Speech by Federal Chancellor Dr Angela Merkel at the World Economic Forum’s Davos Dialogue on 26 January 2021 (video conference)
Thank you very much, Professor Schwab,
Ladies and gentlemen on the screens,
COVID-19 has changed the world – as we can see from this year’s Davos event. For now, we are meeting online. A physical event will then be held in May, but in Singapore rather than Davos. As I just said to Prof. Schwab before this meeting, I hope that you will not be permanently replacing the beautiful mountains of Davos with the skyscrapers of Singapore, although Singapore is of course a wonderful, vibrant and dynamic place.
This time one year ago, it was not yet clear to all of us that we would be living through a pandemic. But some people already knew or suspected as much, and among them was Mr Şahin, the CEO of BioNTech, who told me that he decided on 24 January to upend his company’s entire research programme and develop an mRNA vaccine against this virus. He and many other people around the world have helped ensure that, twelve months later, we have at our disposal limited quantities, certainly, but highly promising vaccines. This shows what humanity is capable of, what science and research are capable of – because it means, in my view, that we have found a route out of the pandemic, albeit a longer and harder route than many of us had hoped. BioNTech has, then – together with Pfizer, and in parallel to other companies around the world – developed a vaccine. It is a start-up from Germany where people from 60 nations work and research together. This also goes to show how valuable international cooperation is and what it can achieve.
However, the pandemic has had a deep impact on our economy and our society, one which will certainly continue to shape our lives in the coming months and years. One hundred million people worldwide have already been infected with the virus. More than two million have died. There are doubtless many more cases which have gone unreported. We are seeing economic downturns in many areas.
The Davos Forum is the right place to discuss the time after the pandemic and ways out of the crisis. Our guiding principle must of course be that everything which helps to curb the pandemic is good. Not just good for people’s health, but also good for economic development and for social and cultural opportunities.
You have chosen the motto The Great Reset as this year’s theme. I would like to ask: Do we really need a great reset, or is what we need in fact a new beginning – less in terms of our objectives and more in terms of how resolutely we act? I would therefore like to address three issues related to the question of what the pandemic has shown us.
Firstly, I believe it has shown us how globally connected we are. If we look at how the virus spread from Wuhan in China around the world, what we actually witnessed was one form of globalisation – not through human action but through the spread of this virus. We have seen that, in a situation where the stakes are so high, trying to cut oneself off from the world long-term cannot succeed; at least, it has not done so in the fight against this virus.
Secondly, it has shown how vulnerable we are. The virus was somehow transmitted from animals to humans. This brings home once again the fact that our lives are deeply entwined with our natural environment. Despite all the technology at our command and everything we are capable of, it is clear that we are and will remain dependent on nature. There is something very reassuring about this, but at the same time, of course, it has consequences.
Thirdly, I would like to make it very clear, and I am referring to Germany here, that this pandemic is a once-in-a-century natural event or indeed disaster which lays bare the resilience, or the lack of resilience, of our societies – as Prof. Schwab just mentioned himself. In other words, weaknesses in our societies have been exposed. Strengths have also been revealed. But we naturally want to do everything we can to eliminate these weaknesses.
Perhaps I should begin with what Germany has learnt – about our weaknesses and our strengths. I can say that we were able to build considerably on the foundation of civic-mindedness, on the commitment and solidarity of the public as a whole. This is our most precious asset. Despite all of the difficulties that a federal structure entails, it also has significant strengths, because it means that responsible action can be taken across the country. But it is also true that all of us, including in Germany, although we are deeply embedded in Europe, made mistakes in the beginning and reflexively withdrew to focus on ourselves alone, only to learn as time went by how we can respond better by acting together.
What have we observed in Germany? The speed with which we were able to act leaves a lot to be desired. Many of our processes are highly bureaucratic and take too long. This is something that we must work on.
But we were able to build on a strong foundation in Germany, namely on solid finances. This enabled us to take resolute action, to help our businesses, to help our people, to use instruments such as short-time work, to keep the economy going and to launch an unprecedented stimulus package worth over 100 billion euro, which has of course also helped bring stability to life in our society as a whole.
We made a poor impression – and this is still the case today – when it comes to the digitalisation of our society. This starts with interregional communication between health offices. It concerns the digitalisation of our administration. It also concerns the digitalisation of our education system, for example when it comes to remote teaching and distance learning at school and university level. This is one focus of our stimulus programme, because we know that we must become better and faster in this area. We know that we need to make up for lost time.
