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Germany 2000: An American Assessment

Germany 2000: An American Assessment.
Speech at Bertelsmann Forum, Gütersloh
Ambassador John C. Kornblum
March 30, 2000

Bertelsmann is the first truly transatlantic company to emerge from the revolutionary changes of the past ten years. Bertelsmann's development is the best reflection I know of the new synthesis which now defines the ties among the Euro-Atlantic peoples. Bertelsmann thrives by knowing well how to grasp opportunity in a world of accelerating change

By following your business instincts, you are also helping to define a new sort of Atlantic community. We have grown together organically; as such our relationship can no longer be characterized by two separate pillars. The end of the Cold War has allowed new forms of human creativity and innovation to arise. The disappearance of ideological and military boundaries between East and West helped to remove the invisible barriers between ideas and capital in the western world. Nations, like corporations, can no longer retreat beyond national or even regional borders. Communities of knowledge are replacing geography as a definition of where we live.

This new paradigm requires an ability to harness opportunities and resources, regardless of their origins. Economic and social structures are increasingly intertwined. The very concept of "German-American relations" has been replaced by a more integrated view.

Therefore, this afternoon I would like to address German-American relations in the broader context of the Atlantic community.

Thomas Middelhof (CEO Bertelsmann) said in Berlin a fortnight ago, "Only societies which develop learning skills will be capable of dealing with the future." ("Zukunftsfähig werden nur die Gesellschaften sein, die die Fähigkeit zum Lernen entwickelt haben.")

There is much to be learned from the lessons of the past ten years. But I have a strong feeling that more far-reaching change is ahead. Technological advance and economic integration are presenting difficult choices for our social systems, our institutions, and our political decision-making processes. Nothing is going to stay the same.

The strain of such rapid change can often be read in the debates that take place within our nations, among European partners and across the Atlantic. Our political systems seem not to have caught up with the new paradigms. Europeans are sometimes threatened by "American dominance." Americans retort that their European friends are not moving forward fast enough with reform.

Much of this is the necessary debate which accompanies fundamental change. But too often the actual state of affairs is masked by misinformation, emotion and even anger which arises from the pressures of change. In other cases, fear is stoking the flames of conflict - fear of the unknown, the uncomfortable, and of the loss of influence.

Every successful businessman knows the importance careful analysis and accurate information. Corporate decisions must reflect an accurate picture of the business climate. Above all, we must learn to ask the right questions. Solutions geared to old questions are often worse than no solutions at all.

This old truth is especially important for our Atlantic community. Challenges facing our partnership today more resemble those of a large, innovative, corporation than they are to an alliance among nations. Our market is changing constantly, our product line is under pressure from evolving consumer tastes, new competitors arise without warning and technology changes at an ever-increasing pace. If we don't judge the current environment correctly, false information -- and fear -- could detract from our success.
For these reasons, I will attempt this evening to adapt corporate practice and provide a sort of annual report. An annual report on the state of our transatlantic family business.

I have chosen to present this report at the Bertelsmann Forum, because your company epitomizes the attitudes necessary to deal successfully with the challenges we are facing. The criteria you apply to business decisions fit perfectly into this picture. For this reason, I have sought to prepare for you a detailed "business analysis " on the state of our joint enterprise - the Euro-Atlantic Community Inc.

I. Key Transatlantic Strengths:

I am pleased to report to you that the bottom line of our Atlantic enterprise is definitely positive. Our products have revolutionized the world for more than fifty years. During the last decade our initiatives have unified both product and market in a fashion unprecedented in the history of the world.
Our receipts far exceed our expenditures. We are building capital for the future, with our products and our strategy in tune with the times.
What are our specific strengths as we begin a new century?

1. A Clear Corporate Vision
First, our corporate vision is clear and convincing. Democratic values and a free market system have proven to be an overwhelmingly strong and positive force for the development of the world. They have ensured for Germany and Europe the longest period of peace and prosperity in their history.

· It was this vision, and the courage of Germans and Americans to defend it, which maintained Berlin as an outpost of freedom throughout the years of the Cold War.

· It was this vision, and the commitment of Germans and Americans to achieve it, which led to German re-unification.

· And it is this vision that we are committed to, and will continue to pursue, as the basis for our corporate mission of building a stable, unified, and democratic Atlantic world that is whole, and at peace.

This vision is truly the foundation of our partnership, upon which all other elements build.

