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By Christian Reiermann
There is an ironclad rule in Berlin politics: The greater the concern the more nervous the rhetoric.
Given such a yardstick, members of the German government must be suffering from anxiety attacks whenever the talk turns to global free trade these days. A case in point is Finance Minister Wolfgang Sch?uble, a member of the center-right Christian Democrats (CDU), who refers to the reports on currency and trade wars, foreign exchange battles and devaluation contests as "sheet lightning."
Economics Minister Rainer Br?derle, of the pro-business Free Democrats (FDP), believes he has spotted the "specter of protectionism" dressed in an insidious disguise. "There are many ways to dress up protectionism," the politician warns. Br?derle recently admitted that, in light of the imminent risk, he feels like a "missionary" for free trade and globalization.
Berlin's political community is not distressed without reason. When the financial crisis erupted three years ago, the international community initially managed to prevent an imminent global economic crash by taking joint action to rescue banks and stimulate the economy. These measures were particularly beneficial for the German economy, which will experience the strongest growth this year since 1991.
Dramatic Distortions
But new, dramatic distortions are now looming in the post-crisis global economy. The current global economic order threatens to fall into disarray in several different areas:
In the wake of the economic and financial crisis, many countries have begun to seal off their markets against foreign products in order to protect domestic producers. Two of the world's largest economic powers, China and the United States, seem to be initiating a race to devalue their respective currencies. Key emerging economies, most notably Brazil and Indonesia, are imposing restrictions on the movement of capital, which could disrupt the global money cycle. In desperation over the grim economic situation, the administration of US President Barack Obama is embarking on a diplomatic offensive intended to pillory countries with chronic trade surpluses. This puts China, Japan and Germany in the line of fire.
Each individual development is cause for concern on its own. But together, they constitute a serious threat to the world economy. The German business model, which builds on the success of the country's export economy, is particularly at risk.
The movement toward liberalization shaped world trade for decades. Tariffs were reduced or abolished and trade barriers were eliminated. This released energy to stimulate growth and increased prosperity worldwide. For years, global trade grew at a faster pace than economic output. It was a clear indicator of the productive effects of the division of labor and the freedom of trade. As Scottish economist Adam Smith pointed out, everyone benefits when each player in the economic system produces what they are best at producing.
Much at Stake for Germany
But now, for the first time since the end of World War II, free trade could face setbacks on a broad front, unless the leaders of the major industrialized and emerging economies can agree on joint solutions to the current problems. The G-20 will meet this week in the South Korean capital Seoul to discuss the condition of the global economy once again. Currency wars and trade imbalances are at the top of the agenda.
Much is at stake for Germany, which is currently experiencing an unexpected employment and growth spurt, due in large part to the substantial competitiveness of its companies in global markets. The German economy is expected to grow by about 3.5 percent this year, perhaps even more.
This success has sparked resentment, particularly among countries that are having a hard time pulling themselves out of the crisis, most of all the United States. The government in Washington sees the success of others as the source of its own troubles. Treasury Secretary Timothy Geithner has long complained that China's and Germany's trade surpluses indicate that these countries haven't developed enough domestic demand to help weaker countries.
A few months ago, French Finance Minister Christine Lagarde used similar arguments to target Germany. Two weeks ago, Geithner followed up on his complaints with action when he proposed a mechanism that would require countries with trade surpluses to modify their fiscal and economic policies in ways that would stimulate domestic demand. This would enable these countries to import more, said Geithner. In other words, countries with a trade surplus should voluntarily give up their competitive advantages for the benefit of the United States.
A Bombardment of Communiqu?s
Geithner failed to get his way at a meeting of G-20 finance ministers two weeks ago. Now, President Obama has decided to take matters into his own hands, and he is hell-bent on advancing the issue at this week's summit.
The White House and the US Treasury Department have bombarded their partner countries with memos and draft communiqu?s explaining their ideas. Washington wants to see countries with a trade surplus or deficit exceeding 4 percent of GDP subjected to heightened observation or required to change their policies. The Americans are doggedly sticking to this quantitative benchmark.
The German government is not prepared to bow to the will of the battered hegemon. "The proposal is not acceptable for Germany under any circumstances," German Finance Minister Sch?uble said in a SPIEGEL interview. His ministry's policy is clear: "We reject non-cooperative solutions."
