American Bases To Be Moved From Germany To Eastern Europe

Invited by a grateful United States, the Czech Republic sent in February 2003 a representative to meet with Iraqi opposition in Kurdish north Iraq. The country was one of the eight signatories on a letter, co-signed by Britain, Italy, Spain and the two other European Union central European candidate-members, Poland and Hungary, in support of US policy in the Gulf.

According to The Observer and the New York Times, American troops in Germany - and the billions of dollars in goods and services they consume locally - will be moved further east to the Czech Republic, Bulgaria, Poland and the Baltic states. This shift may have come regardless of the German "betrayal". The Pentagon has long been contemplating the futility of stationing tens of thousands of soldiers in the world's most peaceful and pacifistic country.

The letter is a slap in the face of Germany, a member of the "Axis of Peace", together with France and Belgium and the champion of EU enlargement to the east. Its own economic difficulties aside, Germany is the region's largest foreign investor and trading partner. Why the curious rebuff by its ostensible protégés?

The Czech Republic encapsulates many of the economic and political trends in the erstwhile communist swathe of Europe.

The country's economic performance still appears impressive. Figures released at the beginning of 2003 revealed a surge of 6.6 percent in industrial production, to yield an annual increase of 4.8 percent. Retail sales, though way below expectations, were still up 2.7 percent in 2002. The Czech National Bank (CNB) upgraded its gross domestic product growth forecast on Jan 30, 2003 to 2.2-3.5 percent.

But the country is in the throes of a deflationary cycle. The producer price index was down 0.8 percent in 2002. Year on year, it decreased by 0.4 percent in January 2003. Export prices are down 6.7 percent, though import prices fell by even more thus improving the country's terms of trade.

The Czech koruna is unhealthily overvalued against the euro thus jeopardizing any export-led recovery. The CNB was forced to intervene in the foreign exchange market and buy in excess of 2 billion euros in 2002 - four times the amount it did in 2001. It also cut its interest rates in January 2003 to their nadir since independence. This did little to dent the country's burgeoning current account deficit, now at over 5 percent of GDP.

Unemployment in January 2003 broke through the psychologically crucial barrier of 10 percent of the workforce. More than 540,000 bread earners (in a country of 10 million inhabitants) are out of a job. In some regions every fifth laborer is laid off. There are more than 13 - and in the worst hit parts, more than 100 - applicants per every position open.

Additionally, the country is bracing itself for another bout of floods, more devastating than 2001's and the ones in 1997. Each of the previous inundations caused in excess of $2 billion in damages. The government's budget is already strained to a breaking point with a projected deficit of 6.3 percent in 2003, stabilizing at between 4 and 6.6 percent in 2006. The situation hasn't been this dire since the toppling of communism in the Velvet Revolution of 1989.

Ironically, these bad tidings are mostly the inevitable outcomes of much delayed reforms, notably privatization. Four fifths of the country's economy is alleged to be in private hands - a rate similar to the free markets of Estonia, Slovakia and Hungary. In reality, though, the state still maintains intrusive involvement in many industrial assets. It is the reluctant unwinding of these holdings that leads to mass layoffs.

The ministry of finance correctly forecast a rise in the country's GDP from 59 percent to 70 percent of the European Union's output in 2005 - comparable to Slovenia and far above Poland with a mere 40 percent. The Czech Republic was preparing itself to join the eurozone shortly after it had become a member of the EU in May 2004.

Foreign investors are gung ho. The country is now the prime investment destination among the countries in transition. In a typical daily occurrence, bucking a global trend, Matsushita announced its intention to further expand its television factory in Plzen. Its investment of $8 million will enhance the plant's payroll by one tenth to 1900 workers. Siemens - a German multinational - is ploughing $50 million into its Czech unit. Siemens Elektromotory's 3000 employees export $130 million worth of electrical engines annually.

None of this would have been possible without Germany's vote of confidence and overwhelming economic presence in the Czech Republic. The deteriorating fortunes of the Czech economy are, indeed, intimately linked to the economic stagnation of its northern neighbor, as many an economist bemoan. But this only serves to prove that the former's recovery is dependent on the latter's resurrection.

Either way, to have so overtly and blatantly abandoned Germany in its time of need would surely prove to be a costly miscalculation. The Czechs - like other central and east European countries - mistook a transatlantic tiff for a geopolitical divorce and tried to implausibly capitalize on the yawning rift that opened between the erstwhile allies.

