23 trillion euro. That was the total value of the goods exported worldwide last year – and it is higher than ever before.
4.8 zettabytes. This number with twenty-one zeroes describes the estimated volume of global internet traffic in 2022 – a thousand times more than in 2002.
281 million. That is how many people were living outside their country of birth worldwide in 2020 – more than ever before.
All of these figures describe a new reality.
They show that economically we are more closely connected than we have ever been before – and that is a good thing, because this connectedness not only brings together people in Germany, across Europe and around the world, but it brings more prosperity, more knowledge, more mobility and very often more cohesion.
But there are also these other figures that this new reality entails.
55 percent. That was, as we know, the share of German gas consumption covered by Russian pipeline gas.
98 percent. This is China’s share in global production of the critical raw material gallium, which Beijing is now subjecting to export controls.
27.6 million. That many people are estimated to have been affected by human trafficking worldwide last year.
These figures show that being connected involves not only opportunities but also risks and dangers – and that economic policy is always a matter of geopolitics, too.
All the more so in times such as these which are propelled so brutally by the Russian war of aggression, boosting not growth and prosperity but in particular inflation around the world, especially when it comes to food prices.
And we are seeing the shadows of this terrible Russian war of aggression in Germany, too. And so we in Germany, now in particular, cannot take an entirely optimistic view of the economic situation but must also be concerned: by inflation in Europe, by high energy prices and supply shortages.
Germany is continuing to pay a heavy price for entering into that ill-fated dependency on Russian gas and oil.
The good news is that, together, ladies and gentlemen, dear colleagues, we in the Federal Government and you as entrepreneurs have over the past one and a half years done an incredible amount to begin repositioning Germany and equipping it for this new, sometimes harsh reality.
Together, primarily thanks to the Federal Economics Minister, thanks to you, Robert Habeck, we have accelerated the energy transition so enormously that we were not drawn into an energy crisis.
And our National Security Strategy and the China Strategy have finally embedded the concept of economic security in our interministerial thinking, too.
I am grateful that the worlds of politics and business are tackling these challenges together.
And yes, all of us here in this room – in the Federal Government, you as entrepreneurs, as business representatives – know how complex these tasks are. That they are and remain challenges for which in many cases we don’t have any blueprints. There are no straightforward, simplistic answers. But doing nothing is not an option. Then others will step in to fill this gap.
We understand as much when we see, for example, the reports of Russian gas that is once again ending up in German and other European pipes via LNG supplies. Or when we see that it is not enough to look at a preliminary product or an end product alone in order to become more resilient, to reduce our dependencies – but that we must consider every part of a long supply chain. We can only do this when we face up to these challenges not with quick and simplistic approaches, but in-depth, down to the very last detail.
Dear Economics Minister, dear Robert Habeck, this was brought home to us both in July when we visited the production site of the chip manufacturer Infineon in Dresden, where one of the largest semiconductor factories in Europe is now being built.
Speaking to the workers there, you sense energy and passion – and that they sense that something entirely new is being built here. And it is right and important for the Federal Government to provide financial support for precisely this kind of project which will bolster industry hubs in our country, as well as across Europe.
Not only because in doing so we create thousands of jobs in Dresden, in other locations and with many suppliers in the region. But because by doing so we lay a foundation to build our economy of the future – connected, secure, sustainable.
Because the chips from Infineon and the other manufacturers which are now being produced in Saxony and other locations, with investments continuing to flow, will be installed in electric cars, in wind turbines, in washing machines and in smart power grid management systems, in our critical infrastructure.
And as we walked through those halls – in some cases wearing interesting tracksuit bottoms and protective suits – you get talking to people and you think how great it is that this is being built here. But you also hear other snippets. For example, one production hall focused on making the wafers and on the subsequent process – what actually happens with these wafers afterwards. The next steps – assembly, testing and packaging – are referred to there, as I learned, with the abbreviation ATP. Chips continue to be sawn, assembled and tested before being installed.
When these wafers, these chips, are completed, they then set off on another journey – but not just between Saxony and other parts of Europe. The ATP processes of many European manufacturers take place almost exclusively in Asia, predominantly in China.
And this shows us once again that we need to look at the entire production and supply chain. We need to examine it in depth. That is why we are working in Dresden – and that is why this Federal Government is working – to build up a genuine semiconductor ecosystem where as much as possible of what goes into the chips in the individual stages of production, and later on during ATP, comes from secure sources.
Our goal is more security with more, targeted connectedness.
Because becoming more independent, more resilient, does not mean disengaging or isolating oneself. We know that no country on Earth can afford to do that, and certainly not Germany as a strong export nation.
