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Eu­ro­pean Re­form and Ger­man Re­spon­si­bil­i­ty

On 8 February 2019, German finance minister and vice-chancellor Olaf Scholz delivered a keynote speech at the London School of Economics and Political Science. The LSE Students` Union German Society organised its annual "German Symposium", which was a perfect setting to discuss "European Reform and German Responsibility".

German Finance Minister Olaf Scholz in front of the flag of the European Union
Source:  Federal Ministry of Finance
  • Date 08 February 2019

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Dame Minouche,
Ladies and Gentlemen,

I am delighted to be back here at the LSE and to discuss the future of Europe with you. These are very interesting times we live in. When I gave my previous speech on European politics at the German symposium in March 2016 – three months before the referendum – the question of Brexit was very much looming. Things have moved on since then. And yet, the possible consequences of the referendum are still looming over all of us. With the exit date approaching rapidly, we still don’t know how – or even when or if at all – the United Kingdom will really leave the European Union.

Let me be clear: I personally will be very sad to see the UK leave us. We are bound together by our culture, by our history, and by our shared values of democracy, openness and pluralism.

We are bound together by our common interest in maintaining a rules-based multilateral order and in ensuring free and fair trade globally. Perhaps more importantly, we are bound together by personal ties, by school exchanges and twinned cities, by friendships and marriages. Not least we are bound together by the countless products that we produce collaboratively through supply chains – even between small and medium-sized enterprises.

Brexit will change the UK’s relationship with the EU, and it will inevitably also affect our bilateral relationship. But let me state this: The United Kingdom will always have a place in Europe and it will always have a friend and partner in Germany. The British-German friendship is built on unshakable foundations. Until last year, I was the First Mayor of Hamburg – not only a Free and Hanseatic City, but for many the most British city in Germany. The United Kingdom is an integral part of Europe – that will not change with Brexit.

We acknowledge Great Britain’s role in freeing Europe from Nazi occupation and we are grateful for what followed. Britain gave Germany a chance to rebuild a free and democratic society – again after the fall of the Berlin wall and with the reunification of Germany. We have not forgotten that.

We love British culture, especially British humour. In education, German students and academics – like so many bright minds from all around the world – flock to Britain’s world class universities such as the LSE.

The United Kingdom and its model of democracy have influenced not only Germany but many political systems around the world. Its rituals and customs epitomise the continuity and proud democratic tradition of the House of Commons. “Mr Speaker” John Bercow and his calls for order in parliamentary sessions have reached global fame these days. And despite the spirited nature of political debate within that institution, British politics has often stood for pragmatism and common sense.

Right now it is incumbent on those institutions to resolve the current Brexit deadlock and to agree on a viable path forward for the United Kingdom. This is a task of utmost importance, because the stakes are high.

We need an agreement to provide certainty for millions of EU citizens who have made a life in Britain and vice versa, and to protect companies that have built integrated supply chains and have constructed business models that rely on the common market. There is still some time left to engage with the European Commission and to make sure that the UK does not crash out of the EU. That would be the worst possible outcome. There is no better deal than the one currently on the table.

Before I come to the main part of my speech, I have to warn you: This speech might seem odd to some of you, because I will make the case for a strong and unified European Union at a time when the UK wants to leave the EU.

Brexit may dominate the news cycle at the moment – especially on this side of the Channel. But we should not be focused solely on Brexit. We are facing many important challenges. I am convinced that a strong and unified Europe is the answer.

When I was at this symposium three years ago, the organisers had chosen Henry Kissinger’s famous epigram as a theme: “Poor old Germany. Too big for Europe, too small for the world.”

What might be considered a succinct description of the ‘German problem’ can – from a German perspective – just as easily be seen as an argument for a strong, united Europe, and as defining Germany’s approach to European reform.

Our geopolitical environment is changing. Rules-based multilateralism is increasingly coming under attack. The reliability of international alliances and partnerships is being called into question. At the same time, armed conflict has once again become part of the arsenal of power politics in Europe.

Many of the most important challenges we are facing are global in scale: tackling climate change, combatting terrorism and dealing with mass migration.

By the middle of this century, there will be roughly 500 million European citizens in a world of then 10 billion inhabitants. In this globalised world, no European country – not even Germany with its economic strength and its population of 80 million – will be strong enough to address these global issues or to deal with global powers such as China or the United States on equal terms. Alone, we are “too small for the world”. Our answer to this problem is and always will be: the European Union.

Europe is stronger when we act in concert. We need to strengthen the EU’s sovereignty as a global political actor in its own right so that it becomes impossible to play Europeans off against each other. Pooling power is the only way we can hope to protect our interests and our European “way of life”.

We are only ever truly independent when we are strong enough not to be pushed around.

