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Ammon on American-German Relationship

ammonPeter Ammon, the German Ambassador to the United States, spoke at Yale University on January 15 on perhaps the most critical issue concerning his post: How does the American-German relationship remain strong amid the multiple crises occurring throughout the world?

“What is the future of the transatlantic relationship at a time when most people are looking to Asia?” Ammon asked a packed crowd gathered in Henry R. Luce Hall auditorium. “My message to you today is this: Today we have a bigger demand for a more coherent global policy than ever before…so it is worth it to stick together and try to work on our global governance system.”

Ammon was a State Secretary at the Foreign Office before taking up his post in the German Embassy, and was appointed German Ambassador to Paris before serving in the United States.

Ammon, who started off lightheartedly with a series of jokes, quickly moved to reaffirm the ties between the U.S. and Germany. There are fifty million Americans who claim German origin, he said. America was the central force behind protecting German freedom in the 20th Century, he added, and both countries have joined together to tackle conflicts such as the war in Afghanistan.

The talk, which was co-sponsored by the German Club at Yale and the Program in European Union Studies, then moved to the so-called “Euro Crisis,” a name for the sovereign debt crisis that Ammon believes is mislabeled. “There is no crisis of the Euro currency as such,” he said. “It is rather a crisis of debt that erupted when people began to live beyond their means, because countries that were borrowing a lot lost credibility on the international financing market.”

He proceeded to outline a grand bargain struck by the Euro countries, which forced affected countries to institute reforms in order to receive money from the other European nations. The result has been “good,” according to Ammon: Overall debts and deficits have gone down and trust has been restored.

“There is a Yale alumni in The New York Times,” Ammon said, referring to Paul Krugman, who graduated from Yale College in 1974, “who argues that austerity measures in Europe don’t work because they stifle growth. My question is: If you allow a government to run up debt, and when the volume of printed money is greater than demand for services, inflation will inevitably happen.”

“Deficit spending is like an economy on dope, like living on speed,” he added.

Addressing the question of whether the crisis is over, he gave the ambiguous answer of “yes and no.” In a way, the crisis is over because the political decision-making process in Europe has converged on a strategy and restored investor confidence. On the other hand, Amman believes that the reform process is a long process and accident-prone. “We have to keep the grand bargain intact and the pressure up, because there are those who want to derail the process,” Ammon suggested.