Minutes ago President Obama and Chancellor Merkel held a press conference at the Whitehouse. While it was greatly anticipated that the two leaders would talk about strategic differences in approach with regards to Europe’s financial crisis and on Middle East affairs, the two leaders opened their remarks with high praise and admiration for one another.
The President, while calling the Chancellor by her first name on a number of occasions during his talk, made reference to the two countries strong trade ties and collaboration in industry while at the same time calling on Germany’s need to show greater leadership in European matters during these challenging times.
Likewise, the Chancellor reciprocated the high praise by giving credit to the United States for its support of Germany after the Cold war stating that, “I would not be here today had it not been for US leadership”.
While on the surface the two leaders choreographed the press conference well, behind closed doors it is no secret that the Chancellor has a very different approach to both the financial crisis in Europe and on matters of German – Middle East relations.
On matters of EU financial control,
The Chancellor firmly believes that many of the European countries in a state of crisis are fiscally undisciplined and lack the labor and tax laws that would make them productive and not to mention competitive in today’s global market place. As such in her view, any form of handout “stimulus” would be a disincentive to the political establishment of such countries to chance course by taking corrective measures. This is clearly in contrast to the American position that is more interventionist.
On matters of German – Middle East relationship
It is no secret that for decades Germany has enjoyed a special relationship with countries in the Middle East, namely Iran, going as far back as the days of Reza Shah (1930s) who used the Germans as a leverage against Russian and British influence in Iran. Mohammad Reza Pahlavi, Reza Shahs son, continued the relationship from 1945 to 1979, paving the way for many German companies such as Linde, BASF, Lurgi, Krupp, Siemens, ZF Friedrichshafen, Mercedes, Volkswagen and MAN to enter the lucrative Iranian market.
But what made this relationship even more exclusive was what happened after the 1979 Islamic revolution and the overthrow of the Shah, who was considered a US ally.
From 1979 to this day most Western countries who were considered US allies, including the US, were shutout of the Iranian market except for Germany and in the absence of any serious rival this bilateral relationship developed into a multibillion dollar one way German export to Iran business relationship.
Knowing full well what endorsing sanctions on Iran would do to Germany and German companies who rely on this trade to keep their businesses profitable and their staff employed, the Chancellor’s position is difficult. On the one hand she does not want to lose the relationship her country has with the United States while on the other hand the Iran market is a vital German economic interest.
On matters of the Palestinians right to statehood Germany has made it clear that it support a two state solution but it has also grown weary of Israel’s continued violations and unauthorized land grab of Palestinian territories. Furthermore, in light of Prime Minister Netanyahu’s speech a few weeks ago in Congress denouncing any resumption of talks based on the 1967 boards the Germans have voiced concern over Israel’s genuine intentions.
In my view, and in light of Germany’s strategic interests in Iran, Germany will use its Palestinian card to appease the US and Israel at the United Nations should the Palestinians unilaterally declare statehood and in doing so convince the Americans to back off from calling for further sanctions on Iran.
The fact of the matter is that 40% of Iran’s trade balance comes from its relationship with Europe of which 29% is with Germany.
In February of 2006, the President of the German-Iranian Chamber of Commerce in Tehran, Michael Tockuss said “some two thirds of Iranian industry relies on German engineering products and spare parts” and not to mention that the value of trade between Tehran and Berlin has increased to nearly 4.7 billion Euros in 2010. This translates into 50,000 German jobs who rely on strong German – Iran relations and the Chancellor know this.