The German-American Partnership: Benchmarking Success in Bavaria
Munich, November 6, 2008
Ambassador William R. Timken, Jr.

As prepared for delivery.

It is a happy occasion for Sue and me to be back once again in Bavaria for what is probably our last visit as the official representatives of the people of the United States. In December our tour of duty will end.

We want to thank the people of Bavaria from upper Franconia to Garmisch and throughout the entire Lander. Thank you for your welcoming hospitality and friendship. We have spent many happy days with you, as have lots of Americans. As you know, Bavaria is the number one destination for U.S. tourists in Germany. In 2006 more than 650,000 Americans visited Bavaria, spending 265 million Euros per year. 100,000 Americans including military live in your state. Each year these numbers increase.

Our travels have not been limited to our visits with you. We have traveled Germany like no Ambassador before, spending 2 days out of every 7 throughout the country. We have gotten to know people of all ages, occupations, political persuasions and backgrounds.

At the same time, I have of course dealt with government officials and office holders from the Chancellor to Ministers to Minister Presidents to members of parliament and Lord Mayors throughout this great country.

Tonight I would like to report to you my concluding observations as we prepare to pass on the responsibilities to the next administration.

The bilateral relationship between the United States and Germany is the strongest, most mature and balanced in history. We are operating on the basis of a true global partnership. Chancellor to President, Minister to Minister, German Lander to American states, Lord Mayors to American Mayors; there has been an unbelievable advancement in interaction since German reunification.

The relationship is no longer one of post-war dependency with a one way flow of American soldiers and investment to Germany. Today the daily exchange of citizens, Germans to America, Americans to Germany both physically and through modern electronic communications is the greatest and most varied in history. Every day Germans and Americans exchange 1.5 million email messages. Germans are the largest group of visitors from continental Europe to the United States. In 2007 roughly 1.4 million came to visit. The United States visitors to Germany ranked # 1 in overnight stays for overseas visitors.

I soon will describe to you the previously unknown extent of our economic and commercial relationship but first I also want to acknowledge as well the great binding effect of our cultures so well developed in myriad ways by so many active people and groups. Here I think of the Pinakothek’s focus on modern American art for instance.

As a former businessman and economist some will believe perhaps that in my enthusiasm for employment, standards of living and job opportunities that I undervalue all the other ways we as two great nations are attached. This is not the case.

Common values and culture must be the granite base of a relationship, but today I would

propose that the glue that holds us together and will hold us together is economic.

I also want to acknowledge that our common security concerns of the Cold War have gone away but have been replaced by others which significantly continue to require our military relationships as part of the partnership. Although the number of American soldiers and their families living in Germany has been greatly reduced, in the near term we have stabilized the numbers.

Together with the German government and most importantly with state governments like Bavaria, we are completing billions of dollars of expenditures on upgraded facilities and housing. This is solid commitment. We all can be extremely grateful for this cooperation.

By the way the beneficial side of the military relationship still works. One week ago I swore in as new American citizens two German ladies who are wives of American servicemen.

Permit me to return to the main message I want to deliver. Millions of German – and American – families depend upon a strong bilateral relationship for their jobs, their standard of living and their economic well being. Because it is so seamless and varied this fact seems to be misunderstood and under-appreciated by our citizens on both sides of the Atlantic.

Yes, this is the glue that holds us strongly together.

In the past 20 years, no two parts of the world have experienced economic integration faster and more intensely than the U.S. and EU. For that reason, the economic relationship between Germany, Europe's largest economy, and the United States is one of the very most important in the world. Because the levels of connectivity that link our two countries, particularly through trade and investment, are so broad and deep, and in some cases so seamless, they are indeed often taken for granted. We want to shine a light on these fundamental links between our two countries – and I would ask you all to join us in this endeavor.

Public opinion has been simmering on the back burner for too long. We need to turn up the gas and get people excited again about the opportunities our bilateral relationship produces.

The size and growth in U.S.-German foreign direct investment is the most significant factor leading to our more integrated economic relationship. In the new global economy, investment flows have the highest consequences on jobs, productivity, and technology.

The United States is Germany’s number one investment target. In 2006 the U.S. was the largest source of foreign direct investment in Germany. U.S. foreign direct investment in Germany has quadrupled, while German direct investment in the U.S. is roughly seven times what it was when the Berlin Wall fell. U.S. affiliate assets in Germany now total more than $400 billion. German assets in the U.S. are even larger at over $600 billion. Altogether that is more than 1 trillion dollars. Americans are the largest investors in the former GDR states. Germany overall is the number two destination of U.S. investment over many years.

On the trade side, the U.S. exported nearly twice as much to Germany last year than it did five years ago and at the same time also imported 50 percent more. By the way, German-Russian trade pales by comparison.

The rapidly accelerating FDI investment between the two economies fuels two-way growth: the greater the trade and investment, the greater the level of foreign affiliate sales and profits. The U.S. is Germany’s largest trading partner, by far.

670,000 Americans, or one in every 200 employed in the private sector, now work for a German company. Meanwhile, American companies in Germany employ nearly 800,000 Germans (one out of every 35 German private sector employees). The multiplier effects of this employment lead to an additional 1.8 million jobs for the German economy. Think about that. Maybe more than 2.5 million German jobs depend on Americans.