Looking at trade policy, which has been the responsibility of the EU for a long time, it is fair to assume that, in the trade dispute with the United States, we would be in a far worse position than we are in now, if it were not President Juncker negotiating with President Trump but rather each individual member state government.

Ultimately, bargaining power in global trade depends on size. The EU forms the world’s largest single market with transparent rules and regulations. This is what makes us a rule maker instead of a rule taker.

This gives us the power to safeguard our consumers, our jobs and businesses, which is especially important for trading nations such as Germany that are highly integrated into a globalised economy.

Our sheer size makes the EU an attractive trading partner for the world, a partner that is able to negotiate free trade agreements very successfully. We witnessed this in our recent agreements with Japan and Canada and are seeing it in our ongoing negotiations with the Mercosur bloc.

Our weight allows us to define our own trade policy criteria. We can defend high worker protection standards such as the International Labour Organisation’s core labour standards, not only at home but along the entire supply chain. Our values, our standards.

We can also ensure consumer protection standards. Our standards on data protection have become a model for many countries around the world. And we can set environmental standards, preventing a race to the bottom when it comes to environmental protection.

The single market greatly increases Europe’s global influence and – as the economists amongst you will know – it also gives European businesses an edge by allowing them to operate from within a large home market.

There is strength in numbers – and this does not just apply to trade. It is also true when it comes to investment and creating innovation.

Europeans have managed to build world leading industries in several technologically complex fields by working together and thus reaching the necessary scale.

Consider Airbus. At its inception in 1970, very few observers imagined that Airbus would eventually go on to challenge Boeing. European cooperation – including a strong UK pillar – made this possible.

The same goes for space exploration and satellite technology. Today Europe is a major player. With the finalisation of the Galileo programme this year, the EU will become more independent of GPS and of Chinese and Russian satellite navigation systems – all of which are under military control.

Looking ahead, Artificial Intelligence is likely to emerge as a key technology where we will have to work together. Here, some applications rely on extremely large datasets and the easy availability of data – factors that give China and the United States an advantage, due to their size and comparatively lax levels of data protection.

A combined European effort is necessary. If we do not want to be left behind, we need to explore a European way forward on Artificial Intelligence that builds on our high standards of privacy and data protection.

Overall, being a part of the European Union provides huge economic advantages to its members, to every member – I might stress. However, the EU was not established primarily as an economic project. First and foremost, the European Union was founded as a peace project. And it worked! It has been a force for peace ever since – perhaps the most successful peace project in the world.

It is impossible to overstate the role European integration played in uniting Europe after the terror and destruction of two world wars. The 2012 Nobel Peace Prize was well earned.

When we look at Germany, the EU’s contribution to peace and stability on the European continent is especially salient. For centuries, the prospect of a strong and unified Germany has been seen as a threat by its neighbours.

Cambridge historian Brendan Simms has gone so far as to describe the ‘German problem’ as the central driving force of conflict in Europe: the perpetual struggle to square Germany’s central location within Europe and the size of its population and resources with the need to establish a balance of power.

After the conflicts of the past, being firmly embedded in European institutions was what finally allowed us Germans to regain our economic strength and to repair our relationship with our former enemies – with France in particular, but also with Poland, with the United Kingdom, and with other European nations. Today, we are friends – and we will remain friends, come what may.

And so it is probably fair to say that Germany has benefitted from the European project like no other country. As a consequence, we bear a special responsibility to work towards its continued success.

Everything we do – and everything we don’t do – impacts on our neighbours. Our influence and resources mean that Germany will always play a crucial role in further developing the European Union – whether we want to or not.

But we accept this special German responsibility for the European project and its progress.

Let me set out what I mean by progress:

First: A strong European Union must have the ability to act. So we should – for example – consider reducing the number of areas in which we require unanimity to make a decision.

When institutional checks become disproportionate, states and institutions are paralysed. They become an object rather than a subject of political decision making.

Requiring unanimity has often been justified on the grounds of protecting sovereignty. But I am not talking about relinquishing sovereignty. I am talking about strengthening it.

In a nutshell: Europe needs to speak with one voice more often, in particular in matters of foreign policy.

The same goes for relaxing the unanimity requirement on issues of taxation. The fact that it took forever to harmonize VAT rates for electronic and paper-based publications – despite a general consensus that this step was necessary – did not improve the image of European politics. We should therefore not flatly refuse the ideas put forward by the Commission.

Second: A strong European Union must become more political. EU politics is regularly considered to be too focused on technical market rules, too technocratic. It is perceived as lacking real political debate.

The fact of the matter is: the key challenges that we must face together as Europeans today involve highly political trade-offs. How can we best combat climate change? This is much more than a technical question. Issues like this require political debate. And many European citizens currently do not believe that the EU can successfully address them. They do not see the EU as overbearing, but rather as not strong enough.

Therefore, an essential step in strengthening the EU is to move towards a genuinely European political sphere in which the national perspective plays a less important role. Too often, European political debates take the form of – currently – 28 national monologues.

