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IA-Forum Q&A on Germany: Mr. Marian Tupy

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IA-Forum's first installment of its Q&A series on Germany with Mr. Marian Tupy of the Cato Institute. Mr. Tupy Marian L. Tupy is Cato's assistant director of the Project on Global Economic Liberty. He has appeared on BBC World and Voice of America. He had his articles published in Wall Street Journal Europe, Washington Times, Investors' Business Daily and Nationalreview.com.

International Affairs Forum: Though longtime allies, the Germans and United States have experienced increasingly divergent views on foreign policy and other issues in recent years. How strained do you view the relationship? How recoverable is it?

Mr. Marian Tupy: The relations between the two countries were never “perfect.” Willy Brandt’s “Ostpolitik” was treated with suspicion in Washington and Reagan’s decision to place Pershing missiles in Europe was deeply resented in Germany.
Following German unification, Germany started to play a more prominent role in European foreign policy. Also, WWII is more distant in the memory of most contemporary Germans, who don’t see the need for Germany to play a subservient role to the French or American interests.
The future of German-US relations will increasingly need to be considered in terms of US-EU relations.

IA-Forum: European leaders, Schröder among them, seemed more comfortable to embrace President Putin and his attempts to manipulate the Ukrainian political landscape than embracing President Bush who, in his foreign escapades, restricts himself to dictatorships. What, if anything, could be gathered from this choice? Is it a decision clouded solely by emotional "anti-Bush /Americanism?

Mr. Tupy: Clearly, there are feelings of anti-Americanism in Germany and the EU and Schroeder did an excellent job exploiting those feelings at the time of the last general elections in Germany. In the Bush White House, where loyalty is prioritized, Schroeder will never be trusted again.
On a more general note, anti-Americanism provides an excellent ideal around which the Europeans can unite and so, at present, the EU is being built as a balancer to the USA. Since Germany is the biggest player in the EU, one has to assume that Germany does not object to the idea of the EU as a balancer to the USA.
Whether the EU and US diverge further will much depend on a number of factors. Internally, one will need to see just how pro-American the new EU countries are. I think that the public in these new countries is quite anti-American, but that their governments – always fearful of Russia in the East and Germany in the West – will do anything to keep the US involved in the European defense structures. Much will, of course, depend on the US foreign policy. American foreign policy mistakes (e.g.: handling of Iraq) are likely to drive the Europeans together at a much greater speed than thousands of committed bureaucrats in Brussels ever could.
Cozying up to Putin can, in my view, be interpreted as an expression of European foreign policy impotence at this point. Russia has what the EU does not – military capability and foreign policy clout. When Russians speak, Americans have to listen. Closer cooperation with Russia enables the EU to punch above its weight.

IA-Forum: Germany still has hopes for a seat in the UN security council. In Europe, Italy is most outspokenly against this, but surely, the United States is not likely to help this ambition in any way. Has Germany any chance in the foreseeable future to clinch a more important position within the UN? What must it do if it is to have any chance for a seat in the security council?

Mr. Tupy: So long as the American veto on the UN SC is preserved, the Americans will not need to put themselves in the position of spoilers of German ambitions. If I were German, I would worry about the British and the French.

IA-Forum: Bush and Schröder are due to meet in Mainz on Feb. 23, a day after the newly re-elected president meets NATO. U.S. officials have said Bush's trip to Europe is designed to mend relations that were damaged in the run-up to the U.S.-led war in Iraq, opposition to which was the key plank of Schroeder's re-election campaign in 2002. Other issues include the fight against terrorism, Afghanistan, Iran, the Palestinian situation, and trade expansion with China. What can be realistically be gained from this summit? What should be? How should Schröder conduct these dialogues with a US President who’s perceived as ignoring the needs of Europe and acts unilaterally?

Mr. Tupy: At the risk of sounding skeptical, I don’t think this is going to be a serious meeting. Bush needs to meet someone in Europe who opposed him in Iraq in order to show that the US is serious about better relations with Europe. He was not going to visit France because of his loathing of Chirac (shared by millions of people in the USA). But ultimately, Mainz is going to be an expensive photo opportunity and very little else. The real business will be discussed between Bush and Putin in Bratislava.

IA-Forum: The German economic reforms have finally taken some shape - but there is concern that while it is now harder to be jobless, it is by no means easier to get a job. Is the commodities- and job market in a position to deal with the necessary recovery and reduction of unemployment?

Mr. Tupy: No. The German economic reforms were too weak and too few to start with. Moreover, the government proposals were emasculated in the Bundestag. Overall, the German labor market is one of the most regulated in Europe and German productivity is decreasing relative to other developed nations.
The German government’s battle to hang on to the jobs in the manufacturing sector (which is under increasing pressure from foreign competitors) is a loosing one. Britain in the 1980’s lost much of her industrial capacity, but continues to grow much faster than German economy, because of Britain’s expanded and vibrant service and financial sectors.

IA-Forum: What must be done in order to turn the German economy around? How can domestic consumer demand be stimulated without threatening to miss the Growth and Stability Pact for a fourth year in a row?

Mr. Tupy: The economy needs to be liberalized (in order to generate higher growth) and government spending needs to be reduced (through tax cuts which would increase the purchasing power of the population). Neither one of these seems plausible because of special interests (unions, greens etc.) and apparent weakness of the federal government (due to opposition to further reforms in the SPD, excessive devolution or regional decision making, and counter-productive attitude of the CDU-controlled Bundesrat).

IA-Forum: With Harz IV (the most controversial part of the economic reform) under way and causing large protests, especially in the east, what can save the SPD from a debacle at the polls in 2006?

Mr. Tupy: Mistakes by CDU could get Schroeder re-elected. The CDU is walking tightrope. It does not want to be seen as a break on reforms, but at the same time, it cannot support the government and thus share in the unpopularity of reforms. That makes the CDU seem indecisive.

IA-Forum: What does the opposition CDU/FDP need to do to regain their strong lead in the polls which they have all but lost in the last several months? Is the infighting between the CDU and CSU to be blamed? Or is it the lack of leadership?

Mr. Tupy: I think that the indecisiveness of the CDU and lack of a clear alternative program to the one espoused by the SPD is more of a problem than personal quarrels in the CDU.

However, the CDU cannot come up with a program of drastic reform, which Germany needs, because it would not get elected. I think that the CDU hopes that SPD will effectively commit electoral suicide and CDU will pick up the pieces. That is a very dangerous strategy.

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