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Learning To Live With The New Germany


International Business: Commentary

LEARNING TO LIVE WITH THE NEW GERMANY

For 40 years, Washington called the tune in the Western alliance, and Germany danced to it. But now, with the collapse of the Soviet threat, Germany is emerging as Europe's linchpin. For Americans, the biggest adjustment may be that the U.S. is no longer the major force shaping Europe from the Atlantic to the Urals. Washington may soon be forced to share power, if not follow Germany's lead, at least on European matters.

Despite four decades of generally cordial ties, some Americans find the idea of resurgent German power unsettling. Twice in the 20th century, the U.S. helped vanquish a German military. Now, Americans wonder: Will German power evolve into an economic and diplomatic equivalent of panzers and pincer movements?

With those nagging doubts as a backdrop, Washington is already wrestling to redefine its relationship with Bonn. Says Gregory Flynn of the Center for German & European Studies at Georgetown University: "The U.S. is groping for reference points."

OPEN MARKET. In some ways, a strong Germany is a boost for the U.S. Cultural similarities and centuries of family ties provide an underpinning that America's troubled relationship with Japan lacks. Germany's market is much more open to U.S. goods than Japan's is. And many key U.S. companies hold strong positions in Germany, where the U.S. enjoys a trade surplus.

But while it flexes its muscles in Europe, Germany will naturally make moves that are in its interest--which will make the U.S. and its other allies uncomfortable. One problem is the time bomb of potential refugees. Millions could spill into Germany if attempts at market economics and democracy fail miserably in the former Soviet bloc. If Bonn's allies don't back it up on tough decisions, Germany could well drift.

To his credit, Bush has assiduously pursued a "special relationship" with Germany, despite discomfort among his advisers. In 1990, Washington broke with Britain and France to back German Chancellor Helmut Kohl's strategy for quick unification. The implicit quid pro quo: that Germany lean on France to cut agricultural subsidies and help keep worldwide trade liberalization talks on track. That issue still hangs over U.S.-German ties.

Germany is raising the stakes in foreign policy, too. Criticized initially for inaction in the Yugoslav civil war, Bonn later drew flak for recognizing the breakaway Yugoslav republics of Croatia and Slovenia while other European nations backed Serbia. Yet now, Washington is about to get behind the German position. "Not recognizing Croatia and Slovenia isn't a position we're going to hold on to for long," says a senior State Dept. official. That will bring all the allies into line behind Germany--as long as the shaky Yugoslav cease-fire holds.

TRUE COMPETITOR. The tests are likely to get tougher. Germany's economic clout is only growing as Europe moves to a single currency built on the German model. At some point, a European currency based on the mark will stand as the trading unit for 400 million Europeans. For the first time, the dollar will have a true competitor.

It's not too soon for Bush to start preparing the U.S. for a new alliance in which Washington doesn't dominate and may follow as often as it leads. Meanwhile, Bush can test Germany's mettle by continuing to push for help in untangling talks over the General Agreement on Tariffs & Trade. That's crucial for trade globally and for Germany's own security, since freeing farm trade could help Eastern Europe's nascent democracies. Such a partnership could show the way to a new form of Western alliance that would keep Germany engaged in the East--and firmly rooted in the West.Bill Javetski


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