Speech by Federal Chancellor Merkel at the 2020 Annual Meeting of the World Economic Forum on 23 January 2020 in Davos
Ladies and gentlemen,
and, above all, Prof. Schwab,
You’ve just mentioned that this is my 12th appearance at this Forum. You have, for the 50th time, the pleasure of being at this event – and not just for one day –, to prepare it and bring people together. I’d like to congratulate you most sincerely on this achievement. What has been created here in the Swiss mountains is something unique.
This Forum has set itself the ambitious goal of improving the state of the world and has brought together representatives from politics, business and society time and again to this end – not only in Davos, but also in many other places around the world. I believe that we can claim, if we cast our minds back over the past five decades, that the world has indeed become a better place.
Fifty years ago, we were still in the midst of the Cold War. Germany was divided. I couldn’t imagine back then that I would one day be standing here. It’s now been 30 years since the Cold War came to an end. A multipolar world has emerged from a bipolar world that, as we were unable to tell 30 years ago, also has a large number of problems.
Per capita income has more than doubled since 1970. The number of people suffering extreme poverty has gone down, even though the world’s population has increased dramatically. We have made tremendous progress in the fight against disease – polio, for example.
None of this would ever have been possible with countries just going it alone, but for me this is the result of people, companies and, above all, countries working together. So this is important, despite the fact that new problems arise year after year, of course. If you take a look at the World Economic Forum’s Global Risks Report, you can see very clearly, because this is always highlighted in colour, how the nature of these problems has evolved. Environmental problems have essentially moved to the forefront of these issues over the last ten years. The issue of sustainability and a cohesive world are of paramount importance. Your motto this year, “Stakeholders for a Cohesive and Sustainable World”, is therefore a motto that is certainly worth discussing.
We talk a lot about the fact that the international community achieves little together. Nevertheless, it managed a few years ago to develop and adopt the Sustainable Development Goals for the year 2030. More than 180 countries accomplished this. This means that we have a very clear roadmap for this new decade as, at the end of the day, we want to achieve these SDGs. However, it was clear at the UN summit last September, which took stock of this for the first time, that we have so very much on our plate here and that we will not be able to genuinely achieve all of the Sustainable Development Goals if we continue at the current pace.
That is why I would also like to express my gratitude – Prof. Schwab mentioned this to me just now – for the fact that an agreement has been reached with the UN to set up a platform on the issue of oceans. This is the right way forward, because we need to link up global efforts so that we also have an idea of how fast we are progressing.
UN Secretary-General António Guterres is therefore right to say that ours is a “decade of action”. We must act, and we must do so, for example, in the area of biodiversity – the vast majority of countries are working on this – and, above all – and this is also playing a huge role at this year’s World Economic Forum – in the area of climate protection.
The issue of achieving the goals of the Paris Climate Agreement could be about no less than the survival of our continent. That’s why there is a need for action, because we know that we will not achieve the Paris goals – above all the objective of ensuring that global warming does not exceed 1.5 degrees – with the present commitments. I will therefore focus on what this means in the first part of my speech. This means that the world must act together – this is, after all, an international agreement. Not everyone is still on board, unfortunately, but many are part of this effort. And this also means that each country must do its own part.
If we look at Germany, the country that I’m representing here, then, after 30 years of German unity, we can say that we find ourselves in a situation in which we’re doing comparatively well. We have never had so few unemployed people. We’re spending a great deal of money on research and development. We have increased our investments. But all this doesn’t reflect what we need to achieve over the next 30 years. After all, the task of keeping global warming to less than 1.5 degrees compared with the pre industrial era means, for example, no more and no less for us in Europe than that we must be climate-neutral by 2050.
The vast majority of the countries of the European Union have committed themselves to the objective of climate neutrality. The Commission President was here yesterday and presented the Green Deal to you. Europe intends to be the first continent to be CO2 free, i.e. emissions-free. But, ladies and gentlemen, these are, of course, transformations of gigantic, historic proportions. This transformation essentially means turning our backs on our entire way of doing business and our way of life, to which we have become accustomed in the industrial age, over the next 30 years – we have already taken the first steps – and transitioning to completely new forms of value creation, which, of course, also include industrial production and which have been informed above all by the digital transformation. We must also get on top of a second giant transformation. And we hope that the transformation to a CO2 free economy will intensify thanks to the digital transformation and that the digital transformation can facilitate this development.
