THE BLOG

When Breaking News Is Only Headlines: Germany, the European Union and the U.S.

09/25/2013 09:10 am ET | Updated Nov 25, 2013

Of all this week's international news -- the horrors in Kenya, Rouhani at the UN, the negotiations over Syria -- it is what some might call 'the boring German election' that will have the greatest long-term impact on the interests of the United States.

Germany is not only the fourth largest economy in the world, it is the industrial and financial engine of the European Union. And with its interlocking trade connections to the other 26 members of the European Union, its economic weight is significantly amplified. Germany is truly the leader of Europe and Europe is America's largest trading partner with $2.6 billion in goods and services traded daily.

Angela Merkel's resounding reelection, which by the way makes her modern Europe's longest serving female head of government, represents a judicious but continuous movement to a more financially connected European Union. With policies built on her perceived view of politics that are based on practicality not vision.

So why is this so important to the long-term interests of the United States?

First, in our globalized world, where national sovereignty is still key but where market power continuously challenges sovereignty the European/American relationship is crucial to the United States' position in the world. With the explosive growth of the emerging market nations and the decline of the percent of global income that the U.S. generates from 36 percent in 1969 to 23.1 percent in 2010 (according to the IMF's World Economic Outlook) the US/EU economic relationship dramatically magnifies the economic power and influence of the United States.

And this multiplier effect of economic power is not just built on daily trade flows but also on investments. The EU and the U.S. enjoy the most integrated economic relationship in the world. U.S. and EU investors together owned roughly $3.7 trillion in direct investment in each other's economy in 2011. The stock of U.S. foreign direct investment (FDI) in the EU totaled $2.1 trillion in 2011 (latest data available), and the stock of EU FDI in the United States was worth $1.6 trillion that year.

What makes this powerhouse of an economic bloc work is a shared cultural perspective that exists in few other sovereign economic relationships. A commonality based on a belief in free societies protected by rule of law, legally protected property rights, intellectual property rights as well as strong support for private enterprise, competition, and innovation.

Second, in this world where international political economics is emerging as rival to old fashioned statecraft, Germany (of course because of its horrendous past) has lead the way to a new model, the merchant state, similar in some respects to Renaissance Venice. In today's Germany, trade (exports are 52 percent of Germany's GDP) and the stability needed to foster trade is more important than a projection of power. It is almost like the old fashion, American WASP family that knows they are rich and has no need to show off.

Compare this to Putin's Russia, a country with a significantly lower GDP than Germany, whose foreign policy seems to be based on Czarist games of statecraft and a need to constantly project power. A country trapped by vested interest that has for all intents and purposes rejected globalization and lives in a world that appears to value 19th geo-political interest.

Angela Merkel's significant reelection victory is a validation of a belief in the importance of the European Union by the Unions most important country. It is also a personal validation of her very difficult job during the most tense years of the Euro crisis: of balancing the fears of her constituents of loosing sovereignty against the practical need of the merchant state Germany to right the then -sinking Euro zone. Her success in this was clearly shown on Sunday night where the AFD, the German party that campaigned on an anti European Union platform, was not able to get even five percent of the vote.

So yes, this past Sunday's elections in Germany compared to the other news of the world, compared to "breaking news" might have seemed boring. But in terms of history and in terms of the United States' role in the world and in terms of how sovereignty and globalization play off of each other, the German elections were a major event.