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U.S. president Obama's chief of staff and former deputy national security advisor, Denis McDonough, meets with Peter Altmaier, Chancellor Merkel's chief of staff, and Gunter Heiss, head of Directorate-General 6 of Germany's Federal Intelligence Service in July 2014. The meeting was part of an effort to improve U.S.-German relations following the problems created by NSA spying in Germany. This meeting took place following the shooting of a Malaysian airline flight over Ukraine and the call for stronger western sanctions on Russia. U.S. president Obama sought to convey to Merkel the importance he placed on German-U.S. relations after Obama failed to make a serious effort to soothe tensions with Germany over spying revelations.

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The economic effects of US and German-French sanctions on Russia ar shown here in this Guardian article by Jim O'Neill, who helped coin the term BRICS that include Russia. The sanctions are likely to make the Russian economy even less significant than its current role in the world economy.  Renewable energy development and alternative use of LNG through new super terminals will likely be speeded up with new investments in Germany and the US. The result could be even faster depreciation of oil based assets for economies dependent on oil and gas exports. This would also contribute to the COP26 pledges for accelerated response to global warming. Western oil companies will also be put in a situation where an accelerated shift to renewables is seen as connected to less dependence on outside sources and so enhancing energy security. Productivity gains and gains in technology are also dependent on good relations with the economies of Europe and the US, Japan, for the rest of the world. This leaves economies that are left out in some form or other failing to grow up to their potential, a situation that accelerates over time and could be seen clearly in the next 5-10 years. This would impact growth rates and economic development in these countries and reverse years of gains in the last two decades.     ...

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In a first at Davos World Economic Forum, China's president Xi Jinping uses the 2017 meeting to give a one hour long spirited defense of the world trading system, critical of U.S. president elect Trump's protectionist views without naming him. Xi pointed out that "no one will be winners in a trade war." And went on to add that restricting world trade was like "locking oneself in a dark room, keeping out wind and rain from outside but also light and air." For the first time Jinping stated that China would take the U.S. role of defending the world trading system from attack as needed. On climate change Xi defended the Paris accords, and gave China's commitment to pursue changes regardless of what the U.S. under president Trump does. This follows Chancellor Merkel of Germany's statements on the issue critical of the views of president elect Trump, and taking the lead to defend the world trading system. Xi also pointed out that many of the ills that led to voter discontent in the West were not really from the freeing up of trade but from the pursuit of excessive profit with the financial crisis of 2008.   ...

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Ms. Annegret Kramp-Krarrenbauer, elected leader of the CDU party in 2018 with the support of Angela Merkel, will not run for chancellor in next years election and will resign from her position by the end of the year. She will continue as Germany's defense minister. After losses for the CDU in recent elections and the embarrassment of local CDU leaders in Thuringia supporting the far right AfD, AKK as she is known decided to step down. Angela Merkel has decided not to run for chancellor again. Germany is set to chair the EU in the second half of 2020, and Merkel is no longer seen as a leader of influence. The Nationalist Alternative for Germany AfD has gained votes in recent elections following the 2015-2016 migrant crisis, with large numbers of refugees from North Africa and Arab world landing in Greece and Turkey and walking to Hungary, Austria and Germany. Merkel's handling of the crisis with acceptance of a million refugees in 2015-2016 unsettled European and German politics. Why? One way of looking at it is that in the same way that the U.S. took in Chinese imported goods ending in the Trump tariffs war, at some point it just becomes too big to handle. That ended up at $1 billion a day in imports from China when president Trump called it off and accused Obama Democrats, Bush Republicans, of betraying the country. Putting it into perspective Germany with one fourth of the population of the U.S. took in about twice the number of refugees in just one year 2015-2016 that the U.S. took in 10 years 2005-2015. The U.S. took in 675,000 immigrants between 2005-2015. This is as if the U.S. took in something like 20 million immigrants in a short period of 1 year on an equivalent basis- though the cultural impact is even greater in a nation like Germany that is like Japan an historically immigrant averse nation. All this happened too quickly for Germany to handle for its fragile cultural fabric. Much of the initial outpouring of support and positive sentiment came from the sense of having gone through World War II and the refugees in that and the early post war period, the need to return in the same spirit support Germany had received. Over time it eroded support for the Christian Democratic Union and Merkel. That Merkel could have done this is itself a small miracle. Now the rebuilding has to begin. Adenauer's CDU and the socialist SPD party of Willy Brandt now have less than 50% support, only with the Greens Party do they make up 50%. The question now is can the CDU, and the SPD which has fallen to 14% in elections, make it back and what kind of future makeup political parties will have in Germany, how the social fabric can be restored. AKK's achievement is to mend relations between the liberal Merkel wing of the CDU and conservatives from Bavaria (CSU) over immigration.  Candidates for CDU leadership are Armin Laschet, Jens Spahn, and Friedrich Merz. Laschet premier of North Rhine-Westphalia has Merkel's support. Looking back too much attention was taken up by the euro crisis, and too little was done in the areas of infrastructure, inequality gaps, education, child care, under Merkel's leadership and of the preceding SPD years, much like what happened under Bush and Obama administrations in the U.S. where wars, economic crises led to neglect on issues that affect lives of ordinary working families. ...