I would like to spend a moment telling you about what we’re doing in Germany and what impact this is having on societies. This goal of climate neutrality is easier said than done. It’s relatively easy to commit to this when you live in cities. It’s a little easier there than if you live in the country and perhaps run a farm or have to walk long distances to work or have a wind turbine on your doorstep.
Firstly, in recent years we took the decision to phase out nuclear power by 2022, albeit for other reasons of sustainability, namely because we believe that waste management for nuclear power isn’t sustainable and that the risks are too great. Secondly, we have decided to phase out coal-fired power generation by 2038 at the latest – if possible by 2035. Coal still accounts for a very high proportion of Germany’s electricity generation – around 30 percent. The phase out is therefore a huge step, especially for the people who mine lignite and who find themselves, in structural terms, in a completely new situation.
However, this is only the smaller part of the story. If we contemplate transforming the energy supply, i.e. first of all the power supply, to make it CO2 emissions-free, then that’s one task. But if we look at Germany’s primary energy consumption, we see that electricity accounts for 22 percent while 78 percent of our energy consumption is accounted for by heating, mobility and industrial production.
Let’s continue to consider the issue of electricity for a moment. We have set ourselves the target here of generating 65 percent, or around two thirds, with renewable energies by 2030. That’s quite a lot for a country where the sun doesn’t shine all that often and where the wind blows quite irregularly. This involves setting up a completely new power line network as the sources of energy production are, of course, mostly located far from where the energy is consumed. We have also set ourselves the goal of reducing CO2 emissions by a total of 55 percent by 2030 and then reaching 95 percent – which is commonly referred to as climate neutrality – by 2050.
The transition to renewable energy sources is a mammoth feat in and of itself. It’s unlikely that it will be possible to achieve a 100 percent share of renewable energies in electricity generation – we have now reached 42 percent by using resources in our own country – because our energy capacity, i.e. the efficiency with which we can generate electricity from the wind and sun, isn’t very high. There are regions in the world where this works much better.
There’s still the issue of 78 percent for industrial production, mobility and housing, however. The concept of “green hydrogen” will play a huge role here, although we approach everything with an open mind when it comes to technology. This will also give rise to completely new connectivities in the world as “green hydrogen” can be produced much more efficiently in many other places outside Europe. But we will also do this in Europe.
This means that – and that’s why I’m delighted that many industrial enterprises have told us that they want to become climate neutral – that we must reorganise our processes entirely, such as in steel production, mechanical engineering and other areas. I had a very interesting discussion just now about the possibilities offered by biotechnology. It goes without saying that this will also play a huge role in the transformation of all of our supply chains.
This means that we will experience dramatic changes without having to do without the products that we are used to today. But we’ll have to change the way we look at all of this. The conditions for this transformation must be put in place at the level of government, and companies must also be prepared to strike out on the path of innovation.
Allow me now to talk to you about Germany. We’re actually a relatively peaceful country. But there have already been considerable social conflicts between those who feel that it’s absolutely vital to set out on this path and those who do not. I want to reiterate that 2050 is 30 years away. I have clear memories of German reunification, which took place 30 years ago. You can achieve a great deal in 30 years. But I also know how short 30 years are if you want to bring about a digital transformation and a transformation of supply chains based on entirely different sources of energy.
Time is therefore of the essence. That is why we, the older generation, must also make sure – I’m 65 years old – that we embrace young people’s impatience in a positive and constructive way and understand that they have a different horizon that extends far beyond 2050. This, of course, raises the question as to how we preserve biodiversity and achieve climate compatibility in this world. This is why we’re called upon to act.
The aim now is to overcome new social conflicts. After all, there is, also in Germany, a large group of people who don’t consider the whole issue to be all that urgent. This group isn’t yet convinced that this is the most important thing at stake. How can we get such people on side? Democracies have the task of involving individuals and sparking their enthusiasm. To my mind, the greatest social tension is between cities and the country, because rural areas bear a much greater burden when faced with changes and urban areas are able to harness change for their own benefit much faster as the infrastructure in cities is superior. For example, it’s much easier to do without individual mobility in a city than in the country.
