President George W. Bush travels to Germany this week to meet with Chancellor Angela Merkel ahead of the G-8 summit in Moscow. In her first months as German leader, Merkel has made a significant effort to improve relations between Washington and Berlin in the wake of the tensions produced by disagreements over the war in Iraq.[1] The overt hostility that characterized U.S.-German relations in the Gerhard Schroeder era has largely disappeared, replaced by a more cordial working relationship between the White House and the Chancellery. Merkel's visits to Washington in January and May were viewed widely as a foreign policy success, and Germany has worked closely with Washington on an array of foreign policy issues, including the Iranian nuclear crisis and the NATO operation in Afghanistan.

However, despite the thaw in relations between the United States and Germany, underlying long-term tensions still remain, particularly in regard to the war on terrorism, with Guantanamo and rendition remaining major issues of contention. German public opinion is still largely hostile toward U.S. foreign policy, and anti-Americanism remains a major force in German politics. Many Germans see America as a threat to world peace rather than as the defender of international security and democracy.

Merkel's own freedom to maneuver on the world stage is limited by her governing coalition and the left-wing Social Democratic Party (SPD) members who hold key positions in her administration. It is striking that some of the most important portfolios in terms of U.S. interests, including foreign affairs and economic policy, are held by remnants of the Schroeder gov­ernment, which could barely disguise its contempt for the Bush Administration.

Schroeder's direct influence has continued through the presence in the German cabinet of Frank-Walter Steinmeier, his closest adviser and long-time protégé. Steinmeier, who was Schroeder's chief of staff, took over from Joschka Fischer as Germany's foreign minister, widely regarded as the second most powerful position in the German gov­ernment. Steinmeier was extremely influential in shaping Schroeder's international outlook and pledged "continuity" in German foreign policy.[2]

It should also be acknowledged that Angela Merkel is no Margaret Thatcher. Merkel has demonstrated little appetite for pushing the kind of intensive economic reform that Germany needs to reverse years of stagnation. Astonishingly, she has pro­posed tax increases as a 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 in France and Holland. She has reiterated the traditional German view that France and Germany together, "with their notions about the social market economy and global­ization," must remain the driving force of the European Union.[3]

Germany is an important ally in some areas critical to U.S. interests, including the NATO mission in Afghanistan. However, it should also be seen as a vocif­erous potential opponent of U.S. interests in other key areas, including aspects of the war on terrorism, the scrapping of trade subsidies in the European Union, the European Constitution, and the role of international institutions and treaties. The worldview in Ger­many, particularly in terms of public opinion, is increasingly shifting away from that of the United States. Germany has become a largely pacifist nation, with a growing belief in submerging its national sov­ereignty and identity within transnational institu­tions such as the European Union and the United Nations. These trends are counter to U.S. interests.

Recommendations for the Administration
Washington must adopt a hard-nosed approach in its relationship with Germany, which is 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 of closely aligned common interests but strongly opposing German policy in areas of disagreement.

Specifically, the Bush Administration should:

• Encourage a healthy balance of power in Europe. It is in U.S. interests that no single bloc dominate continental Europe. The straitjacketed Franco-German axis driven by Gerhard Schroeder and Jacques Chirac posed major problems for the U.S. in its efforts to build support in Europe ahead of the Iraq war. The Bush Administration should strongly back the new German government's efforts to imple­ment a more flexible policy in Europe by strengthening Germany's bilateral ties with pro-U.S. allies such as Poland and Britain. Closer relationships between Berlin and solid U.S. allies, as well as a firm German commitment to the NATO alliance, will enhance America's strategic influence in Europe.
• Support a Europe of nation-states. Washing­ton should strongly welcome the death of the European Constitution in the French and Dutch referenda. The posi­tion of the Bush Administration should be clear: The U.S. supports a Europe of democratic nation-states where the principle of national sovereignty is paramount and sacrosanct. Washington should offer no encouragement for resurrecting the European Constitution, which two of the EU's leading members have firmly rejected. The development of an undemocratic, centralized Europe is in the interests of neither the continent nor the United States.
• Press for greater U.S.-German cooperation in the war on terrorism. Washington should both push Berlin to adopt a more aggressive role in waging the global war on terrorism and call for a greater degree of military, judicial, and intelligence cooperation between Germany and the United States. President Bush should express strong disapproval of the German decision to free convicted terrorist and murderer Mohammad Ali Hammadi and seek a clear explanation of his release.[4]
• Call for real reform of the EU's Common Agricultural Policy (CAP). The Franco-Ger­man-driven CAP is the world's largest barrier to free trade, accounting for 85 percent of the world's agricultural subsidies.[5] The CAP accounts for a staggering 40 percent of the EU's €100 billion budget, and European taxpayers are forced to pay over €80 billion in subsidies and higher food costs.[6] The biggest beneficiary has been France, whose farmers receive up to a quarter of EU agricultural subsidies, amounting to over €150 billion between 1994 and 2003.[7] The Bush Administration should call on Chancellor Mer­kel to push for trade liberalization by the EU and advance the reform process for a trade pol­icy that is hugely damaging to the United States, the developing world, and Europe itself.
• Encourage German economic reform. Wash­ington must push aggressively for Germany to adopt market-friendly policies aimed at making Germany a more competitive, open, and dynamic economy. 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 German 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.[8]
• Increase pressure on Iran. 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. The potential use of force to disarm the Iranian regime as a last resort must also be on the table.[9]

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

Nile Gardiner, Ph.D., is the Bernard and Barbara Lomas Fellow and Director of the Margaret Thatcher Center for Freedom, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation.