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Professor Schwab,
Ladies and gentlemen,
I’m glad to be back in Davos again today. And it’s
my impression that the snow looks more beautiful this year, rather
than worse. I am delighted to greet you all – in particular those of
my Cabinet colleagues whom I can see in the audience – and let me
say that Germany is back with a stable government and that, after a
rocky start, we are all willing to work together constructively.
You have picked a topic that is of paramount
interest, namely shaping the global architecture for the fourth
industrial revolution.
Your discussions will be influenced by two things,
one of them being the Global Risks Report which is published before
each Davos Forum, and which reminds us we face many significant
challenges. Let me mention climate change and natural disasters, for
example, as well as cyber attacks and associated challenges, and
terrorist attacks. At the same time, there are numerous disturbances
and uncertainties in the multilateral system. Taken together with
the general challenges, this has also resulted in the lowering of
growth forecasts by the International Monetary Fund. This gives rise
to a situation in which I think it can fairly be said that this
Forum can play its part in bringing more security into the system,
instead of allowing insecurities to grow further after this
discussion. For I think there are many people who want to strengthen
the multilateral order.
If we look at the global architecture at the start
of the 21st century, we see that it is still based in its essence on
the actions taken following the end of World War II. We have the
United Nations and we have other formats such as the G7, and the G20
set up later at the level of Heads of State and Government in
response to one of the major crises which was ultimately also
already influenced by the digital transformation, namely the big
banking crisis of more than ten years ago. If we’re honest, we’re
still feeling the repercussions of that crisis. It caused an
incredible loss of confidence – in politics, but also in the
economic sphere, particularly in the financial sector. The
regulations we introduced – to better control the banks – were a
step forward, but if you ask people in our countries, you will find
that their belief in a stable international financial sector has
been damaged quite significantly. Therefore we have to do everything
to avoid a repetition of the crisis. If we look at the interest-rate
policies of the major central banks, it’s obvious that we are still
chewing on this crisis, that we are not yet out of the woods, and
that we have limited our own room for manoeuvre in the future in the
course of this crisis. This makes it all the more important to get
back to normality as quickly as possible.
Secondly, we have major international
organisations, such as the World Trade Organization, and these are
beneficial to progress. This international architecture – the United
Nations with all its subsidiary organisations, the International
Labour Organisation, the World Bank and the IMF, as well as the OECD
– have helped make the world a better place all in all.
Notwithstanding all the problems, I would like to remind us that
when the World Economic Forum was established in 1971, the global
population was 3.8 billion, and 60 percent of the population lived
in extreme poverty. The planet is now home to 7.6 billion people,
and only 10 percent of them now live in extreme poverty. That’s
still 700 to 800 million people, it’s true, but it marks a reduction
both in absolute numbers and as a percentage.
One of the bright spots among our international
decisions was, for example, the adoption of the SDGs, the
development goals for 2030, and the fact that the international
community has for example pledged to end extreme poverty by 2030. I
am confident we will achieve this goal. The Global Compact for
Migration and the Global Compact on Refugees which were adopted by
the United Nations with relative unanimity are further bright spots.
However, these two compacts also illustrated how the international
order is currently under pressure and is being cast into doubt.
If we ask why this is the case, and look to the
history of mankind for our answers, we find that the decisions
underlying today’s architecture were taken roughly 74 years ago.
That is, as it were, a lifetime ago. We have to be careful not to
casually dispense with the knowledge and insights of the people who
were in charge in the immediate aftermath of the terrors of World
War II. Because back then those in charge drew what I believe to be
the right conclusions, for example by establishing the United
Nations.
However, we have also seen that international
organisations are very slow to adopt institutional reforms. Just
think how many years it took us to implement the quota reform at the
IMF or to increase the capital of the World Bank. These changes were
urgently needed because emerging market economies such as China and
India had long since had a greatly increased impact on our world
economy. If an existing system reacts far too slowly to change, the
result is that other players make themselves felt, for example by
establishing new institutions. That’s what has happened several
times. The fact that there is now an Asian Investment Bank alongside
the existing G20 format and the World Bank, the fact that there is
also a Shanghai Cooperation Organization, which brings together
China, India, Russia and other countries, and the fact that China is
promoting a 16+1 format to work with parts of the European Union,
this is, I believe, a warning shot which should tell us – or tell
me, as an example of a western politician – that we have to do
something to stop the fragmentation of the international
architecture, that we have to be ready to reform the existing
institutions to reflect the true balance of power in the world.
