Germany and America: Two Reluctant Pivotal Powers
Germany and the United States rank as the two most influential and powerful Western liberal nations in a world challenged by the rise of non-Western and authoritarian powers. It is not an overstatement to argue that the future of the liberal world order will depend to a large degree on Washington and Berlin. Yet both have become reluctant leaders and both represent very different types of powers. Moreover, the publics in both countries are increasingly inward-looking and eschew a larger international role.
America has increasingly come to rely on Germany as its key partner in Europe, both due to Germany’s rise and to the decline of other potential partners. The old special relationship with the United Kingdom (UK) has become weaker with the decline of Britain’s military role and the fading and reluctant role of London in the European Union (EU). France is also regarded as a country to be taken seriously in regard to its strategic role in Africa, but one also in decline. Both Britain and France have had to make substantial cuts in their militaries, reducing their strategic importance to the United States. The EU is seen as an important economic power and a key player in trade and competition policy but hopes that it would take on a larger foreign and security policy role are low given the clear preference of the large countries (including Germany) to conduct foreign policy on a national level. This leaves Germany as the default partner in leadership for American policy.
Geo-Economic Germany and Geo-Strategic America
While both countries have assets for leadership, these assets are very different and they represent two different models of power. German foreign policy can best be understood as one of a geo-economic power, which follows policies based on a new form of realism: commercial realism. Germany has been primarily an economic power since it emerged as West Germany from the ashes of World War II. However, Berlin’s emergence as a geo-economic power is a product of the end of the Cold War. During the Cold War, the Bundeswehr was one of the largest armed forces in Europe—and Germany had major strategic concerns in Europe. With unification, Germany is no longer constrained by security dependence on the United States; markets in Eastern Europe, the former Soviet Union, and China are now open to German companies. The broader strategic dimension that had constrained the economic dimension in German policies has been greatly reduced.
Several traits define this geo-economic model of foreign policy. A geo-economic power defines national interest in largely economic terms. It implies a shift from multilateralism to a form of selective multilateralism or bilateral approaches toward key economic partners. Business and finance, especially export-oriented business, play a predominant role in the shaping of German foreign policy. Economic interests are given priority over such non-economic ones as human rights and democracy promotion. Finally, geo-economic powers use economic power as the principal means of imposing national preferences on others.
Stability, predictability, and the reliability of Germany’s reputation as a stable economic partner are paramount. Given Germany’s great reliance on exports and its dependence on the import of natural resources, it needs to have a reputation as a reliable economic partner. Sanctions, drawing red lines, and employing military force all run counter to Germany’s geo-economic interests. In this sense, risk aversion, already a deeply embedded trait in German political culture, is reinforced, producing the Nein Nation, a Germany that increasingly says no to policies which might endanger these economic interests. Not only has dependence for German security on the United States greatly diminished, but the nature of hard security and of the military as an instrument of state influence have also been transformed. The old roles of protecting the German homeland from invasion or of deploying forces for missions defined by NATO are clearly being downgraded. Given the centrality of economic and, especially, trading interests, security policy has been redefined in economic terms with an emphasis upon the acquisition of raw materials and other natural resources; the need to keep open sea lines of communications; and the growing importance of cyber security. In Edward Luttwak’s characterization, “methods of commerce are displacing military methods.”
While Germany is not a first tier military power but a first tier economic player, the United States is both a major economic and military power with global security interests. The U.S. has a tendency to look to its imposing military instruments in dealing with foreign policy while Germany, being an economic juggernaut, tends to see economics as a main instrument in dealing with global and regional problems. This has resulted in a major gap between a more military-oriented global power like the U.S. and an economic global power like Germany. Rather than a contrast between Mars and Venus it is one between Mars and Mercury, the Roman god of Commerce.
The American strategic culture is a modern one in contrast to post-modern Germany. It remains national rather than post-national and views the world in balance of power terms, although it has a stronger ideological component than that of a traditional realist state. It gives force and the threat of the use of force a higher priority than do most EU countries, especially Germany, and has a greater belief in the concept of just war. This view of the world, which emphasized the role of resolution and military strength in the defeat of the Soviet Union and which disparaged negotiations as appeasement, remains an important strand in American thinking about international affairs in general and Russia in particular. This stands in marked contrast to the German approach to the world of engagement, negotiation, and conciliation, which grew out of Ostpolitik and is reinforced by the risk averse nature of a geo-economic power.
Thus the legacies of over sixty years of diplomatic experience have led policymakers in Washington and Berlin toward diverging strategic cultures, a divergence reinforced by American military capabilities and Germany’s downgrading of military force as an instrument of statecraft. Russia policy provides an example of this contrast. American interests in Russia are almost entirely strategic, ranging from nuclear weapons and Russia’s role in areas of key importance to the U.S.—especially in Central Asia, the Middle East, and the Caucasus—to the security threats posed by Russia. Germany has a much deeper and broader relationship with its big neighbor and German stakeholders in the relationship with Russia tend to be on the economic side in contrast to the American stakeholders in the strategic community. The former benefit from engagement while the latter tend toward threat perceptions.