2. A Winning Strategy
Our second key asset is our strategy. Our methods and means of working towards our vision of free, prosperous societies have been very successful.
By working as a team to achieve smoothly-functioning market economies and to instill strong democratic values in every aspect of our societies, we found that we can achieve freedom and prosperity within our nations without sacrificing stability or economic growth.

In fifty years of unified effort, we worked together to first rebuild from the devastation of the Second World War, and then to build strong, solid societies and economies. We created strong tools in the form of institutions to help us achieve our goals.

Without firing a shot, we prevailed over a hostile, competing ideology. Today we are ensuring our own stability and prosperity in part by assisting the new European democracies to complete their transitions.

Disagreements and difficulties have arisen, but conflicts within the corporation have rarely affected our ability to act in concert. Indeed, our open way of dealing with each other has often resulted in a drive to modernize.
In the absence of an overwhelming ideological threat, we must not forget that our basic strategy is still the key to our future success.

3. Strong Economic Underpinnings
Our third key asset is our economic strength. Our citizens enjoy the highest living standards in the world. This is due to our free market system which stimulates high productivity and skills level within our societies. But our integrated institutions have played a central role in guaranteeing financial stability and encouraging the free exchange of goods.

Transatlantic Trade

Cooperation through our strategic tool, GATT and its successor, the WTO, has enabled us to lower world tariffs by an average of 90%. World trade has increased fifteen-fold in this period.

Today, Europe and America are each other's largest economic partners. Since the formation of the WTO in the mid-90's, trade between Europe and the United States increased by over 20%. Today, trade in goods and services amount to almost 2 billion marks per day.

The majority of the world's innovation comes out of the transatlantic region. We account for over one half of all goods and services produced worldwide. Transatlantic trade alone supports over 12 million jobs - divided almost equally between Europe and North America. German firms employ 650,000 workers in the United States, and U.S. firms provide 800,000 jobs in Germany.

Further Reductions in Trade Barriers

Due to our strength and our regional and transatlantic integration, the nations of the Euro-Atlantic world have both a responsibility, and an interest in further reductions to trade barriers - whether tariff, regulatory, or standards based.

The United States remains committed to a new round of trade negotiations within the WTO. Further deregulation of internal structures in key areas such as telecommunications, energy and services would give an added boost to our prosperity, as would further reform and market opening in agriculture.
As tariffs have decreased drastically over the past 50 years, standards and regulations have become increasingly important in our economic debate. But we are developing instruments to address these issues. The Global Business Dialog on Electronic Commerce (GBD), a multinational committee on e-commerce standards made up of industry representatives, is a great example.

Strengthening our Financial Institutions

One reason for our success is the network of multilateral financial institutions which has grown up since World War II. The International Monetary Fund, the World Bank and related institutions have made possible financial stability and a dramatic increase in international transactions.

But changing circumstances have presented new challenges. Maintaining sound development practices and financial stability in all parts of the world requires creative approaches. Protecting the stability of a market-based international financial system is one of the major challenges our community will face in the years to come.

An excellent example of such new and creative solutions is the European Economic and Monetary Union , most widely known through the EURO. The United States welcomed the EURO as an important contribution to sound economic and financial management in a unified Europe.

Its benefits are not limited to lower transaction costs or an increase in intra-European trade. It has already resulted in a European commitment to intensify the drive towards structural reform. On a more fundamental level, it will continue to act as a politically unifying force and a confidence-building measure among European nations and citizens.

4. Secure Operations
Our fourth strong asset: we have maintained the security of our operations.
This is especially true for our European divisions. Fifty years ago, our European operations were virtually destroyed. Today, our European partners enjoy more security than at any time in their history.

And over the last fifty years of cooperation, we have not only maintained our own security through our common strategy, we have taken an active role to spread security throughout all of Europe. The basis of this security is democracy.


NATO has been a keystone of our Atlantic security, and an example of a tool that we have been able to successfully adapt to meet our changing needs. Just as our Atlantic strategy and vision has not changed, neither has NATO's basic purpose. It is a voluntary association of countries that come together to defend common values and interests: our common "corporate vision."

What has changed is the strategic environment that we face. For much of the past 50 years, our goals focused on defending against a well-defined threat from the east. But the end of the Cold War unleashed a whole new set of long suppressed threats to European stability and security- ethnic and religious tensions, corruption and organized crime. Most are not a question of military conflict. Others, such as Kosovo, can disintegrate into armed warfare despite our best attempts to defuse them.

Last Spring NATO celebrated its 50th Anniversary at a summit meeting in Washington. NATO heads of state agreed upon a new Strategic Concept suitable for the new challenges of the post-Cold War era.

