The Taming of the Shrew: Why a Biden administration could be a disaster for Germany

 

This interesting @derspiegel article¹ (h/t @michaelxpettis ) depicts one of the possible futures, but like the porridge in the Three Bears tale, one is hot, one is cold, and one is just right.

I think that while the  German Chancellery wishes for a "hot" porridge (as in "hot car") this article depicts a possible "just right" scenario: a Biden presidency that in a similar guise of Obama's "thank you for not being George Bush" Nobel, is not #Trump. But there is a "but."

The main obstacle is lo and behold, "money", and  this is not caused by the points of contention, but by the policy initiatives where their hearts beat most together: climate, International policy, economics.

Applying the #Paris agreement standards or worse would be atrociously damaging to the private sector in the US, on top of the brakes applied by the liberal agenda of the more radical side of the Party. Talks of 15$ federal minimum wage, more regulation, more encroachment, will slow down the recovery, and Biden might be understandably rattled by polls going into 2022 (Europe copes by having much less of a private economy, also  pretending that some public arms, like banking, are private enterprises).

Since the US is a Republic, and a torn one at that, such a policy disproportionately damaging Republican states and/or "red Democrat " ones would virtually assure a one-term Democratic presidency... unless counterbalanced by a vigorous economic initiative. For that, read "trade disputes": German car makers would be well advised to help out by reinforcing their presence in the US... and probably will. Moreover, so long, webtax. That will remain  in the headlines in the EU as a sop to the gullible, but Hell will freeze before the EU will embarrass Biden's White House by expoliating the main Dem donors, and based in formerly safe Blue states at that. 

As to foreign policy,  this quote is interesting:

"The return of the U.S. to the international stage will change a lot of things, because together we stand for a cooperative approach," German Foreign Minister Heiko Maas told DER SPIEGEL.

The implied hope is that the new administration will pay proper respect to the EU's traditional policy stance of having untold committees until any issue is either  solved on its own, gone awry, or caused a direct US intervention. That is quite likely, but just as likely in a brave new world of US domestic economic intervention, the only theater where the US might  try and pinch pennies is the EU.  There is no love lost between Democrats and Eastern European countries, the EU  is a rich market, as they most frequently say when talking to the UK across the Brexit table, why bother spending money to defend a place not eager to defend itself? Just barely reaching the minimum NATO goal of 2% would mean for Germany a 33% increase in defense spending,maybe not enough to fill the rooster but enough to make sure that all the existing equipment is in working order. Germany will do that, and not in the fake way over many years they floated to fob off Orange man bad: He threatened to move US troops to Poland. Biden will float moving them home. That, coupled with an hard Brexit, will leave continental EU as a latter day Casablanca or West Berlin: a patently helpless no man's land which some would want to influence and none occupy. Sorry for the French, but if they wanted enhanced defense cooperation they should have moved years ago. Like fifty.

Do remember where Von Der Leyen was before assuming the EU Commission presidency: a cursory glance at google results on that unearth perfectly known embarassments.

As to economics, it's quite difficult to address bilateral EU - US positions without referring to Brexit. London won't lose its preeminence as a financial capital overnight at a EUCO ruling, and bilateral ties between the US and the UK have a bearing in US elections...and beyond, since the ties with Nordic countries are tight as well. Will Germany trade space for a better deal? Possibly, but I don't hold my breath. 

Russia is and remains a bone of contention, as does China. Germany (and Italy, alas)  have at times clashed with the Trump administration about their ties to China especially. On the one hand Biden is so chained to China to make that a non issue, unless the internal Dem opposition tries using his perfectly known business ties to blackmail him into something. Faced with that, the easy way out is something the EU is not equipped to undergo since it's something it's used to do to others: force the issue internationally and pressure others, namely the EU, to publicly sever those ties. unlikely, but not as farfetched.

Plus, the EU needs Dollars. Lots of them.Swap lines haven't been used as a leash, but that doesn't mean they never will.