party or international terror group.

He traced the deterioration of Syrian-U.S. relations to the failed Clinton-Assad summit of early 2000. Although Syria's sponsorship of terror in Israel has only worsened that relationship, he criticized the American position on Syria, complaining that its talks with Assad's government are "diplomatically dysfunctional"—filled with one-sided demands and lacking incentives and options for Assad, such as the possibility of removing that nation from the State Department's list of state sponsors of terror.

Regarding Washington's relationship with Saudi Arabia, here the potential for transatlantic disagreement concerns the Organization of Petroleum Exporting Countries' probable move to accept euros as a currency of payment for the oil trade, putting more pressure on the dollar and causing further EU-U.S. friction on issues of currency and the U.S. current account deficits. The decision most likely will hinge upon Saudi Arabia's drifting relationship with the United States, as the oil kingdom already draws down its American assets.

A German international relations specialist acknowledged recent trends suggesting George Bush might have been right in his bold assertions that the Middle East was ripe for democracy, which now had the Europeans debating whether to "cheer, jeer, join in, or try and spoil his success." However, the second presenter surmised that it is still too soon for events to have proved Bush right or wrong. In a recent speech at the National Defense University, Bush himself laid out the markers of success, including the elimination of terrorist threats, full participation of women in government, the freezing of Israeli settlement activity and creation of a contiguous, democratic Palestine, a Syria-free Lebanon, and free and fair presidential elections in Egypt. Obviously, pointed out this speaker, there is still a "long way to go." He also warned the U.S. president to be careful what he wishes for, as it may come true, agreeing with the first presenter that democracy in the Middle East could bring along with it increased unrest, a rise in anti-Americanism, and fundamentalist governments.

For this expert, the problems of the region run deep. The tensions caused by inherent poverty and joblessness are exacerbated by the humiliation felt from constant outside interference and the consequences of globalization, among them a new satellite TV-driven awareness of how far they lag behind the rest of the world. He presented no clear solution to these problems, but instead laid out various courses of action to perhaps be combined into a grand approach, including more meddling from the outside, setting hopes on gradual internal reforms, disengaging from the region by ending a reliance on Mideast oil—all part of a grand strategy requiring cooperation, or at least a division of labor, by the United States and its allies. But here also existed an essential divergence in American and European Middle East policy: traditionally, Europeans want stability in their backyard, while the current U.S. president finds the "status quo of despotism and anger" unacceptable.

During the discussion period, the German speaker on the Middle East pointed out that the American threats to Iran and Syria are somewhat limited, because the forceful "stick" it wields is stuck in Iraq. Even Bush has admitted that another invasion is unlikely. A German participant noted that the goals of Europe and the United States remain the same, but they differ only in methods. Concerning these methods, the German expert replied that the current division of labor, with the United States wielding "hard power" and the Europeans employing "soft power" is unsustainable, as Europe must develop its own means to protect its vital interests. The United States, he pointed out, has always considered itself the ultimate "soft power."

Concerning the mutual goals, the American presenter reminded the audience that the United States and Europe still differ over the role of Hezbollah in a Syria-free Lebanon. One American at the conference clarified these common goals as establishing Middle East societies, which need not be perfect democracies, but which have responsive governments, plentiful economic opportunities, and do not produce people that "want to kill us."

The German participants were quick to point out that progress in the Middle East requires a partnership with the people of the region, not just between Europe and the United States; and also raised the issue of the region's suspicion of democracy, given hypocrisy surrounding the West's complicity with the overthrowing of a democratically elected Islamist government in Algeria, the blind eye turned to the exclusion of women, the American push for restriction of media such as al-Jazeera, and the tolerance of a nuclear Israel.

The need to consider as a factor in Mideast policy the new aggressive and energy-hungry China was also raised, as the presenters and the audience mused about a possible Chinese veto in the Security Council against imposing sanctions on an oil-producing state, such as Iran.