This is the message: the more we invest in each others' economies, the more we trade, and the more we create the jobs and prosperity that benefit both of our countries. And we should not let our occasional differences over economic policies distract us from that big picture.

Transatlantic economic connections shape our relationship as much as, if not more than, diplomacy and military. Private initiative is the new glue for our partnership.

Many are worried by the recent fluctuations in the financial markets. The problems of credit markets are having a tangible impact on the everyday lives of citizens all around the world. It shows just how connected and interdependent world economies and financial markets are. Recognizing and addressing these challenges will require strong international partnerships, including between Germany and America.

The President-elect will need to work with other nations to reshape and revitalize international institutions such as the World Bank, the International Monetary Fund and the World Trade Organization. The current crisis can jumpstart some necessary changes in these institutions. Our economic world has become globalized and this offers an excellent time to study and optimize the way it works.

This cannot mean, however, a retreat from open market policies. Time and time again, these open market policies have shown themselves to be the surest path to creating jobs, increasing commerce, and fostering progress. Closed markets and strangling bureaucracy is not a viable option.

Both of our economies are resilient. Our two economies will remain as leading engines of global economic growth. The things that will count in the future are excellence and innovation in education, openness in learning from others, welcoming others into the fold, balancing that openness with stability and responsibility, and having in place the shock absorbers needed to navigate a fast-paced globalizing world. Both the United States and Europe have those capabilities. That is why the transatlantic marketplace still has and will retain decisive advantages in terms of both global affluence and influence.

The United States and Germany, as Europe’s largest single market, are the best places in the world to invest and do business.

What better example could there be than Bavaria’s partnership with the United States.

Bavaria’s strongest foreign trading partner is the United States. Twenty-two percent of all German exports to the U.S. come from Bavaria.

The book value of U.S. investment in Bavaria is over 6 billion Euros. That is more than the total Bavarian investment in France and Austria combined. U.S. firms create about as many jobs in Bavaria as Italian and French firms put together. American companies comprise half of all the foreign company presence in Bavaria.

Since “Invest in Bavaria” was created in 1999 to attract foreign firms to Bavaria, they have worked with well over 100 U.S. firms on investment projects that have led to 1750 new jobs. Many of those new jobs are in the high tech area. Indeed half of the 700 U.S. firms located in Bavaria are in a high tech field.

That was one of the reasons that Bill Gates calls Bavaria Europe’s “high tech Mecca.”

Scientific innovation and product breakthrough have enormous economic multiplier effects. Collaboration is not only vital to our own economic growth but to worldwide prosperity.

Bavarian institutions, together with American private sector partners, as well as governments and NGOs, are working to develop new technologies in areas such as alternative energy, the life sciences, and engineering. In the past year alone, here in Bavaria, American companies have set up research units in the fields of aeronautics, intellectual property law, satellite navigation systems, search engine strategies, and biotech. General electric has its world energy research center here.

As a complement to these corporate R&D projects, Bavaria founded the Bavaria California Technology Center to foster joint research at Bavarian and Californian universities in life sciences, environmental technology, information and communication technology and computer engineering. As of May 2008, the center has sponsored over 200 joint research projects. Twenty-three of these projects have received additional funding, in some cases from the EU. Collaboration with California has been so successful that an extension of this technology exchange initiative is under review for the states of Florida, Georgia, and North Carolina.

Both the Max Planck Society and the Fraunhofer Institute, which are headquartered in Munich, focus on applied research and the transfer of R&D results to the private sector. Fraunhofer runs six research institutes in the U.S. Max Planck is about to establish an institute in Florida. The Institute will become a part of the local biotech cluster. The magic word here is indeed clustering – universities, research institutions and industry working closely together in selected fields in order to pool their strengths and achieve greater impact. Initiatives such as these provide opportunities for researchers – from both the public and private sectors – to work together in labs and businesses on both sides of the Atlantic.

The relationships that are created through such business connections and research projects are an important element of the economic integration of our two countries. Add to that list the individuals who participate in the activities of organizations such as the Bavarian American Center at the America House, the BMW Foundation Herbert Quandt, the 31 sister city partnerships, or the 160 university partnerships, to name just a few. Add as well to that list the 35,000 employees of the U.S. Army in Bavaria and their family members. The U.S. Army is, by the way, the third largest employer of Germans in this state.

At the U.S. Embassy we have spent the last 9 months collecting all the data on the German-U.S. economic relationship. I cannot begin to cover it here.

In 10 days we will produce a 30 page paper with some of the highlights and we will establish a web site where all the facts can be found. I have brought a summary pamphlet available here tonight. It is important that we all understand this overlooked dominant factor in our bi-lateral relationship.

It was Jean Monnet, the father of the European Union, who laid out a goal that remains valid today – for the U.S.-German relationship. Monnet said “make men work together, show them that beyond their differences and geographical boundaries there lies a common interest.”

As I leave Germany, I am in complete agreement, with those thoughts!

Vielen Dank.