Of course we also know the world is currently very
much divided on the question of how to move forward. In my opinion,
we must not beat around the bush. If we want to reform existing
institutions which set global benchmarks then we have to be on board
and we have to accept the balance of power as it now is. However,
another mindset is now also represented on the world stage, one
which harbours basic doubts about multilateralism and which claims
that the world works best if everyone thinks of themselves and puts
their own interests first, and then an order will emerge which is
good for everyone. I have my doubts. I think we should always
understand our national interests in such a way that we factor in
other countries’ vested interests, and thereby create the win‑win
situations that are the prerequisite for multilateral action.
I see myself in the tradition, if you like, of the
great sociologist Max Weber, whom I revere, who exactly 100 years
ago spoke about the “ethic of responsibility” for politicians in his
“Politics as a Vocation”, setting us guidelines and making the point
that compromise is the result of responsible action on the part of
politicians. When I hear, as I often do nowadays, that compromise is
something that is not to be accepted, something bad, something
negative, then I would like to respond unequivocally that no global
architecture will function unless we are all able to compromise.
Even now, we are finding it difficult to reform
and update the present system with its global institutions. But the
question asked here at the World Economic Forum goes even further:
We are now faced with disruptive developments, with a fourth
industrial revolution – what does that mean for the architecture we
have today? I for one stand before you as someone who values
multilateralism and multilateral institutions and believes them to
be indispensable if the world is to thrive. The key question is
therefore where can we really set new benchmarks now?
In this regard, I could now make a somewhat
tongue-in-cheek but nevertheless very serious comment: some things
do still work out. On 16 November – I don’t know whether you noticed
– a revolution took place in Versailles, France. The General
Conference on Weights and Measures was held. As a result of this
conference, the old kilogram, the ampere and other units will become
obsolete and measurements will be redefined by natural constants.
This truly is a revolution in the world of weights and measures. The
international community came together to agree on this reform. On 20
May 2019, new definitions for all base units will become effective.
As of that date, the prototype of the kilogram of 1889 will no
longer shrink and we’ll always have a kilogram which has been
clearly quantified. That should encourage us to carry on striving
for reform and to engage with the ideas of the modern age.
The first major challenge that should be mentioned
here is how we deal with data, how we evaluate data and how we
clarify the ownership of data. We’re grappling with these questions
in all areas. Secondly, in the world of big data, we’ve experienced
a huge leap forward in the sphere of artificial intelligence. Here
our task will be to put ethical guidelines in place. Thirdly, I’d
like to mention the possibilities of genetic engineering and
bioethical issues. Here too, we don’t yet have any global
agreements. We have to find answers to these pressing questions. As
yet, I don’t see a global architecture to deal with them. However, I
cannot imagine that every major economic power is going to find
different answers.
Just look at the two major poles when it comes to
data processing. On the one hand, we have the United States. There,
data is largely in the hands of private stakeholders. That makes it
difficult to set down guidelines which determine limits. My view is
that the rules we had in the analogue world cannot be simply cast
aside in the digital world. Rather, we need clear guidelines here,
too. On the other hand, we have China. There the state has extensive
access to all data – even personal data. Neither of these two very
different approaches is in line with my own ideas or those which
influenced Germany with its social market economy, ideas that
include the protection of privacy. For all its imperfections, the
European Union set down guidelines on how to better regulate
personal data with the adoption of the General Data Protection
Regulation. That takes some effort; however, when the Industrial
Revolution took place and people moved from the countryside into the
cities, it was probably also difficult for them to carry around
different sets of keys to open their own doors. These are
civilisational developments which we have to go through. I therefore
believe that we should certainly strive to protect a certain degree
of privacy.
We’re also faced with the major issue of fair
taxation in the digital world. I’m very much in favour of the
proposals currently being drawn up in the OECD, and I believe that
we can achieve greater fairness and clarity in the sphere of
taxation if we combine minimal taxation with what the G20 Finance
Ministers have come up with – the BEPS system. Of course, we
shouldn’t by any means leave this to chance.
Since our difficulties with the NSA back in 2014
or 2013, Germany has tried time and again in the UN General Assembly
and in the UN Human Rights Council to sponsor resolutions aimed at
addressing the privacy of data in the digital age. North and South
are working well together, as you might say, for Germany and Brazil
are trying in cooperation with Mexico, Austria and many others to
define ever more clearly how to move forward in this sphere. But I
cannot deny that this has been a laborious process.
I was delighted when my Japanese colleague Shinzō
Abe said here today that he would like to use Japan’s G20 Presidency
to focus on data and to launch global data governance. I believe the
G20 is a very good format in which to place this issue on the agenda
of the largest industrialised nations on a comprehensive scale.