Instead, a social democrat from Spain and a social democrat from Sweden, for example, could find that they share many of the same opinions and together engage with people from different political sides – just like in national politics.

Progress towards a more political Europe is not about ruling out disagreements. European politics can be hugely controversial, as it has been on the question of how to best share responsibility for arriving refugees. But controversy is a necessary part of democracy.

Democracy is about jointly determining the right way forward based on differing positions. It requires a culture of debate and a willingness to compromise. A culture of debate that the UK has been contributing to the world for centuries.

So what should Germany do to shape European politics in a positive way? For me, there are three lessons:

First lesson: We need to be Europhile. Unfortunately, Germans are by no means immune to the current surge of populist and right-wing parties. But Germany’s position on Europe should never succumb to nationalist, anti-European narratives. That would be a massive act of self-harm. We must counter any – sadly all too common – attempts by those “sneering at Brussels” to blame the EU for domestic problems. For political scientist Herfried Münkler, this lesson follows from Germany’s centrality. Germany can only assume a key role in advancing Europe if there is broad and stable support for doing so.

Second lesson: We need to assume a European perspective. A strong and united Europe is our primary national concern. Germany’s policies on Europe need to reflect this strategic objective. We need to prioritise our common long-term interests over short-term national thinking if we want to move towards a genuinely European political sphere. To this end, we should not be seen as lecturing other member states. This perception has too often poisoned European politics in the past.

Third lesson: We need to be a broker for compromise. Germany must not be seen to dominate European policy. The EU’s role is to balance the interests of all its member states. Any move away from this would call into question the foundations of European cohesion. We cannot allow the EU to be split into different camps. Therefore, we must engage with all member states and take their position into consideration. Of course, our partnership with France is special. But Franco-German cooperation works by providing impulses and by laying the groundwork for decisions – not by shutting out our European partners. The recent progress on eurozone reform is a good example: a fair compromise that has been reached by all parties and on the basis of Franco-German proposals.

A more political EU in the sense that I have described would allow us to make more progress with many of the issues that European citizens care about most. European politics needs to concentrate on the areas in which we can achieve more by working together.

I have mentioned trade policy, external policy, tackling climate change and promoting technologically complex innovations. The same goes for security policy and development policy. Together we can better strengthen our financial system and our economic and monetary union, promote at least minimum social standards, protect ourselves against tax dumping, jointly protect our common external border and manage migration flows.

To strengthen the EU, we need to direct its focus towards policy areas with genuine European added value. This principle should define our approach to the current negotiations on the EU’s next multi-annual budget, which will set out Europe’s strategic priorities for 2021-2027. Although our capabilities are not limitless, there can be no doubt that Germany will make a significant contribution to this budget.

Ladies and Gentlemen

The EU is held together by much more than by common interests. It is not just an economic club. It is a union of values. That term is important to me.

The European Union embodies compromise as a way to settle disputes. It stands for peaceful coexistence on the European continent and beyond. It underscores our commitment to a peaceful, multilateral world order.

Our shared values are the foundation of European integration. They are laid out in the Lisbon treaty: respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights including the rights of persons belonging to minorities. They are the glue that holds us together.

All member states share an interest in upholding our common respect for these principles. And so naturally European institutions must address cases in which member state policies might act counter to our common values, be it by threatening the independence of the judiciary or by harming civil society.

That we can have pertinent discussions on these matters – as in the cases of Poland and Hungary – will ultimately strengthen our core European tenets.

Ladies and Gentlemen

We can expect 2019 to be an eventful year for the European Union. Of course there is the question of how Brexit is going to turn out.

Those who had predicted that the Brexit referendum would be the starting point of EU dissolution have been proven wrong. More than two thirds of EU citizens see EU membership as a benefit – the highest figure since 1983.

Brexit aside, European politics is going to be central for another reason. In May we will have European elections. And apart from a new European Parliament, 2019 will also bring a new European Commission.

As European election campaigns are now slowly taking off, it is important that we get European citizens engaged in European politics by emphasising Europe’s importance for their daily lives.

We need to focus more on the specific questions of European politics, on concrete policy proposals rather than only on general attitudes towards the EU – just as you would never have a national election campaign in Germany centered on whether Germany was a good thing or not.

I am confident that we can take a step towards a more political EU, that we will have a good turnout, and that we can expose the lack of viable policy proposals on offer by populists, by those living in the past and clinging to an oversimplified view of the world. The Brexit vote was a wake-up call – on both sides of the Channel. Today, I have talked about Europe’s answer.

I have said this before, and I will say it again: A strong and united Europe is Germany’s primary national concern. We will continue to champion it. Because doing so is in our national interest, as it is in the interest of all Europeans, but also because it is the right thing to do.

Thank you very much!

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