"Globalisation in recession" – Speech by Foreign Minister Frank-Walter Steinmeier at the Süddeutsche Zeitung Economic Summit 2014, in Berlin on 27 November 2014
Mr Kister, ladies and gentlemen,
I am delighted to be back as a guest at the SZ Economic Summit!
I hope you did not invite me simply because nobody else had time – I hope, and rather suspect, that you chose the Foreign Minister to open your event for a reason. I think it is revealing that, at the end of 2014, at the end of this turbulent year, this economic congress is to be opened for the first time in its history with a speech that unashamedly focuses on foreign policy.
Who would have thought it a year ago? At the time of the last SZ Summit 12 months ago, the coalition negotiations for the formation of the new federal government were in full swing. Remember the speculation? About Cabinet posts and insignificant offices, about which ministries would go to which parties, about whose pet projects would get the go ahead? Few people had any time for foreign policy! There were even those who asked why anybody would want to be Foreign Minister. “The position is obsolete,” they said.
And what do we see today? Foreign policy everywhere! Indeed, I cannot remember any time during my entire political career in which we have been faced with such a barrage of international crises, in so many different locations around the world, of so many different kinds, and all at the same time. It seems as if the world is falling apart.
It is not by chance that I have chosen the metaphor “the world is falling apart”. In my opinion, it explains two major trends that lie behind the individual crises.
Firstly, the loss of order. When, a good two weeks ago, we in Berlin commemorated the fall of the Wall 25 years ago – with the unforgettable sight of thousands of white balloons floating into the evening sky along the route where the Wall used to stand – we were not only remembering a momentous point in Germany's history. The fall of the Wall also marked the start of a new era for the world as a whole. The world's old bipolar order – the decades-long division into East and West with its cynical certainties – disappeared on 9 November 1989.
This old order has been overcome – thank goodness! But the world has yet to find a new one. After the Wall came down, some people thought the West's unipolar moment had come – the “end of history”, the inexorable spread of freedom and democracy around the globe. Others saw the dawn of a multipolar age, with new players from Asia and Latin America, all gathered peacefully together around a single table on the international stage. But I fear that the world of today is neither unipolar nor multipolar. It is non-polar. It is a world in search of a new order. And this search doesn't resemble a calm academic debate. It is a struggle for influence and dominance, combined with ethnic and religious conflicts, which has erupted over the past few months in a perilous number of crises.
Let me give you the bad news first – this is not going to change any time soon. Far from it. We will have to get used to crises being the new normality. And I fear that this is not happening in spite of globalisation, but because of globalisation. For in an interconnected world, dangers and conflicts are no more bound by national borders than are imports, exports and capital flows.
The second trend I'm thinking of is this: the more the world “falls apart”, the more clearly we get to see the existing cracks and divides. In other words, the more public awareness is heightened by international crises, the more we focus on the differences between states, peoples and cultures.
This can be observed in almost all current crises:
The Ukraine conflict is reviving long-forgotten differences and reflexes from the days of the East-West confrontation.
The barbarity and terror spread by ISIS is an extreme manifestation of fundamental religious conflict.
The Gaza conflict has led to the re-emergence of an ugly phenomenon – anti-Semitism – unfortunately also in Europe and in Germany.
Ebola and waves of refugees are fanning new fears of the Global South, of its dangers which risk being visited upon us in the rich North.
And even in our dealings with our closest partners, in particular the US, the public debate is dominated by our differences, not by what we have in common. Sigmar Gabriel summed this up recently when he said that actually Germans and Americans share an emblem – the proud eagle. But the only bird currently of relevance in transatlantic affairs, he continued, is the chlorine chicken – a winged symbol of our supposed dissimilarity.
This “upsurge in differences” unfortunately goes far deeper than the political differences which form the core of the crises. It makes the differences in our heads get bigger!
Unfortunately, the upsurge in differences is also to be seen in our public debate and in the reporting of foreign policy. Just take the Arab Spring, Libya and Syria for example – three conflicts of widely differing origins, which journalists and politicians have endeavoured to force into a narrative that fits European perceptions, casting the young generation as seekers of freedom and democracy rising up against old autocracies. Instead of the complexities of the conflicts' root causes, of which we should be aware, what we hear – in political statements and in the media – is a simplified, black and white story. Although we know full well that when analysing conflicts, it is the varying shades of grey that dominate. That “good” and “evil” are inappropriate categories in most cases because they do not give the whole picture. That the maxim “my enemy's enemy is my friend” has already led us astray on numerous occasions.