We have also seen how crucial a resilient healthcare system is. In Germany, it became clear that we have a very strong individual healthcare system but that, when it comes to community health, to solidarity and prevention, we do not yet have the necessary resilience. In this respect, we must therefore learn from the crisis, from the pandemic.
We believe that our research policy has been vindicated. During my time as Federal Chancellor, we have steadily increased spending on research and development. These now contribute over three percent of our GDP and we want to push that to 3.5 percent. Everything that we are currently seeing with regard to the development of vaccines, as well as other technologies, shows that focusing on research and development is absolutely the right choice.
We must now discuss a major issue that is facing the world. The word sovereignty is once again on everyone’s lips. During the pandemic, supply chains have not always proved their resilience; some have simply collapsed. In order to learn from the pandemic, we must ask if it creates weak points when we depend too heavily on global supply chains, or how we can make these supply chains so stable and reliable that they will hold up even under significant strain. Lapsing into regional protectionism must, I believe, be prevented, if we truly aim to bring the world back on track for growth. But this question must be discussed honestly and openly. And supply chains must be better protected if we truly want to rely on them even in challenging circumstances.
That brings me to the issue of vulnerability. Vulnerability is precisely what we saw as supply chains collapsed. But I would primarily like to discuss vulnerability in terms of the fact that a virus has been transmitted from animals to humans, which I believe goes to show that all of our major global conventions on sustainability – from the Convention on Biological Diversity to the United Nations Framework Convention on Climate Change, which is now reflected in the Paris Agreement – are absolutely right and that we must work harder to implement them than we have done to date, more resolutely and uncompromisingly.
We can deliver on this before the year is out, with the Biodiversity Conference in Kunming in China and also, crucially, by implementing the Paris Agreement. The European Union has done what is expected. As a first step, we have raised our European goal for CO2 reductions by the year 2030 from 40 percent to 55 percent. We have committed to becoming climate-neutral by 2050. If we succeed in this, Europe may become the very first climate-neutral continent. Ahead of us lie – as I believe the President of the Commission has mentioned – deeply challenging months in which we must formulate the Green Deal, setting out the ways in which we can achieve this reduction of 55 percent.
Germany now draws more than 40 percent of its energy from renewable sources. But we know how much effort is required to achieve this. If we truly hope to overcome the vulnerability caused by climate change, we must take drastic political action – with the support and input of the public rather than imposing measures on them. For us, that means phasing out fossil fuels, transitioning to hydrogen, including for process energy, and transforming mobility to run on electricity or indeed hydrogen; we must of course remain open to all technological possibilities.
In its efforts to create a recovery plan – quite an extraordinary step – in response to this extraordinary crisis, the European Union has decided that we should not simply carry on with the same stimulus programmes as always, but instead set very clear priorities. This means that more than 35 percent of the funding must be used for climate change mitigation and more than 20 percent for digitalisation. This is a genuine investment in our future, in greater sustainability.
If the world has achieved anything in recent years which offers the key to overcoming our vulnerability, then it is the Sustainable Development Goals for 2030, which make it clear exactly what we must do to avoid remaining as vulnerable as we are today. However, the United Nations summit last year showed that we are still far from meeting expectations in this regard. The great danger after the pandemic is that we – by which I mean industrialised countries – might initially focus primarily on ourselves and neglect development efforts. We cannot allow that to happen. And so it is Germany’s political goal – and also our goal at European level – not to cut spending on development cooperation, but rather to increase it.
The third point is the issue of global interconnectedness, the dependencies that underpin our lives. This is of course something which we have frequently addressed in recent years. And it is now even clearer to me – it was already quite clear – that we must take a multilateral approach and that isolationism will not help us to tackle our problems.
This is first and foremost clear when we look at the pivotal issue of vaccination, which is of course a route out of the pandemic. And in this regard we should see to it that our words are followed by deeds. I am very grateful that we have decided on a multilateral approach to vaccination and that COVAX was founded as a result. The G20 under Saudi Arabia’s Presidency, among others, did a great deal to make this happen. One aspect of COVAX is that richer countries must pay in – quite rightly. Germany is taking part, the European Union is taking part, and we will continue our involvement going forward. Money is one aspect of this. The other aspect, at a time of scarcity, is of course the availability of vaccines. In other words, it is a question of distribution and not just of money. And so I am delighted that Gavi, which has headed negotiations on behalf of COVAX, has already concluded the first contracts – and with companies which have received approval from bodies including the European Medicines Agency. I am delighted that the World Bank is providing such extensive support for these measures. We will of course do everything we can to ensure that distribution can advance quickly. But we should be under no illusion. The question of who in the world receives which vaccine when will of course create new bonds and new memories, because anyone who receives help in such an emergency will of course remember this all the more clearly than they would in ordinary times or times of plenty.
