Obama-Merkel Cool as Leaders Together Standing Since 2009

Photographer: Joshua Roberts/Bloomberg

Both German Chancellor Angela Merkel and U.S. President Barack Obama view the trans-Atlantic trade pact as a promise of jobs and growth. Close

Both German Chancellor Angela Merkel and U.S. President Barack Obama view the... Read More

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Photographer: Joshua Roberts/Bloomberg

Both German Chancellor Angela Merkel and U.S. President Barack Obama view the trans-Atlantic trade pact as a promise of jobs and growth.

Five years after he first asked for it, Barack Obama is getting the symbolic moment he wanted: addressing Europe from the Brandenburg Gate.

In 2008, German Chancellor Angela Merkel rejected Obama’s request to speak at the Berlin landmark as presumptuous for a presidential candidate. That he’s speaking there next week, at her invitation, is emblematic of how the two political outsiders have forged an unlikely connection.

They’ve both endured economic crises, wars in the Middle East and Afghanistan, and their shared staying power has made them two of the longest-standing world leaders. Merkel is the only major European leader still in power from the start of Obama’s presidency.

“In some respects, they’re the last two people standing since 2009,” said Ben Rhodes, Obama’s deputy national security adviser. “They’ve just gone from crisis to crisis to crisis.”

Along the way, Obama and Merkel have earned reputations for being distant, a trait that also may have brought them closer together, said Jacob Funk Kirkegaard, a senior fellow with the Peterson Institute for International Economics in Washington.

“They’re aloof, cold, calculating, they’re very business-minded,” Kirkegaard said. “They don’t need to have a favorite rock band, or have a personal relationship, or be Ronald Reagan and Margaret Thatcher,” he said. “The most important thing is that they can do business.”

‘Totally Comfortable’

“They’re totally comfortable being candid, direct and cut-to-the-chase,” Rhodes said. “He prefers people who you don’t have to go through a lot of fluff to get to the heart of the issue.”

That matters because the U.S. and Germany are the two biggest players in the trans-Atlantic partnership, and Germany’s economic dominance in Europe has grown as the debt crisis weakened most of the rest of the 17-nation euro bloc.

Disagreement over fiscal policy between Germany and the U.S., which has opposed German-backed austerity, has eased as Europe’s debt crisis has receded. German leaders have signaled a willingness to soften demands for budget cuts. And Merkel and Obama now are both pressing for a U.S.-European deal to expand the $4.5 trillion in annual trans-Atlantic trade and investment.

“We need big projects together that unite us,” Merkel said in an interview with Bloomberg News today. A free-trade agreement “would be a very important signal” for both sides in “a changed environment” after the end of the Cold War.

‘Window of Opportunity’

“We ought to use this window of opportunity,” Merkel said in Berlin. “I will throw my full political weight behind such a mandate for a free-trade agreement.”

The two leaders’ relationship also faces a test, as Merkel plans to ask Obama during his Berlin visit about U.S. phone and Internet surveillance programs, her spokesman Steffen Seibert said. Her government has sent a list of questions to the Obama administration and Internet companies after the spying reports.

Merkel, who is running for a third term in September, plans to host Obama on June 19 for talks at the Chancellery building, a short walk from the Brandenburg Gate where Obama speaks later that day, followed by a dinner at the 17th-century Prussian Charlottenburg Palace.

The meetings will take place with the German economy expanding even as the euro area as a whole is stuck in recession and the country’s jobless rate is near a two-decade low of 6.8 percent, compared with 7.6 percent in the U.S.

Trade Benefits

Both Merkel and Obama argue that the trans-Atlantic trade pact offers a promise of jobs and growth. It may produce annual economic gains for both trading partners by as much as 214 euros ($286 billion), according to a European Union estimate.

U.S. trade in goods with Germany last year was $157.5 billion, while the U.S. ran a $59.9 billion deficit with the European country, a 20.9 percent increase from 2011, according to U.S. Commerce Department data.

Obama and Merkel first became partners on foreign policy. Germany kept thousands of combat troops in Afghanistan as part of the NATO security force and has committed to keeping as many as 800 soldiers there for training after 2014 when the combat mission is to end.

Germany also moved significantly on Iran sanctions to back the U.S., said Heather Conley, a former State Department official during George W. Bush’s administration who now directs the Europe Program for the Center for Strategic and International Studies, a policy institute in Washington.

Goodwill Gestures

Even as they disagreed over the appropriate balance of economic stimulus and budget austerity to ease Europe’s crisis, Obama, 51, a former law professor, and Merkel, 58, a scientist, built a relationship on gestures of goodwill over some 45 telephone calls and meetings since Obama took office.

Merkel, an East German pastor’s daughter, says that includes the 2008 flap over the Brandenburg Gate. A landmark along the Berlin Wall during the Cold War, and the site of Reagan’s 1987 speech calling on Soviet leader Mikhail Gorbachev to tear down the wall, it became a symbol of German reunification after communism collapsed in 1989 -- clearing the way for Merkel’s political career.