Powerful forces are at work in the symptoms I have just described, in this “falling apart” of the world as we know it, and they are pulling in the opposite direction from globalisation. That is why foreign policy trends, as well as our responses to individual crises, are so relevant for an economic conference such as this.
Perhaps we now sensing more clearly than before one particular consequence of globalisation that we have long underestimated: the outside world which is coming ever closer seems more alien and dangerous to many people than we thought.
“The world is getting smaller” – for a long time that augured well, but it now sounds more like a threat to many Germans safe at home.
For as long as I can remember, looking back at this and other economic conferences over the past years, the unstoppable rise of globalisation has been treated as a foregone conclusion, almost a matter of course. Normally politicians and managers gather at conferences like this and sing the praises of globalisation, from all angles:
as a guarantor of Germany's export-based prosperity, as an engine of European integration, as a driving force behind global convergence.
None of that is wrong – even today. However, in 2014 this debate is perhaps not at a turning point, but it is under pressure to justify its assumptions. Globalisation is in recession!
This recession has not, by the way, been sparked by the political conflicts of this year, but has been observable in the economy at the latest since the financial and economic crises of 2007 to 2009. The response to the excesses of the global capital markets was, at least in part, a retreat to tighter national and regional rules and borders – partly because international groupings such as the G20 did not deliver what was needed quickly enough, slowed down as they were by diverse clashes of interest, sometimes regional in nature, between financial centres and the real economy.
There is another field in which we can observe the recession of globalisation. And this is in that ultimate global asset – the Internet. A whole succession of large states – China, Russia and others – are putting extensive resources into regulating and controlling the Internet in line with their own national conceptions.
And since the NSA scandal if not before, the fear of “Big Brother” is spreading here, too. This is a double concern, combining fear of the state and its security agencies on the one hand, with fear of the powerful big data companies on the other. More and more people are rightly asking how the ideal of a global, free and open network should be made compatible with privacy – and how the balance between freedom and security online should be regulated. The old Rolling Stones hit from our younger days, “Get Off of My Cloud”, has certainly been given a whole new meaning...
If my analysis is correct so far, then Germany faces a clear problem – both for you in business and for me as a foreign politician.
The recession of globalisation is a threat to our export-driven economy.
And the upsurge in differences is taking the edge off our diplomatic tools.
For anyone who wants to resolve crises needs the opposite of differences – they have to search for common ground – they have to seek out common viewpoints and common interests, especially when confronted with difficult interlocutors.
I think the first step in the right direction will already be taken when we Germans realise that we cannot be indifferent to this crisis in the global order. Wherever we can, we politicians and businesspeople have to knock any insularity out of the Germans, and dissuade them from taking the easy way out.
I am always glad to tell anyone too attached to the myth of the island of bliss about a study conducted by the McKinsey Global Institute, which reckoned that Germany is the most interconnected country in the world. Connected not just by flows of goods and capital and services, but also in terms of data flows online and through human migration. Few people are aware that the percentage of Germany's population born abroad is already higher than the equivalent figure in the US, the immigration country par excellence.
And once you've accepted that, you have to take the next step: as the most interconnected country in the world, we are reliant on the existence of a peaceful, rule-based international order and have to work to ensure it is maintained! Not just in Europe, but worldwide – for example through reform of the UN.
This is also the context in which I view the debate on the Transatlantic Trade and Investment Partnership. TTIP is, in my opinion, more than a free trade agreement. It is an attempt, together with the US, our oldest and biggest partner, to set the rules and standards of globalisation. For if we don't set them, others will, and certainly not in line with our ideas of sustainable management or labour, environmental and trade standards. Our ideas will only have traction in the world if we can agree with those partners with whom we have most in common.
This brings me to the next point that we have to acknowledge. Purely economic connections do not guarantee political order. This is ultimately also a lesson from 1914, a time that is often in our minds in this centenary year. Back then the tremendous economic and social bonds that linked nations, the first wave of globalisation, were not able to prevent the catastrophe of that summer, as within just weeks, all channels between Europe's capitals were closed and shortly afterwards only the language of gunfire was spoken.