On the contrary, the better connected we are in the world, the more successful and the more secure our country is. That is why our China Strategy is directed first and foremost at us ourselves.
What matters is for us not to simply leave the shaping of a connected world and of globalisation to the “invisible hand” of the market. Or the supposedly strong hand of autocrats. Or indeed the principle of hope and luck.
In the wake of a global financial crisis, the COVID-19 pandemic and Russia’s war of aggression, that would be downright naive.
What we want, instead, is to shape connectedness and globalisation so as to minimise one-sided dependencies and build up partnerships of equals.
On this subject, I would like to emphasise three points.
Firstly, we will achieve more connectedness and more security for Germany and Europe by investing targeted efforts in strategic partnerships with countries around the world, by continuing to strengthen these partnerships and forging new ones.
You will have seen that I recently set off, with this purpose in mind, for another region of the world: Australia, New Zealand and Fiji. As we know, that didn’t quite work out. But luckily it’s possible, in a digitalised, connected world, to make up for it by taking things online, although of course there’s a big difference. And so we were still able to cover one important talking point from our agenda. I was somewhat reassured in the process to hear: “Ms Baerbock, even with your faulty plane, Australia still firmly believes in German engineering.”
We were able, then, to use an online meeting to discuss what would have been the focus of my visit to Australia – the raw materials partnership between our two countries.
And a partnership of this kind sounds entirely logical. You might think: “OK, why do we need a new raw materials partnership now? Isn’t Australia one of our oldest and longest-standing partners in values – don’t we already have something like that?”
But alas, we don’t. And if you then look at what’s going on with raw materials – it’s enough to make your head spin. And you wonder why we weren’t already talking about it in previous decades. But it’s no use crying over spilt milk. What we need to do now is get to work, if we want to learn from our previous dependency in particular.
Australia mines over half of all lithium worldwide, and we will need five to six times as much of it in the future as we do today. For car batteries, smartphones, computers – for everything that’s a necessary part of modern life.
But this lithium, although there’s so much of it in Australia, doesn’t go straight to Germany, to Europe. Australia exports over 90 percent of its lithium to China without processing it. And we in the European Union then import more than 90 percent of the lithium we need from China.
So you might say: Why didn’t this occur to us before? Well, what matters now is that we are working with Australia to ensure that we will need to use this circuitous route less often in the future, by together processing more lithium directly in Australia.
And that opens up considerable new fields of business, including for German and for European companies. In April, for example, Siemens, Andritz and Plinke signed an agreement with Australian partners that covers a refinery for substances used in batteries.
By taking such concrete steps to strengthen our partnerships with friends, we reduce one-sided dependencies that make us vulnerable. And at the same time we enhance connectivity worldwide.
And as you can see from this example, this is not something that should in the future be left to chance – we must continue to strategically intensify precisely these partnerships. The EU and the German Government are therefore analysing all of the dependencies in different areas as part of the European Union’s raw materials strategy.
And on this front, too, we need to be honest – we can’t go it alone. We need you as partners. And the Federal Economic Ministry is working very closely with a great many businesses on this. Entrepreneurs and political institutions must work together to reduce our shared societal vulnerabilities.
The Federal Government is supporting this de-risking by, for example, offering untied loans for long-term raw materials import contracts – to give you certainty when you set up new contracts.
And at the European Union level we are also moving forward with our trade agreements.
As you know, Germany has now ratified the agreement with Canada. The agreements with Chile, New Zealand and Kenya are set to take effect in 2024. We will be signing one with Mexico. And we are continuing to work hard on moving forward in the negotiations not least with MERCOSUR, but also with Australia, India and Indonesia. And some of you are probably thinking – it’s about time.
But at this juncture I would like to point out that we can’t expect an easy ride. We are living in a new world, in a new age, where many countries are no longer waiting for us and shouting “hooray” and “thank you” when we Europeans turn up with our trade agreements.
This becomes all the clearer if you look at the original EU trade agreements, the old texts which we are now in some cases renegotiating, and see that they were written from a very European perspective. That is logical, we are after all the European Union. But the perspective of our own interests – accompanied in some cases by a protectionist touch – is these days no longer simply accepted by others.
That is why we are currently saying, when it comes to some of these agreements, not least MERCOSUR: How can we make the agreements more attractive in both sides’ interest?
Yesterday, at the opening of this Ambassadors Conference, WTO Director-General Dr Ngozi Okonjo-Iweala reiterated it in no uncertain terms:
The Economic Partnership Agreements that the EU has signed with 14 African countries have barely increased our trade with Africa – and, more importantly, their trade with us Europeans.