The Role of the European Allies

NATO is a cornerstone of Atlantic security, but it is also a foundation of European defense. The integration of European capabilities within the Alliance multiplies the effect of individual countries. Since the Berlin ministerial in June of 1996, the Alliance has also been building a special European structure which will ensure that Alliance capabilities can be used for European operations which do not include the U.S.

In addition, these allies within the EU are seeking to build European capabilities on the basis of common EU commitments which are in support of NATO.
The U.S. supports this process on the understanding that it will not duplicate existing NATO structures or activities and will not exclude those Allies who wish to cooperate. As the conflict in Kosovo demonstrated, the most important task for the European Allies is to build capabilities on the basis of shared infrastructure and missions.

The U.S. believes strongly that these efforts will strengthen our common partnership.
Another important European contribution to our common security will be the eastward enlargement of the EU. The inclusion of our Central and Eastern European partners on the basis of the existing EU membership strategy will finally complete the process of unifying the nations of Europe and the Atlantic world.

Ladies and Gentlemen:
These are our strong assets in the Euro-Atlantic community: A shared vision, an effective strategy, strong economies and secure societies. By sticking to these basics, the past fifty years of our partnership has been immensely successful. If we continue to build upon these basic strengths - our community's core competencies so to speak - our future potential is unlimited.

We can truly say that never in their histories have our people been freer, more secure, and more prosperous than they are today. Our German friends have never before lived in such peace and harmony with their neighbors. We should not forget that none of this would have been possible without an Atlantic community. Without the Atlantic tie, this prosperity will not survive.

II. Liabilities

But we are not without liabilities in Euro-Atlantic Inc.
The fundamental change in our business conditions - replacement of a single, hostile competitor with a myriad of new challenges - has put strain on both our product line and our internal structures. In several cases, restructuring has already been successful. But far-reaching changes are still required in areas such as business perceptions, training, and product development.

1. Perspectives not yet harmonized
First, we have not yet harmonized the perspectives of our various partners.
America is entering a new century on the basis of 100 years of growth and success. While we are not blind to the difficulties facing us, our business environment is currently thriving, our societies are confident, and we have great ambitions for the future.

Our European partners, despite an excellent past 25 years, look back upon a century of conflict, catastrophe and collapse. They are not sure about relations among each other and not always confident that today's prosperity will continue. They are lacking confidence and vision.

Our European partners are facing three revolutions simultaneously - reuniting and integrating Europe, modernizing society and dealing with a worldwide technological revolution. Americans went through many of these strains 15 years ago. We are out of sync in several important areas.

Just as our common vision of prosperous secure market economies affects all of the positive aspects of our relationship, our differences in perspectives for the future are a common thread running through controversies among us. In Europe, fear of change often slows down the major restructuring necessary to meet future challenges.

2. Neighborhood conflicts
Our second liability is that parts of our Euro-Atlantic territory remain conflict-ridden and dangerous. Security does not extend throughout the Euro-Atlantic region.

The self-confidence of our partnership is being undermined by ethnic and religious conflicts in strategic parts of Europe.
The outbreak of war in Southeast Europe left deep rifts in European self-confidence. Even more difficult to handle than political disunity among EU nations was the realization that conflicts were still smoldering in the region. Almost overnight, the quick integration of a democratic Europe seemed unattainable. Instead of beginning a new era which was full of hope, Europe began a new era which seemed to be uncertain and problematic.

The European experience in Bosnia reminded Europe that neither NATO nor the EU could continue along the same path as before 1990. The discussion over the consequences of the Balkan war will continue for quite some time.

3. Revolutionary change.
Third. We are in an era of rapid accelerating change. Change is nothing new. Nor is talking about it. As John F. Kennedy once said, "History is a relentless master. It has no present, only the past rushing into the future. To try to hold fast is to be swept aside." W. Edward Deming put it more succinctly, "It is not necessary to change. Survival is not mandatory."

But the pace is picking up. And whereas change is bringing benefits to our societies, it is also unsettling, leading to debates and conflicts.
Many of these debates center around the effects of economic integration. Other debates and conflicts are resulting from the revolutionary advances in science and technology. For example, the debate over genetically modified organisms and food safety is raging on both sides of the Atlantic. Are genetically modified foods more dangerous than the varieties that are created with traditional cross-breeding techniques? Opinions differ.

It is important to realize that these conflicts are not split between Europe and America - rather interests and opinions form a mosaic pattern spanning the Euro-Atlantic world. Differences in approach between European nations are every bit as large as are those between America and Europe.

