Speech by Foreign Minister Guido Westerwelle at the 2nd German Congress of Global Market Leaders: Economic success is also good news for foreign policy

25.01.2012 - Speech

Speech by Foreign Minister Guido Westerwelle at the 2nd German Congress of Global Market Leaders

-- Translation of advance text--


Mr Döring,
Ms Bruckner,
Professor Venohr,
Ladies and gentlemen,

Germany is one of the world’s leading economies. Our companies are globally competitive. German products are in demand all over the world. German businesses, and in particular our SMEs, are now doing better than they’ve done for many years. Employment figures are at a record high, unemployment is going down. All in all, our country has emerged stronger from the economic and financial crisis. That’s good news not just for entrepreneurs, employees and trade unions. For if Germany’s economy is thriving, that’s also good news for German foreign policy.

Germany’s influence in the world has nothing to do with the size of our armed forces. Our influence in the world has to do with astute diplomacy, humanitarian engagement and economic strength. In today’s globalized world Germany’s economic clout clearly gives us leverage especially in the foreign policy sphere that we would not have otherwise.

Conscious as we are of the nexus between economic clout and political influence abroad, the men and women in charge of our around 230 missions across the world of course stand ready to assist you in any way they can. With their excellent contacts on the ground, they can help clear away a good many obstacles or ensure they don’t arise in the first place. Doing business needs political support – that’s as true today as it was in the past, perhaps even more so in fact.

So let me right away invite you to the Business Forum we organize every year in Berlin alongside our annual Ambassadors Conference.

Germany is a country where SMEs represent a very important section of the economy. This is something that’s been much disparaged. Time and again doubts have been voiced as to whether this can be a sound course in a globalized world in which ever larger heavyweights are surely required. It’s now clear that the prominent role SMEs play in our economy is a great advantage. Obviously Germany has plenty of large companies, too, that we’re rightly proud of and which are respected household names all over the world. But there are also a host of hidden champions – global market leaders whose names are familiar only to the specialists yet whose products are key to success in a whole range of sectors.

It’s the job of us policy-makers, I believe, to provide the conditions these companies need to thrive – now and also in the future. I’m thinking here of what needs to be done to secure our future supply of skilled labour, cut red tape and ensure changes of ownership take place with a minimum of disruption.

In my view, however, what climate prevails in our society is also an important factor. Together we want to help create a climate in which people feel their contribution is recognized.

Right now the efforts under way to tackle the so‑called euro crisis are very much the focus of attention. The term “euro crisis” is a misnomer of course. The euro itself is not in crisis. Quite the opposite in fact. Our common European currency is a remarkable success story. Whether we look at the exchange rate or the inflation rate, the euro is as stable as the Deutsche Mark once was. And it has become the world’s number two reserve currency.

If we didn’t have the euro already, we’d now need to invent it – that’s one of the lessons of the 2008 financial crisis. During the financial crisis countries had to spend billions on supporting the international banking system. To stimulate the economy, huge fiscal stimulus packages were put together. Sovereign debt, already high before the crisis, increased steeply. In the end the financial markets questioned whether some euro countries would ever be able to repay their massive debts. The sovereign debt crisis turned into a crisis of confidence.

The provision of short‑term liquidity alone will clearly not suffice to overcome the crisis. What we need to do is convince the markets that in future the euro area will be an area of enduring financial stability. At the moment we’re very busy negotiating a treaty on a new Fiscal Stability Union. It will have three main components.

Firstly, all euro countries will introduce a new constitution‑level budget rule or “debt brake” setting legally binding limits on expenditure. Germany, Poland and Spain have already done so. In 2011 this Federal Government succeeded in cutting the borrowing requirement to some 17 billion euro. Under the previous Government, the 2011 borrowing requirement had been put at 72 billion euro. The debt brake is binding not just on the Federal Government. The Federal Länder (states) must also consolidate their budgets.

Secondly, if EU member states violate the budget parameters set out in the Maastricht Treaty, sanctions will be imposed automatically. So everything possible has been done to prevent the sanctioning of those running excessive deficits being interfered with by considerations of what’s politically opportune.

Thirdly, we’ve agreed to expand economic policy coordination within the euro area. In so doing we’re remedying the mistakes made in the original blueprint for the Economic and Monetary Union (EMU). We’re now taking steps towards the creation of a political union – something which in those days was not yet feasible. Major structural reforms will be coordinated at European level.

In many parts of Europe spending financed by borrowing ever larger sums has become a habit. Combined with the mistakes in the EMU’s original blueprint and exacerbated by the impact of the financial crisis, this has brought us to the brink of the abyss. We’re now shifting to a new paradigm. Piling up debts has reached its limits.