Adjusting to a Pluralistic and Less Western World Order
The rise of non-Western powers, both anti-liberal and democratic, pose a growing challenge for the transatlantic relationship and for German-American approaches to dealing with this new global environment as the world becomes less Western and less liberal. How do Washington and Berlin accommodate these forces and what can they do to preserve and possibly expand a liberal international order? Thomas Bagger, Head of the Policy Planning Staff of the Foreign Office under foreign ministers Guido Westerwelle and Frank-Walter Steinmeier, has developed the idea of Germany as a “Shaping Power” (Gestaltungsmacht) as the conceptual core of a new German strategy. A Gestaltungsmacht is a state that has the power to shape outcomes and events. The term reflects the end of a unipolar era when the U.S. dominated the agenda. This thinking reflects the emergence of a polycentric, highly interdependent, world with rising non- Western powers playing a larger role in global and regional decision-making. The official German government paper on this concept puts it in the following terms:,“[T]hese countries are economic locomotives which substantially influence regional cooperation and also have an impact in other global regions and play an increasingly important role in international decision making. […] We see them as more than developing countries but as new shaping powers.” Germany will be a Shaping Power through the use of networks, fashioning networks with new actors both at home and abroad. Germany has to develop networks alongside its traditional fora of the EU, NATO, and the G-8 to develop the global governance needed to deal with the new challenges of globalization.
The rise of non-Western powers has pushed the U.S. toward a more regional type of trading relations like the Transatlantic Trade and Investment Partnership (TTIP) and its Pacific equivalent (TPP) in the wake of the failure of the WTO Doha round. This makes Germany more attractive as a partner in a new attempt to promote more inclusive multilateralism through the development of exclusive multilateralism or, failing that, to at least protect core liberal values in a group of like-minded liberal states. Germans have tended to favor multilateral and institutional approaches that emphasize a rule-based system of institutionalized cooperation. As Gunther Hellmann notes, there has been an erosion of multilateralism in both Europe and the U.S. but there still remains a larger preference in Germany for what Hellmann calls “inclusive or universalist” multilateralism over exclusive multilateralism that focuses on bringing together like-minded democracies.
Both the U.S. and Germany have their versions of “Pacific Pivots” in reaction to globalization. The U.S. has reacted to this global shift by rebalancing its strategic focus from Europe to Asia.
Despite Russia’s new and aggressive policies in Ukraine, the rise of China remains the key strategic challenge facing Washington for the medium to long term. Unlike Europe, Asia does not have an equivalent of the EU or NATO and the U.S. military role remains the key stabilizing factor of the current political and security order in East Asia. Germany’s Pacific Pivot is entirely economic as reflected in its growing economic stake in China and other countries in the region, with almost no strategic perspectives or role in this large region.
A major implication of this pivot is that Germany, and Europe, will have to pick up more of the leadership in its volatile peripheries to the east and south. Yet Berlin and Washington cannot afford to leave Asia to the U.S. and foster even further American disengagement from Europe. Germany is now seen by the Chinese as the most important European country in China but Berlin shares with Washington a common concern about China’s abuse of intellectual property rights and outright theft of technological and industrial secrets. It will be imperative that both capitals do all they can to avoid a split over China policy and allow Beijing to pursue a policy of divide and conquer.
On global financial issues, Washington and Berlin have diverged in important ways. There is a concern in Washington that Germany continues to benefit from an undervalued currency, the euro, and pursues policies meant to keep the euro undervalued at the expense of both the U.S. and Germany’s euro zone partners. This is part of a larger international financial struggle between export giants such as Japan, China, South Korea, and Germany, which want to maintain currency stability, and countries like France, the southern euro zone, and the U.S., which are pushing for more stimulus and a revaluing of currencies to bring adjustments to their current accounts. Given the longstanding and nonpartisan support in Germany for stability, low inflation, and responsible fiscal policies, German governments continue to turn a deaf ear to both European and American calls for stimulating demand.
Also in the area of information technology and internet governance, Germany and the United States are becoming rivals. The harsh critique in Germany of the U.S. high tech companies in the wake of the Snowden NSA revelations have resulted in calls to create a European or German cloud, which can threaten the lucrative European market for companies like Apple, Facebook, and Google. These firms have lobbied intensely in Washington to limit the damage from the NSA scandal and are a factor in the Obama administration’s attempts to heal the rift with Berlin over cyber. German calls for a digital dialogue have still not been addressed by Washington.
Globalization in all its broad implications has reinforced tendencies for a separation of American and German economic and financial policies. Networks are replacing alliances in this new “Zero Sum World,” in which competition for markets, technology, and natural resources has accelerated. A key question for the future is whether the foreign policy of Germany will be one of Germany Inc., with few allies but many customers and suppliers. Developments in Russia and the eastern neighborhood have begun to force Germany to weigh its economic interests against larger strategic ones concerning the security order of Europe. However, this is not the case in regard to Germany’s geo-economic approach outside of Europe. With the U.S. ceding leadership to Berlin on the Ukraine crisis and the willingness of Chancellor Angela Merkel to impose sanctions on Russia, Germany is clearly at a decisive point in its international strategy. Its risk averse approach in a more risk prone world may not work and Germany is already being forced to take on a larger strategic role beyond a purely economic one. The recession of American power and leadership and the decline of France and Britain as reliable partners have increased pressures on Germany to play a more strategic leadership role. As Josef Janning has observed, “Berlin’s foreign policy machine works best when it can support, encourage, help and reward. It struggles when it has to employ dissuasion, sanctions, or red lines.” Both Berlin and Washington will now have to redefine their relationship in this rapidly changing context.