The German government's negotiators, Jens Weidmann, the chancellor's economic advisor, and J?rg Asmussen, a state secretary in the Finance Ministry, are feverishly trying to organize a concerted defense against the American proposal. In the dozens of position papers and memos that have been traveling back and forth among the capitals of the participating countries, Weidmann and Asmussen make no secret of their rejection of and disagreement with the Geithner proposal.
1 | 2 Next Part 1: US to Bully Germany on Trade Surplus at the G-20 Part 2: Germany Seeks to Undermine the US Article... Print E-Mail Feedback Social Networks FORUM Discuss this issue with other readers! 5 total posts Visit Forums... Most recent posts on the issue: Yesterday at 10.11.2010 from BTraven:
Welcome to the beg-your-neighbour policy of the thirties. more...
Yesterday at 10.11.2010 from chilihead98: Sorry about this.Please accept my apology on behalf of all Americans who know this is not Germany's problem. We should be emulating and teaming with Germany, not castigating you. Many of us know the problem lies with out-of-control trade with [...] more...
Yesterday at 10.11.2010 from Naturhuf: LololololololololI mean, this is for real??!! I almost had a REALLY good laugh if it would be incredibly depressing and disappointing at the same time, not to mention pathetic! Crybabywhinya$$ comes to mind as a new name for the US. more...
Yesterday at 10.11.2010 from verbatim128: A Distorted View of Capitalism---Quote (Originally by sysop)--- The US thinks it knows who is to blame for its struggling economy: Germany and other countries with a trade surplus. Washington wants to see new rules that would punish such imbalances, but [...] more...
11/09/2010 from Macadore:The U.S. is to blame for it's problems. Our defense budget is larger than the next 12 largest defense budgets in the world combined. This is a U.S. subsidy to the world's economies and the U.S. Military Industrial Complex. We [...] more...
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DER SPIEGELGraphic: Trade balances of G-20 members.
RELATED SPIEGEL ONLINE LINKS Interview With German Finance Minister Sch?uble: 'The US Has Lived on Borrowed Money for Too Long' (11/08/2010) Germany Blasts Bernanke: Results of Fed Stimulus Could Be?'Horrendous' (11/05/2010) EUROPEAN PARTNERS PresseuropLet's end the transatlantic squabble (Il Sole-24 Ore, Milan)
Minister under attack for gunboat talk (Frankfurter Rundschau, Frankfurt)
PolitikenNyrup: How low can you go?
Former officer: We monitored Danes for US
Corriere della SeraBerlusconi and Bossi in Veneto Greeted by Catcalls, Applause and Pleas for Money
Benigniâ??s Jibes at PM, Ruby and Bindi
GLOBAL PARTNERS New York TimesIn Setback, U.S. and South Korea Fail to Agree on Trade
G-20 Chiefs Near Pact on Reducing Imbalances
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Marie Osmond: My Son Was Not Gay
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MORE FROM SPIEGEL INTERNATIONAL German Politics Merkel's New Govermnent: Forging Germany's Future World War II Truth and Reconciliation: Why the War Still Haunts Europe Global Economy Green Shoots: Europe Climbs Out of Crisis Climate Change Global Warming: Curbing Carbon before It's Too Late Fall of the Wall 20 Years Later: Legacy of the Iron Curtain Overview International TOP Home Politik Wirtschaft Panorama Sport Kultur Netzwelt Wissenschaft UniSPIEGEL SchulSPIEGEL Reise Auto FROM THE MAGAZINEFind out how you can reprint this DER SPIEGEL article in your publication.
DER SPIEGELGraphic: Trade balances of G-20 members.
RELATED SPIEGEL ONLINE LINKS Interview With German Finance Minister Sch?uble: 'The US Has Lived on Borrowed Money for Too Long' (11/08/2010) Germany Blasts Bernanke: Results of Fed Stimulus Could Be?'Horrendous' (11/05/2010) EUROPEAN PARTNERS PresseuropLet's end the transatlantic squabble (Il Sole-24 Ore, Milan)
Minister under attack for gunboat talk (Frankfurter Rundschau, Frankfurt)
PolitikenNyrup: How low can you go?