If you want to reduce your debts, you have to earn money. You can’t pay them off by making new debts.

The key to a new growth dynamic is competitiveness. We want to concentrate now on strengthening competitiveness rather than new flash‑in-the-pan stimulus packages financed by yet more borrowing. It’s up to member states themselves to create a growth‑friendly environment – by introducing ambitious reforms in the area of old age pensions, infrastructure and the employment market as well.

To cite just one statistic, one in five of the under twenty‑fives in the EU is out of work. In some EU countries youth unemployment is over 40%. We need to do better here. That’s important not just for economic reasons. It’s essential also for the well‑being of our societies.

So at European level, too, we must move fast to launch an agenda delivering more growth through increased competitiveness.

The internal market: this is where the greatest potential for growth lies. In terms of trade and economic ties, the members of the European Union are our most important partners. Germany does more trade with Belgium than with India. German investments in France are larger than in China. Extending the scope of the internal market to new sectors offers tremendous opportunities. That goes particularly for the digital economy, e‑commerce and the energy sector, where greater competition will lead to lower prices and enhanced supply security.

Budgeting for the future: “More competitiveness” must be our watchword in the negotiations on the new EU budget. We want to see European taxpayers’ money invested in research, innovation and new technologies, not in subsidies.

By the way, despite this Federal Government’s strict austerity policy, at national level we’re investing more in education, research and advanced technology than any previous Federal Government. I’m also delighted to see the huge sums German companies are spending on research and development, which this year will amount to over 60 billion euro.

Free trade: in today’s world free trade is of ever greater importance. The European Union and the Federal Government are extremely keen to conclude further free trade agreements. By 2015, let’s remember, 90% of global economic growth will be generated outside Europe. We want German companies and European companies to share in that growth.

The economic map of the world is being redrawn. In the space of a few decades China has become the world’s second largest economy. India, too, is recording extraordinarily dynamic growth.

This year Brazil has overtaken Britain as the world’s fifth largest economy. There was a time when the emerging economies’ performance depended on how the economies of the industrialized countries performed. Today the performance of the industrialized countries’ economies depends on the dynamism of the emerging economies. That’s not a world turned upside‑down. It’s the world in which we now live.

In my view the term “emerging economies” no longer does justice to these new realities. What we have here are new players with considerable economic clout which aspire to play an increasingly prominent role in the conduct of world affairs.

As I see it, these new players are not confined to the BRICS countries alone. It’s been evident for some time now that a good many countries have a similar agenda. What they want is to join the top league. Just a few decades ago these countries, which are now both our economic competitors and our partners, were classical developing countries. Today they’re something very different.

So it’s important we lose no time in adjusting to that fact. In the case of Viet Nam or Colombia, for example. In a world of some seven billion people, new global challenges, too, can be effectively tackled – in the area of energy, natural resources, climate, health or food prices – only by working with these new major players. Anyone who wants to shape globalization needs strong partners.

Germany can thrive only if it is open and connected to the wider world. That’s not pure political theory. It has very practical consequences. Take German practice on granting visas.

I’ve been pressing hard for full use to be made of whatever scope European law provides to facilitate the granting of visas. We’ve introduced a number of important improvements. Like frequent travellers, bona fide applicants – many of them people planning business trips – are no longer required to appear personally at the consulate each time they apply for a visa. We’re also intensifying the cooperation between our missions and chambers of commerce abroad.

This year we’re planning further improvements. At our missions processing the largest number of visa applications – in Russia, Ukraine, Turkey and China, for instance – we’re going to expand our cooperation with private-sector service providers. They will handle the initial formalities within 48 hours, which will speed up the whole process.

With a number of countries we’re also discussing what needs to be done to abolish the visa requirement completely. In recent years the goal of visa-free travel was achieved for five countries in the Western Balkans. We’re now well on track towards abolishing the visa requirement for Russia and Ukraine.

We forgo economic opportunities, after all, if we close our borders and turn in on ourselves. We should be very pleased when business partners from all over the world want to come here and do business with us.

We need to forge partnerships with the world’s new economic and political powerhouses. Turning towards new partners of course doesn’t mean turning away from tried and trusted partners to whom we are extremely close. For clearly these strategic partnerships with the new players on the world stage need to be a European endeavour if their full benefit is to be realized.

Even an economically strong country like Germany cannot compete on its own with rising new players like China, India and Brazil. That’s why we need a strong Europe. That’s why we need more Europe and not less Europe. To remain a global player, Europe must be economically competitive and politically united. Europe is not a has‑been. Europe is Germany’s future.“

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