How do you conciliate those who simply don’t want to believe in climate change and who act as if it were a question of faith? To my mind, however, this is a classic instance of clear evidence in the light of scientific data. But since we’re living at a time when facts are competing with emotions, you can always try to create a post factual world through emotions, which is then just as important. This therefore means for us that we have to reconcile emotions with facts. That’s perhaps the biggest task facing society. In order to address this, it is necessary, as a minimum, to talk to each other. The irreconcilability and walls of silence that sometimes exist between those who deny climate change and those who see it and are committed to ensuring that we tackle it must be overcome.
Many people are talking to each other on this issue who otherwise rarely speak to each other, but not enough people are talking to each other. If we enter a world in which the wall of silence is perhaps sometimes even greater than it was during the Cold War, when there were fairly orderly mechanisms of exchange, then we have a problem. This is why I’m in favour, even if this isn’t easy, of engaging in dialogue – also between groups with the most controversial of opinions – because, if we don’t, we will only become prisoners of our own prejudices and inhabit our own personal bubble. This has become much easier in the digital age than it was in previous ages. This could prove to be our undoing and must be overcome.
I firmly believe that the price for not taking action would be far greater than for taking action. We want to promote innovation and research and believe that industrialised countries have an obligation here. For example, the G20 countries produce 80 percent of CO2 emissions. That means that, in view of the CO2 budget that we have already used up, we have a duty to tread innovative paths in the field of technology.
I was most delighted and, to be honest, surprised to note that Germany took first place in the 2020 Bloomberg Innovation Index. We’re not the kind of people who spend all day banging on about what works well here, because we’re mostly focused on what isn’t going so well. Cultures can be different in this respect. But when it comes to the Bloomberg ranking, then we can allow ourselves to mention this. Interestingly, this excellent result has a great deal to do with the fact that our automobile industry, which is, after all, a core sector of the German economy, is undergoing a phase of transformation with very high investments in research and development. It remains to be seen whether we’re moving fast enough. The risks are clearly pointed up in this study.
We’re focusing as far as possible on market economy mechanisms, and also on regulatory law where this is required. The biggest and most difficult area of transformation is, as things currently stand, mobility. The transition to CO2 free mobility is a huge challenge. We all know that producing batteries and electric cars doesn’t reduce CO2 emissions by itself if not all of the battery’s components are produced such that they are CO2 neutral. That means that we still have a vast amount of work to do in this area.
We want to go down the path of innovation in such a way that we ourselves make innovations available. There is, for example, a surcharge on the price of electricity. We have the highest electricity prices in Europe because we’re promoting renewable energies and reflecting these costs in the price of electricity. Each year, Germany’s citizens spend 30 billion euros on subsidies for this electricity because it isn’t yet competitive. However, this has resulted in the fact that we, in the area of technologies at any rate, have come very close to competitiveness in the wind and solar energy sector and are now able to sell and implement these technologies in developing countries because they don’t have to shoulder innovation and development costs. This is enabling countries that are poorer but which have a much lower footprint with regard to CO2 emissions to enter this new era more swiftly. Germany is now spending twice as much money as in 2014 – four billion euros per year – on investments in international climate protection.
So, ladies and gentlemen, we may ask ourselves: how are things developing outside of Europe?
In Europe, there is always more or less a foundation for prosperity. Yet – and this is something I have often talked about in Germany – it will be difficult to ensure that everyone is taken on board and that we do not leave any large, reluctant groups behind. But if we compare this with many other regions around the world, then we know how much more difficult it is to achieve progress in those places – because, at the same time, they are struggling with war and peace, as well as difficult economic conditions; and because, in places like Africa and also Asia, they must already grapple with the effects of climate change before they can begin to be sufficiently technologically equipped and use the right methods.
All around the world, people appear to be realising that the digital transformation and challenges in connection with our use of the earth’s resources are bringing dramatic change – whether we admit it or not. However, in recent years, this has also led to more and more countries looking inward. Also, tensions between the world’s regions have not exactly decreased.