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Xi Jinping, president of China says at the Davos Forum that world leaders should "join hands and rise to the challenge" from protectionism coming from the new U.S. administration. He called on world leaders to support the Paris climate accords- "to stick to it instead of walking away from it."

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The cover of the German magazine Stern shows U.S. president Obama and the words "The Spy," showing the indignation of ordinary Germans over the NSA spying on German chancellor's mobile phone.

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Hardy and Merced take an inside look at what happened at Autonomy Inc that resulted in the charge of $8.8 billion by H-P in Nov. 2012. The problems start with the hiring of Lee Apotheker, a former CEO of German software maker SAP, as H-P's new CEO in the beginning of 2011. This comes after CEO Mark Hurd is fired over relations with a female employee. Apotheker starts out within months of joining H-P with some precipitious moves that raise questions about his decisions- he dumps the new H-P tablet within weeks of joining, and follows this with a move to shift H-P out of its PC business and focus on software. To do this he pays ten times revenue for Autonomy Inc., a British software maker which has grown through acquisitions and not invested enough in advancements for its software, according to a piece by Al Lewis in the WSJ in August 2011. Autonomy's business is software that analyzes and finds patterns in voluminious data like e-mails, online data, web surfing. The tech community and analysts sees this as a risky investment from the start with Apotheker overpaying for Autonomy. Apotheker has failed to look at H-P's record in acquisitions with the failed Palm acquisition costing H-P over a billion dollars. H-P has a poor record of integrating companies. This proves to be especially true with Autonomy with founder Mike Lynch keeping a distance from Palo Alto headquarters by staying mostly in his London office. Apotheker is fired by the H-P Board within months of taking office and the Autonomy managers including Lynch leave H-P in the following months. Alarmed by a falloff in Autonomy sales, H-P's new CEO Meg Whitman sent a team in May 2012 to review the books of Autonomy. This results in finding "serious accounting improprieties." The problems are caught when a senior finance official at the London Autonomy offices points them out. What Autonomy did before selling out to H-P is to sell low end hardware servers at a loss, and disguise the loss by inflating marketing expense, resulting in marketing expenses going up just as it was trying to sell the company as a pure software company. Middle men who sold the Autonomy software reported sales that were made up and licensing revenue was taken before it was received. Analysts at Forrester Research say Autonomy had not invested in R&D, and did not make regular software releases, had poor customer relations, no regular customer feedback, and lacked transparency on future product plans. The question goes back to how did Apotheker make such decisions without giving enough time, with the due diligence reported to the head of strategy Robison and not the CFO as is normal, and how did he fail to catch the obvious failure to invest in the company R&D? Apotheker described his approach in a February 18, 2011 interview with the WSJ's Ben Worthen. He told Worthen a joke about the Swedish parliament where members discuss a proposal to move driving from the left to driving on the right, by doing this gradually. Apotheker's analogy turns out to be misplaced, his approach brash and dangerous, and the H-P's Board's confidence in their new hire misplaced. It turns out that H-P's previous CEO Mark Hurd came in for criticism for not investing enough in R&D. The money wasted in these acquisitions leaves H-P at a severe disadvantage for increasing investments in R&D when margins and sales are declining in the printer and PC business. On Nov. 20, 2012, H-P share price dropped 12% to under $12. H-P reported a $6.9 billion loss in third quarter 2012. Revenue for the full fiscal year declined 5% to $120.4 billon, and earnings declined 23% to $8 billion. ...