Former officer: We monitored Danes for US
Corriere della SeraBerlusconi and Bossi in Veneto Greeted by Catcalls, Applause and Pleas for Money
Benigniâ??s Jibes at PM, Ruby and Bindi
GLOBAL PARTNERS New York TimesIn Setback, U.S. and South Korea Fail to Agree on Trade
G-20 Chiefs Near Pact on Reducing Imbalances
ABC NewsSplendid! Stricken Ship Returns Home
Marie Osmond: My Son Was Not Gay
NEWSLETTER Sign up for Spiegel Online's daily newsletter and get the best of Der Spiegel's and Spiegel Online's international coverage in your In- Box everyday. FACEBOOK FB.init("8e0192d8770be48129dc946121d0092e"); new TWTR.Widget({ version: 2, type: 'search', search: '@SPIEGEL_English', interval: 6000, title: 'Live Postings @SPIEGEL_English', subject: 'SPIEGEL on Twitter', width: 302, height: 250, theme: { shell: { background: '#ffffff', color: '#666' }, tweets: { background: '#ffffff', color: '#444444', links: '#990000' } }, features: { scrollbar: false, loop: false, live: true, hashtags: true, timestamp: true, avatars: true, behavior: 'all' } }).render().start();Follow SPIEGEL_English on Twitter now:
MORE FROM SPIEGEL INTERNATIONAL German Politics Merkel's New Govermnent: Forging Germany's Future World War II Truth and Reconciliation: Why the War Still Haunts Europe Global Economy Green Shoots: Europe Climbs Out of Crisis Climate Change Global Warming: Curbing Carbon before It's Too Late Fall of the Wall 20 Years Later: Legacy of the Iron Curtain Overview International TOP Home Politik Wirtschaft Panorama Sport Kultur Netzwelt Wissenschaft UniSPIEGEL SchulSPIEGEL Reise Auto Wetter DIENSTE Schlagzeilen RSS Newsletter Mobil VIDEO Nachrichten Videos SPIEGEL TV Magazin SPIEGEL TV Programm MEDIA SPIEGEL QC Mediadaten Selbstbuchungstool buchreport weitere Zeitschriften MAGAZINE DER SPIEGEL Dein SPIEGEL SPIEGEL GESCHICHTE SPIEGEL WISSEN KulturSPIEGEL UniSPIEGEL SPIEGEL GRUPPE Abo Shop SPIEGEL TV manager magazin Harvard Business Man. SPIEGEL-Gruppe WEITERE Hilfe Kontakt Nachdrucke Datenschutz Impressum TOPThe German government is not prepared to bow to the will of the battered hegemon. "The proposal is not acceptable for Germany under any circumstances," German Finance Minister Sch?uble said in a SPIEGEL interview. His ministry's policy is clear: "We reject non-cooperative solutions."
The German government's negotiators, Jens Weidmann, the chancellor's economic advisor, and J?rg Asmussen, a state secretary in the Finance Ministry, are feverishly trying to organize a concerted defense against the American proposal. In the dozens of position papers and memos that have been traveling back and forth among the capitals of the participating countries, Weidmann and Asmussen make no secret of their rejection of and disagreement with the Geithner proposal.
Welcome to the beg-your-neighbour policy of the thirties. more...
Please accept my apology on behalf of all Americans who know this is not Germany's problem. We should be emulating and teaming with Germany, not castigating you. Many of us know the problem lies with out-of-control trade with [...] more...
I mean, this is for real??!! I almost had a REALLY good laugh if it would be incredibly depressing and disappointing at the same time, not to mention pathetic! Crybabywhinya$$ comes to mind as a new name for the US. more...
---Quote (Originally by sysop)--- The US thinks it knows who is to blame for its struggling economy: Germany and other countries with a trade surplus. Washington wants to see new rules that would punish such imbalances, but [...] more...
The U.S. is to blame for it's problems. Our defense budget is larger than the next 12 largest defense budgets in the world combined. This is a U.S. subsidy to the world's economies and the U.S. Military Industrial Complex. We [...] more...
Stay informed with our free news services:
? SPIEGEL ONLINE 2010 All Rights Reserved Reproduction only allowed with the permission of SPIEGELnet GmbH
Find out how you can reprint this DER SPIEGEL article in your publication.
Graphic: Trade balances of G-20 members.
Let's end the transatlantic squabble (Il Sole-24 Ore, Milan)
Minister under attack for gunboat talk (Frankfurter Rundschau, Frankfurt)
Nyrup: How low can you go?
Former officer: We monitored Danes for US
Berlusconi and Bossi in Veneto Greeted by Catcalls, Applause and Pleas for Money
Benigniâ??s Jibes at PM, Ruby and Bindi
In Setback, U.S. and South Korea Fail to Agree on Trade
G-20 Chiefs Near Pact on Reducing Imbalances
Splendid! Stricken Ship Returns Home
Marie Osmond: My Son Was Not Gay
Follow SPIEGEL_English on Twitter now:
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