Above all, esteemed guests from the German business world,
Ladies and gentlemen,
Once again this year, it was unclear if summer in Berlin means sun and blue skies. However, there was no doubt about one thing – that the Ambassadors Conference Business Forum is a fixture of summer in Berlin, and has been for the past 15 years!
In my opinion, this exchange between the worlds of foreign policy and business is actually becoming increasingly necessary. The state of the world does not only play a crucial role in the success of foreign policy, but also in that of your companies precisely because our economy depends more than practically any other on its involvement in the global division of labour. That is why I am pleased that all of you are here today. A very warm welcome to you!
I am delighted to be able to welcome a guest of honour from the UK for the first time here at the Business Forum – Mr Warren East, Chief Executive of Rolls-Royce Holdings. Mr East, it is an honour and pleasure to welcome you to the Ambassadors Conference! I am very pleased to have you with us. Welcome to Berlin!
Brexit and what it means for your companies will be discussed in depth here today.
However, Brexit was not the only reason why I invited Warren East. It is common knowledge that the Rolls-Royce brand stands for superb vehicles. What is less commonly known among the general public, although you here will be aware of it, is that Rolls-Royce is the world’s leading manufacturer of engines and components for aviation and shipping, as well as for the energy and mining sectors. And, what some of you here might not know is that one in five of Rolls-Royce’s 55,000 employees works in Germany. Without the large diesel engines produced in Friedrichshafen, plenty of British ships would literally be stuck in port! In these stormy times for the EU, anyone looking for a watertight example of German-UK cooperation will find it right here!
Ladies and gentlemen,
Like many of your companies, Rolls-Royce is also facing the challenge of having to transform its value chain from the “old and dirty economy” into modern, digital and globally competitive manufacturing. This is why I am very interested to hear what Mr East has to say today from the point of view of a European global player on the current challenges in globalisation.
And this, ladies and gentlemen, brings me to the topic of today’s gathering – shifts of power in a globalised world: shaping change.
The world is in flux and the tectonic plates of global politics are shifting significantly. Here at home, forces are undermining the European Union, while in Asia, Africa, Latin America and countries closer to home, new powers are rising to the fore, and doing so self-confidently and with pride in their countries’ traditions and ways of life. These players are not only strong in economic terms – they also want to have their say and to play a role in shaping the new order. We live in turbulent times. Much of what has become familiar to us over the past decades is now breaking up or at risk – and so far we have not managed to put a stop to this process.
In annexing Crimea and destabilising eastern Ukraine, Russia damaged a cornerstone of the European security architecture with which my generation grew up.
Syria, Iraq, Libya – not only are the conflicts moving closer to Europe, they have arrived in our midst in the form of refugees and many thousands of people seeking protection from the trouble spots in the Middle East.
And there is more: the European Union is now also in the grip of crisis. Brexit is forcing us to experience something that hardly anyone would have believed possible. The UK, a major and crucial partner, will leave the European Union.
I deeply regret the outcome of the referendum in the UK. The UK’s exit from the EU is a bitter blow, not only for the UK itself or the economy, but also for Europe as a whole. The achievements of 43 years of joint membership of the EU with the UK now seem to be at stake or will have to be completely reorganised. Whatever turn the separation now takes – whether it is an acrimonious or an amicable divorce – one thing is already certain, namely that the long-term impact for the UK and European cohesion is nowhere near foreseeable yet. It is our task to keep Europe together. And this Europe is so valuable as regards peace and security, but also as regards our economic stability and development, that I say it is not something to play around with.
Our task now is to look to the future. On the one hand, this means that the EU cannot allow itself to be paralysed by the Brexit debate as regards its other work – especially now. On the other hand, we need clarity as soon as possible. And, particularly with a view to the current economic situation in the UK, I think London also has an interest in creating clarity. The EU of the 27 has laid down the terms: rapid negotiations, no cherry-picking, and until it leaves the Union, the UK will of course remain a full member state, with all the rights and obligations this entails.
However, the key question, which will be of interest to all of you, concerns the UK’s future relations with the EU. Obviously, this is a question that must first be answered in the UK itself. As far as we are concerned, we want the UK to remain a close partner of the EU and the EU member states post-Brexit. However, and this, too, is clear, we need new and fair rules on the future relations between the EU and the UK – binding rules that apply to everyone. As Jean-Claude Juncker said a few weeks ago, the outcome of the negotiations on these rules cannot be that the UK frees itself from the duties of an EU member state, while maintaining the rights of an EU member state. We need to discuss this very clearly on both sides of the Channel so that no room is left for illusions or false expectations at the start of the talks.
