Germany and America – Facing Challenges Together
Berlin, November 12, 2008
Ambassador William R. Timken, Jr.
Dear Juergen,
I want to thank you and BDI for the opportunity to present this most important and compelling information about our bilateral U.S. – German relationship. BDI has been a true partner to me during my tenure as Ambassador. Likewise, Graf von Hohenthal, Fred Irwin and AmCham has been a similar supporter. As a businessman, I have operated all over the world and I have never seen a more effective AmCham organization in any other country.
Thank you also to the German Marshall Fund which continues in leadership as a supporter of our bilateral relationship.
As you know, we just had our Presidential election in the United States. I might add, for the world’s oldest large representative democracy, now 233 years of age, it was a heck of a demonstration of the vibrant power of American democracy.
After almost 3 ½ years here, Sue and I will be heading home in December. We want to thank all the people of Germany for their enthusiastic, warm, and hospitable support. Certainly that is true here in Berlin, but also I believe we traveled perhaps more than anyone before. Spending up to 2 out of every 7 days on the road throughout Germany, we were treated just as warmly everywhere as we met every kind of person who lives in Germany.
When President Bush asked me to come here, he told me to improve the bilateral relationship between our two countries as we forge a true effective global partnership between our nations and between the U.S. and the European Union.
We are already deep into our transition work with the new Obama administration. President Bush has ordered that the transition will be the best ever, and it will be.
Naturally, I am preparing reports and this is what I will say:
The bilateral relationship between the United States and Germany is now stronger, more mature and balanced than it has ever been before. We are truly operating on the basis of a global partnership. Chancellor to President, Minister to Minister, German Lander to American states, Lord Mayors to American Mayors; CEO to CEO; researcher to researcher, teacher to teacher, student to student, person to person, there has been an unbelievable advancement in interaction since German reunification. 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. Over 1,500,000 emails cross the Atlantic each day.
I have also concluded that the least understood, most underestimated, unrealized part of our relationship is our economic interdependency. Today it shapes, or should shape our relationship much more than politics, diplomacy, or even security concerns. In the 21st century, private initiative is truly the glue for our partnership but these economic connections are grossly underappreciated.
Millions -- note that I said millions -- of German and American families depend upon a strong bilateral relationship for their jobs, their standard of living and the economic well being of their families. Because it is so seamless and so varied this fact seems to be almost unmentioned on both sides of the Atlantic.
As a former businessman, 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 are of course the granite base of a relationship.
I also want to acknowledge that while our common security concerns of the Cold War have diminished, they have been replaced by others which significantly continue to require our military relationships as part of the partnership. I would like to commend Germany for its leadership in the EU, NATO, and the other major multilateral organizations that influence peace and prosperity in the 21st century.
In the past 20 years, since the end of the Cold War, 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 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.
For that reason, over the course of the past year, we have been documenting the breadth and depth of the investment, trade and financial connections between Germany, Europe’s largest economy, and the United States, the world’s largest economy.
We have gone to everyone and every place to assemble these facts – the governments of Germany and the U.S.; the German and American states, the Lord Mayors, the NGO’s and on and on. We have received great support from BDI and AmCham. Thanks to everyone for their cooperation.
Today we are releasing a 34 page report, which makes public much of the data, the facts, that we have collected. We are also setting up a website as a platform where people can get more facts on this subject. We also hope still more data will flow to that site.
What we have found has been astonishing to us. I urge you at the minimum to read the report.
I will soon send it to leaders in every field – politics, academic, media, NGO’s , and on and on.
These facts should come to bear on all they do.
Let me review a few of the major findings. Since reunification there has been a profound change in our economic entwinement.
FDI investment between the two economies fuels two-way growth and is the most significant factor leading to our more integrated economic relationship. All told, U.S. foreign direct investment in Germany has more than quadrupled, while German direct investment in the U.S. is roughly seven times what it was when the Berlin Wall fell. The combined assets held by German firms in the U.S., and by American firms in Germany, total over 1 trillion dollars.
Recent Bundesbank data indicates that the U.S. was the largest investor in Germany in 2006 and accounts for 11.5 percent of Germany's foreign direct investment.
As a measure of comparison, U.S. assets in Germany are in fact greater than total U.S. assets in all of South America.
The United States is also German businesses' #1 investment target. German investment in the American Southeast alone is greater than all of European investment in China.