Economic globalisation alone does not guarantee political convergence. The Financial Times recently put it thus: capitalism is politically polygamous. More BMWs on Moscow's roads and more VW factories in China's conurbations do not automatically give rise to greater political common ground – an insight that refutes some widely held beliefs of the '90s and '00s.
We therefore have to continue to work at political level, campaigning for international law and rule-based systems, and defending them wherever they are challenged.
Challenge them is precisely what Russia has done with its annexation of Crimea and its conduct in Eastern Ukraine – and we have to respond. Let me underscore, on this stage too, that anyone who violates the rules for coexistence in Europe threatens the foundations of both our security and our prosperity! To conduct your business, you entrepreneurs must be able to rely on free, fair and settled international rules. We have responded to the threat, by means including sanctions which come at an economic cost to ourselves. But the cost of a sustained threat to the order in Europe would be very much greater, and therefore our reaction was and remains necessary, and that is why, I believe, it is also in the interests of business in the long term.
The pressure we exert through sanctions is never an end in itself. Pressure is meant to produce movement – movement back to the negotiating table. But in order to negotiate, you yourself have to be willing to negotiate. We have therefore made overtures time and again, and created fora in which all parties can negotiate with one another – meetings in Kyiv, in Brussels, Berlin and Geneva. OSCE observers. Round tables. We brought the Russian and Ukrainian Foreign Ministers together at two meetings in Berlin, preparing the ground for the urgently needed direct talks between Presidents Poroshenko and Putin, which took place in Minsk. But, you may say, the Minsk agreement isn't in force yet. It is however a common basis to which we can return, and which we must further implement.
Sadly, this crisis, like others, illustrates an old foreign policy adage. It takes 14 days to start a conflict, but 14 years to resolve one.
We therefore have to maintain the channels of communication that we have, and use them for their true purpose: as fora for negotiation, not as opportunities for media positioning.
I have pointed out what sanctions are. I would also like to underscore what they are not. A European colleague of mine recently said in Brussels, “The sanctions are working – the economic damage to Russia is immense – we've got to continue now!” Indeed, the sanctions, in combination with four other factors, capital flight, the depreciation of the rouble, a hesitancy to invest, and the low oil price, are taking a heavy economic toll on Russia – some 140 billion dollars a year. But it is not the aim of our sanctions to break Russia's economy. That would be extremely dangerous. A destabilised Russia, or worse, a failing Russia would ultimately pose a much greater danger to itself and to others. Anyone who talks that way is doing a disservice to European security.
As I see it, if sanctions are to move people towards negotiating, we need channels of communication open for such negotiations and for dialogue. Many channels are already closed. We, Chancellor Merkel and myself, continue to talk directly with Russia's leaders. Not many do that any more. And therefore we have to use the fora that remain available to us, such as the Petersburg Dialogue, in its full societal breadth. This dialogue has, it is true, become ever more difficult over the past years, mirroring the extent to which societal liberties have become more limited in Russia. It is true that we should think about a more modern, open structure. But we have to make sure that the Petersburg Dialogue does not become a Berlin Monologue! In addition, we should think about new channels. If, for example, Russia is worried about the EU's association policy and the EU is worried about Russia's Eurasian Economic Union, then why don't we bring representatives of the two groupings together for talks sooner rather than later?
I don't know what form Europe's security architecture will take in 10 or 15 years' time. But one thing I do know: there won't be one if we build it without Russia, or against Russia. Furthermore, the world is full of trouble spots, and in many of them – Iran, Syria, etc. – we will never get near a solution without Russia. Those who say, “we wash our hands of them” might reap applause from some quarters, but any hope of solving the conflicts would also go down the plughole. I remember how at the start of the Ukraine crisis, the Canadian Foreign Minister said at a meeting: “Now we have to decide whether Russia is friend or foe, our partner or our opponent.” I said to him, “Maybe you can frame the question like that in Canada. But in Europe, Russia will always remain one thing: a very large neighbour, and it will influence our progress for better or for worse.”
The crisis zones in the Near and Middle East, to which I just alluded, will also occupy us for a long time to come. The troubles there have reached inconceivable heights with the brutality and terror of ISIS, whose fighters are bringing mediaeval barbarity into the Internet age in a most sickening manner.
This, too, is by no means a regional conflict – it is not a problem in Iraq or Syria alone. This terror is directed against humanity as a whole. This is all the clearer if we take a good look at ourselves, at Germany and Europe, and ask ourselves critically how these hatemongers were able to attract young people who have grown up in our midst, in our societies.
