President George W. Bush will meet with Germany's new Chancellor Angela Merkel at the White House on Friday. The summit will be an important opportunity for Washington and Berlin to lay the groundwork for greater cooperation in the war on terror and in confronting the growing threat posed by rogue regimes such as Iran and Syria. The meeting will also pave the way for an easing of tensions between Germany and the United States in the wake of the Iraq war and a modest warming of relations.

However, the Merkel chancellorship does not herald a fundamental transformation of the U.S.-German relationship. Washington must not raise its expectations too high with regard to relations with Germany in the post-Schroeder era. Merkel's ability to act on the international stage will be heavily constrained by her coalition government and the fact that many key positions in the new administration are held by members of the Social Democratic Party (SPD). Some of the most important portfolios in terms of U.S. interests are held by remnants of the Schroeder government, which could barely disguise its contempt for the Bush Administration.

And Angela Merkel is no Margaret Thatcher. Merkel has so far demonstrated no appetite for pushing for the kind of intensive economic reform that Germany needs to reverse years of economic stagnation, and has actually proposed higher taxes as her solution to the country's economic woes. As a committed Euro-federalist, Merkel is also a firm believer in closer political integration in Europe, despite the rejection of the European Constitution by France and Holland. She has reiterated the traditional German view of the central role of the Franco-German axis in the European Union. In Merkel's words, "Germany and France, with their notions about the social market economy and globalization, should be driving forces."

Germany should be viewed as an important ally in some areas critical to U.S. interests, including the NATO mission in Afghanistan and the battle against al Qaeda. However it should also be seen as a vocal potential opponent of U.S. interests in other key areas, including the scrapping of trade subsidies in the European Union, the European Constitution, and the role of international institutions and treaties. Germany's worldview, particularly in terms of public opinion, is increasingly shifting away from that of the United States. Germany has largely become a pacifist nation, with a growing belief in submerging its national sovereignty and identity within supranational organizations such as the EU and the United Nations.

Germany is a mid-level power on the international stage with little global projection of military might and limited geo-strategic influence outside of Europe, and so it is natural that Germany's primary foreign policy focus will not be the United States but her relations with Europeans neighbors, principally France, Russia, the UK, and Poland. Unlike Great Britain or France, Germany has few global aspirations, with the exceptions of a UN Security Council seat and expanding trade markets. The Germans consistently punch below their weight on the world stage, despite possessing the world's third largest economy. As Chancellor Merkel noted in a recent news conference, "by European and global standards Germany is in a state of decline."

Washington must adopt a hard-nosed approach in its relationship with Germany, an approach fundamentally different from the close Anglo-American special relationship. The U.S. should work with Germany on an issue-by-issue basis, cooperating with Berlin on matters where there are closely aligned common interests but strongly opposing German policy in areas of disagreement.

German Policy on the World Stage

The Merkel administration has pledged to strengthen Germany's ties to the United States and reduce tensions between Berlin and Washington after a disastrous period in U.S.-German relations since 2002. However, the new government has signaled that it does not foresee a significant shift in policy on most of the key issues that divide the two countries, including Iraq, strategies for waging the war on terror, expansion of the EU to include Turkey, reform of the UN Security Council, the legitimacy of the International Criminal Court, and the implementation of the Kyoto Protocol on global warming.

Those expecting a renaissance in U.S.-German relations are likely to be disappointed. While the relationship between the White House and the Chancellery will be more cordial, underlying policy tensions will remain. The United States will continue to face a German public that is overwhelmingly hostile towards U.S. foreign policy and which is likely to remain so. Many Germans now see America as a threat to world peace, rather than the defender of international security and democracy. In a 2005 poll conducted for the German Marshall Fund and the Compagnia di San Paolo, 60 percent of Germans stated that it was "somewhat undesirable" or "very undesirable" for the United States to "exert strong leadership in world affairs." Just 5 percent believed that U.S. leadership was "very desirable."

Despite her strong support for the Iraq war, a hugely unpopular position in Germany, Angela Merkel has pledged not to send German troops to Iraq. The deployment of German soldiers to the Middle East would instantly split the CDU/SPD coalition and force the fledgling government to collapse. It would also be strongly opposed by many in Merkel's own party.

Instead Merkel will continue the Schroeder government's policy of supporting Iraqi stabilization and reconstruction efforts without a direct military footprint inside Iraq. Germany has trained Iraqi police and units of Iraqi engineers in the United Arab Emirates since May 2004. In addition, Germany has provided $200 million in reconstruction funds and forgiven 4.7 billion euros in Iraqi debt.[4] Merkel has also pledged continuing German support for the NATO-led International Security and Assistance Force (ISAF) in Afghanistan, which includes 1,600 German troops.

