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courage is contagious
Viewing cable 09BERLIN345, SCENESETTER FOR THE PRESIDENT'S BILATERAL MEETING
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
09BERLIN345 | 2009-03-24 12:12 | 2010-11-28 18:06 | SECRET//NOFORN | Embassy Berlin |
VZCZCXRO8237
OO RUEHBC RUEHDE RUEHDIR RUEHKUK
DE RUEHRL #0345/01 0831251
ZNY SSSSS ZZH
O 241251Z MAR 09
FM AMEMBASSY BERLIN
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3656
INFO RUCNIRA/IRAN COLLECTIVE PRIORITY
RUEHZG/NATO EU COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 1001
RUEHMO/AMEMBASSY MOSCOW PRIORITY 2024
RUEHDIR/IRAN RPO DUBAI PRIORITY
RUEKJCS/SECDEF WASHINGTON DC PRIORITY
RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0399
RHEHNSC/NSC WASHINGTON DC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
RUEKJCS/JOINT STAFF WASHINGTON DC PRIORITY
S E C R E T SECTION 01 OF 02 BERLIN 000345
NOFORN
SIPDIS
FOR THE PRESIDENT FROM CHARGE D'AFFAIRES JOHN M. KOENIG
E.O. 12958: DECL: 03/23/2034
TAGS: GM MARR NATO PGOV PHUM PREL
SUBJECT: SCENESETTER FOR THE PRESIDENT'S BILATERAL MEETING
WITH CHANCELLOR MERKEL ON THE MARGINS OF THE NATO SUMMIT
BERLIN 00000345 001.2 OF 002
Classified By: Charge d'Affaires John M. Koenig for reasons 1.4 (b) and
(d)
¶1. (S/NF) Chancellor Merkel will be focused on a productive,
substantive meeting when you visit Baden-Baden April 3.
Germany holds the greatest untapped potential in Europe for
our transatlantic agenda; unlocking it will take sustained
effort by the Administration, and the payoff will not be
immediate. What is most on Merkel,s mind is her political
future, six months before national elections, with her poll
numbers wobbling and her coalition increasingly
dysfunctional. Germany,s capacity to act is constrained by
(1) the short-term demands of domestic politics (about which
we can do little), (2) the slow pace of change in public
support for a German leadership role (a focus of our
engagement), and (3) the constant demands of the economic
crisis. Your meeting provides an opportunity to map out key
priorities with Germany for the remainder of Merkel,s
current term and beyond.
---------------------------------
Merkel,s Own Crisis -- Leadership
---------------------------------
¶2. (S/NF) Merkel is methodical, rational, and pragmatic --
qualities that propelled her to stratospheric levels of
public support early in her tenure, when she presided over a
recovering economy and a successful presidency of the
European Union. The past year has been less kind, and the
almost exactly equal split in the German electorate between
left and right is re-emerging as elections approach. Merkel
now faces a &Gordian knot8 of rising unemployment, economic
crisis, and domestic political dissatisfaction at a time when
she can least afford a wrong move. The effectiveness of
Merkel,s &Grand Coalition8 government is declining as her
Christian Democrats (CDU) and their Social Democratic (SPD)
partners begin in earnest their campaigns for the September
2009 election. The Chancellor,s edge over the rival SPD,
led by Foreign Minister Frank-Walter Steinmeier, is
diminishing. When cornered, Merkel can be tenacious but is
risk averse and rarely creative. This suggests she will
remain a very circumspect Ally until the election.
¶3. (C/NF) The collapse of German exports and industrial
activity has shocked Chancellor Merkel and her advisors.
They had thought Germany would escape the worst of the world
recession thanks to its competitive position in emerging
markets. In the New Year, Merkel and Finance Minister Peer
Steinbrueck (SPD) rushed a relatively robust stimulus program
through the Bundestag that is timed to counter a surge in
unemployment just before the September elections. Like most
Germans, they doubt further deficit spending will generate
lasting growth, and fear too large a stimulus may cause
stagflation at home and dangerous new global imbalances.
Merkel and Steinbrueck remain bitter at the brush-off they
allegedly received during the last administration when they
advocated tighter financial oversight. Tougher regulations,
they insist, are essential to restore confidence in the
banking system and get credit flowing again, thus creating
the pre-conditions for a sustainable recovery.
