By Dawn's Early Light

Schroeder was no Merkel

Merkel's Values Trump Economics

Europe receives 80% of its natural gas supplies from Russia, through the Ukraine, as noted in DEL post "Holding the Russian Energy Bear at Bay".  Germany is currently very dependent on Russian shipments of natural gas via the Ukraine. No wonder that former Chancellor Gerhard Schroeder played up his relationship with Russia's Vladimir Putin and played down Putin's anti-democratic ways.  The icing on the cake was "Schroeder's 'Sellout''" in taking a lucrative job at Russian-owned Gazprom after he was defeated narrowly by Ms. Angela Merkel.

All the more pleasing was the Sunday Times Online header "Merkel's harder line on Russia looks set to persist". 

"ANGELA MERKEL, the German Chancellor, showed no sign yesterday of being held captive by the deepening energy relationship between Moscow and Western Europe.

While President Bush was urging a softly, softly approach to human rights criticism of President Putin, Frau Merkel was more forthright about the need for a free press. This G8 summit, it is becoming clear, will take a sharper tone towards the Russians.

In the past, EU participants — and above all Germany — gave Russia an easy ride in recognition of the West’s overwhelming dependence on Soviet oil and gas.

Frau Merkel, a fluent Russian speaker, who lived her first 35 years in communist Germany, has a far more hard-nosed attitude to the Kremlin. Why should energy supplies be allowed to be the defining element of the German-Russian relationship, she recently asked an adviser."

Democratic values and personal freedoms are worth defending for this current German Chancellor.  This type of refreshing focus for a critical player in the European Union goes a long way to explain why the massive rift in US-German relations has healed so quickly.

The US-German position over Iran, Israel and Russia are converging to a large degree.  Trade discussions are emerging with respect to the current failing Doha round of trade talks that should work against some of the French reluctance to see farm subsidies tackled. 

Ms. Merkel took Russia and China to task for their lack of "responsibility" in dealing with rogue nations like Iran.

"We found that there is a lot that we [the United States and Germany] agree on, as regards our common responsibilities, responsibilities that we see for the two of us the world over. And I, for one, think that as regards, for example, Iran, this responsibility ought to be shouldered by more and more countries -- that goes for Russia, that goes for China. It will only be if we act in concert that we will be able to vanquish the tyrants, remove dictatorships and contain those who sponsor terrorism. And Germany would like to give its contribution to that."

Germany, along with the United Kingdom, was successful, from their view, in getting the United States to agree to direct multi-party talks with Iran, something that has not been done since the 1979 Tehran hostage crisis.

Both President George Bush and Chancellor Merkel suggested that it was best to keep their democratic criticisms to Mr. Putin private, that public condemnation would not best achieve the democratic reforms they are seeking in Russia.

The upcoming G-8 summit in St. Petersburg that President Putin is hosting will be fascinating diplomacy to follow between the major powers in attendance.

Holding the Russian Energy Bear at Bay

The WSJ had an encouraging piece last week on Georgia's economic development.  President Mikhail Saakashvili has been taking on autocratic Russian President Vladimir Putin over Europe's growing energy dependence on Russian natural gas supplies through the Ukraine.  Russia's strategy, according to the WSJ, (subscription required) is:

"Gazprom -- the leading vehicle of Kremlin energy influence -- has accelerated a three-pronged strategy. First, it is campaigning to bottle up its control of Central Asian gas resources. Second, it is consolidating and expanding its hold on energy infrastructure among countries that were once part of the Soviet Union. Finally, it is trying to use a deepening war chest to acquire private and privatizing energy assets elsewhere in Europe.

Rising tensions with Moscow reached a crescendo last week when Mr. Putin, before meeting with German Chancellor Angela Merkel in Tomsk, Siberia, accused the West of "unfair practices" and agreed with Mr. Miller that it would redirect supplies elsewhere if its European expansion plans were blocked. A senior EU official says Mr. Putin's "pipeline rattling" is in direct response to EU pressure that Russia ratify an International Energy Charter requiring it to open pipeline access to competitors -- much as telecommunications companies share their bandwidth.

Secretary of State Condoleezza Rice, who said at a Senate hearing recently that energy politics is "warping" international diplomacy, joined the battle in Ankara, Turkey, urging Turkey and Greece to reduce their dependence on Russia by favoring new pipeline plans that rely on Azerbaijan. Vice President Dick Cheney flies to Kazakhstan this week as part of a continued effort to get it and Turkmenistan to join pipeline plans that would reduce Russia's near-complete dominance of Central Asian resources."

