As prepared for delivery.

Reflections on German-American Relations
Düsseldorf, November 18, 2008
Ambassador William R. Timken, Jr.

I would like to thank the North Rhine Westphalia chapter of the American Chamber of Commerce for the invitation to join you this evening.  As a businessman, I have operated all over the world and I have never seen a more effective AmCham organization in any other country.

After almost 3 ½ years here, Sue and I will be heading home in December.  We have spent almost a third of our time in Germany on the road.  This is my 16th visit to NRW.  I have criss-crossed your beautiful state, meeting hundreds and hundreds of people from all walks of life, and gotten to know many U.S. investors and German companies with strong links to America.  I knew NRW from many visits during my former life in the private sector, but my experiences since arriving in Berlin have only reinforced the importance of NRW in Germany and in German-American relations.  We want to thank all the people of NRW for their enthusiastic, warm, and hospitable support. 

One of the most valuable assets of the German-American partnership is the friendship of millions of people on both sides of the Atlantic.

This week is International Education Week, the time each year when the U.S. Department of State and the Department of Education highlight the benefits of international education and exchange worldwide.  Exchanges between the United States and Germany are the highest in Europe.  They rank among the most popular in the world – and the numbers are going up.  Sue and I both felt one contribution we could make during our time in Germany was to focus on developing opportunities for young people who are often underrepresented in traditional exchange programs.  In that regard, thanks to the support and commitment of many people, we have some great success stories to tell.  One in particular began here in Düsseldorf.  In 2006, Sue met a teacher at a local Hauptschule, Johanna Kaup. 

Together with George Knowles, the Consul General at the time, they came up with the idea for a new exchange program for minority students.  The first Windows on America group of students from Düsseldorf visited the United States in June 2006.  It was the first of ten groups so far.  More group visits are planned. 

The Windows on America initiative had a special meaning for George Knowles.  He passed away in 2006.  He would be very happy to know that the program is doing well.  Just last week, our current Consul General, Matt Boyse, met with returnees from the latest group to go to America, this one from the Henry Ford Schule in Cologne.  A German foundation has been established for the program.  But to be sustainable, Windows on America will need ongoing private support.  We have a special debt of thanks to people here in this state, especially the business community for their early support. 

I see this effort as part of the mandate that President Bush gave me when he asked me to serve as Ambassador to Germany in January 2005.   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.  Millions of emails are exchanged between our countries each day.

During my time in Germany, I have also concluded that the least understood, most underestimated, and 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 their economic well being.  I might add that the state of North Rhine Westphalia has a very healthy percentage of those jobs.  Because this economic interaction is so seamless and so varied, this fact seems to go almost unmentioned -- here and in the United States. 

As a former businessman, some may ask whether in my focus on job creation, economic growth and opportunity, and standards of living that I undervalue the many other ways we as two great nations are attached.  This is not the case.  Common values and culture are the granite base of a relationship. 

I also want to acknowledge that while the common security concerns of the Cold War have diminished, others have replaced them 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 other major multilateral organizations.

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 federal governments of Germany and the U.S.; the German and American states, the Lord Mayors, the NGOs, and on and on. 

Last week we released a 34-page report, which summarizes much of the data that we have collected.   We have also set up a website as a platform where people can get more facts on this subject.  We hope still more data will flow to that site.  What we have found has been quite astonishing.  I urge you at a minimum to read the report.  I am sending it to leaders in every field – politics, academic, media, NGOs , and on and on.  These facts should come to bear on all they do.  We invite reflection on these facts.

Let me review a few of the major findings. 

Since German unification there has been a profound change in our economic entwinement.  Foreign direct investment between the two economies fuels two-way growth and is the most significant factor leading to our economic relationship.  All told, U.S. foreign direct investment in Germany has more than quadrupled since the Berlin Wall fell, while German direct investment in the U.S. has grown roughly seven times. 
The combined assets held by German firms in the U.S. and by American firms in Germany total over one trillion dollars.  The most recent Bundesbank data indicate that the U.S. was the largest investor in Germany in 2006 and accounts for 11.5 percent of Germany's foreign direct investment.   To put this in international context, U.S. assets in Germany are in fact greater than total U.S. assets in all of South America.  U.S. investment in North Rhine Westphalia alone totaled almost $25 billion in 2005.  That is more than U.S. investment in China or the Republic of Korea and about the size of U.S. investment in Italy.