That is what makes a multipolar environment so challenging – precisely because there is tension between the poles and these are constantly changing in strength. If we look at China’s GDP thirty years ago, it was much lower than Germany’s. China overtook us in 2007 – and today China’s economy is much stronger than ours. Of course, the ebb and flow of power causes uncertainty. And this, in turn, creates even more tension. We must bear this in mind and address the issues that arise.
Today – in fact, almost as I speak to you now – Holocaust commemoration events are being held in Israel, in Yad Vashem. Germany’s Federal President is there, and he will once again point to the responsibility that we bear for what we brought upon the world. He will also promise that we will do everything in our power to ensure that something like this never occurs again.
Today, we can look back on 75 years of peaceful coexistence in Europe. But that is not the case for everyone. The new year was only a few days old when we were all surprised by mounting tensions in Iran and Iraq. We were concerned, and we asked ourselves: what is this leading to, and how can we de escalate?
Germany is one of the countries that says: if we have imperfect agreements – and the nuclear agreement with Iran is certainly an imperfect agreement – then let’s not throw away something that’s not perfect before we have something that’s better. That is why we are campaigning to maintain the nuclear agreement. However, we did now trigger the dispute resolution mechanism – because of course we don’t want Iran to get the impression that it is no longer bound by anything. That would send the wrong message.
We have seen that we cannot simply disconnect from what’s going on in the world. In 2015, Germany and many other European countries took in a large number of refugees. I have said many times over – including, I believe, right here – that if you ask where mistakes were made, then the mistake in terms of security was not to take in those people who were standing on our doorstep. No, the mistake was to not have paid attention from the very beginning, to have not created conditions that enable people to stay in their home country. In a country like Syria, with just over 20 million inhabitants, half of which have fled their homes – either as internally displaced persons or by going abroad – and when you see that Turkey is hosting some four million Syrian refugees, that Lebanon has become destabilised, to a significant extent also because of the refugees it has taken in, and how Jordan is suffering under the burden it is bearing, then the only conclusion you can draw is that we must, time and again, do everything we can to set peace processes in motion, no matter how difficult this may be.
We need to make sure that what we are witnessing in Syria does not repeat itself in Libya. Last weekend, we attempted – and it’s nothing more than that – to find a solution for Libya, before the conflict there becomes a proxy war similar to the one people in Syria are burdened with. With regard to Libya, we are witnessing how the adjacent countries in the Sahel region, which are among the poorest in the world – the people of Mali and Niger, at least most of them, cannot dream of ever travelling to Davos – are now being plagued by terrorism, because Libya is an unstable state and many weapons are pouring in from there. We all must make a joint effort – and Germany is both trying to do its part and must do more – to prevent these countries from becoming completely destabilised. All development efforts and aid run the risk of becoming ineffective if a country like Niger must already now spend 30 percent of its overall income on its own security – in Germany, our discussion is centred on spending a mere two percent on defence – 30 percent of an already very small budget are being spent for this purpose; and even that’s not enough. The terrorists are still better equipped.
So of course my hope for these countries, when they ask for help, is that we will fight terrorism there the same way we do on our doorstep – namely, with a broad coalition that also gets support from the United Nations, with a robust mandate. After all, they are willing to fight for their countries. Yet so far, we haven’t managed to also get them the backing of the United Nations.
If we look at the significance that Syria took on for us in Europe, that means we need to make an even greater preventive effort and be a force for good – so that we can either prevent migration flows or succeed in promoting orderly migration. This is why I am pleased to announce today that we will continue to participate in international aid efforts – including the Gavi vaccine alliance. Between now and 2025, we will again make available 600 million euros towards fighting diseases, improving medical systems and thereby also promoting stability. At the same time, however, we must of course guarantee security. Because, without security, there can be no development. And without development, there can certainly be no security.
Ladies and gentlemen, Germany is part of the European Union; and, as Mr Schwab has pointed out, we will hold the Presidency of the Council of the European Union during the second half of this year. The European Union will undergo substantial change on 31 January. Until now, countries always joined the organisation. Luckily, there are still a few that wish to join. But now one country will be leaving us: the United Kingdom. This means profound change, but we will come to terms with it. It was the will of the British people. We will continue to do everything we can to maintain good, intensive, friendly and good neighbourly relations with the United Kingdom.