Europe's growing dependence on Russian natural gas was brought home to the average European when Russia cut off supplies to Ukraine during the last winter season, demanding steep increases in payments.  According to the Washington Post:

"Europe relies on Russia for about a third of its natural gas supplies. Those supplies arrive via two major pipeline routes constructed in the 1980s over the objections of the Reagan administration. Today the United States realizes that Russian gas will remain vital to Europe, but it is pushing nations to diversify supplies so that Russia cannot exploit Europe's energy dependence for political purposes....

At the same time, however, Russia sells 80 percent of its natural gas to Europe and is worried about European plans to increase gas purchases from Algeria and Libya, as well as about liquefied natural gas from Qatar, which plans to triple its exports."

Mr. Saakashvili is working with Germany's Angela Merkel and other European countries, including Turkey, to bypass the old Soviet system.  In today's Wall Street Journal story "In Russia's Shadow, Georgia's Leader Remakes Nation":

"Mr. Saakashvili, who has strong backing from the U.S., is trying to transform Georgia's economy in a hurry. His aim is to end centuries of Russian domination and to forge new ties with the West. Corruption is down, and tax revenues have at least doubled since 2003, due in part to a new flat tax and improved collection, helping to pay for the government's many projects. The nation's gross domestic product rose 8.5% during the first quarter....

New pipelines that pass through Georgia are coming on line this year, giving Western nations access to oil and gas from the Caspian Sea area, one of the world's few significant new sources of energy outside of the Middle East and Russia. Georgia also is a key plank in the Bush administration's efforts to promote democratic governments in the former Soviet bloc."

The US embassy in Tbilisi supports a 650 person staff.  The United States is very committed to economic and energy reform in Georgia to counter Mr. Putin's impressive efforts in consolidating state control over Russia's energy and using it as a political weapon with Europe, the West and Asia.  To counter this, ahead of the upcoming G-8 summit, the US has been working to support alternative routes that bypass Russia and its reserves of natural gas.  Referring back to the Washington Post article:

"Bryza and more senior U.S. officials have been promoting pipeline routes that would bring gas from fields in Kazakhstan, Turkmenistan and Azerbaijan near the Caspian Sea through Turkey to Europe. One such pipeline, from Azerbaijan through Georgia to Turkey, opens Oct. 1. U.S. officials have been saying that reserves in Azerbaijan alone could justify bigger pipelines even if territorial disputes over the Caspian Sea are not resolved. (Missing from the U.S. vision: supplies from Iran, whose natural gas reserves are second to only Russia's.)

Former Soviet Bloc countries are enthusiastic, especially since Russia has boosted prices on gas sold to Moldova and Belarus. Georgia President Mikheil Saakashvili said during a recent visit here that he supports a pipeline that would bring gas from the Caspian Sea basin through Azerbaijan and Georgia, then under the Black Sea (to avoid Russia) to Romania and then north to Poland. Building that line would take at least five years."

Germany would be one of the largest beneficators of an alternative route for energy, and Ms. Merkel has met with the Georgian President to discuss these options.  It will be interesting to see if Turkey's desire to provide an alternative route for energy supplies could become an important area of leverage in their often troubled bid to become a member of the European Union.

Regardless, Georgia represents an improved US and European ally in trying to roll back Russian advances in energy control.

Schroeder's Sellout is Merkel's Advantage

Coming Anarchy has a similar take to Dawn's Early Light on the sellout nature of Gerhard Schroeder's decision to go to work for Russian-owned Gazprom.  However, Coming Anarchy also points to the recent anti-Israel and anti-rational statements of Iranian President Mahmoud Ahmadinejad denying the holocaust and inviting Europe to carve out some land to relocate Israel. 

"What do these two events mean for German foreign policy? Both weaken Germany’s previous policies and continue to chisel away wiggling room. With Schröder’s so-called legacy already severely damaged by the man himself, the SPD is being forced to distance itself from not only Schröder but his pro-Russian policies. This leaves them with an easy cover should they begin to shift their foreign policy not to mention giving the CDU a golden opportunity to force them to do so....

Thus, these two events, completely outside the control of the current government, have served to undermine Germany’s previous policy with regard to Russia, Iran and have tarnished the SPD’s past few years of policy (how much remains to be seen). All of this significantly strengthens Chancellor Merkel’s position domestically giving her more leeway in her upcoming meeting with President Bush and his advisors from January 12th to 14th."