I'm saying this to make it clear that no matter what outrage, what abhorrence, what fury we may feel when we see the terrible images from Kobane and elsewhere – a military response alone will not be the answer. It must be embedded in a political strategy. This is also true for the Syria conflict, in which we have reached a political stalemate, and I am therefore supporting the new UN Special Envoy Staffan de Mistura in his attempt to pursue new avenues, such as local truces.
Of course a military response is part of any package, and we will not shirk our responsibilities. This summer we decided to support the fight by supplying arms to the Kurdish Peshmerga forces. I travelled very early on to Erbil and spoke to people who had fled their mountains and villages for the safety of refugee camps. They had all lost family members, either due to the atrocities perpetrated by the terrorists or due to the oppressive temperatures which reached 44°C. That was when I realised that I could not look those people in the eye and say “how fortunate that the Peshmerga forces are there to fight ISIS, but when help is needed, we just send them blankets and food.” We therefore decided to send arms. It is indeed one of our principles not to supply weapons to crisis zones. However, it is also one of our principles to protect human life and ultimately to safeguard our own security. In cases like these, foreign policy has to choose between less than perfect options. In such cases, you have to be careful to uphold principles, not to hide behind them.
We also help the people who bear the brunt of the suffering. NGOs, the Technical Relief Agency and the Bundeswehr have been flying into Iraq and Syria and distributing humanitarian supplies there since the fighting started. We will this week adopt a federal budget that will see our funds for humanitarian assistance doubled. For more than three years, millions of people have been fleeing the violence in Syria. Germany is already making a huge contribution – both financially and by taking in refugees. Nevertheless, I think we have to do more, precisely because the flood of refugees into the neighbouring countries, especially Jordan and Lebanon, risks destabilising those countries. Let me give you two examples. Lebanon is home to 4.5 million people. It has already taken in more than 1.5 million Syrian refugees. Lebanese schools now teach more refugees than local children. In Jordan, before the crisis, drinking water was in such short supply that locals only got water once a week. Now, because of all the extra people, it is once every 14 days. Those are just two of the reasons why I hosted an international conference on refugees at the Federal Foreign Office in late October, to coordinate support with the affected countries and our partner states, and to prevent this conflict from destabilising the entire region.
Ladies and gentlemen, after this brief tour of our disintegrating world, let me conclude by turning my focus back to our own country, to Germany, and its role in the world.
As you know, I talk of responsibility when advocating foreign engagement. At the start of my second term of office I was often asked why I made such a point of it. Let me tell you. We do not seek out this responsibility. It is inherently ours.
Our role in the world has changed. For decades, until that fateful day of 9 November 1989, Germany was on the front lines of the Cold War. West Germany lived in the shadow of the Wall and under the protective mantle of the Western Alliance, in particular the US. We were a partner with equal rights but without equal duties. Then the Wall fell, and we have since become a new country:
firmly anchored in Europe,
peaceable, and respected in the world,
and now we're football world champions too…
This story is a success story. We're allowed to revel in it, but we must also see what made it possible: a free, peaceful, rule-based world order. And because of that, a country like ours which has benefited more than most from this international order must also contribute more than most to safeguarding it.
And, if my analysis that globalisation is in recession is correct, then our foreign engagement is ultimately also a stimulus package to counter this recession and to promote the objective of an interconnected and rule-based world, which is so very important to us Germans.
The expectation that Germany will play an active role is something I encounter every day when I talk to people abroad. I recently asked a large group of international experts to formulate their expectations of German foreign policy. To quote just one of them: Germany should “lead Europe, to lead the world”, “europeanise Russia” and “multilateralise the US”. Not much to ask, really! And do you know who said this? It wasn't a Frenchman, or an American. It was an Indian professor.
And what's the view from the other side, from within Germany itself? In a recent poll, the Körber Foundation asked Germans whether Germany should play a more active role internationally than it had done to date. “Yes,” said 38 percent. “No, do less,” said 60 percent.
Ladies and gentlemen, such is the divide between external expectations and domestic willingness with which I am faced. To be honest, if I were an engineer, I would not in good faith try to bridge such a gap. But as a politician I have no other choice! And I would very much appreciate it if German business would do a little bit to help – if what I have just said is not entirely wrong, doing so would even be in your own best interests!