Iran

An expert on Iran characterized it as a nation, while in transition and having a complex political system full of institutional rivalries, as overall currently stable, socially, politically, and economically. This dispelled the picture some seek to paint of an outdated theocracy on the verge of economic collapse and reformist revolution. Indeed, his Iran would most likely weather the effects of sanctions and other threats the West is making to discourage the leaders from seeking nuclear weapons. The expert warned that conservative powers were consolidating their control over security institutions, and that there existed a "fairly stable" economic situation, stemming from a strong oil market and the influx of cash into the country. The problems that do exist are mostly structural, and include under-taxation and state intrusion, large subsidies and mismanagement, hence no short to medium-term crisis.

The reformers' power lay in the executive branch, whose influence is being constricted by the conservatives. The expert also noted strong public disenchantment after the failure of the reform movement to meet the expectations that brought it into power. Although the reform movement is weakened, it is not yet fully dead, as the society remains politicized and the hopes among many for reform have not diminished. All in all, unmanageable political instability is plausible, but not for at least the next five years.

U.S. foreign policy in the past four years has had the effect of strengthening Iran's strategic position since it eliminated two of the nation's greatest historical enemies: Iraq's Saddam Hussein and the Taliban in Afghanistan. However, it created a new security threat, as 150,000 American troops are now Iran's new neighbors. The presenter contended that Iran has seized the new opportunities created to refashion itself from an "anti-status quo" power into a more pragmatic "accommodationist" power, with strategic ambitions to become a major regional player.

At the center of this lies Iran's nuclear program, concerning which there exist domestically three very broad camps: (1) the minority, which includes people from across the political spectrum but mainly conservatives forces, who are for a full-fledged nuclear weapons program, (2) the largest faction, pragmatists also from different factions who seek the status and pride that comes with a fully transparent program with nuclear fuel cycle capability (and the deterrence capability that comes with it) that puts Iran at the threshold of creating a bomb, but still one or two steps away, and (3) a minority that does not want a nuclear program, but is pushed either to express ambivalence or remain silent by harsh Bush administration rhetoric. The expert argued that U.S. rhetoric concerning the nuclear program has played into the hands of the hardliners, placing the issue in the center of not only U.S.-Iranian relations but also internal political dynamics. The stance on nuclear capability has become a measure of legitimization for even the reform-minded, making it difficult for any Iranian leader to make any concessions.

Europe has focused more attention on Iran as it seeks to extend its influence in this region, hence the measured successes of the EU3 negotiations, conducted by France, Germany, and the United Kingdom. However, the presenter predicted that the current European-American approach of "good cop-bad cop" will fail, as the Iranians are unlikely to give up the fuel cycle capability. Also, considering America's current force commitment to Iraq and Afghanistan, among other hot spots, precludes a military operation, four options remain: (1) not likely to work, the United States joins with the European Union nations in offering carrots, (2) Security Council sanctions, (3) full blown political engagement, requiring a paradigm shift by the United States which might just interest the Iranians, and (4) a middle of the road option, supported by the French, which accepts some fuel cycle capability and perhaps European help, but with guarantees and heavy supervision by the International Atomic Energy Agency and the Europeans. But the United States is also unlikely to sign on to this final option.

The current American strategy plans on the failure of Iranian-EU talks, which now have the belated and superficial support of the United States, at the hands of the Iranians, which will then lead to a Security Council resolution, perhaps in late summer or Fall 2005. The Iranians view the U.S. support for the EU talks as more a feature of U.S. transatlantic alliance management rather than genuine shift in policy to narrowly engage Iranians, especially as Bush administration hawks continue to threaten sanctions and military strikes.

During the discussion, an American participant disagreed with the characterization of Iran as an emerging accommodationist power, instead reminding the presenter that Bush and the U.S. Congress cannot ignore Iranian support for terrorist groups, its continued call for the eradication of Israel, and its insistence on possessing nuclear weapons. However, he also considered the "middle of the road" option not entirely "far-fetched." The Iranian expert retorted that Iran's foreign policy is notably less ideologically driven than before, it no longer engages in terrorist activity itself, and it is not unlikely that it would accept a peace deal between Palestine and Israel.

One German participant suggested that Europe play the "bad cop" in this instance, with the United States taking a reverse role. Unfortunately, argued the presenter on Iran, U.S. "soft power" lost credibility in the Middle East with the invasion of Iraq, and the current carrots of Boeing spare parts and membership in the World Trade Organization are not enticing enough to influence Iran. He concluded by warning against UN sanctions, which he argued would not bring Iran to its knees and would probably cause it to mobilize its resources to speed up the program, or at the extreme, pull out of the Nonproliferation Treaty. The commitment to the negotiations is serious as Iranians will do everything to remain within the legal boundaries of NPT and seek the entitlement provisions of the NPT.