While Ms. Merkel may have misstepped diplomatically with her meeting with Secretary Rice [See DEL post here], she has a golden opportunity to move German diplomacy as her opposition party in her coalition government must move right to distance itself from the remnants of Schroeder's perceived sellout and failed Iranian policies.

Schroeder's "Sellout"

The Washington Post has a hard-hitting editorial today on former German Chancellor Gerhard Schroeder's new job working for the Russian Government.  The editorial is titled "Gerhard Schroeder's Sellout".  "What?" you say.  "Yes", Gerhard Schroeder, champion of Russia, ignorer of Russian democratic suppression, France's tool in its Atlantic spat with America, is going to work for Gazprom, the Russian state-owned oil firm.

"To make the decision even more unpalatable, it turns out that the chief executive of the pipeline consortium is none other than a former East German secret police officer who was friendly with Vladimir Putin, the Russian president, back when Mr. Putin was a KGB agent in East Germany. If nothing else, Mr. Schroeder deserves opprobrium for his bad taste.

But the announcement should also raise questions in German voters' minds about the real reasons Mr. Schroeder was so keen to see this pipeline project launched. The pipeline has cost Germany diplomatically by infuriating its Central European and Baltic neighbors. They point out that the Russian government chose to use the sea route rather than run a new pipeline alongside one that already exists on land, despite the far greater expense. The only possible reason for doing so was political: The Baltic Sea pipeline could allow Russia, a country that has made political use of its energy resources, to cut off gas to Central Europe and the Baltic states while still delivering gas to Germany. Many have wondered why Germany chose to go along with this project. Could it have been because the former chancellor realized that he was, in effect, creating his own future place of employment?"

Is it possible that Schroeder's anti-US Iraq position was personally motivated to curry favor with Vladimir Putin?  We may never know.  But the whole story raises a great deal of "what if" questions on a global scale. 

The Economist has many good articles on Gazprom and questions whether it is a company or an extension of the state.  This October 6th, 2005 article, "Russia's Energetic Enigma" explains Gazprom's influence.

"According to the scuttle-butt, Vladimir Putin has a plan for when his second and—as Russia's constitution requires—last presidential term expires in 2008. Rather than changing the constitutional rules or becoming prime minister, Mr Putin may become boss of Gazprom, Russia's state-controlled gas monopoly.

The rumour is as telling as it may turn out to be fanciful. Gazprom is a leviathan. Last week, it agreed to buy most of Sibneft, the country's fifth-biggest oil firm, in what will be the biggest takeover in Russian history. But Gazprom's gas resources are already so big that its new subsidiary barely disturbs the company's profile. Gas will still constitute 90% of its production next year. One Moscow investment bank calculates that for oil to account for half of its output, Gazprom would have to buy the entire Russian oil industry. Last year, Gazprom produced 20% of the world's gas. It has 60% of Russia's gas reserves and 16% of the world's. If it were a country, its oil and gas reserves combined would rank only behind Saudi Arabia's and Iran's."

If I were a German I would be extremely angry and would demand answers.  The Russo-German alliance never made sense from a historical paradigm of Germany's self-interest in Europe.  Gerhard Schroeder's sellout doesn't in itself provide the answer, but it does lead to plenty of questions and adds one more scandal to Germany's post-Cold War history of chancellors.  And Mr. Schroeder's decision could prove far more damaging to the world order than former Chancellor Helmut Kohl's financial scandal.

Ms. Merkel's First Diplomatic Misstep

Dawn's Early Light must confess that German Chancellor Angela Merkel's first diplomatic outing with US Secretary of State Condoleezza Rice was not reminiscent of Bismarck [See DEL post "Germany's Angela Merkel the Next Bismarck?"].  I am not ready yet to concede the field on the future ability of the German Chancellor, but I feel I must point to this Financial Times article (which is one of many similar stories).

"Angela Merkel and Condoleezza Rice were doing a good job of healing the rift between Germany and the US last Tuesday, until Germany’s new chancellor made a serious diplomatic gaffe.

The US secretary of state had admitted the kidnap of a German citizen by the American security services was a mistake, Ms Merkel said. As soon as the press conference was over US officials denied Ms Rice has said any such thing."

