Sunday, November 23, 2014

Merkel in China

NEW DELHI – German Chancellor Angela Merkel’s second visit to China in a year comes against the backdrop of dire forecasts of a difficult September for the eurozone. Mindful of such concerns and persistent pessimism in global financial markets, Merkel is now taking bold political initiatives at home and overseas. Indeed, her China trip should be seen as an effort to assert leadership across the eurozone.

At home, Merkel recently sent out a clear message to her critics that Germany must pay a price for eurozone leadership. She cautioned her colleagues against loose talk about a “Grexit” – Greece’s exit from the eurozone – and assured visiting Greek Prime Minister Antonis Samaras that Germany remained committed to his country’s membership of the eurozone.

While it required courage to take such a tough stance, doing so helped to bolster her position at home and throughout the eurozone. There is now no doubt that Merkel is willing to commit Germany to the cause of preserving both the European Union and the eurozone, and that she will work to achieve that goal. If she succeeds, she will emerge as the first great European leader of the twenty-first century.

This stance suggests that Merkel appreciates the essence of the argument that François Heisbourg, the chairman of the council of the International Institute for Strategic Studies (IISS), advanced in a recent essay: a federal arrangement does not fall apart because of problems at the periphery but because of “failure at the heart of the system.” Merkel has come to terms with Germany’s position – and that it must act to preserve the unity of the whole.

The eurozone (and probably the EU) cannot be saved in Greece or Finland if it cannot be saved in Germany. Committing Germany to that objective is precisely what Merkel has defined as her political goal for the rest of her term in office.

Within hours of declaring her leadership at home, Merkel announced her visit to Beijing. The timing was highly significant: Merkel goes to China, the emerging global power, after declaring her own commitment to strengthening the eurozone, if not the EU as a whole, as a credible pole of an emerging multipolar world.

In recognition of Germany’s growing significance, Chinese Prime Minister Wen Jiabao welcomed a delegation of German business leaders to Beijing this May with the words: “Stronger Chinese-German cooperation is good for the two countries, good for China-EU relations, and good for world prosperity and stability. The strategic dimension of Chinese-German relations, therefore, can only be strengthened, not weakened.”

There are several dimensions to the bilateral relationship. Germany needs both China’s markets and the funds that its government can deploy to purchase German and European bonds. It also has more than 7,500 enterprises operating in China, with gross investment totaling $18.5 billion. Moreover, Germany has sold $15 billion worth of technology to China, and bilateral trade hit a high of $169 billion in 2011, accounting for 30% of total China-EU trade. The two countries have set a bilateral trade target of $280 billion for 2015.

Trade, however, is not the only immediate concern. Far more important, especially for Germany, is to get China to invest in and hold its bonds. In mid-August, at the First IISS Oberoi Lecture in Mumbai, Klaus Regling, the CEO of the European Financial Stability Facility, underscored the importance of Chinese demand for EFSF bonds and China’s role in stabilizing the eurozone.

Regling also revealed that there is now increased and frequent coordination between monetary authorities in the United States, Germany, and China, drawing attention to the fact that the “old Triad” of the dollar, euro, and yen may now have been replaced by a “new Triad” of the dollar, euro, and Chinese renminbi. While Regling spoke of an emerging “multipolar monetary system,” his remarks clearly indicated the functioning of a “tripolar” system.

Lying at two ends of that monetary triangle, the eurozone and China have acquired a geopolitical stake in helping each other. Hans Kundnani and Jonas Parello-Plesner of the European Council on Foreign Relations view the China-Germany relationship as one that will shape the overall China-EU relationship. Like many strategic analysts, they worry whether Germany, in pursuit of purely short-term economic interests, might forsake long-term strategic interests and concerns about human rights, environmental problems, press freedoms, and other political and geopolitical issues.

It is significant, therefore, that German political parties have emphasized the need for Merkel to raise such matters in her talks with Chinese leaders. However, Merkel’s focus may well remain on trade, investment, and currency flows. After all, unless she can turn around the eurozone, her rising profile at home and in Europe could easily wither.

What this means is that to secure German leadership of Europe, and her own leadership of Germany, Merkel has to “walk on two legs,” so to speak. She needs to balance both geo-economic and geopolitical factors – both interests and values – in advancing Germany’s relations with China.

