Category Archives: Europe

The end of the affair: US-German relations in the age of Trump

The End of the Affair: US-German relations in the age of Trump

 Introduction: The Body Language is that of an 80’s John Hughes Film

 Far too often, the press takes the garden variety meet and greet get- togethers of the world’s leaders overly seriously. Countries are–as they have been since the dawn of time—largely driven by interest calculations, rather than whether their leaders would be likely to go on a date together.

 Saying this, no one should doubt that personal chemistry does play a role at the margins as to whether states cooperate. It is simply human to be far more likely to take risks and make sacrifices for people we cannot help but like, even as it is a chore to do the same for those we simply cannot stand, even if it is in our interests to ultimately do so. That is what made the painfully awkward recent meeting at the White House between President Donald Trump and Chancellor Angela Merkel so interesting, as it was palpably obvious these two creatures would never be fast friends, whatever the setting.

 Instead, Trump’s seeming refusal to even shake Merkel’s hand (despite her gentle cajoling) made the whole socially awkward situation resemble nothing so much as one of the wonderful 1980s movies of John Hughes, sympathetically if hilariously cataloguing the all-too-real angst and social awkwardness of American teenage life. Merkel resembled the class drudge—hardworking, socially awkward, conventional—forced to sit through a study hall with the High School jock in Trump.

 The President—bombastic, unpredictable, overly impressed with himself—looked at the Chancellor as though what she was and what she personally stood for came from another planet. As Hughes’s films wisely made clear, their frostiness on one level simply confirmed that they would never be going to the High School Prom together, as it is hard to imagine more different sorts of human being.

 Of course the lack of personal chemistry between Trump and Merkel matters more than usual just now as US-German relations have dramatically altered beyond all recognition. Their lack of personal rapport means that what would have invariably have been a hard landing for the two great powers—given their very different ideological and personal priorities—is in danger of becoming a free fall, not being cushioned by their two leader’s common affinity for one another keeping the show on the road. Instead, US-German relations in the age of Trump amounts to the end of the affair, when the two countries cease being allies in the classic sense of the term.

 Ideological canyons that cannot be crossed

 Even within the western alliance formed after World War II, the US and Germany always stood at opposite ideological ends of the common NATO spectrum, with Berlin being the most Wilsonian of the major powers while the United States was the most nationalistic. Strikingly, whoever ran Germany–be it the centre-right Christian Democratic Union (CDU) under Adenauer, Kohl, and Merkel or the centre-left Social Democratic Party (SPD) of Brandt, Schmidt and Schroeder–the overall schools of thought foreign policy orientation of Germany altered very little. To this day, everyone of significance in the German foreign policy elite is some form of Wilsonian.

 Wilsonians emphasise international law and norms, the importance of international institutions such as the UN and the EU, that diplomacy (often on its own) should be the primary tool used to solve problems, that countries should almost always act on the international stage as part of larger alliances, and that the world is growing increasingly interdependent, meaning individual countries’ sovereignty matters less and less.

 The striking ideological difference between Germany and America is that while practically everyone in the former would find this view of the world simply the way things are, Wilsonianism represents only one of three basic American schools of thought impulses propelling American foreign policy forward in our new multipolar era (along with neo-conservatism, and realism). This is a huge difference and explains much of the reason for the present Berlin-Washington low-simmering crisis.

 In the new Trump administration there are presently duelling forms of realism, with not a Wilsonian in sight. Trump’s own Jacksonian nationalism has been shamefully understudied in European capitals (as has been America and its history, ideology, and culture in general) so that the new President of the United States is the rudest of ideological awakenings for Europeans in general, and Germans in particular. For it is impossible to think of two foreign policy ideologies that differ as profoundly as Jacksonianism and Wilsonianism.

 Jacksonians–named after the bellicose, populist seventh president—have long been an important, if minority view in American foreign policy thinking. Epitomised by the President’s ideological guru Steve Bannon, Jacksonians are populist (so distrustful of elites in general, let alone foreign ones), strongly nationalistic (caring solely about the American people), transactional (allies are only as useful as what they have done for America lately), and utterly relaxed with using force to specifically preserve American honour and narrow American interests.

 Jacksonians constitute a minority branch of realism that has suddenly and dramatically found its day in the sun under the new administration. As is true for Trump and Merkel personally, it is hard to imagine two creeds more diametrically opposed than the Wilsonianism of the Germans and the Jacksonianism of the new White House.

 Even more classical realists like Defence Secretary James Mattis and National Security Adviser H.R. McMaster are likely to ruffle German Wilsonian feathers. While far more accepting of the need to work with allies (frustrating as they can be) and to work in national coalitions of the willing to tackle common problems based on having specific shared interests, garden variety realists still do not make a fetish of alliances for their own sake, and demand that Europeans contribute in a way they have seldom been pushed to do so.