The European press jumped on this story and played it up, giving it plenty of attention.  However, it was a major meeting between the US and Germany and an opportunity to repair the relationship in a post-Schroeder environment.  Ms. Merkel flubbed this chance.  The FT continues:

"Did the chancellor intend to embarrass her guest by betraying her private confession? Was she lying? Had she unwittingly disclosed confidential information? Or was it just a slip of the tongue?

To Berlin veterans, the incident had a familiar feel. Ms Merkel has forged an unenviable reputation as an inept speaker in her 15-year political career. She is prone to lapsus linguae and not everything she says always makes sense.

Her electoral campaign last summer was peppered with blunders."

It is true that Ms. Merkel handed back to her SDP opponents much of the initial support she had going into the final voting.  It is clearly a black eye for Ms. Merkel, but I am guardedly optimistic that positive change is still in the air.

Sec Rice endures European Grandstanding

The Washington Post began the reporting on the United States using European prisons to ferry terrorist suspects to for interrogation.  Today's WaPo story sums up their original reporting and the European response:

"The Washington Post reported on Nov. 2 that the CIA has been hiding and interrogating some of its most important al Qaeda captives at a Soviet-era compound in Eastern Europe as part of a covert prison system that at various times has included sites in eight countries, including Thailand, Afghanistan and several democracies in Eastern Europe. The Post did not identify the Eastern European countries at the request of senior U.S. officials, who said the disclosure could disrupt counterterrorism efforts in those countries and elsewhere and make them targets of retaliation."

The article begins with putting Secretary of State Rice on the hot seat with this opening:

"Rice's tour of Europe has been dogged by questions concerning the treatment of prisoners at secret CIA prisons. She issued a detailed statement on U.S. policy before she left for Europe on Monday, intending to dampen the furor, but there has been confusion in the United States and Europe over its precise meaning."

Poland is one of these countries and the story has been covered well by Beatroot.  The United Kingdom is another, which makes Foreign Secretary Jack Straw's request for US "clarifaction" silly.

Can one honestly think for a moment that the US intelligence agencies are not working in concert with their European counterparts in a fight against terrorism?  Only the most die-hard liberal would think the US is running its own clandestine prisons on European soil without the host government's knowledge.

Fortunately this WSJ Opinion piece puts it all into perspective while declaring the Europeans opportunistic and political cowards:

"One of Europe's moral conceits is to fret constantly about the looming outbreak of fascism in America, even though it is on the Continent itself where the dictators seem to pop up every couple of decades. Then Europe dials 9-11, and Washington dutifully rides to the rescue. The last time was just a few years ago, as U.S. firepower stopped Slobodan Milosevic, who had bedeviled Europe for years.

In return, it would be nice if once in a while Europe decided to help America with its security problem, especially since Islamic terrorism is also Europe's security problem. But instead the U.S. Secretary of State has to put up with lectures about the phony issue of 'secret' prisons housing terrorists who killed 3,000 Americans.

We put 'secret' in quotes because the CIA could hardly carry on operations in Europe without the knowledge of the countries involved. Rather, as Ms. Rice dryly put it, the U.S. often engages "the enemy through the cooperation of our intelligence services with their foreign counterparts." So the so-called "rendition" programs at issue -- involving the transportation, detention and questioning of terror suspects -- are precisely the kind of anti-terror efforts that multilateral Europeans ought to love."

Europe is a relativist, post-Christian (post believing in good-evil), society.  Along with this moral relativism coincides a collection of governments who have abdicated their ability to project military power and defend their interests abroad.  However, their ability to hold press conferences and badger the US on human rights and torture, aside from being laughably disengenious, is about all that Europe can muster. 

On trade, security, immigration, terrorism and economic growth, the Europeans have proven, over the past decade, an impotent lot.  Carping on a Ms. Rice matches the dignity of the position of strength Europeans now find themselves in.  Dawn's Early Light has advocated often why Europe matters.  It is stories like this that give me second thoughts.

EU in the Headlights: Blair's Challenge

Fighting in the Family

United Kingdom and EU rotating President Tony Blair has a tough road ahead of him as he seeks to get the 25 nations of the European Union to agree on a seven-year budget.  The Common Agriculture Policy or CAP is loathed by the British, loved by the French, and attractive to the 10 new members of the union.  Margaret Thatcher, in 1984, was faced with a Britain that was much poorer and with little farming compared to the other EU members.  She negotiated the British rebate on UK membership dues, loathed by the French, loved by the British, and a growing drain on EU coffers. 

