Published daily by the Lowy Institute

The Merkel-Trump meeting: NATO, jobs and trade

Merkel and Trump may be contrasting personalities, but this is not necessarily a handicap to a functional, pragmatic relationship.

German Chancellor Angela Merkel and US-President Donald Trump at the White House on Friday (Photo: Barcroft Media via Getty Images)
German Chancellor Angela Merkel and US-President Donald Trump at the White House on Friday (Photo: Barcroft Media via Getty Images)
Published 20 Mar 2017 

Few world leaders embody the virtues of patience as completely as Angela Merkel. Fewer still demand them as much as Donald Trump. So when the two met face-to-face for the first time on Friday, the news media concentrated on these two antithetical personalities and the contrasting worldviews they represent. But behind the shadow-boxing, the ‘lecturing’, the reproaches and the awkward non-handshake, this was exactly the type of measured and sober affair that has characterised Merkel on the world stage. Focussing on areas of common interest, the German Chancellor sought to lay the groundwork for a constructive and pragmatic relationship. For the chief topics of discussion – security and trade – could not be of greater urgency.

While officially in Washington as the head of the German government, Merkel was informally representing both the EU and Europe’s NATO member states, which have been thrust into uncertainty by Trump’s aggressive and disparaging rhetoric.

In recent weeks, defence Secretary James Mattis and Vice-President Pence have been quick to shore up support for NATO in Europe in light of Trump’s notorious attack of the institution as ‘obsolete’. But sticking points needed still to be addressed. One of these is the commitment, made in 2014 and since raised repeatedly by the President, for all member states to dedicate 2% of GDP to defence spending. As it stands, only five of NATO’s 28 member states meet this target and, despite the obvious problems of a benchmark measured in relation to GDP (Greece, for example, passes the threshold only because of its frail economy), Germany’s contribution remains a mere 1.2% of GDP: only the 15th highest of all states.

Trump received a commitment from Merkel to this effect, though his insistence over the weekend that ‘Germany owes vast sums of money to NATO and the United States’ has sparked retaliation from Berlin. German military spending remains a thorny issue in Europe: Germany’s continental partners accept its economic dominance on the tacit proviso that it does not translate into military power. Still, and as noted by Stefan Theil of the Handelsblatt, Germany’s consistent federal budget surpluses give her some wriggle-room on this, and indeed increased military expenditure may help provide a much-needed boost for the domestic economy.

Economics and trade were the most pressing issue on the table in Washington. On her visit, Merkel was accompanied by business leaders from Siemens, BMW and Schafeller, all of whom rely heavily on American trade and investment. The degree of these relationships is substantial: as Merkel reaffirmed in a speech last week at the Munich international craft trade fair, direct investment in the United States by German companies totals over €270 billion, while some 750,000 American jobs rely directly on German firms. At home, trade with the United States directly employs some 1.6 million people.

But Germany’s export-driven economy stands to lose more than most from Trump’s protectionist policies, and the noises so far emanating from Washington have not been encouraging. The country’s enormous trade surplus (currently at €253 billion) renders it especially vulnerable to a US-led trade war. The Trump administration, channelled through the President’s economic advisor Peter Navarro, has criticised Germany’s trade surplus with the US (€49 billion) on the basis that it threatens American manufacturing jobs. Moreover Germany, as Navarro sees it, sits in an exploitative relationship with its EU partners. It’s an old argument, to be sure (though one arguably of greater potency within Europe itself). Yet the patent unsustainability of Germany’s current situation does require some movement on Merkel’s behalf, if not simply as a signal to the US. That Germany conducts most of its most important business through a matrix of multilateral institutions might seem mystifying to Trump, who has routinely expressed his frustrations at such structures and a preference for bilateral deals. Merkel’s problem is that she possesses no official power to renegotiate any trade deals between the two states. This is solely a matter for the EU: an institution that, like NATO and German exports, has fallen prey to Trump’s wrath.

The meeting did not produce anything concrete, and many questions remain about the future of German-US trade. Nevertheless, though his words are always treated with scepticism, Trump’s assurances that he was a ‘believer in free trade’ and ‘not an isolationist’ will be cautiously welcomed in Germany.

Domestically, Merkel’s trip to Washington was not without risk in an election year, especially as her Social Democrat opponent Martin Schulz has skilfully and successfully exploited the deep anti-Trump sentiments running through the country. A February survey revealed that German citizens now have record-low trust in the US (down 37% since Trump’s election). But the importance of this is easily overstated: if Germans do fear Trump’s new world order as much as Schulz implies, then Merkel’s resolute advocacy for German markets, German jobs and German security will be of much greater resonance in September’s election. A more fundamental political test for Merkel will come in July, just two months before voters cast their ballots, when Trump will visit Hamburg for the G20 summit.

The importance of Friday’s meeting should not be understated: no post-war German Chancellor has ever landed in Washington in such hazy global conditions. Merkel does not expect to have the same level of bonhomie with Trump as she did with his predecessor: as has been affirmed again and again, the two see the world in starkly different terms. But the German Chancellor is no stranger to challenging interlocutors, and in her interactions with Recep Tayyip Erdogan and Vladimir Putin has relentlessly pushed for relationships to remain open, however strained, even when her peers have abandoned them. Hence Merkel’s insistence, despite the public back-and-forthing between her and Trump on refugees, human rights and the Mexico wall, that it is better to speak with rather than about one another. Merkel and Trump may be contrasting personalities, but this is not necessarily a handicap to a functional, pragmatic relationship, particularly when that relationship is endowed with such historical depth.

In Washington, Merkel’s personal ambition was to convince Trump that, in her, he has a reliable and experienced peer on the world stage, and one whom he can respect and seek out even in cases of deep disagreement. As a representative not only of Germany, but of fellow NATO members and the EU, Merkel sought to prove to the US that it needs its friends. But as a fellow world leader, her goal was to prove that Trump personally will need them too. One short visit will not achieve this. But then again, patience is her forte.

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