Biden and Berlin: How Germany can help reset transatlantic relations

The election result in the United States (USA) is now certain. Despite the refusal of leading Republicans to recognize the election result and to congratulate the election winner, everything now speaks in favor of the next (and thus 46th) President of the USA being Joseph R. Biden, Jr. This means an experienced Washington insider will again sit in the Oval Office, marking a return to more typical pre-Trumpian forms of policy and diplomacy.

Biden has made clear that domestic priorities will be the primary initial focus of his presidency, including getting on top of the coronavirus crisis and stabilizing the chaos within US bureaucracy resulting from Trump’s unorthodox – to put it mildly – “firing and hiring” method for replacing competent staff with loyalists. Biden also hopes to reduce the deep partisan divide now apparent in the US voting population. This will not be easy because the division within the US is deeply rooted.

Restoring American leadership

One approach to healing internal divides can be through restoring America’s leadership in international relations, which the current president sought to scale back in many areas and in ways that led some observers to compare him with a wrecking ball. With a mixture of openness to multilateral rules and the protection of American interests, the majority of Americans could be persuaded to get behind a national vision for global leadership.

In this context, the future President Biden has already made several promising announcements. With a view to the multilateral order, observers expect the cancellation of both the termination of the Paris climate agreement and the withdrawal from the World Health Organization (WHO). There is also hope with regard to international treaties such as the nuclear agreement with Iran. And last but not least, it is expected that the blockade by the US of the World Trade Organization’s (WTO) Appellate Body, which is crucial for settling trade disputes, will come to an end.

Improving transatlantic relations

The US's bilateral relations with the rest of the world should also be clarified. On the one hand, the soft behaviour towards dictators and autocrats will become more principled again, and on the other hand, relations with US partners will become more predictable and friendlier. In Europe, above all in Germany, one sees an end to the transatlantic conflicts in sight, even if it seems certain that the USA will attach increasing importance to transpacific relations. In Berlin almost all prominent politicians conjure up the importance of transatlantic relations; the hope is expressed that the first foreign visit will take the new President to Berlin and Brussels. According to reports, he has already made phone calls to heads of government in Europe.

Against the background of the future president's political restrictions, improving transatlantic relations - beyond the rhetoric - will not be a sure-fire success, as has been pointed out on the issues in transatlantic trade for example. But differences aside, it is now clear that the relationship between the West and China needs to be redefined, and the US and EU need to take a common position, so that a transatlantic partnership is strongly in the interest of both sides. In addition, there are specific German-American topics that affect other European countries. The key to this - and thus to the transatlantic relationship - clearly seems to lie in Berlin, in several respects.

The view from Berlin

First of all, there is a great deal of German interest in good relations across the Atlantic. The German economy needs American cooperation particularly strongly on two levels: Firstly, bilateral tariffs and non-tariff restrictions in transatlantic trade are particularly annoying for an industry-heavy and export-dependent economy like ours. Secondly, our economy is also suffering from the longstanding obstruction of the WTO by the USA, which de facto paralyzes the dispute settlement mechanism, and the refusal to accept the successor to the resigned Director General Roberto Azevedo.

This fundamentally critical stance towards the WTO is not an invention of the Trump administration, but existed before (when Mr Biden was Vice President). In this regard, there is a great deal of German interest in more cooperation, also with a view to reforming the WTO. The US too – albeit in a different respect – has a great interest in German cooperation, namely in defense policy. Here, too, a conflict has long been simmering about German defense spending, which is well below the NATO target of 2 percent of gross domestic product (GDP). In view of the dire situation of the Bundeswehr, this gap is incomprehensible from the perspective of German self-interest and should now be closed.

A second issue in the German-American relationship is the Nord Stream 2 Baltic Sea pipeline, which is to transport Russian gas to northern Germany in the future. The US has two reasons for being skeptical. The first reason is economic. The US gas suppliers are looking to increase European market share. Here the federal government should make it clear that Germany is looking for its own procurement markets. External interference is to be rejected.

The second reason for criticism from the USA of German politics is, however, relevant, namely the potential dependence on Russia, which Germany and Europe could become with the expansion of transport capacities for Russian gas to Germany.

This is mainly a problem because NATO's relationship with Russia is still extremely tense. With the ability to control delivery, Russia could attempt to drive wedges between NATO members. Therefore this argument should be taken seriously. In addition, many European partners in Germany view the construction of the pipeline with great concern and therefore reject it. If you weigh up the advantages and disadvantages of the construction and operation of Nord Stream 2, there are many arguments in favour of at least suspending operations.

The construction could be completed and a signal could be sent to Russia that the German side is generally interested in further gas deals with Russia, but only if Russia shows itself to be a reliable partner. That would at least mean that the cyber war against the USA and the EU will be stopped as well as the constant provocations of the neighbors at the borders. The annexation of Crimea will be the subject of fair and open negotiations with Ukraine, and human rights violations in Russia will also cease. So far, all sanctions have been unsuccessful, and pausing the gas business to generate political leverage could contribute to long-term success.

The German government could introduce this pause in the German-Russian gas trade, alongside an increase in defense spending as an offer in the negotiations with President Biden over the newly defined role of the USA in the global order (climate, health, foreign trade, security). This guarantees the new president a diplomatic success that one hopes could be sold positively to a majority of Americans. And the Germans would have achieved an improvement in transatlantic relations for themselves and the Europeans, which, especially during the time of the European Council Presidency, can be seen as a real contribution to European integration. That would be a great legacy from the Chancellor!

Andreas Freytag, Professor and Chair of Economic Policy, Friedrich Schiller University, Jena and Visiting Professor with IIT

The views expressed here are the authors’, and may not necessarily represent the views of the Institute for International Trade