 Mattis’s recent declaration to Washington’s NATO allies that the US cannot care more about European security and Europeans do (given their shameful free riding off the American military due to their anaemic defence spending), is a common theme expounded upon by these more polished internationalist realists, as well as the more rough and ready Jacksonians such as Bannon. Given Germany’s woeful defence efforts (a paltry 1.19% of GDP in 2015) and stubborn refusal to do much to change this, an ideological and policy collision of some sort is practically inevitable.

 Different Policies for Different Worlds

 If the US and Germany are universes apart in terms of the efficacy of defence spending in the international arena (and the corresponding funding of their militaries), driving a stake through the heart of NATO, the same holds true for their positions on the EU, the other pivotal international institution in German eyes.

 While the success of the embattled EU is by far Berlin’s number one foreign policy priority, the Trump White House looks on Brussels with a mixture of contempt for its weakness (compared to its over-puffed sense of itself) and ideological antagonism, due to its elitist, technocratic, supranational ethos. Over time, the best that the German government can hope for from the Trump White House over this issue is indifference.

 This is particularly hard on the Germans, used to ritual American protestations of support for the European project. While for many years now these declarations of support have been little more than rhetorical, in many elite German eyes the continued benign support of the world’s only superpower matters, as it illustrates that Europe (and Germany) are not alone in their desire to make the EU the greatest of successes.

 At a deep psychological level, American support for the EU meant Europe was not being left alone, with all the historical baggage that entails. Ironically, the best Berlin can now hope for from the Trump administration is to be left alone.

 Practically, in terms of policy, this means if Brussels continues to fail to master the north-south euro crisis or the east-west schisms that have developed as a result of the refugee crisis, it is Berlin alone—with scant help from Washington—that will have to make the existential decisions about the future of the European project.

 Assuming the victory of Emmanuel Macron in the French presidential elections, he will be the last, best, chance the French elite have to right the ship of state after thirty years ignoring economic realities and the corresponding pathetic rates of French growth. Five more years of less than two percent growth, more terror attacks (tragically highly likely), and a lack of serious structural economic reform means a Le Pen presidency is a real possibility the next time, as—given those circumstances—populism would continue to be explosively on the rise in France. 

 Years of ineptitude and inaction have already taken their toll. For the first time in the history of the Fifth Republic it is highly likely this year that both the two major, established parties of the French right (the Republicans) and the left (the Socialists) will not have a candidate between them in the final round of voting in the French presidential election.

 Coupled with the fact that Macron will not have an established party behind him, betting against his chances to on his own manoeuver structural economic reform through the French parliamentary system (let alone highly traditional French society) is a reasonable wager for the Front National (FN) to make. Macron’s demise would signal the end of France as a pro-EU country, as well as the obliteration of three generations of German foreign policy.

 Germany also has its eyes nervously on its neighbour to the south as well as the west. For Italy is also too big to fail, and near the edge of a political nervous breakdown. Again, the causes are clear. Tellingly, the IMF estimates the country will not return to its pre-Lehman crisis economic size until far off 2025. As is true in France, the Italian political elite is tarred with the brush of colossal, endemic economic failure, with both the left under Renzi and the right under Berlusconi being severely discredited in the process.

 This has opened the door to the populist, euro-sceptic Five Star movement, waiting in the wings for the present—and yet another—cobbled together weak establishment Italian government to fail, proving Five Star’s point about the haplessness of the present Italian elite, as well as its subservience to Brussels (for which read Berlin) over the economic issues that truly matter.

 The Italians must hold elections by February 2018. According to today’s polling, the most likely outcome is that Five Star win a plurality of the seats in parliament, but that the establishment parties of the left and right band together—in an unnatural, unsustainable coalition—not accomplishing much of anything in terms of structural economic reform. At this point, just a few years down the road, Five Star could well find itself in power. A referendum on Italy staying in the euro would be sure to follow.

 As in France, Italian populism is powered by the obvious failure of political elites to enact structural reforms leading to a steady two percent yearly rate of growth. Short of this, in German eyes, the European project has only two or three years to go before the real existential political crisis of populism hits, calling into question the survival in its current form of the European Union itself.

 It is in this policy context of looming existential political crisis for the EU that the Trump administration’s dramatic policy about-face on Brussels must be viewed. Frankly, it could not come at a worse time for Berlin, with the whole EU edifice noticeable wobbling, due to the rise of populism, Brexit, the endemic euro crisis and the unresolved tensions arising out of the refugee crisis.

 In German eyes, if ever there is a time for American support now would seem to be the moment. Instead, the Trump White House is hostile toward a European project that America has supported for generations, just at the very moment unstinting support is called for by Atlanticist Germans such as Chancellor Merkel. Over the EU, America has morphed from steadfast ally to at best, hostile onlooker.