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Chancellor Merkel meets President Trump in a key summit in March 2017. The two leaders have different styles, one flamboyant the other reserved. Chancellor Merkel tells the German media "it is better to talk with each other than about each other." Trump called Merkel's refugee policy "catastrophic," Merkel has said that the Geneva convention requires countries to do this on humanitarian grounds. On trade German's Economy minister Brigitte Zypries says Germany would file a suit on any hike in import duties at the World Trade Organization, that WTO rules restrict import taxes to 2.5% on autos. Germany's BMW plant in the U.S. exports more autos than GM and Ford put together, and Merkel is likely to emphasize large German investment in the U.S.. The heads of BMW and Siemens and other industry executives are accompanying Merkel to the U.S. as trade will be a key topic.

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Wolfgang Ischinger, former German ambassador to the U.S. 2001-2006 and president of the Munich Security Conference, says that one thing that would make a difference in the current state of German and European relations with the U.S. after NSA spying on chancellor Merkel, is for president Obama to show contrition. The continuing dynamics are important, as is evident in the deterioration in relations in 2003 following the American intervention in Iraq when not enough was done, says Ischinger. His view is that the proposals to limit diplomatic personnel of the U.S. in European countries, or putting on hold the Trans-Atlantic trade talks, are not good ideas as they do not help restore trust. Building on a report by the European parliament in 2001 on protections against intelligence operations would be a good start.

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As the focus shifts to the east, the war in April in Ukraine shifts to a prolonged war. It also means that the focus now is also on economic separation of US and European economies from Russia and China. As it was this overdependence that lacked prudence or good sense, that emboldened Russia in its relations with the US and Europe, and China in its relations with neighbors in Asia. This report looks at the arms aid Ukraine may need to defend the region on its eastern border with Russia. Russia plans to focus on the separatist Luhansk and Donbas regions in the east which have sought closer ties with Russia. The war in the east has dragged on already for over 10 years.The rest of Ukraine and particularly western areas near Poland such as Lviv and areas near the Baltics have shown strong sentiment for an independent Ukraine able to choose her own path. Throughout history the Baltics and Poland have had a strong influence on western Ukraine and Russia on eastern Ukraine bordering Russia, with influence swinging one way or the other throughout Ukraine depending on the period in history. After the westernization and modernization of Russia under Peter the Great in the 17th century and of Prussia as a German state independent of the Hapsburgs in Vienna around the same period, geopolitics shifting the balance of power took on a bigger dimension. Putin's actions can only be seen as a throwback to using the tactics of invasion going back to this period in history from 1700 to 1950, when dominant powers France, Austria led by Hapsburg dynasty, and Britain with the Dutch fought wars seeking advantage mostly on territory of German states and Italian states, and in all parts of the world. This also laid the grounds for colonization of large parts of Asia and Africa by Europeans in this contest for dominance through trading companies that traded for profit, and used tax revenues from acquired lands for profit making and military activity. In some ways poor economic choices such as the excessive dependence of the US and European economies and their integration with China and Russia have led to the war. As they created advantages Russia and China did not have in technological capabilities and stronger economies that make war an alternative to support foreign policy goals. In the long term it is this these unsustainable economic choices that will be pulled back following the pandemic for shorter supply chains closer to home. This prudent economic separation could not have happened without recent events, as even now Germany industry says its dependence and integration with Russia is hard to reverse for gas supplies, and American business is only now making the changes away from dependence on China in its supply chain.   ...

