In December, AICGS took the pulse of the German-American relationship and we expressed concern about its future. That paper also sketched out the most critical issues on the bilateral agenda. And, after further discussion with our colleagues in the expert community in Washington, we have revised that agenda below with additional insights, questions, and possible answers.

World leaders will discuss some of these pressing challenges at the 50th Munich Security Conference this weekend. In addition to other members of her cabinet, Chancellor Merkel will soon come to Washington to meet with President Obama, where all of the following issues will take center stage.

Europe’s Recovery and Trade

The recent fight between Washington and Berlin over the size of the German current account surplus reflects a larger rift on economic policy – lingering disagreement over the nature of the financial crisis. Germans argue that the financial crisis exposed structural weaknesses in the worst hit economies. The United States believes stimulus can address these temporary weaknesses and allow Europe’s struggling economies to fully emerge from recession. This lingering rift exists alongside a broader pessimism about the Euro-zone, which has restrained markets and weakened investment even as the German economy continues to grow.

In this environment, it has been easy to overstate the benefits of the Transatlantic Trade and Investment Partnership (TTIP). Yet, the fact remains that it is the single-most effective lever to jump start growth and sustain transatlantic relations. TTIP is also strategically important; a successful agreement would create the world’s largest free trade zone and establish the rules that would control and sustain the global economy. Although the United States and Europe may not always agree on a range of issues, their combined economic leverage will be critical in shaping the future world order. However, mapping the path forward will be anything but easy as the TTIP negotiations progress. Will divergent perspectives on each side of the Atlantic continue to cause tension in the coming years?

Cyber Security and Data Privacy

The volcanic reaction in Europe concerning the National Security Agency’s programs exposed deep differences between Germany and the United States on cyber security and privacy. President Obama’s recent speech was meant in part to allay concerns about U.S. electronic surveillance practices, but the clear violation of German and other allies’ sovereignty has led to a wider breach of trust than any one speech can address. European observers remain skeptical of U.S. intentions and recent moves in Germany and at the EU-level may jeopardize longstanding agreements (e.g., the U.S.-EU Safe Harbor Framework), threaten ongoing negotiations over TTIP, and even bring about sanctions against the United States.

Yet, the recent impasse over the NSA should not deflect leaders’ attention from the broader challenges posed by the digital age. Consumers need assurance that their privacy will be respected; businesses need help protecting their intellectual property; and governments will continue to bear responsibility for protecting critical infrastructure and the safety of their citizens. However, there are no clear international standards or norms on how to deal with the exponential increase of data online and the pace of technological change. Both Germany and the United States have a shared interest in establishing new rules of the road and maintaining an open and secure internet. Can both countries work together toward developing common standards or will they remain too far apart?

International Security

The United States cannot resolve all of the world’s problems on its own, nor can Germany be expected to always take the initiative when Europe is not united. Yet, this reality should not excuse Berlin from accepting risk and devoting more resources to the common defense. The United States has welcomed German ideas for maintaining NATO’s future relevance and support for the EU’s common security and defense policy (CSDP), but Washington is critical of Berlin’s unwillingness to define its strategic interests and articulate them clearly to its public and its allies.

In his recent farewell speech, former German defense minister Thomas de Maizière defended German security policy. He stated that no one in Europe should tell Germany how to approach foreign missions and that NATO remains the “political-military anchor,” especially after spending a decade fighting alongside the United States in Afghanistan. Germany also contributes its considerable development and technical expertise elsewhere, for example, by providing refugee assistance and training chemical weapons inspectors destined for Syria. It also will continue to contribute its armed forces to peace and stability missions even after the Bundeswehr’s transition to an all-volunteer force. New defense minister Ursula von der Leyen has even hinted at a more activist foreign policy, suggesting that Germany cannot “look the other way when murder and rape are part of the daily routine” in other countries.

It remains to be seen, however, whether Germany’s new government intends to do “more with less” or would rather do “less with less.” How might Germany effectively pool its military resources with its European allies? How will the new government in Berlin respond to reductions in U.S. troop numbers in Europe, base closures, and the continued presence of nuclear weapons in Europe? Will Germany evolve a national security bureaucracy and commit to its security policies, rather than simply following a case-by-case approach? At the same time, what exactly does the United States expect from Germany?

Energy and Climate Change

Energy prices have gone in opposite directions across the Atlantic. U.S. development of domestic resources and new extraction technology has put the country on a path towards self-sufficiency. Meanwhile, Germany is facing increasing domestic pressure to reduce the cost of the Energiewende, a collection of policies that would end the country’s production of nuclear power by 2022 and boost renewable energy production to 60 percent of overall energy use by 2050. And, the European Union itself is shifting away from binding, national targets towards a single, Europe-wide goal of a 40 percent reduction in carbon emissions by 2030. It seems that energy will remain cheaper for Americans than for Europeans and the push for global carbon emissions is taking a back seat to concerns about economic growth.

The geopolitical consequences of these changes are still largely unknown: Will current policies hurt EU and German industrial competitiveness and drive more of their energy-intensive industries towards the United States? How will this impact the relationship with traditional energy suppliers like Russia and the Gulf States? Is there any prospect for U.S. and European policy convergence or greater exchange of ideas and technologies?

Regional Diplomacy: Russia, China, and the Middle East

Russia

Russia looms large in Berlin’s worldview. Trade, energy, and cultural ties are significant factors in the German-Russian relationship. Though Germany’s leaders will not always agree with the direction of U.S. policy, both clearly see the benefits and the challenges of bringing Russia closer to Europe. Unfortunately, Russia’s deteriorating relationship with both countries leaves little room for constructive dialogue. Germany and the United States may look instead towards bolstering ties with Poland, the Baltic States, and jointly addressing the turmoil in Ukraine. Do the United States and Germany share an agenda with Russia that includes missile defense, arms control, Afghanistan, Iran, Syria, and relations with countries in the post-Soviet space? Or will Germany’s different mix of stakeholders and views on Russia lead to an increasingly divergent policy from that of the United States?

China

Relations with China are perhaps equally important for Germany and the United States. Trade with China helped Germany weather the economic crisis and will continue as long as China’s economy remains open and strong. However, Germany must not allow the appeal of the world’s largest market to distract it from other important economic and security issues. Particularly worrisome for Berlin should be the threat to markets and supply routes should tensions in East and Southeast Asia turn into open conflict. Germany’s own historical experience with reconciliation Europe could yet play a constructive role in reducing tensions. How else can the United States and Europe work together in East Asia?

The Middle East

In the Middle East, Germany maintains strong ties to both Israel and Turkey. It is perceived by many in the region as a neutral party, an important trading partner, as well as a major arms exporter. Yet, there remain a range of challenges in a region beset by conflict: Even if Iran suspends its nuclear development, how will that impact its regional ambitions? Are there measures that can be taken to turn around Turkey’s strained relationship with the West and Egypt’s move away from democratic rule? How will the United States and Europe respond to the new violent extremist threats emerging in North Africa, Syria, and Egypt?

A New Map

This map of the bilateral agenda is not a formula for a frictionless relationship. Germany and the United States are two independent powers, each with their own set of responsibilities and overlapping, though not necessarily identical interests. This will remain true regardless of who is occupying the Chancellery or the White House. Yet twenty-five years after the Berlin Wall came down, Germany and the United States must continue to improve upon the relationship even as they adjust to an emerging global order