¶4. (C/NF) Hoping to escape responsibility for the economic
crisis, Merkel has issued public critiques of U.S. recovery
policy that exaggerate the differences between Washington and
continental Europe. In fact, Germany faces many of the same
difficult choices as the U.S. The Chancellor is expected to
put forward a further stimulus package later this year. Her
government has bailed out big banks while holding firm on
state aid to ailing firms like Opel. The conventional wisdom
in Germany is that Opel could be rescued with minimum state
aid if only it could be separated from GM, but in fact there
is no viable business plan for the firm to stand on its own.
The Chancellor is surrounded by bad options: an
interventionist approach would further alienate economic
conservatives in her CDU (who are already defecting in droves
to the free-market FDP); if she does nothing, Steinmeier and
the SPD will harvest the goodwill of centrist voters for
trying to save Opel. Merkel has not been above shifting
responsibility to the USG and General Motors, which she and
BERLIN 00000345 002.2 OF 002
the German media unfairly blame for bleeding Opel dry. In
the end, Merkel,s government will likely be forced to prop
up at least parts of the automaker.
--------------------------------------------
Increasing Political Caution during Campaign
--------------------------------------------
¶5. (S/NF) Merkel and Steinmeier are pragmatists; on foreign
policy, in particular, there is more that unites them than
divides them. But the centrifugal forces of the election
campaign and the growing mistrust between the CDU and SPD
make it increasingly difficult for them to agree on any big
ideas about Germany,s role in the world or its relations
with the United States. Buffeted by events, Merkel is
struggling to define a convincing vision for &her8 Germany;
&competence8 is the sole component at this point. She is
blessed that Steinmeier, her principal competitor, faces even
greater difficulties. His party has lost its bearings in the
Grand Coalition and is plagued by internal divisions.
Steinmeier himself is a technocrat and a latecomer to
electoral politics -- his shortcomings on stage are
significant. Steinmeier has tried to make up ground on
Merkel by publicly identifying himself with the new U.S.
Administration. However, his ability to deliver on policy
initiatives without the Chancellor,s political support is
limited.
¶6. (C/NF) Afghanistan is an example. Merkel has been
cautious throughout her chancellorship and has doggedly
resisted real or perceived pressure for Germany to take on a
larger military role. She and Steinmeier both have supported
the Comprehensive Approach, but the Chancellor,s CDU, in the
face of public skepticism, is reluctant even to consider
increasing police or civilian support. Steinmeier and the
SPD have been more forward-leaning, but they cannot deliver
on their own. You should emphasize that at the moment the
U.S. is not seeking significant additional military forces
from Germany, but that every member of the international
community will need to do much more (e.g., training security
forces and providing civilian assistance) if we are to be
successful.
---------------------------------------
Policy Opportunities on Russia and Iran
---------------------------------------
¶7. (C/NF) Germany should play a central role with the U.S.
in defining a coordinated western Russia policy that resets
the relationship without retreating from our values. The
winter gas crisis made Germans rethink Russia,s reliability
as a supplier, but the lack of alternatives and the
desirability of gas as a clean energy source have left the
government resigned to dependency on Russia in the
near-to-medium term. On energy as well as Georgia, neither
Merkel nor Steinmeier has identified areas where German
policy steps could help create a more persuasive set of
incentives for Russia to integrate further into rules-based
relationships and institutions. Meanwhile, Germany is
concerned about threats to economic and social stability in
Central and Eastern Europe, but prefers EU and IMF approaches
to limit its share of the bill.
¶8. (C/NF) Both Merkel and Steinmeier welcomed your Nowruz
address to the Iranian people and government. They support
the U.S. investment in the diplomatic track and agree that
Germany and the EU need to invest in the economic pressure
track. Germany,s close ties to Israel include an imperative
to defend Israel,s right to exist and to play an active role
in international non-proliferation efforts toward Iran.
Merkel will be looking to the meeting to gain a better
understanding of how you see the USG Iran policy unfolding
and what role we need Germany to play.
¶9. (U) Mr. President, Mission Germany is honored to support
you on your first overseas trip as President, and we look
forward to welcoming you in Baden-Baden.
Koenig