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Economy To Dominate Obama, Merkel Discussions


It's MORNING EDITION from NPR News. I'm David Greene.



And I'm Renee Montagne. Germany's Chancellor Angela Merkel has her first White House meeting with President Obama today. The two leaders are expected to talk about big issues — including some that divide them sharply. Most prominent are how to best address the global economic crisis, what to do about climate change, and whether Germany will further increase its military commitment to the war in Afghanistan. NPR's Eric Westervelt reports from Berlin.

ERIC WESTERVELT: During the George W. Bush years, Chancellor Merkel was often seen smiling and friendly with the president, even when he surprised Merkel by giving her an impromptu shoulder rub during a G8 meeting in Russia. By all accounts the two leaders liked each other, even if they didn't agree on every issue.

There's been no such personal chumminess thus far between Merkel and President Obama. Perhaps that's partly because Merkel and her ministers have repeatedly chided the Obama administration on key issues, including the global economy and climate change strategy.

Germany's environment minister, Sigmar Gabriel, said recently, America may have a black president, but Obama still needs to prove he's also a green president. Here's Chancellor Merkel Thursday as she boarded her plane for Washington.

Chancellor ANGELA MERKEL (Germany): The United States has already done a lot on climate change but still has a long way to go.


WESTERVELT: The two leaders' different approaches to the economy crisis have proved the biggest sore point. U.S. officials have complained that the Germans, with Europe's largest economy, should do more to stimulate growth. Chancellor Merkel has fiercely resisted any large scale U.S.-style bailout of troubled German companies beyond two relatively modest stimulus packages earlier this year.

She's also sharply criticized U.S. monetary policy, warning that governments can't spend their countries out of recession without risking a repeat of the economic crisis in the years ahead. That issue will be atop Merkel's agenda today, says Stefan Brown, who covers the chancellor. Brown is a columnist and reporter with the newspaper Suddeutsche Zeitung.

Mr. STEFAN BROWN (Suddeutsche Zeitung): She will try to have tough discussions about financial crisis, big spending, what will we do to have an exit strategy for the big spending situation at the moment.

WESTERVELT: Deeply engrained in German consciousness is the history of hyperinflation during the Weimar Republic. Soaring inflation - a kilo of butter cost 168 million Reichsmarks in 1923 - wiped out people's life savings, pushed families into poverty and helped give rise to the Nazis. That history and Merkel's own center-right political philosophy are shaping the German response to the economic crisis, says Dr. Simon Kashau(ph) with Berlin's Free University.

Dr. SIMON KASHAU (Free University): If you look at the savings rate, for example, German's are much more keen on saving money they earned. Whereas Americans are much more risky or much more keen on spending more than they actually earn. And that is a difference in psyche and philosophy. German's are just generally more cautious when it comes to money.

WESTERVELT: Beyond the economy, there are sharp differences over other issues, including Afghanistan. Administration officials have made impassioned pleas to NATO allies to do more. Germany has said no to sending any more ground forces.

The biggest problem is actually Germany's election year paralysis, says the Free University's Kashau. Chancellor Merkel's in a reelection fight with the leader of the Social Democrats, who's the foreign minister in her own coalition government. Kashau says that means major foreign policy decisions are expected to languish until after the election in late September.

Dr. KASHAU: And that's the bad fix we're in right now with the German foreign policy. That could cost us influence within the alliance and within a transatlantic relationship.

WESTERVELT: Despite the political ruffles, Merkel's likely to relish the chance to have her photo taken today with President Obama, who's still extremely popular in Germany, a photo she's likely to use prominently during her summer reelection campaign.

Eric Westervelt, NPR News, Berlin. Transcript provided by NPR, Copyright NPR.