What complicates the entire framework of discussion is the current Doha round of trade talks that is stalled after Jacque Chirac killed even the lackluster EU offer to reform agriculture trade policies [see DEL: "Note to Brazil and India:Blame France!"].  According to The Economist, Tony Blair:

"proposes to increase Britain’s net contribution by a total of €8 billion ($9.4 billion) over the six-year budget period, either through a lump-sum payment or a reduction of the rebate. In exchange, he wants to see the overall budget cut. His plan trims about €24 billion off the €871 billion figure proposed by Mr Juncker, largely through cuts in rural-development aid and assistance to the EU’s new members in central and eastern Europe.

But though the proposal avoids direct confrontation on the CAP, the issue still looms large. Britain wants to keep the bulk of its rebate as compensation for the EU keeping the CAP. And Mr Blair’s plan calls for a review of all EU revenue and spending in 2008, when Britain will presumably once again go after the CAP with a carving knife."

To put the CAP in perspective, only 2% of the European workforce farm, the CAP sucks up 40% of Europe's budget (did you think it was going towards technology?), while 80% of the subsidy goes to 20% of the richest farmers. 

Why do people not in the EU care about how the Europeans want to misguidedly spend their citizens' taxes?  Because the subsidy significantly impedes development in the third world and is blocking an agreement on free trade.

What EU Stagnation Means to the Developing World

In 2003 the Europeans attempted a compromise that demonstrates how far the divide still is.  The Economist writes:

"In 2003, the EU agreed to replace a blizzard of farm-support payments with a single payment scheme, which subsidises farmers' incomes directly, rather than by paying higher prices for their crops and livestock. This should remove the worst trade-distorting aspects of the CAP. Farmers now get paid an average of only one-third above world market prices, compared with 80% in the mid-1980s. Overall subsidies are down: from over two-fifths of farm receipts in the 1980s to one-third and falling in 2004.

The trouble is that the 2003 changes were a classic case of only partial reform, as everyone knew at the time. They were too little both for Europeans and for Europe's trading partners. They did not affect tariff levels, which are now the main subject of dispute between the EU and the rest of the world. Nor did the 2003 reforms do enough to resolve looming budget problems. Even so, they went too far for many farmers, who now see themselves as an endangered species."

Given the recent French rejection of the EU Constitution and their desire to not create more political turmoil to compete against the Paris riots, there is little likelihood of any political willingness to promote change.

However, farm subsidies in the developed world are not constrained to just Europeans.  Another Economist article illustrates how beholden the OECD is to farm subsidies.

"There is, though, wide variation between OECD members. Producer support is worth less than 5% of farm receipts in New Zealand and Australia, but amounts to roughly 20% throughout North America, 34% in the European Union, and a whopping 60% in Japan. And while the overall value of support has fallen from 2.3% of GDP in 1986-88 to 1.2% now, the reductions have been uneven. Canada and Mexico have made deep cuts in their farm supports, for instance, while Turkey has actually increased its supports."

The developed world is worried about the spread of AIDS, radical Islam, avian bird flu, and a host of other troubles in the developing world.  However without radical farm subsidy reform, starting in Europe (as proposed by the United States) and followed by Japan, the Doha round will accomplish little.  If the developing world continues without the opportunity for sustainable development and the ability to trade for hard currency with the industrialized world, it will find other exports that may be far more costly to the world.

Terrorism, drugs, diseased and impoverished immigrants are the likely exports the third world will trade with the industrialized nations if a fair trade round is not concluded.  This will be far costlier than sustaining 2% of the European workforce.

The Belmont Club Weighs In on Merkel

Wretchard of The Belmont Club poses this important question: "What foreign policy will the new Chancellor of Germany pursue?"  Along with citing DEL, he links to Hero von Essens' piece "Angela Merkel's Travels (And Her Limits)," which reasons:

"Under Merkel, Germany's foreign policy focus will free itself of Schroeder's shortsighted French fixation, and she will desist from the anti-American posturing which so disfigured Schroeder and Fischer's tenure. Germany assumes the EU Presidency in 2007, so these small signs of opening up to the outside world are mildly encouraging for proponents of such things as reform of the EU budget, including the ludicrous CAP system, a more Atlanticist foreign policy, and integration of the new, eastern EU countries."

Wretchard then asks in reflection of Ms. Angela Merkel's recent European tour:

"Dawn's Early Light in comparing Merkel to Bismarck made a suggestive comparison. Bismarck unified Germany: what might she do for Europe? Although the European Union draft constitution has fallen into a coma, its departure did not permanently answer the question of what Europe should be."

