USA and Germany at a crossroads with Afghanistan, journey ban, commerce tariffs

A handout photo from the Federal Government Press Office of Chancellor Angela Merkel and US President Joe Biden is in the White House overlooking the Washington Monument in Washington, DC on July 15, 2021.

Guido Bergmann | Handout | Getty Images News | Getty Images

LONDON – After four years of tension under former President Donald Trump, US-Germany relations were already at a crossroads. Experts now say the ongoing crisis in Afghanistan could fuel the fire even further.

The November election of President Joe Biden raised hopes for a transatlantic realignment between the two economic powers, but analysts say that despite some encouraging rhetoric, many key issues remain to be addressed.

“We see a lot of positive signs: there have been great movements from the Biden administration, there has been a lot of communication and dialogue with visits back and forth and back and forth [German Chancellor] Angela Merkel was in Washington. So that’s absolutely positive – although we don’t have any tangible results yet, ”Simone Menne, president of the American Chamber of Commerce, told CNBC earlier this month.

“There are still a few things to be resolved, that is the tariffs on steel and aluminum, so the travel ban and the data exchange,” she added.

The European Union, which has Germany as the largest economy, announced in May that it would not introduce any previously planned second tariffs on US products. The move was intended to enable dialogue about steel and aluminum tariffs that were imposed during the Trump presidency. But Europe’s trade chief Valdis Dombrovskis told the FT in July that there was a future The agreement could not achieve the mutual suspension of all tariffs.

In addition, in June the EU decided to open its doors to US travelers as the health situation improved in both regions. However, Biden has not yet taken the mutual step, which has angered some European officials.

Despite opposition from US politicians, Germany’s government also decided to build a gas pipeline from Russia, the Nord Stream 2 project.

“American-German relations have changed in tone, but not yet in substance,” said Carsten Brzeski, economist at ING Germany, via email to CNBC.

Afghanistan crisis

More recently, Biden’s decision to withdraw American troops from Afghanistan, and the subsequent swift takeover of the country by the Taliban, has angered many in Europe. Some politicians, including in Germany, see these developments as a problem for the political and moral credibility of Western nations.

Merkel did not publicly criticize her American counterpart, but the developments in Afghanistan are “bitter, dramatic and frightening” according to the German media.

Her successor as chairman of the conservative CDU, Armin Laschet, went one step further. The withdrawal of international troops is the “greatest debacle that NATO has suffered since it was founded”.

Germany now realizes that the Biden government is significantly more EU-friendly and uses a more polite tone, but still keeps the US first and the rest of the world second.

Carsten Brzeski

Economist, ING Germany

“The political costs of this situation for Merkel and her government will be high. That doesn’t reflect well the relationship between the United States and Germany, ”Erik Jones, professor of European Studies at Johns Hopkins University, told CNBC via email.

He added, however, that “both governments will be too distracted by the domestic consequences of the Afghan situation to be very concerned about the implications for their bilateral relations at the moment.”

Brzeski added: “Germany now realizes that the Biden government is clearly more EU-friendly and uses a more polite tone, but still keeps the US first and the rest of the world second.”

Coordinated Response?

British Prime Minister Boris Johnson convened an emergency G-7 meeting on Tuesday to coordinate the responses of Western leaders to the crisis in Afghanistan.

But not everyone is convinced that a coordinated solution is possible.

“The pace of events [in Afghanistan] surprised everyone, “Tina Fordham, director of global policy at Avonhurst, a consultancy, told CNBC Street Signs on Monday.

The reality is that for several years the leading nations of the G-7 have not been able to agree on a common framework for solving many problems, as evidenced most clearly by the uncoordinated response to the pandemic. “

She said Western leaders want to be seen to prevent the worst of a humanitarian crisis in Afghanistan, but that any action could have far-reaching consequences.

“What I don’t think is appreciated that much by market participants or G-7 leaders is that this progress with the fall of Afghanistan could be a critical political risk to our own domestic environment.” She added.

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