In other words, we have already transcended so-called "foreign relations." We have moved to a sort of "Atlantische Innenpolitik," as you say in German. By this I mean that specific social and economic concerns often jump formal borders and override national policies.

Few have understood this structural exchange - on either side of the Atlantic. Complicated inner-Atlantic disagreements are all too often branded as a "drifting apart." Conflicts are habitually mislabeled as differences in lifestyle preferences or values rather than being accepted as topics worthy of discussion and debate.

4. Basic Infrastructure Needs to be Refurbished
Finally, the infrastructure of our Euro-Atlantic community has, in many ways, not been able to keep up with the rapid changes of our times. Some basic aspects of our societies: the labor market, our transportation infrastructure, our health care systems, educational systems, pension systems as well as our social safety nets no longer meet the requirements of a modern age.

These traditionally domestic issues are becoming vital elements in our transatlantic dialogue as working life becomes increasingly transnational in nature. Our societies are becoming more mobile. The capability to work remotely and over long distances is growing.
The U.S. has done much to promote structural and social system reform at home. But there is still much to do.

In Germany and throughout Europe, the pace of change is slower. Most policy makers publicly acknowledge the need for structural reforms. But decision-makers remain unsure about the pace and degree of reform. They don't know how much they can achieve without tearing the social structure apart.

Change is also hampered by an inability to ask the right questions. Many in Europe are still arguing about the need to maintain a specific way of life -at a time when many of these traditions have long since been overtaken by new ones.
Or there is the question of how best to organize our business. Many in Europe believe that we cannot begin to harmonize our product line until the European partners reach the same stage of development and influence as the Americans. In a knowledge society such aims at separation can only isolate those who are behind. Our European partners must learn to focus more on means and ends rather than on theoretically attractive visions which are often focussed on the past.

III. Outlook
Shareholders in the Euro-Atlantic community:
This is the state of the Atlantic partnership -- overwhelmingly positive yet not without challenge. Our basic foundations are strong, yet our liabilities are putting a damper on the dynamism of our corporation.

Today, many of the world's most successful corporations are restructuring their operations. They define their goals to precisely reflect changed circumstances and create their products using the most up-to-date information and knowledge.
We have begun the process, but we still have much to do. The primary task we face is to instill a broader worldview into our European divisions. More autonomy. A greater sense of individual responsibility.

Our task today is to define a wider horizon for the European engagement in our partnership. We need to regain the quality that throughout the centuries made Europe great - outward-looking European universality and a "can do" attitude.

A New Synthesis
President Clinton came to Germany two years ago, seeking to inject a new such attitude into our Atlantic community. He called for Europe to join us in a number of practical projects to achieve our goals. Through this, he hoped to revive the European commitment to making ideals a reality. Rekindling this spirit, this open, goal-oriented attitude, he said, is the key to Europe's future.

In this, Germany has a special role to play. Germany is America's most steadfast European partner. It is also becoming a stronger pillar of Europe.
Germany can give substance and direction to the European role in the world. A dynamic and secure Germany will ensure that a pragmatic and responsible Europe develops. A positive and confident Germany will help create a positive and confident Europe.

For decades we have been using the image of two independent pillars to define the future of the Western world. But this image should perhaps be updated to fit a new re-structured partnership. In the spirit of the future, I believe we should draw on the world of science to define our community.

We are nations and peoples who share the same heritage, goals and visions. We rely on each other for continued prosperity, security and inspiration. Our old picture of two separate communities building a bridge across the Atlantic is out of date. We need a new image for our community.

It occurred to me recently that this image already exists - in the Reichstag in Berlin. The ramp leading to the top of the new dome is really two ramps - one up and one down which together take the form of one of life's basic building blocks: the double helix.

A double helix cannot be separated without ending life itself. Europe and American can also not be separated without irreparable damage to each of us. Therefore, I suggest that we adopt the form of a double helix - two intertwining threads -- as our new corporate symbol.

Europe and America are a single organism. We have a complex structure, with a multitude of needs. But as with the strands of a double helix, we cannot be separated if we wish to thrive. Working within this new symbol, concentrating on our core strengths, we can ensure that our partnership, which has been so immensely successful over the past 50 years, carries that success into the new century.

Any reference obtained from this server to a specific commercial product, process, or service does not constitute or imply an endorsement by the United States Government of the product, process, or service, or its producer or provider. The views and opinions expressed in any referenced document do not necessarily state or reflect those of the United States Government.
U.S. Diplomatic Mission to Germany /Public Affairs/ Information Resource Centers 
Updated: August 2001