Like Schroeder, Merkel will be a strong supporter of institutions such as the United Nations and the International Criminal Court, as well as lofty global conventions such as the Kyoto Protocol. Her foreign minister Frank-Walter Steinmeier has given the UN notice that the new German administration will aggressively pursue a permanent seat on the Security Council as part of the Group of Four (G-4) nations, which also includes India, Japan, and Brazil. So far, the United States has signaled its support for Japan's application but has strongly opposed the broader G-4 application, which is likely to be a significant source of tension between Washington and Berlin in 2006.

Germany and the War on Terror

In the war on terror, President Bush should find in Merkel an important ally on the international stage, though the White House should not anticipate another Tony Blair, who has emerged since 9/11 as an eloquent and powerful world leader in the fight against al Qaeda. U.S.-German cooperation in the battle against global terror should be stronger in the post-Schroeder era, especially in terms of intelligence cooperation. There will still be tensions, however, especially over the U.S. rendition of terror suspects and the CIA's secret prison facilities.

Another major source of tension is Germany's continuing refusal to extradite terror suspects to face trial in the United States because of German opposition to the use of the death penalty. This was highlighted by German authorities' recent decision to release convicted Hezbollah terrorist Mohammad Ali Hammadi, whose extradition to the United States has been long requested.

In 1989, a German court convicted Hammadi, a Shiite militant from Lebanon, of the brutal killing of U.S. Navy diver Robert Dean Stethem in the June 1985 Hezbollah hijacking of TWA Flight 847 from Athens to Rome. Stethem, singled out because he was an American serviceman, was savagely beaten before being executed and dumped on the tarmac of Beirut International Airport. Hammadi had been sentenced to life in prison but was released in the face of strong opposition from the U.S. Government in December 2005 and flown to Lebanon after serving less than 19 years behind bars.

Key Recommendations for the Bush Administration

Maintain a Balance of Power in Europe. The Paris-Berlin alliance will continue to be a dominant force in German thinking under Angela Merkel. However, the Merkel/Chirac dynamic will be weaker than the Schroeder/Chirac partnership, with potential disagreements over issues such as the China arms embargo. It will be in the U.S. interest to maintain a healthy balance of power in Europe, and where possible the United States should seek to strengthen collective and bilateral ties between Berlin and close U.S. allies such as London and Warsaw. As well, the U.S. should support a firm German commitment to the NATO alliance, which will enhance America's strategic influence in Europe.

Call for a Europe of Nation-States. The position of the Bush Administration should be clear: it supports a Europe of democratic nation-states where the principle of national sovereignty is paramount and sacrosanct. Washington should give no encouragement to the idea of resurrecting the European Constitution, which has been firmly rejected in two of the European Union's leading members. The development of an undemocratic, centralized Europe is neither in the interests of the continent nor the United States.

Foster Greater U.S.-German Cooperation in the War on Terror. President Bush should push for Germany to adopt a more robust role in the global fight against terror, including a greater commitment to enhanced defense spending. The President should also call for European governments to cooperate with the United States by extraditing terror suspects to face prosecution in the U.S. and by classifying Hezbollah as a terrorist organization. As well, he should seek a clear explanation from the German government regarding the release of convicted terrorist Mohammad Ali Hammadi.

Increase the Pressure on Iran. Washington and Berlin should push the International Atomic Energy Agency to refer Iran's violations of its nuclear safeguard agreements to the UN Security Council. The United States, Germany, Great Britain, and other allies in Europe should forge an international coalition to impose targeted economic sanctions on Iran and strengthen military, intelligence, and security cooperation with threatened states, such as Iraq, Turkey, Israel, and the members of the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates). Such a coalition could help both to contain the expansion of Iranian power and to facilitate military action, if necessary, against Iran.

Encourage German Economic Reform. Washington must push aggressively for Germany to adopt market friendly policies aimed at making its economy more competitive, open, and dynamic. As Germany's largest trading partner outside of Europe, with bilateral trade valued at nearly $155 billion, the United States has a huge vested interest in the health of Germany's economy. Germany is also a major foreign investor in the United States, with investments worth just under $150 billion, providing 800,000 U.S. jobs.

Press for Real Reform of the Common Agricultural Policy. The Franco-German driven CAP is the world's largest barrier to free trade, accounting for 85 percent of the world's agricultural subsidies. The CAP consumes over half the EU's budget and costs EU taxpayers roughly $46 billion per year.[9] The Bush Administration should call on the new German chancellor to push for trade liberalization by the EU and to advance the reform process for a trade policy that is hugely damaging to the United States, the developing world, and Europe itself.

A Pragmatic Relationship

Washington must adopt a pragmatic, realistic approach toward working with Germany. Realpolitik must be the order of the day. As the EU's largest economy and member by population, Germany is simply too large a player to be ignored. It is in the U.S. interest to actively engage Berlin on an issue by issue basis, working together where agreement can be reached. But Washington should be under no illusions that the Germany of today is the same as that of Helmut Kohl or Konrad Adenauer in its approach to transatlantic relations.

Nile Gardiner, Ph.D., is a fellow in Anglo-American security policy at The Heritage Foundation.

John Hulsman is research fellow in European affairs at the Heritage Foundation.