Ladies and gentlemen,
Brexit. The Ukraine crisis. IS terrorism. Syria, Libya, Iraq – we live in a world full of contradictions. A world that on the one hand is growing ever more intertwined, but whose contrasts are colliding, unchecked, with ever more speed, on the other. If this is the case, it must have consequences for our foreign policy activities.
Germany, as a country that has close ties with the rest of the world, is particularly dependent on a rules-based international order. And since that is the case, we have to do all the more to preserve and develop this order.
This is precisely why we are so active and committed in our conduct of crisis policy, whether it involves Ukraine, Syria, Libya, Mali or Colombia. This is precisely why I put so much time and energy – and often plenty of patience and perseverance, too – into working with our partners to find political solutions to these conflicts.
And precisely because we want to strengthen the international order in a lasting way, we took on the Chairmanship of the OSCE, an organisation that, looking back, was regarded ten years ago as an outdated and somewhat ineffectual relic of the 20th century. Some people thought it was no longer needed. Today, following the outbreak of the Ukraine conflict, the OSCE is the only organisation left in which we have any East-West exchange whatsoever. This week, the OSCE Foreign Ministers will meet in Potsdam to discuss the security situation in Europe and ways to improve it.
These ways to improve the situation include a suggestion I made public last week. My suggestion was that in these difficult times, in which the rifts between East and West have certainly become wider once again, we look at how we can nevertheless create topics that are still worth discussing together. It is important that we work together to develop an interest in the situation not getting out of control despite these difficulties. That is why we suggested that we turn our attention to arms control again. This would signal that the security situation has changed as a result of the Ukraine crisis and the annexation of Crimea, but that we also need to flag up the fact that one side cannot create lasting security at the expense of the other and without taking the other side into account. And it would signal that we need to find ways once again in which we can think in terms of joint security in Europe in order to prevent escalations and unpredictability in the future.
And, ladies and gentlemen, we are applying for a seat on the UN Security Council in 2019 and 2020. This is also an expression of our willingness to take on responsibility and to strengthen the multilateral order.
I want to see a German foreign policy that is not overly self-confident, but also does not hide itself away. This is not because we want to be in the limelight, but rather because our partners – and rightfully so, in my opinion – expect us to make a contribution that reflects our size and economic strength when it comes to defusing crises, alleviating suffering and finding solutions.
I have already said what role Europe plays in this. There is no doubt that outside Europe, the United States is our most important partner and ally. I cannot recall any other time in the past two decades when there has been such intense cooperation between the Federal Foreign Office and the US Department of State as there currently is with US Secretary of State John Kerry. Much binds us – the US and Germany – together. And this is also the reason why we are looking with such interest at the US presidential campaign, with its many unusual features, and why we have a particular interest in the outcome.
I would like to remind you about something Egon Bahr said a long time ago, a sentence that is still very wise: “America is indispensable; Russia is immovable.”
With regard to our relations with America, we have a broad basis on which we can smooth out differences of opinion, again and again. Earlier on, I spoke about the rifts with Russia. There is no doubt that relations will Russia have become unmistakeably more difficult. However, it’s a fact that Russia remains a large neighbour of ours.
And we need to try to turn what are currently not such good days in European-Russian relations into better days and to establish a strong relationship. This does not mean that one cannot take a critical view of Russia’s domestic or foreign policy.
But we should not see German-Russian relations through an apocalyptic lens. We should do everything in our power to overcome the current difficulties. This primarily includes the Ukraine crisis and our work in the Normandy format. But that is not all. It is also obvious that the West will not be able to solve any of the major crises outside Europe without or against Russia. That was the case for the nuclear dispute with Iran, and it is the case of the overt conflicts in our neighbourhood, be they in Syria, Iran or Libya. This is why – even if it is difficult – it is a task of foreign policy to continue endeavouring to improve relations between Germany and Russia and between Europe and Russia.
Ladies and gentlemen,
Germany is perceived as an “honest broker” in foreign policy, and that is why we are an interesting partner for many of the emerging powers as regards creating new elements of the global order. I see this wherever I travel, be it in China, India, Brazil or recently in Mexico and Argentina. And what I see is that there are many points in common, particularly as regards the management of our global challenges, be they climate change, migration, the spread of digital technology or urbanisation. All of these are topics that do not only require state and non-state actors to work together, but also – and above all! – necessitate cooperation between governments and business. Without your companies’ expertise and experience, we will not be able to master these challenges.
