Global Policy Forum

By Peter Beaumont, David Roseand and Paul Beaver

America is to punish Germany for leading international opposition to a war against Iraq. The US will withdraw all its troops and bases from there and end military and industrial co-operation between the two countries - moves that could cost the Germans billions of euros. The plan - discussed by Pentagon officials and military chiefs last week on the orders of Defence Secretary Donald Rumsfeld - is designed 'to harm' the German economy to make an example of the country for what US hawks see as Chancellor Gerhard Schrí¶der's 'treachery'.

The hawks believe that making an example of Germany will force other countries heavily dependent on US trade to think twice about standing up to America in future. This follows weeks of increasingly angry exchanges between Rumsfeld and Germany, in which at one point he taunted Germany and France for being an irrelevant part of 'old Europe'. Now Rumsfeld has decided to go further by unilaterally imposing the Pentagon's sanctions on a country already in the throes of economic problems.

'We are doing this for one reason only: to harm the German economy,' one source told The Observer last week. 'Our troops contribute many millions of dollars. Why should we continue to support a country which has treated Nato and the protection we provided for decades with such incredible contempt?'

Another Pentagon source said: 'The aim is to hit German trade and commerce. It is not just about taking out the troops and equipment; it is also about cancelling commercial contracts and defence-related arrangements.'

The Pentagon plan - and the language expressed by officials close to Rumsfeld - has horrified State Department officials, who believe that bullying other countries to follow the US line will further exacerbate anti-Americanism and alienate those European countries that might support a United Nations resolution authorising a war.

German industry earns billions of euros every year from supporting the US Army Europe which, although reduced from its Cold War heights, still totals 42,000 troops and 785 tanks - almost three times as many as the British Army owns. Many of these soldiers and their fighting equipment, including Apache helicopters, have already been sent to the Gulf.

German industry is heavily involved in supporting the US presence. Among the defence companies which stand to lose out are missile-maker Diehl, aerospace and defence giant EADS Deutschland, armaments maker Rheinmetall and vehicle maker Krauss-Maffei Wegmann. There is also a US Air Force contingent of about 15,000 service people with bases at Bitburg, Frankfurt-am-Main and neighbouring Ramstein, where the commander doubles as part of the Nato command. This force includes nearly 60 F-16 fighter-bombers and a squadron of A-10 tank-buster aircraft.

Rumsfeld and his staff have made no attempt to hide their fury at Schrí¶der's 'treachery and ineptitude' over Iraq. Last week Schrí¶der leaked to reporters a Franco-German plan for avoiding war by increasing the number of UN weapons inspectors before informing his American counterparts.

'After this, Germany is finished as a serious power,' one of the sources added. 'This is simply not the way to conduct diplomacy at a moment of international crisis.' One diplomatic source said Rumsfeld was 'furious at Germany. He is a bruiser and it looks as though he means to do it'.

Under these plans, the US would move its troops in Europe eastwards to countries such as Poland, the Czech Republic and the Baltic states, all of which have strongly supported America's line against Saddam Hussein. It is likely that the overall size of the deployment would be reduced, as the US military changes its priorities for a long-term and disparate engagement with international terrorism.

Although Rumsfeld had already been considering a redeployment of US troops around the world after a war in Iraq to save money and respond to new threats, the plans now under consideration go far beyond what had been discussed. It is likely that future years will see a sharp increase in the proportion of special forces troops able to deploy rapidly across the globe. Germany would suffer considerable financial loss if US forces were withdrawn from the country. The bases provide jobs for local people as everything from administrators to cleaners, and are huge customers for dairy products and bread.

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