Germany and Latin America

Meet the New Amiga

Germany Mexico
Welcome to Mexico, Señora Merkel. Source: Picture Alliance.

At the end of her four-day visit to Argentina and Mexico this week, Angela Merkel will be guest of honor at a concert held before the dramatic backdrop of Mexico City’s Monument to the Revolution. That show will close a festival called Pop-Up Tour, which celebrates German business, culture and technology. It features whiz-bang exhibits by Bosch, Daimler, Volkswagen and BASF; science workshops for kids; films, DJs and jazz concerts; free language classes, and live streaming of the Berlin Philharmonic. Germany at its best meets Mexico at its most receptive.

The contrast between Germany’s Tour and Donald Trump’s Wall is striking and probably intentional: mobility rather than stasis, mingling not division, soft power instead of hard barriers. Indeed, to many Mexicans, Germany and Ms. Merkel represent a new beacon of the liberal, free-trade global order, against a rude and reckless United States. With both nations under verbal attack from Donald Trump, goes the narrative, it makes sense to work more closely together.

“She is isolating Trump to show that the whole world is on one side. And Mexico is a reliable ally in this.”

Dámaso Morales, professor of international relations at UNAM University

Ms. Merkel’s visit is “a very clear signal of solidarity with Mexico, underlining the importance of the country for Germany,” says Germany’s ambassador to Mexico. Mexico’s deputy foreign minister, Carlos de Icaza, said the visit underlined Mexico’s place within a broader international structure, beyond the limitations of bilateral relations with the United States. He emphasized German investment as a continued vote of confidence in the country. Dámaso Morales, professor of international relations at UNAM University, wrote: “The message Merkel is bringing to Mexico is that the world remains open. She is isolating Trump to show that the whole world is on one side. And Mexico is a reliable ally in this.”

The chancellor, however, is being more guarded, as though performing a balancing act for Germany’s global image. Just over a week earlier, she implied in a Bavarian beer tent that America is no longer reliable as a strategic partner. Many countries would now like to see Germany take over as leader of the liberal world order, especially since Germany presides over the G20 this year. But Berlin does not want to give the impression of forming an anti-Trump alliance, nor of promoting a caricature of Ms. Merkel as “leader of the free world.”

Officially, Ms. Merkel’s primary purpose on this visit to Latin America is to coordinate preparations for next month’s G20 summit in Hamburg. Both Argentina and Mexico are members of the grouping, which brings together the leaders of the world’s main developed and emerging economies.

In Argentina, Ms. Merkel met with Mauricio Macri, the country’s center-right president. Speaking afterwards, she said Germany will try harder to complete a trade deal between the European Union and Mercosur, the regional trade bloc which includes Argentina, Uruguay, Paraguay and Brazil. These negotiations have dragged on since 1999, but all sides are now keen to make a deal this year.

Merkel in Argentinien
Ms. Merkel’s meeting with Argentinian President Mauricio Macri was refreshingly free of awkward handshake moments. Source: Osvaldo Fanton/DPA

For Argentina’s center-right government, which has attempted to bring the country back into the global financial and trade system after a decade of isolation, the threat of American protectionism is serious. In breaking with Latin America’s populist legacy and pushing for free market reforms, Mr. Macri is betting on liberal trade policies to spur Argentinian growth. Mr. Trump’s protectionism could negate that strategy.

Mexico, meanwhile, is Germany’s largest trade partner in Latin America, while Germany is Mexico’s largest European partner, with a bilateral trade volume of $16 billion a year. An estimated 2000 German companies have invested in Mexico. Mr. Trump’s protectionist policies directly threaten these Mexican-German business webs. The American president has threatened to impose tariffs on imports from Mexico and to renegotiate the North American free-trade agreement, the NAFTA. He also famously campaigned on a promise to build a wall along the frontier between the two countries, and pledged he would make Mexico would pay for it.

But German investment to Mexico depends on the free flow of trade across that border. In the first quarter of this year, Volkswagen exported 54,000 vehicles to the United States from its Mexican factories. Daimler, the maker of Mercedes cars, is in the process of investing $1.4 billion in a factory in Aguascalientes, while BMW is spending a similar sum on a new production facility in San Luis Potosí.

For Mexico, therefore, Germany is not only a key partner in its own right but also an important voice in lobbying for a new trade deal with the EU. Speaking on a visit to Mexico three weeks ago, German foreign minister Sigmar Gabriel came out strongly in favor of a deal. Germany has superseded Spain as Mexico’s most important European partner, the key to finding a deal with the European Union, thinks Luis Huacuja, a historian.

 

Brían Hanrahan is an editor with Handelsblatt Global.

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