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How U.S. -Chinese relations today parallel relations between the U.S. and Japan in the late eighties and early nineties. The dnagers of extrapolating from the enormous growth in China today and Japan then, into the future decades. The prospect say anlaysts that the model of development in Japan then, and China today, with an emphasis of state driven direction, works for several decades and then starts sputtering. At some point it becomes a model that cannot be sustained. Some analysts like Arthur Kroeber, of Dragonomics, an economic forecasting firm based in Beijing, see it as a model that is right for that stage of developmment in a country's progress from an agricultural to an industrial economy. But there are critical differences with Japan, for one China has not completed its transition to urbanization as it has large parts of the country that are rural. And industrialization has increased the level of inequality in China. See the articles citing Gini coeficcients for China which show significant deterioration. The other difference is that Japan still had a pioneering secotr of companies in the export sector from Toyota to Panasonic, whereas China's companies in most secotrs are state run or heavily financed by state run banks. Japan has one other striking difference in that it has a democratic form of government and a thriving and independent media, which makes Japan's transition to a post industrial economy with an increase in private initiative less difficult....

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Did Putin overreact as he did in Georgia. On the issue of Russian speaking people in neighboring eastern European countries Putin has strong emotional reaction, as evident in the 2008 Georgian conflict. In Ukraine the issue assumes significance because of the effect of western sanctions, adverse foreign investor sentiment and the tendency of rich Russians, similiar to Argentines, to shift assets abroad. Capital flight was $75 billion in the first 6 months of 2014. Add to this adverse effect on foreign investor sentiment on an already slowing Russian economy, and growth will be seriously affected. Car sales are expected to decline by 12% in 2014, according to a trade group. The rhetoric has been toned down on Russian television. And Russian analysts now say relations with the West must be maintained. Polls by state run polling company WCIOM show 66% of the Russian public oppose Russian forces entering Ukrainian territory.

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The Ukraine war could go on for months in a prolonged war of attrition now that Russian strategy is to withdraw its forces near Kviv and concentrate its forces in the east - on Donbas and Luhansk- says this report in the WSJ. US, Britain and other allied nations in Europe are increasing assistance to Ukraine in the conflict which could result in a long conflict. The result could be lasting changes in how the world was perceived pre covid and pre Ukraine. As in past conflicts in Europe there may be no winners in this war, just lasting changes in economic structures, more refugees integrated into the Eastern European economies, and accelerated changes in supply chains, renewable energy investment. Russia's people are not fully engaged, with use of younger less motivated and trained soldiers, leading to a conflict similar to that of the earlier period in European history where kings in Europe fought wars for geopolitical advantage, small territorial gains, and wars ended in small shifts in the balance of power between England, France, Netherlands, Denmark, Sweden, Russia. German chancellor Scholz is said to be reading Cambridge historian Brendan Simms account of this in a book titled- "Europe." The book is appropriately subtitled "Europe- The Struggle for Supremacy 1453 to the Present." Simms sees Germany as critical to what happens in Europe.  One of the key changes is the reintegration of Germany and European Union with the US as happened during the years after world War II. The policies pursued by former chancellor Merkel in relation to China and Russia and the integration of the German and European economies with China and Russia is likely to be reversed for stronger US-EU ties under the Scholz and Biden leadership of the alliance, and stronger economic ties with Japan and India in Asia.     ...

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A look at the views of Michael McFaul, former U.S. ambassador to Russia and Strobe Talbott, a State Department advisor, on how the Obama administration missed signals of a more assertive policy from Russia during the period Medvedev was president. At the time Medvedev offered a softer tone from Russia and the U.S. extended cooperation. With the return of Putin as president for a second term, his more strident views on the role of Russia in the world following the collapse of the Soviet Union have emerged, especially in tems of policies in Syria and Ukraine.

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China's new foreign policy team under the Jinping-Keqiang administration. Foreign minister Yang Jiechi, becomes state councilor, and senior official on the team. The new foreign minister Wang Yi, was China's ambassador to Japan 2004-2007. The new ambassador to the U.S. is Cui Tiankai, a diplomat who graduated from the Johns Hopkins School of Advanced International Studies in the U.S. Cui was ambassador to Japan 2007-2009. Managing the China-Japan and China-U.S. relationships is critical for China because China depends on U.S. and Japanese companies for investment and new technology, for continued economic progress. The relationship has been affected by the territorial disputes with Japan in the East China Sea. Germany as an advanced technology manufacturer and commodity exporters Australia, Canada, Argentina and Brazil depend on the Chinese market for exports, creating an interwoven economic dynamic that is likely to be the dominant factor in relations. This is also the perception of Li Keqiang who told a press conference in Beijing that the competition with the U.S. has been overemphasized, that he "does not believe conflicts between great powers are inevitable." Foreign affairs remains subordinate to domestic policy and priorities in China, as China tackles the problem of reorienting its economy to give an important place to the private sector and consumers. Itself not an easy task, as prime minister Keqiang pointed out at his first press conference: "Talking the talk is not as good as walking the walk." One of Keqiang's main allies in this effort is Robert Zoellick, former president of the World Bank, who helped put together with China's DRC, the report "China: 2030," outlining these priorities....