Session 2: Political Prospects in Two Countries

This session's American presenter complained of a stagnated American political scene with entrenched, "homogeneous and distinctly ideological" parties that are engaged in a "fractious" cultural debate. In his many years living in the city, he claimed never to have "seen a more difficult time in Washington" than now. These tensions are only exacerbated by a population evenly divided politically (45.4% Republican vs. 45.1% Democratic). Every election, thus, seems as though it could tip the balance of power, flushing the ruling party out and the minority party back into the majority, producing a relationship the presenter noted in today's Congress resembled that of a warden and an inmate in a "very harsh prison." Therefore, it has become difficult to ignore party politics and looming elections and merely legislate on issues. The speaker saw no signs that either party would gain a breakthrough majority that would change this divided arena, noting that both parties can make a case for ascendancy due to demographic and structural changes, and Congressional districts are becoming homogenous echo chambers with fewer and fewer competitive races.

The presenter also made predictions for Bush's second presidential term, historically characterized by hubris, a loss of energy, lack of new initiatives, and scandal. Bush, the American surmised, was so far lacking neither in confidence, energy, nor new initiatives, especially in the domestic arena, as foreign affairs taxed his time and attention in the first term. However, divisions will arise in his own party, as he must placate his conservative base, deal with a Republican Congress for whom this lame duck president personally now has no reelection effort for them to hitch theirs to as they eye the 2006 midterms, and keep the attention of a Republican Party already seeking out the next presidential candidate for the 2008 campaign.

Concerning Europe, bitter feelings still remain in Congress from before the Iraq war. The American presenter had hoped Europe would have more fully embraced Bush's recent speech there to help diffuse antagonism in the United States. However, the European cooperation concerning Syria is well-received in Congress.

This session's German speaker spoke on a range of issues concerning domestic politics, the transatlantic relationship, and the institutions that help define it as well as the outside influences that are redefining it. He heralded the importance of the transatlantic community, whose members, consisting of fifteen percent of the world's population, command fifty percent of the globe's GDP and seventy percent of its trade. This proportion of population, he warned, would shrink as Europe and the United States aged and stagnated, while the world forty years hence would contain nine billion souls. Long-term politics, he argued, cannot ignore these developments. The web of connections across the north Atlantic, already the world's densest, must become stronger.

He addressed whether the North Atlantic Treaty Organization would remain the closest Western security link, noting that the European Union does not include Atlantic players such as the United States and Canada, or Norway and Turkey, and that NATO omits some EU nations. Although there remains an important place in NATO for Europe, it will be held by nation states, and not the European Union. And the European Union certainly cannot replace NATO, as its own draft constitution preserves defense as a matter of its sovereign member states, facilitated by intergovernmental cooperation.

The German presenter criticized the public debate about lifting the EU arms embargo against China as one example of an unstructured debate among member states of NATO and – with regard to Germany – as an example of an unfocused, non-strategic but opportunistic approach in dealing with vital interests. German efforts to lift the arms embargo are alienating the U.S. Senate, needed to ratify any change in the UN Charter granting Germany its seat. He condemned the move on the embargo, noting that 80% of Bundestag members, including a majority of the SPD members, would vote against it were it to come up in that parliament. However, he cautioned that too loud an American voice on the issue might provoke a reversal in German public opinion. Echoing earlier concerns, he also pointed to the growing economic influence of China, especially in the Middle East, and called for engagement of Chinese leadership in the efforts to help stabilize the global oil supply, especially in regions from which that nation has a new and profound economic interest.

During the discussion, the American speaker agreed with one fellow countryman about the current and future fiscal crises, warning that if the plan to overhaul Social Security with private accounts did succeed, it would spark a "dramatic reaction abroad." These crises would affect the vulnerable budgets of public diplomacy and development programs if Congress decides to seriously cut spending (defense would remain unaffected). However, he noted, European problems are worse, and as they "struggle to save the welfare state," no money will be available to build up European defense, widening the defense capabilities gap between the United States and the rest of the world, and thus exacerbating transatlantic tensions as the responsibility for handling crises falls more and more on American shoulders. The German presenter clarified the slow efforts at reform in his country, noting that the true problem lay within the structure of its high, complicated, business-unfriendly tax load.