Merkel denied candidate Obama the stage of the neoclassical monument five years ago because then “anybody could come along and want to do the same,” she said in April. She said she explained that to Obama, and he understood.

Medal of Freedom

When Obama honored Merkel with a Presidential Medal of Freedom and a state dinner in 2011, it was the highest-profile visit of a German leader in 16 years.

Merkel told Obama that receiving the honor in the White House Rose Garden was “beyond even my wildest dreams.”

It was during that same visit, said a U.S. official familiar with the conversation who asked for anonymity, that Merkel privately told Obama that he was welcome to speak at the Brandenburg Gate. Obama took the opportunity to press Europe for a “sensible resolution” of the debt crisis.

Obama and Merkel are both outsiders to the traditional ruling elites of their nations.

Obama is the first black U.S. president and served in Washington for less than a term as a senator before his election. Merkel is a physicist who entered politics in her 30s. She’s Germany’s first female chancellor and the first from the formerly Communist east, and rose to the top in the male-dominated Christian Democratic Union.

Shoulder Rub

President George W. Bush famously made Merkel flinch with an uninvited back rub at a meeting of the Group of Eight nations in 2006. By contrast, at last year’s G-8 summit at Camp David, Maryland, when Merkel responded with a wordless shrug to Obama’s query about how things were going, the president didn’t try to endear himself, saying only, “Well, you have a few things on your mind.”

The Transatlantic Trade and Investment Partnership will be the most important issue of this visit, said Constanze Stelzenmueller, a fellow in Berlin with the German Marshall Fund of the U.S., which promotes trans-Atlantic cooperation.

An agreement may help Merkel’s and Obama’s shared goal of keeping the U.K. in the EU, and progress may boost Merkel’s standing with the business community heading into the election.

Negotiations will begin in July if U.S. lawmakers and EU governments agree, with a goal of completing a framework by the end of 2014. Governments and industry must resolve concerns about automobiles, genetically modified crops and other items.

China’s Clout

The U.S. also is negotiating a trade accord with Pacific nations, looking to answer China’s growing clout in global commerce. “It’s a political signal as much as an economic signal about repositioning the trans-Atlantic relationship for the future world,” Daniel Hamilton, head of the Center for Transatlantic Relations at the School of Advanced International Studies in Washington, told reporters in Berlin earlier this year. “This is not just another free-trade agreement.”

Peter Chase, the vice president of the Europe program for the U.S. Chamber of Commerce, said Merkel’s benefit to Obama is linked in part to her relations with Europe’s other leaders.

“The question is: can she deliver,” Chase said.

Obama and Merkel last spoke on Feb. 11, when Obama called to let her know that in his State of the Union speech the next day he would announce plans to cut by half, or 34,000, the number of U.S. forces in Afghanistan. Obama also told British Prime Minister David Cameron and Afghan President Hamid Karzai.

Brandenburg Gate

Obama’s speech at the Brandenburg Gate is meant to signal that Germany and the U.S. must work together to meet new challenges of globalization, according to a German government official who asked to speak anonymously because the talks weren’t public. Aides to the two leaders settled on the speech venue a few weeks ago, the official said.

When Obama visited Berlin in July 2008, his speech in a city park drew a crowd of hundreds of thousands. As president, he has made stops in Germany including for a NATO summit and a visit to Buchenwald, the former Nazi concentration camp.

Obama’s been more popular in Germany than in the U.S., according to polls. Eighty-five percent of Germans would have voted last November for Obama over Republican Mitt Romney, according to an Oct. 29-31 YouGov poll of 1,051 people done for the Die Zeit weekly. Obama won with 51 percent of the vote.

“He’s an incredibly popular leader among Germans,” said Philip Murphy, the U.S. ambassador to Germany.

Reconsidering Austerity

Facing U.S. pressure, European leaders last month signaled they are open to reconsidering their austerity program after three years of slimming budgets, a deepening recession and record unemployment.

In Germany, where seasonally adjusted unemployment in May rose by 21,000 people, more than four times as much as economists estimated. German gross domestic product grew 0.1 percent in the first quarter.

Even so, the jobless rate of 6.9 percent is barely higher than the two-decade low of 6.8 percent and German household spending rose 0.8 percent in the first quarter. The Bundesbank expected the economy to gather pace this quarter.

Regardless of what both leaders want to signal about how well they get along, Merkel has said she won’t shift fundamentally on austerity and her aversion to stimulus spending.

“This has truly been a dialogue of the deaf,” Conley of CSIS said. “We give our prescription of, ‘You need to stimulate more,’ and Germans say, ‘No, we need to reduce spending, reduce debt levels and get healthier.’”

“The Germans have re-branded ‘austerity’ to be ‘growth-friendly consolidation’ -- which is austerity by another name,” Conley said. “Hopefully in a kinder, gentler way. But German policy hasn’t changed.”

To contact the reporters on this story: Margaret Talev in Washington at mtalev@bloomberg.net; Tony Czuczka in Berlin at aczuczka@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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