Naturally, it’s only possible for Europe or
Germany to take part in the debate on what a global architecture
should look like if we are a major player, if we are an economically
strong player that is in a position to enforce ethical measures. For
the reality is that you can only have an impact internationally if
you are economically strong and able not only to analyse the
problems and to provide moral guidance but also to speak from your
own experience.
Coming back to my own country, to Germany, I can
tell you that we still have a strong economy which, however, has
been shaped to a very large degree by the industrial age. In our
country, the manufacturing sector still produces much of our wealth.
And the automotive industry certainly still plays a very important
role in this generation of our wealth. If we look at the
revolutionary development in the automotive sector then, of course,
we can see there are potential risks: risks in terms of jobs; risks
in terms of data management. For example, the question as to who
owns data is of crucial importance. If, as it were, data always
belongs to platforms then our prospects are less favourable than if
they belong to the car manufacturers themselves. The fact that we in
Germany, for instance, but also in Europe, aren’t able to this very
day to produce battery cells ourselves is certainly a major problem
for Europe’s future as a car manufacturing base. That’s why I remain
convinced that we should make policy decisions concerning this
industry – as we’ve already done in the case of chip manufacturing –
and use our cooperation in Europe to close the gap in areas of
technology where we’ve fallen behind. For I believe that we cannot
simply leave a large portion of the value added in relation to
tomorrow’s cars, for example in the sphere of e‑mobility, to other
continents if we want to be a competitive player on a durable basis.
Germany faces three challenges of considerable
importance to our future, which I’d like to mention here.
First of all, the energy transition – the issue of
affordable but also sustainable energy which meets our climate
protection objectives. I’m quite certain – and this, after all, is
becoming more evident from year to year – that climate change is of
huge importance to us and to the world as a whole. Industrialised
countries therefore have a responsibility to develop technology
which can also benefit others. That’s not because the CO2 emissions
of 80 million people, as in Germany’s case, could have a great
impact on overall global emissions. Rather, it’s because we have the
capability to do so and because we have already emitted so much CO2
in the course of industrialisation. I’m therefore very happy to be
able to say to you – even though it has an impact on our energy
prices – that renewable energy is now the cornerstone of our energy
supply in Germany and accounts for the largest percentage in our
overall energy mix.
We will have phased out nuclear energy by 2022. We
have a very difficult problem, namely that almost the only sources
of energy that will be able to provide baseload power are coal and
lignite. Germany has now phased out its own coal production. That
means that subsidies have been discontinued. Lignite isn’t
subsidised and is thus a relatively cheap but very CO22‑intensive
source of energy. We’ve therefore set up a commission which is
examining the phasing‑out of coal-based power in Germany and is now
in the final stage of its work. Naturally, we cannot do without
baseload energy. Natural gas will therefore play a greater role for
another few decades. The dispute about where our natural gas comes
from is thus a bit over the top. For, on the one hand, it’s
perfectly clear that we’ll continue to obtain natural gas from
Russia. However, it goes without saying that we want to diversify.
We’ll therefore also purchase liquid gas – perhaps from the United
States and other sources. We’re thus expanding infrastructure in all
directions. However, I believe we would be well advised to admit
that if we phase out coal and nuclear energy then we have to be
honest and tell people that we’ll need more natural gas. What’s
more, energy has to be affordable.
This brings us to a subject on which we in the
coalition have resolved to do better. For, being honest, I have to
say that compared with elsewhere in the world, we are far too slow
with construction projects. We are too slow when it comes to the
expansion of the grid – the generation of renewable energy requires
entirely different transmission structures. We are too slow when it
comes to our infrastructure as a whole. – I see our Infrastructure
Minister here. – Our aim must be to become quicker, obviously
without neglecting the rule of law.
The second point is digitisation. Here, too, it is
a matter of infrastructure – but of very much more besides. One
thing that particularly worries me – and this is something else we
can only resolve at European level – is that we have fallen far
behind in the platform economy. Maybe it’s the case that countries
with a fairly saturated and relatively well-functioning
administration do not feel such a drive to innovate as developing
countries and emerging economies do. In particular, nothing the
state does with its citizens is anywhere near as digitised as it
should be. So we plan to ensure that all administrative services are
available to our citizens in digital form as well, by 2022 at the
latest. Here, too, though, we really are not up with the
frontrunners at European level. We’re actually a bit behind.
I think the digital transformation is going really
well in our big companies. Things are getting better in SMEs; B2B is
working really quite well. But business-to-customer is where it all
unravels. Here we are in a competition. That is absolutely clear.