Yet, Germany is one of the largest trading partners of the United States. American firms sell $24 billion worth of goods annually there - compared to $600 million in Poland. Germany's economy is five to six times the aggregated output of the EU's central European new members plus Slovakia.

According to the New York Times, there are 1800 American firms on German soil, with combined sales of $583 billion and a workforce of 800,000 people. Due to its collapsing competitiveness and rigid labor laws, Germany's multinationals relocate many of their operations to central and east Europe, Asia and north and Latin America. Even with its current malaise, Germany invested in 2001 $43 billion abroad and attracted $32 billion in fresh foreign capital.

Indeed, supporting the United States was seen by the smaller countries of the EU as a neat way to counterbalance Germany's worrisome economic might and France's often self-delusional aspirations at helmsmanship. A string of unilateral dictates by the French-German duo to the rest of the EU - regarding farm subsidies and Europe's constitution, for instance - made EU veterans and newcomers alike edgy. Hence the deliberate public snub.

Still, grandstanding apart, the nations of central Europe know how ill-informed are recent claims in various American media that their region is bound to become the new European locomotive in lieu of an aging and self preoccupied Germany. The harsh truth is that there is no central European economy without Germany. And, at this stage, there is no east European economy, period.

One third of Hungary's GDP, one half of its industrial production, three quarters of industrial sales and nine tenths of its exports are generated by multinationals. Three quarters of the industrial sector is foreign-owned. One third of all foreign direct investment is German. France is the third largest investor. The situation is not much different in the Czech Republic where the overseas sales of the German-owned Skoda alone account for one tenth the country's exports.

The relationship between Germany and central Europe is mercantilistic. Germany leverages the region's cheap labor and abundant raw materials to manufacture and export its finished products. Central Europe conforms, therefore, to the definition of a colony and an economic hinterland. From a low base, growth there - driven by frenzied consumerism - is bound to outstrip the northern giant's for a long time to come. But Germans stands to benefit from such prosperity no less than the indigenous population.

Aware of this encroaching "economic imperialism", privatization deals with German firms are being voted down throughout the region. In November, the sale of a majority stake in Cesky Telecom to a consortium led by Deutsche Bank collapsed. In Poland, a plan to sell Stoen, Warsaw's power utility, to Germany's RWE was scrapped.

But these are temporary - and often reversible - setbacks. Germany and its colonies share other interests. As The Economist noted correctly recently:

"The Poles may differ with the French over security but they will be with them in the battle to preserve farm subsidies. The Czechs and Hungarians are less wary of military force than the Germans but sympathize with their approach to the EU's constitutional reform. In truth, there are no more fixed and reliable alliances in the EU. Countries will team up with each other, depending on issue and circumstances."

Thus, the partners, Germany and central Europe, scarred and embittered, will survive the one's haughty conduct and the other's backstabbing. That the countries of Europe currently react with accommodation to what, only six decades ago, would have triggered war among them, may be the greatest achievement of the Euro-Atlantic enterprise.

Germans and Americans stood side by side during the Cold war, do you remember? The better question is, when were your times of need?

Vietnam? Nobody ever dared to think that Germany, GERMANY! should send troops to Asia in a time when its own country was at risk (SOVIETS!).

Sept 11 2001? Well, German soldiers were in Afghanistan from October 2001 on - and they still are. The German Navy is at the Horn of Africa on US request.

Iraq war? It was your war, not Germany´s. Still, German soldiers took the guard duties at the US bases in Germany for their American buddies so that they were available for combat.

There is no conflict between the US and Germany/France. France is not liked by the Bush administration, granted, and Chirac is a lame duck. But Chancellor Merkel - who has been in favor of the Iraq war when she was the opposition leader - is a leading figure in Europe, and President Bush knows that. He´ll meet with her this week in her election district at the Baltic Sea. Would you do that with your enemy? Germany is a strategic partner for the US, and important bases are kept here. So, make no mistake.

Germany proved to be an unreliable ally. Eastern europe jumped in to help with the heavy lifting in iraq. Pay back time.

Did you ever heard about Molwania? Very pro-American and fascinated of all kinds of uniforms. This is a place were you can built bases and bases. The right place to relocate Ramstein.

Molwania - country of the defective smile. A guidebook. ;-)

Another detail: The Czech state arose out of national resistance to Germanization and they haven't forgetten WWII. The relkationshipo between the Czechs and germans is somewhat like that between the Irish and the English, except that the Hapsburgs never ruled as badly as did England.