Europe – and this is in line with Ursula von der Leyen and her new Commission’s goal of being a geopolitical Commission – must certainly speak with a loud, clear voice. I think the declared aim of becoming the first CO2 neutral continent is also a good message for the world. It is equally important to do more in the sphere of development policy and to contribute more to peaceful solutions in this world.
During its Presidency, Germany wants to contribute two things in particular that I want to mention here today. First, there will be a summit with African countries, which we will hold in Brussels and at which we will above all address Africa’s agenda. I am very pleased that we will not only be doing things for Africa, but increasingly doing things with Africa. Africa has set itself a development agenda. Last summer, Africa established a free trade zone. What is more, the African Union has held a summit in Niamey, the capital of Niger – which is the poorest country in the world. A decision was taken to jointly establish a single market. This will certainly take some time to accomplish, but it is a brave decision.
We should support the Africans in what they envision for their continent, and help them turn this into reality. What we should not do is keep offering up ideas on what their development should look like. We should finally understand that being partners on an equal footing with Africa is not only charitable, but can also be mutually enriching.
In Germany, the average age is roughly 45 years – whereas in Niger and Mali it is 15 to 16 years. What does it mean when such a large part of the population is focused on the future? In Germany, we’ve gotten used to the idea that general progress can be slow, and that there is still enough time. In other countries, people are under quite a lot more time pressure. That’s why I say that Europeans only stand to benefit if they focus a little more on Africa and learn from the creativity, motivation and lust for life that people there have, under considerably more difficult circumstances.
Second, we will do something that certainly won’t be easy: So far, the European Union has not had a uniform policy on China. For years, everyone saw China as an interesting trading partner. At some point, Central and Eastern European countries formed a group and concluded that, if France, Germany and other big countries are constantly meeting with China and striking big deals, then why don’t we, too, join forces and have regular meetings with China? For the very first time, we want to have an EU China Summit that includes all 27 member states and that will be held in September in Leipzig, Germany. At this event, we want to focus on three main issues. Since 2013, we have been working on an EU China investment agreement. I can only hope that we will succeed in concluding it in 2020. But it’s not certain that we will manage to do that. It will require flexibility on all sides. We will talk about how we can jointly tackle climate change. This is a tremendous opportunity for us, because China, too, is introducing an emissions trading system – that is, market-based mechanisms. If we could interlink the European emissions trading system with that of China, we would have covered a very large part of the world, and this could serve as an example. We also want to examine relations with third countries. Here, the focus is once again on Africa, because China is very active in Africa. We want to step up our engagement, and we hope that we can maybe find common benchmarks that will help the respective countries develop their own economies.
We will, of course, also address a number of European issues. We have a Digital Agenda. Just now, during my meeting on the nexus between biotechnology and the digital revolution, I heard again what I’ve heard so many times before: Europe is good, especially on how it handles data – but Europe is far too slow. We must overcome this sluggishness – because if we don’t, we will not become a geopolitical player; we know this is true. However, with 27 member states, that’s not so easy, because each country has a parliament that instructs its Government to pursue certain objectives in Brussels. But we have no reasonable alternative. And that is why we want to help move things forward.
As Europeans – and Germany is certainly one of the lead countries on this – we will also work to promote multilateralism and to strengthen multilateral organisations. Of course, everyone is free to conclude trade agreements with anyone they wish; the European Union does just that. Hopefully, we will manage to reach a trade agreement with the United States. But on the whole, I think the most efficient way to create global prosperity is to have well-functioning multilateral organisations. These include, for example, the World Trade Organization. It must be reformed – and on this I agree with the American President – but it must also again become a functioning organisation. The fact that we currently have no workable dispute settlement procedure is basically a sign that the organisation is not functioning well.
I will therefore close by repeating the motto under which you are gathering here and now: “Stakeholders for a Cohesive and Sustainable World.” That’s all of us. It includes states and politicians. We should take this task seriously. I think we have opportunities. However, if we feel like we’re faced with too many problems, we must not turn increasingly inward. That would be the completely wrong lesson to draw 75 years after the end of the Second World War. Now I know that simply repeating the same messages over and over again will not make them more convincing. But in my view, this is a good cause to fight for, even though it may be difficult at times. I know that many among you are fighting to achieve the same goal.
Thank you very much for the opportunity to speak to you.