One participant wondered what opportunity there might be to cooperate and together solve both European and American domestic problems. The American presenter noted that new innovative ideas that could originate from either continent were needed to fix the welfare state (in America namely Medicare and Medicaid, and not Social Security, as healthcare comprises one-sixth of the U.S. Gross Domestic Product). He cited the late Senator Daniel Patrick Moynihan's belief that in order to fix such grand problems, cover, courage, and cooperation were needed from elites of all stripes in order to sway the public to support making difficult decisions. The German presenter prescribed a similar solution for his country, suggesting a grand coalition of SPD and CDU leaders to overhaul a pension system with more benefit recipients than working supporters, specifically finding a financing plan not based solely on wages.

In this political session, speculation arose about the 2008 presidential race, and the American remarked that probable presidential hopeful Sen. Hillary Clinton was "a cross between Margaret Thatcher and Indira Gandhi," and although caricatured as an ultraliberal, she is in truth an electable centrist with the homeland security credentials that come from being Ground Zero's U.S. Senator.

The German speaker contended that although the idea of German strength has been a traditional rallying tool for Germany's political elite, it, like each other European nation, is "too small to face successfully the challenges of the future." Therefore cooperation and integration, not only on the continent, but also across the Atlantic, are necessary.

Session 3: U.S.-German/EU Concerns (trade, development assistance, environment)

The final American presenter lauded the European Union for "breaking the mold" in terms of international law and regulation, and furthering the causes of integration and innovation—praise he admitted was not heard often enough from Americans. At a recent conference, ideas, falling into four categories, were proffered on how to further integrate economically the United States and Europe: (1) simplifying regulation, especially on the European side, and reducing tariff levels on both sides, which would benefit both transatlantic relations and European growth, (2) deepening capital markets and reducing their fragmentation in Europe, (3) furthering innovation and technology, specifically in the areas of energy efficiency and new technology, (4) and cooperating further in transportation and supply chain security.

He saw room for cooperation in the fields of international development and environmental protection, the latter of which is still tarnished by the disagreement over the Kyoto Treaty. He echoed the U.S. president's recent speech and suggested moving on and finding common environmental ground outside of the treaty, not only concerning climate change, but also on issues such as children's health, a U.S. initiative lauded by the European Union. The American speaker also commended a "fabulous" cooperation concerning counterterrorism, not only bilaterally, but also through the European Union, spurred in part by the Madrid attacks, whose anniversary was that day.

The German introducer focused his presentation on trade, noting that whatever political sniping occurred in the past few years, trade relations remained very good—indeed U.S. Foreign Direct Investment in Europe rose more than thirty percent from 2002 to 2003. However, disagreements still exist over genetically modified organisms and a jungle of subsidies, direct and indirect, for aerospace competitors Boeing and Airbus, an issue which both the United States and European Union seek to settle bilaterally. However, the fact that Washington wants a comprehensive solution while Brussels is aiming for a short-term one, coupled with the forces of globalization that cause each companies' products to have parts from many nations outside the negotiations, complicates any resolution of the dispute.

He also traced the disagreement over the China arms embargo mainly to differences of perception, since China, threatening to become America's "premier strategic competitor" in the Pacific, poses no such risk to a continent with no strategic interests in that ocean. As much potential as that misunderstanding has to derail transatlantic relations, the real problem, the German contended, was the exchange rate of the dollar, whose low value is hurting German exports. During the discussion, however, one American was quick to point out that the German bilateral trade surplus remained over $40 billion. Concerning the exchange rate, a German reminded the audience that the rate of $1.31 to the euro had been its previously predicted natural level, and in the past that predicted value had even been seen as a source of pride in the Eurozone. Another seconded that opinion, and characterized the past period of euro weakness as an "opportunity missed," when profits from trade were taken and not wisely used.

