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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?


To: Monty Lenard who wrote (42784)3/11/2000 9:55:00 PM
From: Haim R. Branisteanu  Read Replies (2) | Respond to of 99985
 
Remember 1987 - arguments with the German BundesBank was the trigger.

Strained Ties: I.M.F. Issue Divides U.S. and Germany

By ROGER COHEN

ERLIN, March 11 -- The fiasco over the appointment
of a new managing director for the International
Monetary Fund has caused serious damage to the critical
German-American relationship and revealed deep personal
rifts within the governing coalition of Gerhard Schr”der, the
Social Democratic chancellor.

With accusations flying between Berlin and Washington over
one aborted German candidacy and another whose fate
remains unclear, two things are evident: Germany's new
political assertiveness makes the United States
uncomfortable, and the German perception of America is
increasingly critical.

Michael Steiner, the chief diplomatic adviser to Mr.
Schr”der, said: "It has been quite an experience trying to hit
this moving target set by the Clinton administration. We have
discovered that the superpower sees its global role not only
in the military area but also in setting the rules of
globalization through the I.M.F."

He added, "The superpower in Washington grew stronger,
but Europeans are also gaining consciousness of themselves
and cannot share the view that the role of the I.M.F. is
simply to transport the philosophy of the superpower."

His words reflected a strained moment in a
German-American relationship that has stood at the core of
Germany's postwar growth into a European power. "The
fight with America" was the unambiguous headline in the
influential paper Die Zeit this week over a lead article that
was a chronicle of discord.

Chief among the disputes, for the moment, is that
surrounding the fund. The collapse of the candidacy of Caio
Koch-Weser, Germany's deputy finance minister, after it
was rejected by the United States has left a bitter residue
marked by charges and countercharges as to who misled
whom and who really made the mess. The atmosphere was
not improved when the government of Social Democrats and
Greens this week proposed a more conservative official,
Horst K”hler, and the Clinton administration scarcely rushed
to embrace him.

Mr. K”hler, the German president of the European Bank for
Reconstruction and Development, appears likely to gain at
least the formal approval of European Union finance
ministers on Monday. But Italy is known to have strong
private reservations, and the position of the United States
remains unclear.

The affair has proved particularly poisonous because Mr.
Schr”der -- habitually a follower of the all-politics-is-local
school with little taste or instinct for international affairs --
chose to make a personal crusade of the German quest to
head the fund in Washington.

"This was the chancellor's step into the foreign policy arena,"
said a member of the cabinet. "And now he is angry with the
United States, angry with Joschka Fischer and angry with
himself."

The chancellor's irritation with Mr. Fischer, the Green
foreign minister, has some of its roots in the fact that he
remains much more popular than Mr. Schr”der. But it has
been immeasurably compounded by Mr. Fischer's evident
decision, in the words of the cabinet member, "to disappear
into the bushes on the I.M.F. matter."

The foreign minister, whose taste for the cameras is
normally little short of irrepressible, has been conspicuously
quiet, and if his much vaunted closeness to Madeleine K.
Albright, the United States secretary of state, is real, it has
proved of no evident usefulness to Germany in its quest to
lead the fund.

There is little love lost between Mr. Fischer and Mr. Steiner,
the modern-day representatives of an old German rivalry
between the foreign ministry and the chancellery over the
control of foreign policy. Always simmering, this friction has
now been revived with a bang.

To American officials involved in the debacle, the overall
impression has been one of German inexperience,
mismanagement, clumsiness and ineptitude. This view,
naturally, is not appreciated in Berlin.

"The German approach was to say, now we're grown-up,
we're going to show you we're grown-up, and we're just
going to do it, without prior consultation, without lobbying,
without involving our embassies -- nothing," said one
American who has played a central role in negotiations.

Certainly, Germany feels it is grown-up. Mr. Schr”der's
government has been at pains to make clear that it views
itself as the initiator of a new phase in German history, one
in which the period of postwar tutelage is over, a "Berlin
Republic" has been born, and the country is ready to drop all
adolescent coyness and call itself "a great European power."

As Die Zeit put it this week in trying to explain why so many
tensions with the United States exist -- over the monetary
fund, over American plans for a national missile-defense
system, over capital punishment, over the European role in
NATO and over much else: "Past are the times when one
was afraid of one's own courage and rather hid differences
under the carpet."

But while the United States pays lip service, and perhaps a
little more, to the view that Germany's assumption of new
responsibilities is healthy, it finds this more abrasive
Germany unsettling. Especially when, as American officials
put it, the country manages to mishandle a sensitive
diplomatic quest to such an extent.

Mr. Steiner said Germany's quest to lead the International
Monetary Fund had been handled as "professionally as could
have been done." He added that he had documentary
evidence that Germany had initially been misled by the
United States.

The thrust of this "evidence" appeared in today's issue of the
respected Frankfurter Allgemeine Zeitung, which published
an elaborate, unsourced account of how the United States
had told Germany that it would accept any consensus
candidate of the European Union, before changing its view at
the last moment.

Germany had therefore played exactly by the rules in putting
forward Mr. Koch-Weser and gaining formal backing for
him from the European Union, only to be let down -- in
Berlin's view -- by an unreliable Clinton adminstration
wielding American power with all the subtlety of a
sledgehammer.

"First, the Europeans just had to agree," Mr. Steiner said.
"Then we had to agree on somebody with the so-called
necessary strengths. Well, nobody can think about
reproaching Mr. K”hler for being weak. Nobody can even
think about reproaching him for not knowing his job. And
Mr. Clinton himself has now said a German managing
director would suit him."

The president has indeed expressed interest in a German
head of the fund. But even quick American approval of Mr.
K”hler -- and it is far from assured -- will not rapidly set
right the battered German-American bond that remains the
bedrock of America's security interests in Europe.