The European Council on Foreign Relations

Germany in Europe: Trading East and Thinking West?

Date: 2nd December 2010  |  Author: Ulrike Guérot,

Categories: Europe and the world, Germany in Europe,
Tags: europe, trade, wikileaks, germany, eu

As Karl Marx said, history is not repeating itself, but sometimes one seems to find similarities. At the moment, there is sort of a trend-inversion going on with respect to the question of with whom the EU should build a free trade zone. The current thinking seems to reflect a 1000-year-old European tradition of looking eastwards, rather than the focus on freeing trade across the Atlantic that we have seen in the recent past.

In 1995, there was hype about the transatlantic market place. A Transatlantic Business Dialogue (TABD) was set up; hundreds of conferences and meetings took place that aimed at overcoming non-tariff trade barriers. The emphasis was on the importance of the (still) impressive figures generated by the transatlantic trade relationship between the US and EU, which even today is the largest bilateral trade and investment relationship in the world, worth almost a third of global trade. This was the moment, when the EU just had acquired a single market and the West, following Fukuyama’s ‘End of History,’ believed that it had emerged as history’s victor. It was also a time when the US and Europe were  convinced they would stay eternally united; nobody back then had the imagination to predict that the Eurasian continent would incrementally seek for unity beyond the classical ‘West’.

But times have changed and history is showing clear signs of geographic gravity.  Even in the 1930s, the USSR was of special economic interest for Germany’s iron, engineering and electrical industries and the German government decided to issue loans of roughly 300 million Reichsmark to its Russian partner. Last Thursday, again reflecting Montesquieu’s old observation that geography obviously matters for policy, Russian Prime Minister Vladimir Putin expressed his desire to establish a free trade zone with the EU, reaching “from Lisbon to Wladiwostok”. This was the second straightforward Russian flirt with Europe in a month, following the NATO Summit in Lisbon, where the Russians had an ‘observer seat’ at the table and where the Europeans – after the Deauville meeting – were trying to figure out the extent to which they should answer the Medvedev proposals on the new European security architecture and give it a more European-Russian varnish. Russia has deep economic problems (WikiLeaks once again confirmed this) and is hence desperately looking for opportunities to modernise its economy and society. Moscow feels squeezed between the two major powers encircling it – the EU and China. With the latter now seeming more challenging and robust than the former, and therefore more dangerous to Russia, Moscow now clings to the West.

At the same time, America is increasingly shifting its gaze from Europe to the Pacific. Trade is increasingly about ‘Eurasia’  and ‘Chimerica’. The transatlantic political consensus and rhetoric still have a hold on the West, but something fundamental is changing beneath the surface. Nothing could prove this better than the diplomatic notes published by WikiLeaks this week, brutally showing that Europe is becoming less important for Washington. Even as the euro crisis prompts fault lines to develop between Germany and her European partners (about which I comment in a post by BBC Europe Editor Gavin Hewitt), the cracks and rifts of the shifting transatlantic tectonic plates are also widening. Where the attention goes, the love goes, some say…but trading East and loving West may become a difficult exercise – and Marx, after all, wasn’t wrong in all he said!