 Conclusion: New words and new thinking are needed to describe the world

 Words matter, and in the new multipolar era we find ourselves in, it is time we learn again to use them correctly. Simply put, the US and Germany are no longer allies in the Cold War sense of the term. No longer forced into lock-step loyalty by the unbending logic of the global bipolar system of US-Soviet domination, in our new multipolar world, it was always highly likely that US-German relations would loosen, as both sides have the relative luxury to disagree about more things more often.

 But far more than this is going on just now. Personally, ideologically and over the two basic transatlantic institutions (NATO and the EU), Berlin and Washington simply do not agree about either how the world works, or what should be done to tackle its many problems. While neither the US nor Germany are enemies, based on this undisputed reality it is hard to see how they can be called allies at the moment, either.

 And perhaps this new reality is the key to understanding how states must work together in our new shades-of-grey multipolar world. As the US-German case illustrates, far fewer countries will be outright enemies or fast friends as was the case in the simpler bygone era of 1945-1991. Instead, countries will more and more work together over specific areas and over specific issues—based on shared interests—with all but a precious few countries (for the US say, Britain as lock step ally and ISIS as implacable enemy) sitting somewhere on the continuum between friend and foe.

 The new era that evolving US-German ties illuminates requires a new vocabulary for looking at how and why and when states will actually work together. More importantly, after decades of ossified geopolitical analysis, it requires new thinking to make sense of the fascinating, perplexing world we now find ourselves in.

 Published in Aspenia Italia, April 2017.  

 

          

  

 

 

 

Unilever and the confused priorities of the Davos elite

If Angela Merkel epitomises the overrated in terms of international statesmanship, her equal in corporate terms must be Paul Polman of Unilever. As is true with the German Chancellor, it us unfathomable to me that the leader of a major corporation with a record this hapless should be lionised. For the larger point is that both are symbols of a world that has forgotten that, in healthy societies, recognition must coincide with a record of real accomplishment.

In Polman’s case, his peculiar talent is to perfectly talk the talk of Davos Man, the globe elite who–despite foreign policy disasters in Iraq and economically running the world into a ditch post-Lehman—somehow still thinks they are the repository of global governance wisdom. Since taking over Unilever in 2009, Polman specifically has talked sonorously about water conservation and the dangers of global warming, decreasing the Anglo-Dutch company’s carbon footprint, using more sustainable materials in making the Dove soap and Lipton tea that are two of Unilever’s core brands, and promoting global health.

All of these are worthy causes, and if I were looking for the new head of Oxfam I might well consider Polman for the job. The problem is that a fixation on these societal goods does not necessarily dovetail with a passionate commitment for maximising shareholder value that is the ultimate moral duty of any company chief.

In line with the general philosophical confusion of much of the Wilsonian centre-left, Polman ignores the fact that, in the real world, trade-offs amongst positive goals are merely a fact of life. When asked how much time he spends on specific Unilever business compared with cajoling politicians around the world to sign onto the Davos wish list, Polman tellingly has replied, ‘To me it is the same. I don’t separate that.’

But of course it is not the same. By refusing to prioritise between maximising shareholder value and saving the world, Polman is likely to do neither. For a man who loves everything loves nothing and helps nothing. Life is about priorities, about making choices, not ducking them.

Of course, setting the bar so morally high also leaves you open to endless charges of hypocrisy. In Unilever’s case its global reach has, under Polman’s watch, led it to reaching a settlement over allegations of mercury poisoning in India, while being accused of monopoly practices in South Africa, being slow to halt sexual harassment on its tea plantation in Kenya, and poor labour practices in Vietnam. While Unilever has moved to correct the abuses, in practical terms the company can never be as saintly as Polman’s rhetoric.

But it is Polman’s business record that is perhaps the greatest cause of concern, flowing as it does from his confused all-things-to-all-men Davos philosophy. Banishing reporting of quarterly returns (I would too if my record were as poor as his), Polman urges the world to take the long view. Let us take him at his word.

In the 12 months to 15 February 2017, just before Kraft Heinz announced a $143 billion takeover bid, Unilever’s share price rose some 10 percent. The wider FTSE 100, however, soared by some 28%. In the fourth quarter of 2016, Unilever’s sales missed expectations globally, while falling 2.3 percent in Europe, with many forecasters expecting even worse times ahead in 2017. Defending these poor recent results, Polman blamed both the ‘shock’ of Brexit, wherein the pound fell by 20% against both the euro and the dollar. He also pointed to Prime Minister Modi’s ‘surprise’ anti-corruption campaign, where the Indian government withdrew 500 and 1000 rupee notes, which undercut Unilever’s business there.

