Euro crisis 'elephant in the room' for Harper-Merkel talks

As political dates go, apparently this one was a long time coming.

Officials have been trying to arrange bilateral talks between German Chancellor Angela Merkel and Canadian Prime Minister Stephen Harper for months. After failing to co-ordinate their schedules around successive G8 or NATO summits, Merkel finally arrived in Ottawa Wednesday afternoon for a whirlwind 24-hour visit.

This German visit is no stopover: officials emphasize that she's journeying across the Atlantic especially to see her Canadian allies.

In addition to ceremonies on Parliament Hill and private talks with Harper, Merkel will stop in Halifax on the way home for the signing of a memorandum of understanding on scientific research between Dalhousie University and the Helmholz Association of German Research Centres.

Fresh off her summer vacation, Merkel's quick trip to Canada may appear on the surface to be a bit of a holiday-extender: August is a nice time to mix official travel with private chats between allies with much in common.

But August is also the calm before several political storms likely to re-ignite in September, particularly for Merkel, who faces her electorate next year.

Below is a guide to what's on the agenda — what topics could see a warm embrace of like minds and which ones could chill the conversation with long, awkward pauses.

Harper told reporters in Toronto Monday that trade negotiations between Canada and the European Union "continue to move forward in a very positive way."

The talks are down to the short strokes. Both sides agreed on a deadline at the end of the year and the difficulties faced by the European economy have added both importance and uncertainty to the talks. The two sides met in late July and will meet again in September.

"Obviously, as you know, nothing's settled until everything's settled," Harper said. "We still have a couple of rounds to go."

But German officials and trade experts point out that single countries like Germany are no longer playing a hands-on role in the talks — responsibility for a deal now rests with the negotiators working on behalf of the European Parliament.

"At the end of the day, it will not be up to Chancellor Merkel, nor will it be up to any of the other heads of state of the European Union," says Kurt Hübner from the University of British Columbia's Institute for European Studies. "We shouldn't overestimate the relevance of these kind of talks."

Georg Juergens, deputy head of mission at the German Embassy in Ottawa, told CBC News on Monday that Germany has high hopes for a trade deal. "By now it is so far down the track we can only watch as it proceeds and keep our fingers crossed."

Harper has talked a lot about what should be done about Europe's economic woes, but from his office straight on down through his backbench there have been harsh words anytime anyone's suggested Canada might need to contribute to an IMF package to support struggling European economies.

Neither leader will be keen to replay the war of words that Finance Minister Jim Flaherty engaged in with EU Commission president Jose Manuel Barroso earlier this spring. But Juergens says it is the "elephant in the room."

"We may also be able to see a better understanding of each other at the end of the day because this is a complicated and large issue that affects both our economies," Juergens says. "One cannot exclude that there is a change of opinion on one side or the other ... just the exchange of views could be very useful."

When asked if Merkel intends to ask Harper to reconsider his rejection of a Canadian role in a bailout, Juergens wouldn't rule it out.

"Both our countries are interested in getting the economy stimulated again but both our countries do not have the means to do so by just spending more government money and running deeper into deficit," Juergens adds. "We need to do some creative thinking on what else might stimulate our economies, and maybe the deregulation of labour markets or the deregulation of the rules that govern the activities of industry might turn out to be helpful."

Harper will no doubt be interested in Merkel's take on the crisis.

"They represent different strands of conservatism," Hübner says. "But they have a lot of commonalities too ... they will make sure that austerity is necessary.

"I think Canada and Germany are on the same page here," he adds.

"It's really important for Canada to realize that if something goes wrong in Europe it's like the proverbial 'if somebody sneezes another person catches a cold,'" suggests Amy Verdun, a European specialist and political science professor at the University of Victoria. "Canada is integrated into the global economy as much as any of the European countries."

She thinks Harper's priority and Merkel's priority could be tied together in these talks, suggesting there could be some "log rolling" where "Merkel would come out and say you know you're interested in that [trade deal], we're interested in that [IMF funding], where was the support when we needed it?"

Bilateral chats like these also provide valuable opportunities to compare notes on conflict zones like Syria or shared international concerns like Iran's emerging nuclear program.

"In such a situation it's even more important to be on the same page with your partner and to talk things through and weigh different options," Juergens says. "Although they may not be of immediately operative value on the very next day, it is good to reassure yourself that you share the same analysis."

Neither country favours military intervention in Syria.

"The situation in Syria is not one where you could easily solve it by sending in troops. It seems more like a civil war right now. The region is too volatile and the country is too big," Juergens says.

Germany's deputy head of mission also says "a confidential exchange of views should be helpful" on Iran.

More delicate moments could unfold when the discussion turns to Canada's ambitions as an energy superpower.

The fight Harper's government has picked with Europe over its fuel quality directive and measures targeted against Alberta's oilsands has cost Canada a few friends in Merkel's neighbourhood.

As Germany's environment minister under Helmut Kohl, Merkel would have taken a keen interest in Canada's recent abandonment of the Kyoto Accord.

"She's very engaged and outspoken in terms of climate policies. And the European Union has a very ambitious target," UBC's Hübner says. "The reputation of Canada in Germany has suffered tremendously mainly due to how the Canadian government is dealing with this."

Hübner suspects Merkel will be asked when she gets home whether she raised these concerns with Harper.

The Harper government's framing of this issue and the IMF "bailout" has turned Europeans off: they're tired of Canada's lecturing on economic issues when it won't listen to Europe's environmental concerns.

Canada, he says, is getting a reputation in Germany as not being willing to contribute to the global public good.

Will Merkel call Harper on it during these talks, hoping for a political payoff back home?

Things are running more smoothly on other files. In February, Canada reached an agreement with Germany to open a new military support hub to support future international missions.

Other defence matters aren't expected to figure prominently in these talks, with the exception of some potential lobbying on the procurement side.

Recent cuts to Canada's consular services in Berlin are also not expected to bring any tension, Juergens says, as Germany has its own budget cuts to deal with.

"We are downsizing our consular representations in Canada. We are thinning out and we have all the understanding in the world for the necessity of that," the embassy's second in command explained.

So no hard feelings then for Canada's shuffling of diplomatic resources in favour of emerging interests in Asia. But while Germany may understand, it won't want to be forgotten.

"Canada takes Europe for granted and it can afford to do so because the relations are very good," says the University of Victoria's Verdun. "There has to be an additional effort spent on new friends but also maintaining the relationship with the old friends."

"I think they must have a very good rapport," Juergens says of Harper and Merkel specifically, "because they are very sober, no-nonsense politicians who don't have extreme personal vanities.

"They want to sit down at the table, they want to address the problems in sober words and I think those should be good talks," predicts the German official.