Germans and Americans stood side by side during the Cold war

Should read "West Germans". I don't trust United Germany. It flirts constantly with Liberal Socialized "State" status.

German soldiers were in Afghanistan from October 2001 on - and they still are.

I thank Germany for that!!!! So I have to ammend my earlier comment, Germany has done some things, as you point out.

Now how about the rest of the WOT?

Iraq war? It was your war, not Germany´s.

This is a false distinction IMO. The Iraq war is part of the larger WOT. Germany has done some things to help in the larger WOT. There are also many things they have not done in the WOT.

Germany is being as wishy washy about the WOT (yes that includes Iraq) as our own liberals are.

Couldn't be because Germany got oil from Iraq and didn't want the US leveraging in on their interests, ehhh? Oh yeah "War for Oil" is only an American thing. (/sarc)

German spies offered help to Saddam in run-up to war

Germany Releases US Patriot's Hezbollah Murderer-Trades Terrorist Murderer for hostage in Iraq

First of all, we are grateful for Germany's help in Afghanistan.

Having said that, how is it in Germany's interest for USA to fail in Iraq?

Islamofascism will prove to be much greater threat to long term Western Civilization in Europe.

Sure, terrorists are going to kill soft targets in America and perhaps Australia too but they are not at risk to destroy our civilization like they are in Europe.

There are six million Muslims in France and certainly more than that in Germany.

great read...

I am stunned by the speed Europe has developed and still hope that the good efforts we made are going to bear fruits of wealth and peace in our time.

Germany is not celebrating economic miracles at the moment but at the same time I see us contributing to stability and growth in the east.

Some see a sell-out of eastern european assets to an overwhelmingly agressive central power though. But I know from my daily job that modern companies like Pfleiderer, VW, SAP, DaimlerChrysler are not nationalistic institutions - but the opposite. They have to be cosmopolitic to be successful - oldest example is Ford Motors - they are as german as they are american.

And in the end: What else then a buy-in of large cosmopolitical companies could make eastern europes economies stabile and quickly prospering ? Put their highly motivated talents into work ? Give them international ties and market shares immediatly ? Give them the mentoring of prooven business experts ? Give their local small- and mid- sized business a steeply rising and reliable incomming cash flow ?

It's not the question that the poles would have done it by themselfes - but how long whould that have taken ? China, Brasil and India are not waiting for anyone - they are a big chance of potential markets for polish, estonian and czech products now - only that some of them are called, Stihl, Bosch, FESTO etc. etc.

You can't expect more in shorter time then what Europes children have build up in the east and I am very proud on the role of my country in these developements.

How can you not be wishy washy about the war on terror ?

Can you explain who's gonna be a terrorist and what exactly 'war' means these days ?

germany was often critized in a very rude and under the belt manner for it's 'passive' role in the conglomerate of not further denoted actions - some of military nature - some of structural nature - some of not furhter disclosed nature but having to do with detaining people because they are on a list of unknown nature - against certain groups in various countries to be named in the future.

Germany answered that it will under no circumstances deploy troops other than those who are not members of the german bundeswehr (like a large GSG9 detachment - special federal police forces build with the SAS counter terrorist units in mind and training together with these people) to Iraq. Certainly we send troops to afghanistan in larger ammounts so units are freed for Iraq.

Now what's your opposition against german actions exactly ?

Nobody in Germany wants the US to fail in Iraq. Ok, I take that back. The Lefts wants you to fail, because they don´t care about instability in the Mid-East and a government crisis in the US.

Normal people know that the Iraq thing needs to be completed, even though they still say that it was a mistake - and obviously the majority of Americans think so too.

I supported the war, simply because it´s right to topple a regime that kills its opponents. Not because the WMD s#it. But let´s not talk about that, it happened, and we all know that your government underestimated the power of terrorism after the actual combat.

You will understand that we cannot go into that country now, that you´re reducing your troops. Germany has contributed a little to the restructuring process, mainly to send a signal to the new Iraqi government that even the former war-opponents stand behind them.

Afghanistan is our common baby, this is different. But Iraq is your baby. I don´t believe that a civil war will break out there or that terrorists take over the country. So, there´s no need for others to step in.

I´m happy that Germany and the US, which ever had excellent relations on the lower levels and citizen-to-citizen level (student exchanges, military contacts, tourism, etc), now got back to a good-as-usual atmosphere among our leaders. Many assume that President Bush will invite Chancellor Merkel to Crawford when he´s having BBQ with her at her home. Now if that´s not great, I dunno! :)

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