It is the two major Chinese overseas development banks that between 2007 and 2020 invested more in African infrastructure, in infrastructure projects, than the World Bank, the African Development Bank, the European Investment Bank and the bilateral development organisations of the US, Japan, Germany, the Netherlands and France put together.
Yes, the EU remains Africa’s most important trading partner today. But China could overtake the EU on this front by 2030.
This is what made the German Government’s efforts during our G7 Presidency last year so important to us in geopolitical terms – our efforts to link up the European Union’s global infrastructure initiatives, as well as those of the other G7 members.
Global Gateway. I suspect if we were to ask around here just now, no one would be able to say exactly what that actually is. However, as abstract as the term sounds, and as many question marks as it evokes, in my view the Global Gateway – if we do it right and especially if we roll it out in full at last – is not only one of the European Union’s most important external trade instruments, but also one of the European Union’s most important security instruments.
Because with the current geopolitical situation, external economic policy is always also security policy. And – I say this to the members of the European Parliament who are here today – it is right and important that the European Parliament in particular is pushing the Commission and us member states so hard on this issue.
However, just as important as our European outlook is the need to expand our viewpoint. It is important that in future we view trade agreements much more from our partners’ perspective.
Why is it that some of these trade agreements have in the past floundered? Well, yes, in part because of criticism here.
But if we look closely at MERCOSUR – as the Economic Affairs Ministry, the Minister for Economic Affairs and our State Secretary have done over the past few months at various levels with the Federal Foreign Office and the Federal Chancellery – then we see that it is also due to the fact that Brazil and its current government view some of what the European Union anchored in the agreement as the forest protection clause rather differently, namely as protectionism.
And – it is important to me to say this, particularly as I might be quoted – the reason for this is not because Brazil’s President Lula does not want to protect the Amazon – quite the opposite.
The Brazilian Government is making it clear, rightly in my opinion, that protecting the Amazon doesn’t simply mean: we won’t do anything more. Rather, the key question is this: how can we work together to protect the Amazon and create added value on the international market, including the European market, for sustainable products from the rainforest?
And that is precisely what we intend to do: not only to see mutual interests in connection with trade agreements, but to see how we can also look at the same interest from various angles.
This would also produce added value in comparison to other trade agreements, for instance. When I was in China, there was a Brazilian delegation there too, also talking about forest protection. And no conclusion was reached.
So if we join forces, I believe we can make the better offer, particularly in areas like that. We as the European Union should therefore not downplay ourselves. We can, if we want to – and especially if we have the ability to view the world from the other perspective too – be more reliable partners than others. For fair and transformative investment instead of dependencies and oppressive contracts.
And, yes, we must not be naive. China will always be quicker at building an airport than us – and not bother unduly about the rule of law. But is an airport all we want? No, actually.
If we are able to put our investment and our infrastructure projects in place a little bit faster, not only worldwide but also here at home, while at the same time strengthening the rules-based order and the rule of law, then that is the better alternative. And it is by no means the case that countries are saying: we won’t go for that. Rather, some countries currently have no alternative to Chinese investment agreements.
In other words, what we want is partnerships that are in the interests of all countries concerned, and especially of their people.
This brings me to my second point – and that is the question of what is in fact in our German and European economic interest.
If we are honest about this, too, then it’s the same as with trade agreements between emerging economies and industrialised countries: on some points, our interests simply don’t converge one hundred percent. But if the interest consists of both sides upholding their interests, then you can work well together. And I believe it’s exactly the same sometimes – between policymakers and industry, between the Federal Government and some companies – when it comes to economic policy issues.
This was demonstrated by the debate about our Strategy on China as well. And one thing I found hugely important was this:
It became clear not only that different ministries take different views of the Strategy, but also that a family-run business takes a different view than a DAX company, for instance. DAX companies in particular rightly focus on their returns in the short and medium term, not least because of their shareholders. Some family-owned companies do take a different view. For us as a state, this means that the Federal Government bears a responsibility for the overall economic interests of our country.
While these interests do not match exactly, they are all justified.
Over the past couple of years, we have asked a lot of ourselves when we have talked about precisely this:
how, following the Russian war of aggression – when the state had to spend billions of euros of taxpayers’ money to stabilise individual companies and buy back gas stores – we can together ensure that such a thing never happens again.
How we tailored relief packages for companies and citizens costing billions, packages that were absolutely right and important, but how we can in future ensure that something like this – and in an interconnected world it can always happen that a country or a region breaks away overnight, for whatever reason – does not impact on our own economic performance or our ability to act.
Germany is one of the world’s strongest economies. But we cannot afford something like that twice. That’s why we are continuing to work towards further reducing our economic dependencies today and tomorrow, dependencies that might break us.