Therefore, taking liberty with his two questions, let me rephrase: "How will Ms. Merkel's foreign and domestic policy, even in her weakened grand-coalition position, affect European development and integration?" 

Wretchard gives an interesting take on Germany, given its historical position on European and American relations.

"Now it is doubtful whether the European Union will be around in the year 2100 at all. Significantly the Germans did not share the French illusion of thinking the Second World War and the Cold War that followed was won from the Elysee Palace and Brussels. Germany knew that the fourth leading nation in Europe was located across the Atlantic. Puschmann  noted, 'It may not be immediately obvious at present, but Germany does, at least potentially, share Britain’s positive outlook on the transatlantic alliance. Post-war Germany has historically been an Atlanticist nation, standing firmly by the side of the United States and the United Kingdom'. If Merkel sees Europe within the wider context of the West, rather than through the fantasy prism of the Euroleft, she will at least have Bismarck's breadth of vision, though not, perhaps, his opportunities."

Where Chancellor Merkel stands on domestic and foreign policy issues is important to the extent she can influence international relations.

Step 1: Ms. Merkel Needs to Increase her Political Capital

For Ms. Merkel to succeed in transforming Europe and retaining power, she must increase her political capital.  Voters were reluctant to outright support Ms. Merkel's harsher economic reforms of her Christian Democrat Party compared to the Social Democrat approach of supporting the status quo that had failed to reform Germany's 11% unemployment rate.  While America may be the 50/50 nation, German's unfortunately can't even get either party's plan to a 50% voter approval rate.  Given the state of affairs in Germany's current government, Ms. Merkel benefits from extremely low expectations.  Yet she and her chief political opponent share a good deal in common that may help with bringing modest economic change.  As The Economist notes:

"Both of the country's big parties are now led by eastern Germans: the Christian Democrats by Angela Merkel, the prospective chancellor, and the Social Democrats by Matthias Platzeck, premier of Brandenburg. Predictably, the tabloids say that Ossis are the new Bossis. More striking are the similarities between the two.

Both leaders grew up in Brandenburg; both are 51; both are Protestant; both come from a relatively bourgeois background (Ms Merkel's father was a priest, Mr Platzeck's a doctor); both became scientists; and both are divorced, although Ms Merkel has now remarried and Mr Platzeck has three adult daughters. The pair's political lives have also developed in parallel. Both entered politics after the fall of the Berlin Wall (Mr Platzeck as a Green minister in East Germany's last communist government, Ms Merkel as a spokesperson for the first democratic one). Both rose through the ranks and took the helm of their parties more or less by accident. Both are modernisers, but also pragmatists."

Ideologues do not make for good compromisers but pragmatists do.  Ms. Merkel has strong convictions but is shrewd enough to make incremental advances.  This may buy her time domestically to bring about economic change.  The negotiated "coalition contract" will raise the sales tax (VAT) from 16% to 19%, increasing the retirement age to 67 from 65 for workers born after 1970, cut spending by $41 billion in order to create a budget that does not increase debt beyond the 3% of GDP allowed by the EU (source The Economist). So while domestic policy may be limited for great short-term success, Ms. Merkel is unlikely to lead Germany along Schroeder's self-destructive path.

Step 2: Foreign Policy is Ms. Merkel's Key to Achieve Political Capital

Ms. Merkel's political capital for domestic reform and winning an election 4 years out will require a winning European foreign policy.  I see her opportunities as follows in Europe:

1. Tony Blair and Jacque Chirac have vastly different goals for the United Kindgom and France and are often bitter enemies politically.  France and Britain need an "honest broker" to help compromise on the British Rebate and Common Agriculture Policy (CAP).
2. Former Chancellor Schroeder's relations with President Bush were icy at best.  America, fighting it out in Iraq, needs allies in Europe.  Ms. Merkel, not caught up in the Blair/Chirac feud over the War in Iraq, can be an "honest broker" for America with Europe.
3. French President Jacque Chirac, weakened by the recent internationally devastating Paris Riots, can no longer claim French Socialism is the model for Europe.  Ms. Merkel can play an "honest broker" in a middle approach between Anglo-American capitalism and French socialism to pull together a weakened European Union.