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Germany's Economy minister Zypries warned that Germany would take legal action by taking the case to the World Trade Organization if president Trump imposes tariffs above that allowed by WTO rules. She said this before a meeting at the White House between president Trump and Chancellor Merkel. The U.S. is Germany's largest export market with 107 billion in imports and the U.S. exports 58 billion euros of products to the U.S. Zypries accepted that the large trade surplus of Germany was "a problem," but that America "needs our machines and industrial plants" for the time being. Germany has insisted that it does not provide unfair advantages to its companies, and that German companies were simply more competitive. Trump has focussed largely on China for anti-competitive practices, though he mentioned BMW by name during the campaign. In the last 2 years the euro has depreciated significantly against the dollar giving German companies competitive advantage, largely as a result of the ECB- in opposition to German economic policy- trying to stimulate the economy of other southern eurozone countries such as Spain, Italy and France. ...

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Russia experts Robert Nurick of the Atlantic Council, and Graham Allison of the Belfer Center of International Affairs at Harvard, see a sea change in attitudes to Russia following the interventionist policies of president Putin. The Obama administration will now focus on limiting Russian influence for the remaining two years of Obama's second term. There is a loss of faith in Putin on the part of Obama and close advisors. Russia is seen as a regional power, and the Ukraine crisis is seen as having a serious impact on the Russian economy through decline in trade, foreign investment and capital outflows. Russia is a regional power because it is not the same as the old Soviet Union, it is much smaller, with a declining population, and dependent on oil revenues, and in this sense not the Russia U,S, president Truman and Kennan faced during the Cold War. Obama advisors see Putin's actions as counterproductive for Russia, as the economy is now seen as contracting in 2014, making its actions in Syria, and in Ukraine, unwise foreign policy moves that hurts Russia's economy and future prosperity. Democratically elected leaders in Turkey and Russia with control over the media and shutting down the opposition using control of the judicial process, have shortchanged democratic ideals, and in the process concentrated powers in one leader. This creates risks of arbitrary exercize of power without the checks and balances that are built into a truly functioning democracy, with foreign policy errors eventually leading to a resolution of the conflicts created as these policies are increasingly called into question. Putin and Erdogan were reelected because of economic growth- a contractionary economy or steep declines in growth put everything at risk. A footnote on Kennan, American diplomat and linguist, is appropriate. A quick reading of Wikipedia's excellent account of Kennan will show that Kennan was in favor of a nuanced approach to Russia based on changing conditions. He observed that policies that were seen as anti-Russian actually helped Russian leaders throughout history solidify autocratic type rule, which actually hurts Russia's normal evolution and development. Normal development and evolution similiar to ways Germany and other nations left behind Prussian history and traditions for a open, free society, and in the ways even the U.S. left behind older practices such as slavery in the south and limited representation democracy. In fairness to Kennan it should be said that containment of the Cold War was more a Truman-Acheson doctrine- continued under Eisenhower by Dulles-Nitze, and under Kennedy by Rusk-McNamara- which has roots in Soviet intentions of destabilizing war ravaged western Europe starting with Greece, following similiar efforts in Eastern Europe. Truman was right in aiding Greece, but the U.S. needed to be aware of changing conditions and not take a rigid stance, and get locked into supporting client states just because they were "our guys," a lesson Kennan emphasized throughout his life. Putin and Erdogan use appeals to Russian and Turkish nationalism to improve electoral support and stifle free expression of ideas necessary for growth in any society. This also provides a way to have a discussion with our German friends on engagement and economic relationships, without the rigid outlook of a Wilsonian or Acheson-Dulles kind. ...