EconoMatters, Richter Scale

Germany and UK: Standing Up to the US?

When Germans and Britons finally find a common cause.

Königswinter Conference. (Credit:debrige.de)

Takeaways


  • It's time to stop obsessing over differences between Germany and Britain. Instead, find commonalities between the two.
  • What can be done to counteract Washington’s and US business sector's crafty maneuvers to seek commercial advantage?
  • The US government and businesses are crafty in gaining upper hand in business dealings with Europe.

For many years, Germans and Britons often went separate ways when faced with political demands from Washington. The Brits usually opted for what they believed was their “special relationship” with the United States.

That meant they almost reflexively gave Washington extra leeway — even if that meant a disunited European position. Under those circumstances, U.S. diplomats had an easy game with Europe.

What a difference a political reality check can make. When the thesis of the costs of such disunity between London and Berlin was forcefully presented at the most recent Königswinter conference, a surprising development unfolded.

Senior-level German and British participants from the government, business and politics quickly managed to find a lot of commonalities – even to the point of discovering a common strategic purpose.

Call it a joint desire no longer to be picked off so easily by the U.S. government and business interests. The latter two often work together in remarkable, behind-the-scenes unison to have the upper hand in business dealings with European interests.

The British side reported top-level ministerial disgust with U.S. requests to halt exports by British firms, because their innovative products contained a supposedly sensitive item that was originally delivered many years ago under a U.S. license. The decision to abandon the sale was made grudgingly to oblige the stronger “partner.”

Predictably enough, but still to its utter dismay, the British side found out a couple of years later what the real purpose of the commercial intervention had been.

How it plays out

By then, a U.S. firm had finally caught up with the innovative British product that had been “iced” by the U.S. government. The U.S. firm was now busy making global sales.

Using specious requests such as this to interfere in commercial deals achieves the desired result – ensuring the United States’ own advantage.

However, it did not go down well with the British government, which, with the benefit of hindsight, felt it had been taken for a fool.

Next, other participants chimed in with their own negative experiences, talking in particular about the shenanigans of Qualcomm. The San Diego-based firm’s maneuvers have the net effect of stifling innovation in Europe’s IT industry.

The game typically unfolds like this. Say a firm based in the UK comes up with a great innovation that could alter the marketplace. It secures its position by obtaining all the needed patents.

Then, it finds out to its great astonishment that the U.S. Information and Communications Technology (ICT) giant takes great liberties in using parts of that technology, in the main by crassly violating the much smaller firm’s patents.

Faced with a very costly – and ultimately still uncertain – detour into the U.S. court system, the U.S. firm will make a low-ball offer to the emerging industry players to buy up the small firm in its entirety.

That’s one way to solve problems when one may encounter patent violations. The cynical calculation that the Qualcomms of this world are making is this: We have the cash, and thus the breath, to extend this legal fight for a very long time.

If all goes “well” for the U.S. side, the European ICT start-up faces one simple business calculation: Do we want to get hung out to dry (in the literal valley of death) – or do we take a low-ball offer from the U.S. giant?

Such are the crass and yet very refined ways of ensuring that Europe’s IT sector does not generate sizable start-ups that can evolve to have great market value.

Never mind that in their policy speeches, U.S. officials will then lament about Europe’s insufficient achievements in growing new large ICT firms.

As far as British-German relations are concerned, it is high time to stop obsessing about the differences between the two nations. Strategically and in many other ways, it is much more productive to talk about finding common interests.

Part of that equation must be to counteract Washington’s and the U.S. business sector’s crafty, but often very self-serving maneuvers.

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About Stephan Richter

Stephan Richter is the publisher and editor-in-chief of The Globalist. [Berlin/Germany]

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