Otto von Bismarck's brilliance was apparent in his ability to fashion alliances to strengthen Germany and keep a healthy balance in Europe, playing the French, British, Russians and Eastern Europeans at times against each other.  Ms. Merkel's ability to be an "honest broker" towards Europe and with Washington across the Atlantic may allow her the flexibility to again bring about radical reform to restructuring a broken Europe.  A more efficient Europe will enhance the German economic engine that has historically powered Europe.

This does not answer the important question of "what Europe will be," but it does hopefully address Ms. Merkel's ability to build the political capital necessary to push forward a Europe that would integrate East and West, with an economic model more towards capitalism than socialism and ultimately not at loggerheads with American foreign policy.

Germany's Angela Merkel the Next Bismarck?

November 26, 2005 - Welcome Instapundit and Belmont Club readers.  Make sure you click on the comments section to read some challenging ideas by Joe Katzman and M. Simon of Winds of Change along with UK's Peter Gentle of the up and coming Polish based blog Beatroot and systemic thinker Dan from tdaxp.  Also see DEL post "The Belmont Club Weighs In on Merkel" as a follow up to the Belmont Club piece (above).

Prussian Bismarck's Strategic Genius

Otto von Bismarck was the brilliant leader of Germany (1862-1890), responsible for unifying the country, building an empire and securing peace in Europe through a complex system of alliances that his successors could not maintain.

"His most significant policy objective was that of securing German unification; he took advantage of skillful diplomacy and a series of wars to achieve this goal...  In foreign affairs, opposed to his previous "Blood and Iron" policies before the unification, Bismarck pursued the goal of uniting Germany under Prussia's leadership, and as 'honest broker' securing the German Empire's position by maintaining peace in Europe with a complicated system of alliances."

Bismarck built a strong German military, sought to not compete with the British with its colonies or navy, contain the French by securing alliances with Austria, Italy and at times Russia.  He was the leading statesman of Europe, being responsible for such treaties as the "Three Emperors' League" (Germany, Austria-Hungary, Russia), "Triple Alliance" (Germany, Austria-Hungary, Italy), "Reinsurance Treaty" (Germany, Russia).  What Bismarck created in Europe with him at the helm provided great stability for Europe (though not necessarily needed economic reform), but was too complicated a system for leaders of less than his caliber to grow, let alone maintain.  The result of the failure of European leaders to continue the balance of power in Europe led directly to the First World War [DEL strongly recommends Pulitzer Prize winning, Barbara W. Tuchman's Guns of August as an exceptional novel on WWI, Dr. Henry Kissinger's Diplomacy and noted Military Historian John Keegan's The First World War] and changed civilization forever.

Former German Chancellor Schroeder's French Folly

The balance of power in Europe changed radically after the collapse of the Soviet Union.  Germany became focused on integrating its two separate countries.  The United Kingdom continued its Atlantic focus while slowly moving towards European integration.  This left France coyly attempting to leverage German strength yoked to Franco-diplomacy, thereby creating a new center in Europe.   

Once Gerhard Schroeder defeated Helmut Kohl for leadership of the German state and her diplomacy, his goals where short term in nature.  Attempting to secure his position in power domestically appeared often his only long-term goal.  Chancellor Schroeder tacked every which way the wind blew to gain domestic support, including anti-American positions, such as colluding with the French to thwart US efforts in Iraq.  He succeeded in damaging the US-German relationship and threw his efforts behind Franco-Russian diplomatic enterprises, even creating a "special relationship" with Vladimir Putin, to the rightful frustration of Poland. 

While UK Prime Minister Tony Blair was often described as America's "Poodle" in the British media, Chancellor Schroeder proved himself far better as Chirac's "Poodle".  German foreign policy was marked by stagnation in the past decade without pushing forward major economic reforms other than European Union integration (with an anti-American bent) that moved along until the French "Non" vote and betrayal of the German position over the EU Constitution [See DEL posts "Why France's Self-Destruction Matters" and "France and the EU Constitution"].

Germany's economy, much like France's, was marked by chronic high unemployment and a growing welfare system, and was unable to support a future Germany that was robust in world affairs.

German Chancellor Angela Merkel's Brilliant Diplomacy - Another Bismarck?

Asia Summary

For Dawn's Early Light readers interested in Asia, here are some articles worthy of mention, though due to my cold I will not be able to provide the normal longer commentary.  However, they are well worth reading and mentioning in this space.