On the trade side, German-U.S. trade represents almost a quarter of total U.S. trade with all 27 EU member states. Germany sends approximately 60 percent more exports to the U.S. than the second largest European exporter. Germany also trades more with the United States than it does with China and India put together. This decade-long export success in the U.S. market is reflected by its substantial export surplus of $45 billion in 2007. Think how many German jobs are created by that surplus. The United States is Germany’s largest export market outside the EU.
The underlying message is this: the greater the trade and investment between the United States and Germany, the greater the level of foreign affiliate sales and profits. That translates into increased prosperity and, most important, more jobs in both of our countries. In fact, today American companies in Germany provide jobs for nearly 800,000 Germans. This is equivalent to 1 in every 35 German private sector employees! But even beyond this is the multiplier effect as those 800,000 Germans spend their disposable income. Through the multiplier effect, these jobs support up to an estimated additional 2 million jobs for German citizens. German businesses employ 670,000 Americans, for a direct total of over 1.5 million jobs in our countries.
Of course, increased economic integration allows opportunities, as well as financial difficulties, to spread rapidly across borders -- as we have seen over the past several weeks. There will undoubtedly be much analysis of the recent turmoil in the financial markets and the freezing of credit markets in the months and years ahead.
When we emerge from this period – and we will emerge from it – the task for the new administration in Washington and for America’s international partners will be to ensure that a balance is restored between risk and reward in the marketplace. A balance must also be struck between smart regulation and market discipline.
Collectively, we need to rebuild confidence in our markets so that capital can flow again to help spur global growth. Both the American and German economies are resilient. They will remain as leading engines of global economic growth – and the best places in the world to do business.
While trade and investment creates jobs and prosperity, these indicators do not tell the full story.
There has been a similar and perhaps even more dramatic growth in capital markets. The U.S.-based investors share of German equities grew rapidly from just over 2 % in 2001 to almost 18 % by the end of 2006. During 2007 that figure surged to over 22 % of the DAX.
German investors held $266 billion in overall U.S. securities as of June 2007.
These are just a few data points we have pulled together for business and commerce. Jobs for Germans are provided in many other areas. Despite our diminished military presence you may be surprised to find that the U.S. Army employees more than 35,000 people in Bavaria and is the third largest employer there after BMW and Siemens. The U.S. military also spent over $5 billion U.S. dollars in Germany, not counting what our personnel spend.
Let’s turn to other areas. Germans are the largest group of visitors from Continental Europe to the United States. The United States ranks # 2 in total overnight stays by foreign visitors to Germany and # 1 for visitors from overseas. In 2007 U.S. visitors spent 6 billion U.S. dollars in Germany. We are talking about millions of tourists crossing the Atlantic Ocean.
Today, student exchanges between the U.S. and Germany are the highest in Europe. Some 30,000 students at the high school and university level spend an academic year in each of our countries. Let me emphasize, while government supported exchanges are important, the number, variety and impact of private programs is far greater. In the private sector, businesses thrive by sending employees and their families back and forth between Germany and the U.S.
Ernst & Young’s 2008 study found the United States and Germany rated as the first and third most dynamic countries in terms of innovation. German firms conduct more R&D in the U.S. than those from any other country – over $ 6.3 billion dollars in 2005 alone.
The public and private technology tie-ups between Germany and the U.S. are astonishing. American and German researchers and scientists are working side by side in laboratories everywhere. A lot of it is in high technology fields searching for new products and solutions to global problems. Just in the last months Microsoft, Google and GE have announced new research centers in Germany.
I shall stop at this point. By now my point should have been made. When people say the United States and Germany are drifting apart, they ignore the fact that millions of us are actually drawing closer together economically at a rapid rate. During these times of economic stress and job loss, we need each other more, not less. Let the pundits ignore these facts at their peril. Investments, trade and jobs is the glue that today binds us together.
Too often I have heard politicians make the case that somehow politics is separate and distinct from the world of commerce and business, the implication being that we can sustain a gap in political relationship while maintaining an economic relationship between nations. For a short while perhaps, but in the long run no. This is especially true when the welfare of so many families is at risk, as is the case in the German-U.S. relationship.
We all need to speak up louder and stronger in public forums promoting the real value of our bilateral partnership to the wellbeing of both the German and American people. It is not well understood.
As I return to the United States you can be sure I will carry this message to Americans as well.
Vielen Dank.