And it is a competition that will decide whether those who operate
the platform or those who offer the product gain the value added, as
it were. I don’t think this battle is over, certainly not from the
German perspective. We can win it, but we will have to be fast.
The third point is demographic change in Germany.
Here, freedom of movement within the European Union is a big help.
But on top of this we in Germany have now decided – after decades of
discussion, it has to be said – to adopt an immigration act for
skilled workers. Of course, this also means that we will have to
manage migration better. Here, too, though, we have made
considerable progress in recent years.
We have seen, ladies and gentlemen, – and here I’m
adding a fourth point – that we can only truly move forwards if we
stop believing that we can go it alone. The war in Syria and
terrorism in Iraq have shown us how globalisation is reaching us in
Europe and especially in Germany too, in the form of many refugee
flows. That is why I am very proud to be able to say that Germany is
one of the major donors helping to bring stability to the arc
comprising Syria, Jordan and Lebanon. For we know that it is much
better if people can stay in their home countries and not fall into
the hands of human traffickers. Our development, too, goes better,
if we provide help on the spot. That is why our focus will be on
this region, but also on partnership with Africa. That is why we did
so much with Africa during our G20 presidency.
Let me say this once again: from the European
perspective, Africa is often regarded as a problem continent. But if
we take a look at how Africa, a huge continent which will have two
billion inhabitants in 2050, is gradually expanding multilateral
cooperation and strengthening its African Union and regional
associations, at how it intends to introduce freedom of movement and
at how it has a clear idea of future infrastructure projects, then
we also have to regard Africa as a continent of opportunities. This
applies particularly to us Europeans, Africa’s neighbours.
And so a clear commitment to multilateralism, even
if it takes courage, is a fundamental prerequisite for our
policymaking. It is also well worth bringing together like-minded
countries across the world. Because anything else will end in
misery. With this in mind, Germany sees its future firmly within the
European Union. Because the European Union can generate the
necessary energy to move things forward.
However, we are now having to come to terms with
the shock of the United Kingdom wanting to leave the EU. I am
directing all my thoughts and energies to finding an orderly
solution in which we can have a good partnership for the benefit of
all. We are absolutely dependent on cooperation with the British in
matters relating to internal security, external security and
defence. But we are also a trade area – and the closer and the less
complicated our relations are, the better. But of course this is
also up to the UK.
Within the European Union, we have always
championed free trade. And I am pleased that the EU‑Japan Economic
Partnership Agreement is entering into force on 1 February. We are
also committed to trade talks with the United States of America. We
have concluded the trade talks with Canada. And I believe more
should follow – with Singapore and Australia, if possible also
MERCOSUR and others.
Ladies and gentlemen, we in Europe have decided to
take the huge step of saying that in future we also want to combine
our defence capabilities. This is also a question of our vision of
ourselves. This joint strategic agreement to consider defence policy
together is not directed against NATO. In fact, it can make things
easier for NATO, because today we have over 170 different defence
systems or weapons systems. The US has, I believe, fewer than 60.
You can imagine the resulting loss in efficiency with respect to
training and maintenance.
Germany and France’s decision to build combat
aircraft together in future, to build tanks together, is, of course,
a very important strategic decision – just as yesterday’s signing of
the Treaty of Aachen between Germany and France as the continuation
of the Élysée Treaty is a commitment, a commitment in an age of many
uncertainties. It is a commitment that says yes, we want to play our
part as important partners in Europe and to further develop the
European Union. Yesterday I found it very moving that not only did
the French President and the German Chancellor sign a treaty, but
that this was done in the presence of the Commission President, the
President of the European Council and the rotating Romanian
Presidency of the Council of the European Union. This was intended
to make it very clear that we want to help to strengthen Europe.
But let me tell you that, for historical reasons,
we Germans do still have our difficulties with multilateralism.
Agreeing arms export guidelines with France, for example, is a huge
task. But it has to be done, because no‑one will want to develop
weapons systems with us if they are not sure they can sell them
later. In other words, and I want to say this unequivocally, it is
not the case that I always find multilateralism easy because it is
always easy. On the contrary: it is difficult. But then I always
have to ask myself: what is the alternative, and what will it mean?
We can see it in all of our countries: the challenges posed by
populism, the emergence of nationalist forces. We have to square up
to these challenges. But perhaps that makes the battle lines clearer
and stronger.
That is why I and my colleagues in the German
cabinet will champion a multilateral order which does not end at the
European Union, but which is capable of giving really good responses
to the new global challenges. However, that means that we must take
care not to ruin the existing order so much that no‑one believes in
the validity of new parameters any more. So I am delighted to have
had the opportunity to speak to you on this note today.
Thank you.
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