I believe it is clear that this is the moment for multilateralism. What is multilateralism? Multilateralism does not, of course, just mean that we work together somehow or other, but that we do so transparently. It must in all honesty be said that at the beginning of the pandemic, there was perhaps not enough transparency with regard to the information on the outbreak of the pandemic in China and also to the sharing of this information by the World Health Organization. But this does not mean that we will now look back to dwell on the failures that were made; instead, we must learn from them. And so I am pleased that a WHO delegation is now in China and will be able to take another look at the situation.
We must strengthen the WHO, the World Health Organization. It is thus very encouraging that the United States of America, now that Joe Biden has taken office, has rejoined the WHO and will contribute to its efforts. This sends an important and powerful message.
As I have said, global connectedness means that we must take an interest in the development of every part of the world. This means that development cooperation also serves our own national interests – this is our belief in Germany, as elsewhere. We will in particular continue to strengthen our bond with Africa and our investments there. During our G20 Presidency, we launched the Compact with Africa, which still enjoys support from the IWF and the World Bank today. We will continue our involvement with this initiative.
Another important consideration is fair global trade, an issue with many different aspects. The WTO supports rules-based international trade structures, and we must work to reinforce these structures. Efforts to do so have come to a standstill in recent years and this must be remedied. Because no rulings can be issued at the moment, the WTO is essentially unable to take proper action. Notwithstanding my great respect and appreciation for bilateral international trade agreements, I believe that the WTO is the core element of rules-based global trade. And so Germany will continue its efforts to strengthen this organisation even after the pandemic.
However, we do also have a wide range of bilateral and multilateral trade agreements. I would like to mention the impressive RCEP agreement, which creates close trade links between countries with very different social structures within the Asia-Pacific region.
During Germany’s Presidency of the Council of the EU, we took a step forwards in consolidating the EU-China investment agreement, which had been the subject of lengthy negotiations beginning in 2013, and reaching a political agreement. Why am I so delighted that we were able to take this step? Because I believe that we can ensure a new quality in Europe’s investments in China as well as China’s in Europe, which will in turn mean that we do greater justice to the need for reciprocity, which will create greater transparency around subsidies in particular for state-owned companies, which will also enable more predictable access to high-tech areas and – this is particularly important to me – which also affects labour standards, in particular the standards of the International Labour Organization. If we want to have sustainable multilateral institutions in the area of trade in particular, issues of environmental protection, climate change mitigation and fair labour will play an increasingly important role. This is why the core standards of the International Labour Organization are so important. This is something else that we have been able to establish more firmly thanks to our efforts.
We must rapidly find multilateral solutions to the new challenges of digitalisation. I hope that we will be able to continue and expand the OECD’s work on a minimum tax for digital companies together with the new US administration in particular, and that we will be more successful in enshrining the central role of competition law around the world in order to prevent monopolies from emerging. There are of course trends in this direction. We must address this at an international level, too, because otherwise each one of us will be left to tackle monopolistic structures alone and our efforts will be insufficient.
We have a keen interest in seeing economic recovery begin around the world. We have seen the latest figures. There are regions where the economy is growing. Europe, on the other hand, has been relatively hard hit, but growth is forecast for this year. However, the recovery must as far as possible be a global recovery, which naturally means that we must coordinate our efforts. I believe that the G20 has a key role to play here. The Italian Presidency is, of course, also working in precisely this direction.
When we look at what the pandemic has done to us, I would conclude that it has served to confirm everything that made up the spirit of Davos in recent years. The issues discussed there were the right ones. There is a quote by the German writer Erich Kästner: “There is no good unless one does it.” The pandemic has shown us that discussion, debate and clarity of thought are important. But I believe it has also shown us that the time is now coming when we must act, making the greatest possible shared and concerted effort in line with the same, mutually agreed principles; when, in short, we must do something to remedy as far as possible the weaknesses that we have seen exposed.
That is all – thank you for listening.
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