Dr. Stephen F. Szabo is the executive director of the Transatlantic Academy (TA) at the German Marshall Fund of the United States.
 A Pew survey released in July 2014 found that 60 percent of Americans polled believed that the U.S. should pay less attention to problems overseas and should concentrate on challenges at home. These numbers were up from 20 percent in 1964, 40 percent in 1995, and 50 percent in 2004. These tendencies to look inward mirror those in Germany where a 2014 Körber Stiftung poll found that 60 percent of Germans wanted Germany to play a restrained role in foreign policy while only 37 percent wanted a more active German foreign policy.
 See Hans Kundnani, “Germany as a Geo-economic Power,” The Washington Quarterly 34:3 (Summer 2011), 31-45 and Stephen F. Szabo, Germany, Russia and the Rise of Geo-economics (London: Bloomsbury, 2015).
 Abraham L. Newman, “Flight from Risk: Unified Germany and the Role of Beliefs in the European Response to the Financial Crisis,” in From the Bonn to the Berlin Republic, ed. Jeffrey J. Anderson and Eric Langenbacher (New York: Berghahn, 2010): 306-318.
 Edward Luttwak, “From Geopolitics to Geoeconomics,” The National Interest 17 (Summer 1990); for broad survey of the concept see Paul Aligica, “Geo-economics As A Geo-Strategic Paradigm: An Assessment,” The Hudson Institute, 9 August 2002.
 As Samuel Charap has observed, “The (Russia and the U.S.) national security establishments continue to view each other as adversaries, almost twenty-five years after the Cold War ended,” Samuel Charap, “Beyond the Russian Reset,” The National Interest, July/August 2013.
 Die Bundesregierung, Globalisierung gestalten- Partnerschaften ausbauen-Verantwortung teilen: Konzept der Bundesregierung (German Foreign Office, 2012), 4. See also Thomas Bagger, “The Networked Diplomat,” Internationale Politik, 3 August 2013; and the joint German Marshall Fund, Stiftung Wissenschaft und Politik paper, Neue Macht: Neue Verantwortung/ or New Power, New Responsibility: Elements of a German foreign and security policy for a Changing World (English version), 2013, http://www.swp-berlin.org/en/projects/new-power-new-responsibility/the-paper.html.
 Thomas Straubhaar,”The Transatlantic Trade and Investment Partnership (TTIP): From Global to Regional Multilateralism,” in Liberal Order in a Post-Western World, Trine Flockhart, et.al. (Washington, DC: Transatlantic Academy, 2014): 25-35.
 Gunther Hellmann, “Liberal Foreign Policy and World Order Renewal,” in The Democratic Disconnect: Citizenship and Accountability in the Transatlantic Community, Seyla Benhabib, et.al. (Washington, DC: Transatlantic Academy, 2012): 108.
 The U.S. administration’s view as expressed in the critical U.S. Treasury report in 2014 is that “Germany’s anemic pace of domestic demand growth and dependence on exports have hampered rebalancing at a time when many other euro area countries have been under severe pressure to curb demand and compress imports in order to promote adjustment. […] The net result has been a deflationary bias for the euro area as well as for the world economy.” The Treasury singled out Germany ahead of both China and Japan, the traditional target countries for the U.S., after a long period of concern over the impact of German policies on both Europe and American exports. See Ian Talley and Jeffrey Sparschott, “U.S. Blasts Germany’s Economic Policies,” The Wall Street Journal, 31 October 2013, http://online.wsj.com/news/articles/SB10001424052702304527504579168113091545256. This critique was renewed by Treasury Secretary Jack Lew in September 2014 who said the U.S. had “philosophical differences with our friends in Europe” over the need to boost demand. Jamie Smyth, “Lew urges Europe to stimulate demand,” The Financial Times, 22 September 2014, p. 2.
 See Annegret Bendiek, “Beyond U.S. Hegemony: The Future of a Liberal Order of the Internet,” in Liberal Order in a Post-Western World, Trine Flockhart, et.al. (Washington, DC: Transatlantic Academy, 2014): 57-70.
 See Gideon Rachman, Zero Sum World: Politics, Power and Prosperity after the Crash (London: Atlantic, 2010).
 See for example the joint German Marshall Fund, Stiftung Wissenschaft und Politik paper, Neue Macht: Neue Verantwortung/ or New Power, New Responsibility: Elements of a German foreign and security policy for a Changing World (English version), 2013, http://www.swp-berlin.org/en/projects/new-power-new-responsibility/the-paper.html.
 Josef Janning, “Germany’s summer of discontent on foreign policy,” European Council on Foreign Relations, 30 June 2014, http://www.ecfr.eu/blog/germanys_summer_of_discontent_on_foreign_policy.