There is only one special relationship that really matters to Barack Obama’s White House, and it is not the ties of shared history, language and culture between Washington, DC and London. The United Kingdom is not the political leader of the European Union, nor its most powerful economy. Its influence on Russia and on the evolution of the most challenging East-West crisis since the end of the Cold War is not that of a game-changer. This advantage belongs to Germany.
President Obama dedicated much time and attention to trying to repair the relationship with Angela Merkel during her visit to Washington last week. Bonds of trust between them have clearly been damaged by the National Security Agency’s eavesdropping on the German Chancellor’s telephone calls. As yet, Washington’s therapeutic balm is not working, the Germans want a “no spying” agreement. The US President is bent on curbing his spies’ transgressions, but not eliminating them. It seems the best that Germans and their fellow Europeans can hope for are changes to US laws to give foreigners the same rights to personal privacy as US citizens.
This will not dissolve European anger with American security services, but too many other important things are going on to allow data-protection issues to dominate. Ukraine is rapidly putting East-West relations back in the Cold War freezer, while the outlook for launching the new economic era promised by the transatlantic trade and investment partnership (TTIP) negotiations is beginning to look shaky,
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Both challenges are unexpectedly acute tests of Western solidarity and political will. Each is vulnerable to spill-over effects from the other. A growing fear in Berlin and other Western capitals is that Vladimir Putin, Russia’s president, has a winning strategy for detaching eastern Ukraine from the western half of the country.
A military response to Russia’s land- grabs – over and above the current light spraying of NATO forces over the Baltics – is not on the agenda. What, then, can be done to threaten such damage to the Russian economy that Putin will look for a way out from the present confrontation?
Merkel and Obama have now identified the trigger for further “consequences” – Russian-inspired chaos that forces the cancellation of Ukraine’s elections on 25 May – but they have not agreed on the choice of weapons. A tough US response is more credible than action from Berlin. Merkel is still unsure about taking on the German business lobby that is so strongly opposed to sanctions. Germany is Russia’s third-largest trading partner, sitting plumply on a total annual trade of close to €80 billion. There are upwards of 6,000 German companies in Russia – more than from all other EU countries combined.
Focusing on the TTIP is a necessary reassurance for German business when such dark clouds are gathering above global politics. The hoped-for agreement would boost the capacity of the EU and the US to write economic and trading rules in dealing not only with China but also with energy-rich but economically puny Russia.
TTIP is becoming as politically important as it is economically promising and, therefore, too big to fail. Merkel wants a quicker tempo towards the timely and ambitious deal that both sides say they want, but the challenge is so complex that completion is unlikely before the end of 2015.
Failure is unlikely but definitions of success are thin on the ground. It is difficult to exaggerate the obstacles so long expected that are now emerging from the negotiations that touch on highly sensitive issues rooted in differences in culture, sovereignty, political process, attitudes to trade barriers, and to health, safety, environmental and consumer protections.
Eventually, there will be some tariff reductions, but not eliminations, as well as ‘low-hanging fruit permitting mutual recognition of some standards in the automotive and pharmaceuticals industries. Widening regulatory convergence to other sectors will be much more difficult, not least because US regulators are quite likely to resist surrendering their autonomy to processes that require compromise and co-ordination. In civil society, opposition groups are starting to land some heavy punches, especially in the blogosphere, that cast doubt on the European Commission’s claims of economic benefits totalling €120 billion added to gross domestic product, tantamount to €545 a year for every family.
Research suggests that political leaders on both sides need to be more active in promoting TTIP. The Pew Research Center of the US reported last year that there is more opposition than support for TTIP goals in the US and Germany. Suspicions of regulatory convergence, the core priority of the negotiations, are particularly strong. Germans are much less in favour of this than Americans, a reflection of anxiety across Europe that TTIP will trigger a lowering of protections of workers, consumers and the environment. The US’s mission in Germany has a long “Myths and realities” page on its website that makes no mention of the possible quantified benefits of TTIP to which the Commission is still wedded.
The crisis in Ukraine, unwelcome in itself, should help generate some momentum for the TTIP talks. The prospect of a new transatlantic economic alliance might encourage Moscow to turn towards a diplomatic solution, especially if Germany and other member states can take more of their energy supplies from the US and much less from Russia.
So could TTIP be the new Marshall Plan that both forges political solidarity between allies and generates economic recovery?
John Wyles is an independent consultant based in Brussels.