Japan Draft Constitutional Changes Strengthens Military

"Japan's Draft Charter Redefines Military", Washington Post, November 23, 2005

"The governing Liberal Democratic Party on Tuesday released a draft revision of Japan's pacifist constitution that for the first time since World War II would recognize the country's armed forces as a fully functioning military...

The constitutional draft would broaden the government's ability to send forces overseas; such an order now requires special legislation in parliament.

The revision also opens the door to a broader interpretation of the constitution, permitting what some call "collective self-defense" -- or coming to the military aid of other countries. The most likely beneficiary would be Japan's closest ally, the United States, which has urged Japan to adopt such measures. Changes in Japan's constitutional status would have major significance in the region, particularly in the event of a conflict between China and the United States over Taiwan."

DEL posted on this development in "What is Japan's Asia Strategy? (Part II)" on October 29, 2005.  After PM Koizumi's crushing September 11, 2005 electoral victory and his ability to purge his LPD party members that were unsupportive, he is in a good position to continue steps towards strengthening the US-Japanese alliance as well as contain China over issues such as Taiwan and check China's growing military strength.

India to unveil new thinking on foreign investment

The Financial Times (subscription required) writes an article on the above title that is important with respect to India's goals in catching up to China and put some extra horsepower into their economy.

"India’s Communist-backed government will on Thursday afternoon consider a sweeping liberalisation of foreign direct investment rules that would kick start a long-stalled programme of economic reforms.

Kamal Nath, India’s minister for commerce and industry, has proposed allowing 100 per cent foreign direct investment in a range of sectors, including airport construction, oil & gas infrastructure and cash & carry wholesale trading."

Indonesia to Again Receive US Military Support

The US wants Indonesia back in its sphere of influence and not that of the Russians or Chinese.  Goodwill created by the US in the wake of last year's devastating tsunami helped US standing in Indonesia.  This, coupled with its strategic importance as the largest Muslim nation, is the reason for the aggressive US diplomatic move.  The Asia Times Online reports:

"Citing 'national security interests' and noting that Indonesia plays a strategic role in Southeast Asia and is a 'voice of moderation in the Islamic world', the US State Department jumped the gun on Tuesday and lifted a Congress-approved arms embargo against Indonesia.

With East Timor now independent and Aceh no longer a theater of war, Indonesia's pressing need is to upgrade its armed forces to cope with internal security, fight terrorism, guard vital sea lanes, protect the country's numerous oil and gas platforms from terrorist strikes and enforce its maritime boundaries to prevent foreign trawlers from poaching its resources.

Smuggling, illegal fishing and maritime piracy are rife in Indonesian waters, and the addition of more sophisticated vessels will go a long way to curbing these threats...After discussions with President George W Bush, Yudhyono, an ex-general, told a news conference, "I am not pleading for a resumption. We deserve it because we have undergone a reform in our military, with an emphasis on respecting human rights and democracy."

The bulk of Indonesia's hardware is US-made and the TNI - as the army is called - suffers shortages as it can't get replacements and spares.

As a result, Jakarta has increasingly turned to Moscow. After Yudhyono's discussions with Russian President Vladimir Putin, it was announced that both leaders had agreed to start up intensive negotiations on setting up a joint production facility for certain sophisticated military equipment and to develop a national defense industry in cash-strapped Indonesia."

Read the whole article for the details on Indonesia's Type 209-class submarines, Ahmed Yani-class ships, Tribal-class frigates, Claude Jones-class frigates, F-5 fighter and A-4 attack planes, F-16As, Su-27SKs Su-30MK fighters and Hawk 209 light attack jets.

China's Awkward Relations with the EU

DEL has written before on the failure of Chinese foreign policy to lift the arms embargo from the European Union (thanks to a strong US diplomatic effort against French profit motives).  Another Asia Times Online piece discusses the EU-French-Sino relationship.

"The recent state visits by President Hu Jintao to the United Kingdom, Germany and Spain are the latest steps in a continuing effort by the Chinese government and its European counterparts to strengthen their ties, but they also demonstrate some of the contradictions China faces in dealing with Europe and its constituent member states.

Both the European Union and China have described their relationship as strategic, although sometimes this seems no more than a hyperbolic way of saying each considers the other important. It is perhaps true that the relationship is more strategic for China than the EU. The promotion of multipolarity is one of the key foreign policy aims of the Chinese government, and the EU is a crucial element in the policy." 

The piece discusses UK, German and French positions within the EU trade and military policy regarding China. 

Hope you enjoy the articles.