And that is precisely why it cannot be a matter of indifference to us if major German companies expand their business in China to such an extent that, if the country breaks away, there are massive consequences for us and all business locations in Germany and Europe. So I am grateful to have had the opportunity, not least during my travels around Germany this summer, to visit some of these companies to talk about what degree of risk they can each bear, and what that would mean for our economy.
And we certainly have to look at individual cases, because there simply isn’t a blueprint for such situations. Something applies to one sector, something completely different to another. What is vital if we want to safeguard ourselves is that we as a society are aware of your and our risks – and that we work together to minimise them.
At the same time, it is clear, though, that the Chinese market is far too big for a German chemical company or heat pump manufacturer not to have a presence there. The important thing is to avoid imbalances.
That’s why I would like to take this opportunity to say a very sincere thank you for the intensive discussion – for the critical discussion aimed at working together to strengthen Germany as a business location.
And I believe one thing we all agree on is the fact that we still need to invest even more in our strength, in Germany and in Europe.
That is my third point. We have to invest today so that tomorrow we are leaders in the technologies that will shape our interconnected future.
We are doing this in Dresden and of course in many other places besides. That’s why we are focusing on key technologies: AI, greentech, semiconductors.
It is important that we do this not only as the Federal Republic, but in our common European Union. The European Chips Act will mobilise a total of 43 billion euro for the production of semiconductors, to double the EU’s share of the global semiconductor market to at least 20 percent by 2030.
In all these discussions, the Federal Foreign Office has repeatedly heard this:
What use are all these investments and all these companies if in the end there are no skilled workers?
And it’s true. Someone needs to work in the factories. But here, too, if we simply describe the problem and say it’s too big to tackle, then others will fill the gaps, or even fewer people will come here.
That’s why it is so important for our economic security, for the geostrategic orientation of our external economic policy, that we invest here at home not only in infrastructure and in attracting businesses, but also in minds, international minds.
For that reason, as you will know, the Federal Government has approved a new Skilled Immigration Act, making Germany a country of immigration fit for the 21st century at last. And yes, that too, would indeed have been needed yesterday rather than today. Again though, there’s no use crying over spilt milk. There’s no point in fretting over the fact that the previous visa system seemed to be designed more for isolation. And that’s why, unfortunately, there’s so much work to be done now.
And I know how many pleas my embassies around the world receive from your companies – whether in Baghdad, New Delhi, Peking or elsewhere – saying:
For goodness sake, hurry up with the visas. We need visas. Quickly, quickly, quickly!
So we have presented a Visa Action Plan aimed at speeding up and digitalising procedures. For it’s clear that if skilled workers from India or Brazil can get a visa for the United States or the UK much faster and more easily than for here, then they’re not going to wait for us. Especially not as our language is not the most widely spoken one in the world.
So here, too, as in the case of trade agreements, we need ideally to be better and more attractive than others. We need to speed things up while obviously – and I say this very clearly – maintaining and strengthening our security standards for visas throughout.
In all honesty, this also means it all depends on us here in Germany. On this subject, I have heard some people say: Well, visas, digitalisation, you can surely expect that from anyone who wants to come to Germany. If you want to work or study here, then surely you’re in a position to do it online in Indonesia.
Let me say something about this, from my trips to various countries in the world: on the streets in Delhi – I’ve just spotted the German Ambassador to India – I could have paid for everything at a little street stall using an app on my mobile, even though the sign might not have been entirely correct. Unfortunately, our phones weren’t fully compatible with that digital technology, so I had to borrow a mobile from a colleague locally.
And so, when it comes to visas, the problem with digitalisation may not lie with the missions abroad, and certainly not with the people trying to apply for visas there. Rather, all the foreigners authorities here in Germany – and there are a lot of them – need to be able to process these digital visa applications.
That’s the crux of the problem that we need to work intensively on. And let me say this: the negotiations Robert Habeck is conducting with the WTO are anything but simple. But if, hopefully, we manage to make progress in these negotiations, then we should be able to make progress with 16 Länder in a federal system and to digitalise our entire visa system, and thus our immigration system.
Because economic security in an interconnected world – and that is what lies at the heart of our National Security Strategy – means not just looking beyond our borders, enhancing connectivity worldwide, but above all directing our security focus inwards, towards us here in our Europe.
Towards a Europe which will, I hope, soon have a real Capital Markets Union.
Towards a Germany with even better connectivity between the various authorities, from municipal to Land to federal level.
For if we want to create economic security, there is no longer any distinction between domestic and foreign affairs.
And I am confident that we can succeed in this.
Because Germany is a strong country.
Thank you very much.