The Atlantic economy after German unification: Cooperation or the rise of ‘Fortress Europe’

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Abstract
With the end of the cold war and the weakening of the security bond between Europe and the United States, economic relations assume increasing importance. As Europe's dominant economic power, Germany has a central role in the management of the trans‐Atlantic economy. This analysis of economic relations between Germany and the United States shows that whilst investment flows between the two economies suggest common interests and mutual dependence, the structure of German and American trade reveals a strong potential for conflict. Moreover, the experience of the 1980s suggests that economic ties between Germany and the United States are not sufficiently intense to guarantee unconditional cooperation in the management of the Atlantic economy. Divergence in macroeconomic policy has inevitably led to tensions over trade, exchange rates and interest rates. Unless this tendency is checked, the result will be the emergence of ‘Fortress Europe’ with a heightened potential for conflict with the United States.

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