But, as regular readers of this column well know, neither of these events should have been surprising (as they have not been to me), and the possibility of both should at a minimum have been planned for. Instead of doing this, the lure of attending another development conference with the great and the good seems to have been to much of a temptation for Polman. For he has certainly taken his eye off the analytical ball.

There only so many hours in the day. And where you put your time in life, there also shall be your treasure. Polman–mindlessly lauded by the city elite—has made it unambiguously clear where his priorities lie. He has straightforwardly said, ‘I am really more interested in development.’ There is nothing at all wrong with this. But it is not overmuch to point out that a company as important as Unilever (with 168,000 employees in 2016) deserves a full time chief executive.

In the wake of the crash caused by many of his Davos colleagues, Polman has earnestly called for ‘a better form of capitalism.’ My gentle suggestion is that Unilever deserves a better form of capitalist.

Published in City AM, March 20, 2017

Italy’s dying elite is dragging the Eurozone ever closer towards the abyss

Venice—The great German novelist Thomas Mann once rightly described this bejewelled city as one of ‘flattering and suspect beauty, half fairy tale and half tourist trap’. The same can be said for the country of Italy as a whole, where things are rarely as they seem.

For the problem with political soap operas is when they become suddenly deadly serious, as is presently happening in a country where political schisms are as common as great food and peerless scenery. The wounded ruling Democratic Party (PD) has split, with the rebels forming a new party called (confusingly enough) the DP, The Progressive and Democratic Movement.

It seems as if we are all trapped in the unbeatable scene from the great Monty Python movie, Life of Brian, where the Pythons sketch out in hilarious detail the infinitesimal differences that have led the anti-Roman movement to splinter into a thousand pieces.

Yet lurking just beneath the obvious hilarity of the endless splits in the Italian left—founded at least as much on personal jealousies and vendettas as real political disagreements—something terribly serious is going on here. As this column predicted, the defeat of former Prime Minister (and present beleaguered head of the PD) Matteo Renzi leaves Italy just two moves away from bolting from the euro-zone, dooming the whole flawed project to its final reckoning.

If the radical populist Five Star movement of comedian Beppe Grillo were to win the next election (which must be called by February 2018 at the latest), that arch euro-sceptic has vowed to call a referendum on euro-membership itself. Present opinion polls place such a pivotal vote as too close to call.

Formerly staunch euro-federalists, Italians have grown ever more sceptical as their economy has moved backwards since the Lehman crisis of 2008. In February 2017, the European Commission warned Rome it must reduce its Everest-like debt mountain of 133% of GDP. Presently, youth unemployment hovers at 36%, a Depression-era level by any measure. Worse, Germany (and its EU henchmen) are seen increasingly by Italians as the villain of the piece, forcing the country into endless rounds of austerity without delivering the economic growth which is the only thing to make such a sacrifice politically palatable.

With Renzi’s PD split, an Ipsos poll of February 2017 had the Five Star movement pull into the lead for the first time, with 30.9% of the projected coming vote. The PD was down to 30.1%, with Silvio Berlusconi’s discredited Forza Italia movement at 13%, and the rising populist, anti-immigrant Northern League on 12.8%. As the PD is all that is left of the Italian political elite, its recent schism makes the odds on Five Star coming to power more and more favourable.

And there is no one waiting in the wings to save the Italian elite from itself. Renzi was discredited by his December 2016 overwhelming referendum defeat over electoral reform. Berlusconi was discredited by his many wasted years in power, where Italy failed to undertake the desperately needed structural reforms to make its economy fit for purpose in the post-Great Recession era. Both the established left and the right in Italy have taken to falling apart internally, making their failures seem both comical and contemptible.

It is as if we are in a late scene in Lampedusa’s grand, tragic masterpiece, The Leopard, where Don Fabrizio, the Prince of Salina, entirely comprehends both that his world is falling apart, and that he will do absolutely nothing to stop it. Last week, in a dinner with influential Italian friends of 20 years, the ghost of Don Fabrizio was explicitly conjured up, in order to explain to me what is presently going on in Italian politics.

For my wise and kind hosts were explaining that the Italian established order as it has been known here is dying, and more importantly why no one is doing much of anything to halt this slide into the abyss. But there are bigger beasts about to be slain here. For Italy–unlike its equally ailing fellow euro-zone member Greece—is simply too big to fail. Neither Brussels nor Berlin can hope to bail it out. As such, the coming populist rejection of the euro by Italy would definitively spell the currency’s end in its present form.

The organic political scene in Italy suits its nature, part comic, part tragic, and very human. However, this time the consequences of Italian political failure could well prove incalculable for Europe as a whole.

Published in City AM London, March 6, 2017.