Ladies and gentlemen,
When we talk about order, it must also be clear to us that order is not ordered from above. Instead, it needs to have the support of the people. However, many people today feel cut off from the success of globalisation and a share in the achievements of our open and interconnected world.
And if you look at the figures, this hardly comes as a surprise. The IMF, the World Bank and the OECD – none of which can exactly be described as hotbeds of left-wing revolution – have been warning for years about the dangers of growing global inequality. World Bank economist Branko Milanović conducted a study on the major winners and losers in terms of income between 1988 and 2008. The winners were the richest one percent in the world, but also the middle classes in the emerging market economies. The losers were the poor and the middle and working classes in the highly developed nations. While the reasons for this are not the same on all continents and certainly not in all countries, it does seem to be clear that the promise of globalisation – greater prosperity for all through more trade and interconnections – has not come true or has yet to come true for millions of people.
And this feeling of being left out to dry, of not having a share, which many people feel, is being exploited by populists on both sides of the Atlantic. Whether we’re talking about Trump in the United States or right‑wing populists here in Europe, these are people who respond to the problems of an increasingly complex world with simplistic slogans that declare things like “cutting ourselves off is the best solution”.
Politically, this is both nationalistic and xenophobic. In economic terms, it is protectionist. These are two sides of the same coin. And when the two go hand in hand, this is dangerous for both politics and business. These slogans are directed against the open society. This is toxic for politics, as well as for our economy, which depends on openness and interconnections. And that is why, ladies and gentlemen, our joint task in politics and business must be to take a stand against the populists’ simplistic answers and calls for isolation.
However, this is just one part of the story. The other part is more difficult. And that is because if we take it seriously, it also means that we need to examine the roots of inequality in our own societies. It means that we need to ensure that the opportunities and benefits of openness and globalisation cannot only be seen and felt by a few people, but rather by as many people as possible.
If we do not manage to do this, then we run the risk of our policies losing credibility, of no one believing that we are working on reasonable rules for globalisation and that politics and business have an enduring interest in this. This is currently reflected in the public and heated discussion on trade agreements.
Germany is a successful economy. One of the reasons for its great success lies in its booming export sector. And if we look at the demographic developments in our country, it becomes clear that this economic dependence on exports will actually increase in the future. In this situation, we cannot oppose free trade, but must instead commit ourselves to it as a matter of principle. However, the whole truth is that there are good free trade agreements and there are less good free trade agreements.
CETA is probably the best and most progressive trade agreement the EU has ever negotiated. However, we are also aware that we have not yet got to that stage as regards TTIP. We cannot delude ourselves. When it comes to standards and procedures, we are still a long way off what CETA set as standards. This will be the benchmark for all other trade agreements. I don’t know what can still be achieved by the end of the year or by the US elections in November. But obviously I have noted that both presidential candidates, both Hillary Clinton and Donald Trump, have expressed scepticism and even rejection of TTIP. This might have an impact on the speed of the schedule that we will see in the coming weeks and months. I think we have to say that TTIP is currently a long way from the level of the Canadian free trade agreement as regards standards and procedures.
That’s one side of the coin. That is the debate between ourselves and those who are willing to compare quality and standards between various free trade agreements.
It is more difficult to have a debate with those who don’t wait to see the quality of various free trade agreements and are not willing to compare them, but instead fundamentally doubt the benefits of open markets, which they see and experience as a threat to their own jobs.
My advice to us is not to simply ignore an international debate, which has not in fact been launched by us in the European Union, but rather by the World Bank and the UN, or to neglect it as an annoying chore.
In the 2030 Agenda for Sustainable Development, the international community adopted what could be described as a global social contract last year. We need to learn that the aims set out in this Agenda have become something of a foreign policy benchmark against which we will also be measured. We will be judged by our willingness – given the scope we have as a not exactly small economy at the heart of Europe – to help make the world fairer and more humane.
When we take on the presidency of the G20 next year, perhaps we will have an opportunity to highlight this topic and to make it a greater priority of ours before we find ourselves in the dock accused of not devoting ourselves sufficiently to the topic of global justice.
This is the case for politics. But as business people, you too, ladies and gentlemen, have a role to play. And I am delighted that many German companies enjoy such respect on global markets because they recognised this link earlier than others did. You see it as a given that long-term investments in foreign markets, rather than short-term resource exploitation, is what counts. Your invest in your employees’ education and training and ensure that they feel a long-term sense of commitment to your firms. That is why I say that this too, and not only products, are part of the “Made in Germany” brand. And your global success and excellent reputation prove that these principles are also sustainable in a globalised world.
With that in mind, I look forward to today’s discussions and hope you will all enjoy the Business Forum.