Page 1 of 2 Obama's strategy and the summits
By George Friedman
The week-long extravaganza of meetings between the Group of 20 (G-20), North
Atlantic Treaty Organization (NATO), European Union, United States and Turkey
has ended. The spin emerging from the meetings, echoed in most of the media,
sought to portray the meetings as a success and as reflecting a re-emergence of
trans-Atlantic unity.
The reality, however, is that the meetings ended in apparent unity because the
United States accepted European unwillingness to compromise on key issues.
United States President Barack Obama wanted the week to appear successful, and
therefore backed off on key issues; the Europeans did the same. Moreover, Obama
appears to have set a process in motion that bypasses
Europe to focus on his last stop: Turkey.
Berlin, Washington and the G-20
Let's begin with the G-20 meeting, which focused on the global financial
crisis. As we said last year, there were many European positions, but the
United States was reacting to Germany's. Not only is Germany the largest
economy in Europe, it is the largest exporter in the world. Any agreement that
did not include Germany would be useless, whereas an agreement excluding the
rest of Europe but including Germany would still be useful.
Two fundamental issues divided the United States and Germany. The first was
whether Germany would match or come close to the US stimulus package. The
United States wanted Germany to stimulate its own domestic demand. Obama feared
that if the United States put a stimulus plan into place, Germany would use
increased demand in the US market to expand its exports. The United States
would wind up with massive deficits while the Germans took advantage of US
spending, thus letting Berlin enjoy the best of both worlds. Washington felt it
had to stimulate its economy, and that this would inevitably benefit the rest
of the world. But Washington wanted burden sharing. Berlin, quite rationally,
did not. Even before the meetings, the United States dropped the demand -
Germany was not going to cooperate.
The second issue was the financing of the bailout of the Central European
banking system, heavily controlled by Eurozone banks and part of the EU
financial system. The Germans did not want an EU effort to bail out the banks.
They wanted the International Monetary Fund (IMF) to bail out a substantial
part of the EU financial system instead. The reason was simple: The IMF
receives loans from the United States, as well as China and Japan, meaning the
Europeans would be joined by others in underwriting the bailout. The United
States has signaled it would be willing to contribute $100 billion to the IMF,
of which a substantial portion would go to Central Europe. (Of the current
loans given by the IMF, roughly 80% have gone to the struggling economies in
Central Europe.) The United States therefore essentially has agreed to the
German position.
Later, at the NATO meeting, the Europeans - including Germany - declined to
send substantial forces to Afghanistan. Instead, they designated a token force
of 5,000, most of whom are scheduled to be in Afghanistan only until the August
elections there, and few of whom actually would be engaged in combat
operations. This is far below what Obama had been hoping for when he began his
presidency.
Agreement was reached on collaboration in detecting international tax fraud and
on further collaboration in managing the international crisis, however. But
what that means remains extremely vague - as it was meant to be, since there
was no consensus on what was to be done. In fact, the actual guidelines will
still have to be hashed out at the G-20 finance ministers' meeting in Scotland
in November. Intriguingly, after insisting on the creation of a global
regulatory regime - and with the vague US assent - the European Union failed to
agree on European regulations. In a meeting in Prague on April 4, the United
Kingdom rejected the regulatory regime being proposed by Germany and France,
saying it would leave the British banking system at a disadvantage.
Overall, the G-20 and the NATO meetings did not produce significant
breakthroughs. Rather than pushing hard on issues or trading concessions - such
as accepting Germany's unwillingness to increase its stimulus package in return
for more troops in Afghanistan - the United States failed to press or bargain.
It preferred to appear as part of a consensus rather than appear isolated. The
United States systematically avoided any appearance of disagreement.
The reason there was no bargaining was fairly simple: the Germans were not
prepared to bargain. They came to the meetings with prepared positions, and the
United States had no levers with which to move them. The only option was to
withhold funding for the IMF, and that would have been a political disaster
(not to mention economically rather unwise). The United States would have been
seen as unwilling to participate in multilateral solutions rather than Germany
being seen as trying to foist its economic problems on others. Obama has
positioned himself as a multilateralist and can't afford the political
consequences of deviating from this perception. Contributing to the IMF, in
these days of trillion-dollar bailouts, was the lower-cost alternative. Thus,
the Germans have the US boxed in.
The political aspect of this should not be underestimated. George W Bush had
extremely bad relations with the Europeans (in large part because he was
prepared to confront them). This was Obama's first major international foray,
and he could not let it end in acrimony or wind up being seen as unable to move
the Europeans after running a campaign based on his ability to manage the
Western coalition. It was important that he come home having reached consensus
with the Europeans. Backing off on key economic and military demands gave him
that "consensus".
Turkey and Obama's deeper game
But it was not simply a matter of domestic politics. It is becoming clear that
Obama is playing a deeper game. A couple of weeks before the meetings, when it
had become obvious that the Europeans were not going to bend on the issues that
concerned the United States, Obama scheduled a trip to Turkey. During the EU
meetings in Prague, Obama vigorously supported the Turkish application for EU
membership, which several members are blocking on grounds of concerns over
human rights and the role of the military in Turkey. But the real reason is
that full membership would open European borders to Turkish migration, and the
Europeans do not want free Turkish migration. The United States directly
confronted the Europeans on this matter.
During the NATO meeting, a key item on the agenda was the selection of a new
alliance secretary general. The favorite was former Danish prime minister
Anders Fogh Rasmussen. Turkey opposed his candidacy because of his defense on
grounds of free speech of cartoons depicting the Prophet Mohammed published in
a Danish magazine. NATO operates on consensus, so any one member can block just
about anything. The Turks backed off the veto, but won two key positions in
NATO, including that of deputy secretary general.
So while the Germans won their way at the meetings, it was the Turks who came
back with the most. Not only did they boost their standing in NATO, they got
Obama to come to a vigorous defense of the Turkish application for membership
in the European Union, which of course the United States does not belong to.
Obama then flew to Turkey for meetings and to attend a key international
meeting that will allow him to further position the United States in relation
to Islam.
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