Much of the discussion focused on Germany's economic malaise, with anecdotes of factories being moved from Germany, not even to Eastern Europe, but to France, where social costs were still considerably lower. But there remained potential and hope, and one German praised the cooperation between labor and management to reduce the fixed cost base that the crisis over German corporate structures had prompted.

When questioned on how to rouse Germany from its "gloomy" pessimism and infect it with the American "risk virus" of entrepreneurship and competitiveness, the German speaker pointed out that it was the job of politicians and media to focus the public's attention on serious issues. Yet too often, he lamented, surrogate themes (Laci Peterson, Michael Jackson, etc.) dominate the public consciousness. The American introducer agreed, but pointed out that the incentive structure in Europe is biased against taking risks.

Another German participant sought to pour "water in the wine of [the American speaker's] praise for the EU," reminding him of the huge labor repercussions that follow the enlargement of the European Union, that the progress made is "not entirely irreversible," that the EU economic growth and stability pact is "being undermined as we speak," and that the elite-driven integration process has only narrowly passed various referenda when put before national populations. He bemoaned the "democratic deficit" that frustrates many Europeans, especially at the level of national and provincial government.

Closing Presentation

The closing speaker, Martin Walker of United Press International, chided and chastised both the United States and Europe, seconding many points made throughout the day. He pointed to the "dramatic" development that President Bush had "given in," showing signs in recent weeks of coming around to the European point of view on issues such as Iran, Hezbollah, and especially European integration. On this last issue, Walker hailed Bush's speech in Brussels in which the president announced to the European Union, "There should be no doubt in your mind that my government and the United States wants the European project to succeed." However, Walker warned, there had been doubt among some in the Bush administration about their support for that project, as many surrounding Vice President Cheney were wary of the rise of a strong, disobliging Europe, especially as the slogan from the National Security Advisor leading up to the Iraq war was "punish France, ignore Germany, and forgive Russia," and caricatures of "toxic Texans" and the "old folks home" of Europe abounded on both sides. What has quieted those voices and brought about a more conciliatory George Bush, argued the speaker, is that "[Europe and the United States] can both of us now maintain the fiction that we won." The Bush administration has a new confidence regarding this season's positive developments in the Middle East, and now "believe their own rhetoric much as a cockerel believes he is responsible for the dawn and rising sun." Walker felt secure in the fact that "the sheer depth and weight of our investment partnership... is going to triumph over all of the petty follies of our politicians."

Walker suggested Americans and Europeans both be realistic about the current state of transatlantic relations, viewing it in proper historical perspective. Contrary to the rhetoric of the past few years, there has been no "golden age in transatlantic relations" to point to and contrast with today's. From Suez to the second Iraq war, there have been at least half a dozen "major NATO crises" in his lifetime. However, 9/11 changed one aspect of the rivalry this time around: the United States is no longer a status quo power, a position Europeans have been slow to realize and embarrassingly slow to apply to their own problems. Walker reproached his fellow Europeans for the impending "demographic disaster," the "intellectual disasters" of the decline of German education, and the economic endemic on the continent. He also admonished Europeans for being so "feeble, so pacifistically inclined" considering they live in "probably the most dangerous single neighborhood on the planet."

Noting the "serious work program ahead of us," Walker laid out the three most serious foreign policy arenas for Europe: (1) the Middle East, where Europe will become an active player as its borders stretch to touch Iran, Iraq, and Syria, (2) Russia, where democratic reform is under attack by the "ex-KGB thug" President Putin, and (3) China, which will most likely face off against India in "a kind of semifinal ... with the winner then taking on the U.S. for the global leadership title." He advised Europe to "play a useful role in that particular battle" (not helped by the lifting of the arms embargo), lest the continent truly become "irrelevant." Europe must look outside the "old NATO area" and join the United States in a serious global agenda. Unfortunately, noting the "grandstanding" sure to surround upcoming elections on both sides of the Atlantic, Walker expressed doubts that either side could responsibly tackle its most important issues alone or together. He criticized the "profligate way" in which President Bush has treated the world's most important economy, and he characterized both U.S. and EU farm subsidies as "wicked" with regard to their effect on the developing world.

Walker concluded noting that although an illusory mutual victory in the Middle East is within reach, in