US Ambassador on Red Alert

It didn’t take long.

Less than a week after the leader of the former East German communist party took office as economic minister of Berlin, America’s highest representative in Germany said he was concerned.

"Because of the past, there are of course concerns," Ambassador Dan Coats said in an interview with the Berliner Zeitung. "Many Americans are asking themselves how this coalition will govern, but that’s something we need to wait on."

Coats, who arrived in Berlin at the beginning of September, said he was curious to see how the coalition, and the Party of Social Democrats leader and new economics minister Gregor Gysi, would welcome American investors to the financially-beleaguered German capital.

"The question will be: How high will the taxes be and how cooperative will the government be when problems arise?" he said in the interview, which appeared on Monday.

Coats comments amount to an unusual foray into domestic politics for a foreign diplomat, and they may ruffle some feathers in Berlin.

PDS emerges out of Berlin’s financial ruin

The charismatic Gysi, who took the minister’s position a week ago, has an incredible task ahead of him. Owing to a financial scandal in Berlin’s former, conservative-led government and slow growth, the city's debt amount to some 40 billion euro ($36.75 billion).

In response to years of financial mismanagement, Berlin voters upended politics in the capital city by giving more than 22 percent of the vote to the PDS. The number was only a few percentage points lower than the conservative Christian Democratic Union. But it eventually forced the ruling Social Democratic Party, and Mayor Klaus Wowereit into talks with Gysi, despite the objections of German Chancellor Gerhard Schröder.

Those talks bore fruit on December 19 and 20, when Wowereit and Gysi announced that they had struck a coalition deal. Under the deal, Gysi, 54, became deputy mayor and took up the position of economics minister on Jan 15, one of three cabinet positions given to the PDS:

Gysi says he, PDS are qualified

The trained lawyer said he plans to cut bureaucracy, redirect subsidies from individual firms to infrastructure and seek to lure companies through sharing state-financed research. He has brushed aside criticism that his Party of Democratic Socialism, which calls for more regulation in the German economy, will scare off potential investors.

"All this ideological stuff is nonsense," he said in an interview with Reuters TV last week. "Take a look at China. The Communist Party rules there, and all by themselves. Yet Siemens and American investors have invested there."

Coat’s past comments

It was not the first time Coats has weighed in on German politics since being announced as a candidate for the ambassador’s position. The former Republican senator from Indiana and defense secretary candidate in George W. Bush’s administration, created an uproar in German government circles during his Senate confirmation hearing in August.

The former Senate Armed Services committee member and military industry lobbyist, criticized the size of the German defense budget and the priority the country gave to its international military obligations.

"Clearly there has to be a recognition on the part of the Federal Republic of Germany that if they are to maintain a central partnership and position in NATO it has to be accompanied by more than rhetoric,"

Coats also called a proposed EU rapid reaction force as "hollow," without proper funding.

A German government spokesman said officials were astonished that Coats would make such comments before ever arriving in Berlin.

Coats has made a better impression since moving at the beginning of the September, praising German reaction, both personal and official, to the Sept. 11 attacks.

But the US Embassy did recently cause irritation amongst Berliners by fighting hard to regain the deed to prime real estate near the Brandenburg Gate, which had been out of American hands since the Second World War.