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    1. CommentedJohn Brian Shannon

      The Eurozone countries are beginning to see there is no real future for them without Germany, German leadership, direct and full access to Germany's marketplace and German good-will.

      Global trade is accelerating and at the end of this recession, international trade will again grow exponentially. Linkage with a strong, well-connected partner will be of utmost importance going forward.

      Until then, economic survival is paramount. Only Germany can do this for the Eurozone members -- no other nation on the continent has the means to do so, nor are any European non-Eurozone nations volunteering for such a thankless task.

      The sooner everyone wraps their heads around all of this, the better it will all work out for all involved.

    2. CommentedJakub Słowiński

      China-Germany relationship would hardly shape the EU-China ties. Every major country in Europe has more or less its own agenda towards China: Britain won't do anything that could wreak havoc over US agenda towards PRC, what is more, London is showing signs of being possible rival to Beijing in Myanmar and Myanmar, along with Pakistan and Kazakhstan, is one of the three most important possible transit countries for China in order to get rid of Malacca Strait dependence, France is somewhat out of strategy, but its stance on Syria, which is getting more aggresive every day, won't do anything good in accordance to its ties with China. Spain and Italy have too much problems to have a strategy, recently Poland along with other CE countries is trying to catch up with China, following the example of Orban, but with more reality-based thinking in whole process. And what is more important, China prefer its current way of bilateral handling of European countries, EU as a whole is more pretentious and less effective in order to get along. If someone believes that EU, following German example will establish some considerable strategy on China, let him take a look at how this process goes with Russia...
      The task of having good relations with China is easy for Germany, because it is to some extent in the outer space of institutionalized system of the world, established after WWII and since then not very much modified. It is the trading power and because China is the trading power too, ties between them are deemed to strenghten. Germany is exceptional in Europe, especially different to UK and France. Let's be frank, Germans couldn't even promote effectively the Polish initiative of Eastern Partnership so how will they unite Europe towards would-be-in-few-minutes the biggest economic powerhouse in the world?

    3. CommentedAlexandros Liakopoulos

      The problem with Angela is she proved herself toο... German to become a Leader of the EU. "Germanizing" Europe can never be tolerated from European people wgo value their national identity and state's independence. The current european "hostility" against the European Institutions and theit imposed "rescue-the-banks" operations across Europe, along with the German preoccupation on austerity which maybe destroys European economies as parts of a whole, but in the same time it creates the necessary environment for Germany (and/or Bundesbank) to become the "Primus inter pares"...
      Mrs Merkel faces the realitites of political economy, as it is created under an ongoing competition on the European continent between the World Banksters Gang, as it is taking concrete form on Mario Draghi's presence on the ECB leadership, and the German National State, the "Europe' s steam engine". A Germanized Europe is her counter-proposal to the banksters' proposal for a Banking Unification. Saying it in a few concrete words, Angela misses the chance to become a European leader, as it opted for a policy that threats all other European nations with the creation of the very monster the EU was first conceived for: to avoid the war as an answer to German preoccupation for the creation of a new Reich. Therefore, even if such trips of Angela aim to present her as the Collective Representative of Europe - which she is NOT - she has already sapped the very political ground on which she could be recognised as such between her European colleagues, in order to be afterwards recognised as such by other world leaders: the European Solidarity which drives the whole unification process for some 6 decades.

      Therefore, she might manage or not to become a new European Furer, but she will never manage to get recognised as a European political figure of collective authority, based on values and ideas that would allow her to enjoy the pressuposed political support back home, before travelling abroad. Recognizing this very fact is the very problem Europe faces today: people and institutions who with their actions and/or failures, wrong ideas and catastrophic policies have moved the continent from some decades of prosperity to a future of pain, claim they are the representatives of Europe. However, Europeans tend to speak last on all subjects, far after their leaders do, speak or act according to their own and not the people's agenda. But when that happens, History teaches the results: if we fail once more to fight back against Banksters' crimes and their new ineterests, along with Germany' s expressed strategy for the creation of a German Europe, no matter what the global initiatives Angela will try to develop, we will all face the historic punishment as brutally as we got it in the last century... History keeps repeating itself while we keep ingoring its teachings: so, who is to blame for the punishments to come, while we all knew the History is a very hard teacher before taking its class? This is the question...