The United States is also German businesses' #1 investment destination.  German investment in the American Southeast alone is greater than all of European investment in China.  Investments in the U.S. by German firms with headquarters in North Rhine Westphalia comprise 34% of total German investment in the United States.

There has been a similar and perhaps even more dramatic growth in capital markets.  The U.S.-based investors’ share of German DAX 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.

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.  The United States is Germany’s largest export market outside the EU.  Overall Germany trades more with the United States than it does with China and India put together. 

The same comparison can be made for this state.  In 2007, exports to the U.S. from North Rhine Westphalia amounted to $13.6 billion, more than to its four most important Asian markets combined. 

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. 

My 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 and more wealth in both of our countries.  In fact, today American companies in Germany provide jobs for nearly 800,000 Germans.  This is the equivalent of 1 in every 35 German private sector employees.  Over 100,000 of those jobs are based right here in this state.  All told, through multiplier effects, these jobs support up to an estimated two million additional jobs for German citizens.   German companies employ 670,000 Americans in the U.S. – a total of over 1,500,000 jobs.

Of course, increased economic integration allows opportunities, as well as financial difficulties, to spread rapidly across borders – as we have seen in recent weeks.  When we emerge from this period – and we will emerge from it – the task for policymakers at central banks and elsewhere 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.  The G20 conference last weekend in Washington focused on how governments can collaborate on the reform principles that might prevent a recurrence of the recent turmoil in the financial markets and the freezing of credit markets.  I am certain that we will ultimately succeed in restoring a stronger and more robust financial system that can support solid and sustainable economic expansion.

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 have proven resilient in the face of other economic shocks.   They will remain as leading engines of global economic growth – and the best places in the world to do business.   During these times of economic stress and job loss, we need each other more, not less. 

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. 

Pundits and politicians ignore these facts at their peril.  Investments, trade and jobs is the glue that binds us together.   But we have also found that there are numerous multiplier and spin-off effects. Economic indicators alone do not tell the full story. 

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.  American firms are also active in Germany.  In the last months alone, Microsoft, Google and GE have announced new research centers here. 

The public and private technology connections between Germany and the U.S. are also astonishing.  The network of research institutes in North Rhine Westphalia is one of the densest in Europe.  Almost all of these institutions collaborate in one way or another with American counterparts.  For example, the German Aerospace Center in Cologne has an office in Washington, D.C. and works closely with NASA, the U.S. Geological Survey, the Johnson Space Center in Houston, MIT, the National Optical Astronomy Observatory and others.  The Technical University in Aachen works with MIT and Columbia in nanotechnology and in many other areas.  In June, the Rectors of Bochum, Essen-Duisburg and Dortmund universities signed a cooperation agreement with the University of Pennsylvania in engineering.  Much of the research being done is in high technology fields.  The results will be new products and solutions to global problems.  American and German researchers and scientists are working side by side in laboratories on both sides of the Atlantic. 

In addition, some 30,000 students at the high school and university level spend an academic year in each of our countries.  Both the German Fulbright Commission and the German American Partnership Program are the largest government-supported exchange programs of their type worldwide.   Of the approximately 120 non-profit and commercial exchange organizations in Germany, which offer programs for high school exchange, internships, au-pair, work & travel, etc., some 35 are headquartered in North Rhine Westphalia.  As I said earlier, while government supported exchanges are important, the number, variety and impact of these 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.

Millions of tourists also cross the Atlantic Ocean each year – in both directions.  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.

Less easy to quantify is the great binding effect of our cultures so well developed in myriad ways by so many active people and groups.  One example, the New York Philharmonic has reportedly played more often in Cologne than in any one foreign location.   

I shall stop at this point.  By now my point should have been made. 

Too often I have heard politicians make the case that politics is separate and distinct from the world of commerce and business, with the implication that we can sustain a gap in our political relationship while maintaining our economic relationship.  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 more forcefully in public fora to promote the real and lasting value of our bilateral partnership for the well-being 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.