Sigmar Gabriel: Now Is the Time to Strengthen Europe

Neujahrsempfang der Braunschweiger SPD

Sigmar Gabriel: “We don’t need ‘more Europe,’ but rather a different Europe.” Source: DPA

 

The German Economics Minister and leader of the Social Democratic Party tells Handelsblatt Europe must forge its own trade relations with Asia, and face down Donald Trump’s protectionist threats.

On an intercity train zooming through the lowlands of the German state of Lower Saxony, German Economics Minister Sigmar Gabriel talked to Handelsblatt about Germany’s role in Europe and the world, the need for investment in infrastructure and the challenges posed by the shift away from nuclear power and toward green energy, known as the Energiewende. Click here for a summary of his comments.

Handelsblatt: Mr. Gabriel, is Germany ready for Donald Trump’s “America First” policy?

Mr. Gabriel: Germany should act with self-confidence and not be fearful or servile. We are a highly successful, technologically-advanced export nation with many hard-working people and smart companies.

Germany is not only stable at this time, but also serves as an anchor of stability for many other countries in Europe. Mr. Trump’s first speech as U.S. president shows that he is dead serious. We will have to put on some warm clothes for the chill ahead. But there is no reason for faintheartedness.

Still, German carmakers shudder at the thought of punitive tariffs. Shouldn’t they move their production from Mexico to the United States?

Each company will have to decide that for itself. I would not make my long-term strategy dependent on the election of one U.S. president. Mr. Trump must simply recognize that the U.S. economy often isn’t competitive, while the German economy is. Besides, when one window closes another one opens.

What do you mean by that?

Now is the time to strengthen Europe. Only about 10 percent of our exports go to the United States, while 60 percent go to the rest of Europe. You can see the weight of our economic interests. We need to strengthen Europe, develop a common foreign and security policy, beef up investments so that we’ll have the best infrastructure in the world and, most of all, develop our own Asia, India and China strategy. We don’t need “more Europe,” but rather a different Europe. A Europe that takes a common position in the world. If Mr. Trump starts a trade war with Asia and South America, it will open opportunities for us.

What does that look like?

In my opinion, a Europe of 28 member states, micromanaged by the European Commission and one that does not address the big questions of a shared foreign and security policy or a shared economic and fiscal policy, has no future. The European Union that gets mired in tiny details has reached its limits.

What are the alternatives?

So if a country like Poland followed Great Britain’s example, it wouldn’t be so bad for Europe?

Who are the winners and losers of Mr. Trump’s new protectionist policies?

To begin with, it will be very expensive for Americans themselves. The economy doesn’t function with pressure and directives from policymakers. I also see opportunities for Europe if Mr. Trump doesn’t just isolate the country against China but against all of Asia. Europe should start by quickly developing a new Asia strategy. We need to take advantage of the spaces America is now clearing.

Chinese President Xi Jinping warned the United States against a trade war and brought China into play as the new protector of free trade. Do you believe him?

His words need to be followed by actions. China is currently not willing to be a fair and equal partner for investors. But if U.S. protectionism means that new opportunities are opening up for Europe throughout Asia, we should take advantage of that.

Let’s turn to the German economy and its ability to compete. Anyone who wants to prepare the economy for the future needs to get a handle on energy costs. How do you intend to ensure that they do not continue to rise?

But it doesn’t help a company that competes internationally with companies that pay no Renewable Energies Act reallocation charge.

Those who are not part of this illustrious group bear the full burden of the costs and can run into difficulties.

What is your advice to these companies?

Eight months before the national election, the parties are outdoing each other with campaign promises. Is Germany doing so well that we can invest, lower taxes and pay off our debts?

The Christian Democrats and the Christian Social Union promise that by reducing income tax and eliminating the solidarity surcharge, they will achieve massive tax cuts on the order of about €35 billion ($38 billion). That’s 10 percent of the federal budget. On the other political side, there is a danger in making too many promises on social spending. Politicians will have to back away from all of these promises after the election, and broken campaign promises are small crimes against democracy. My advice is to exercise moderation, even in an election year. We have to reduce the burdens on families and single parents but we cannot apply the same approaches everywhere. We cannot spend the money that we urgently need for investments in education and transportation infrastructure.

Finance Minister Wolfgang Schäuble wants to use the €6 billion budget surplus to pay off debts. Isn’t it important to pay off your debts in good times?

That’s a threat and not a reasonable policy. We spend far too much time talking about the 15 percent of crybabies who vote for the Alternative for Germany, for example. Instead, we should talk about those who get up every morning and go to work, but feel that they have been abandoned in a world of rising rents and the devastation of rural areas.

What does that have to do with the budget?

Where does the country have to be in 2021?

We have to have the best digital infrastructure in the world. I have always said that our goal is to achieve this by 2025, but the faster, the better. The country has to get a grip on the housing market by 2021. People will not accept paying €2,400 in net rent for a three-room apartment in a big city. Hopefully we will have a planning law that enables us to spend the money to repair our ailing infrastructure. The Christian Democrats and the Christian Social Union don’t believe that we should invest in the country’s stability. They have appointed the interior minister for 11 years, and now they are complaining about a shortage of 14,000 federal police officers. We want to change that.

As chancellor, will Ms. Merkel implement this program by 2021?

Ms. Merkel will certainly not do that. In light of Angela Merkel’s dramatically poor term of office with the Free Democratic Party, I said, lightheartedly, that Ms. Merkel is only a good chancellor as long as the Social Democrats keep an eye on her.

Full article: Sigmar Gabriel: Now Is the Time to Strengthen Europe (Handelsblatt Global)

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