Ομιλία του πρώην Αντικαγκελάριου και Υπουργού Εξωτερικών της Γερμανίας κ. Sigmar Gabriel, στην Ετήσια Γενική Συνέλευση του ΣΕΒ, 29/5/2018

Dear Mr. Chairman (Theodore Fessas),
Ladies and gentlemen,

Let me start by thanking you for inviting me to Athens. It is a great honour to be here as guest of the Hellenic Federation of Enterprises, and to speak to you all.

With your 3,500 members you represent around half of Greece’s business activities.That means that it will be your economic success which will determine whether your country will eventually manage its turnaround – a turnaround to becoming a stable and sustainable national economy. It also means that your work and your success will be instrumental in achieving what this country needs the most: better living and working conditions for its people and more social security and stability.

But Greece’s success in achieving its reforms will not only affect its people but also be key to shaping the future of our joint European currency, the Euro. And since I believe the Euro’s fate and the future of European integration as a whole to be highly interconnected, it is with the certainty of conviction that I say: the whole of Europe needs Greece to succeed.

Ensuring this country’s success within Europe is, in itself, a truly Herculean task, and one that carries a substantial historical dimension. The necessary changes undertaken along the way have had to alter the DNA of this country significantly, as its former political and business elite were far too used to exploiting their country.

However daunting such internal issues are, there are also external challenges that loom large over us as Europeans. And these challenges are not only of unprecedented scale and complexity but are also evolving at breakneck speed.

Let me mention a few other internal challenges: There are the …

  • general economic tensions between Northern and Southern Europe and particular concerns about possible debt relief for Greece.
  • political tensions between western and central European countries, as exemplified in the conflict over issues such as the rule of law, freedom of the press and an independent judiciary between countries such as France and Germany on the one side and Poland and Hungary on the other.
  • tensions with regard to the rule of law between North-Western Europe and Eastern Europe. It is not just Slovakia that is suffering alarmingly from endemic corruption, bad governance and the spread of organised crime.
  • (And this is before even thinking about a possible accession to the EU by 2025 of countries such as Serbia and Albania).
  • tensions created by the UK’s Brexit, a process with no blueprint that can be followed and which looks set to tie up enormous amounts of resources.

All things considered, who wouldn’t conclude that the EU had enough on its plate to keep itself busy for a while? There is, however, a slight snag to such thinking: the world will not wait around until we Europeans have got round to doing our homework. For Europe, the grace period is over.

On the contrary, the global political landscape is changing at such speed and so drastically, that even a more united European Union would find it hard to remain steadfast.

External tensions have increased dramatically.

The digital revolution with its global and data-driven economic model is putting Europe under enormous competitive pressure. In the next few years, we will no doubt be seeing staggering upheavals in almost all sectors of the economy, as well as on the labour market.

At the same time, the world order as we know it is dissolving before our eyes. What used to be rock-solid principles are now being put to the test, ironically by the very country that established this “liberal order” after World War II and spent years upholding it. The US is currently feeling “overstretched” and is withdrawing from the global arena back to the home stage. What’s more, its “America First”-strategy is threatening to destroy all that it once created, with revisionist powers using the resulting uncertainty and instability and hustling to fill the void left by the US’s withdrawal. Some, like China, are employing geo-economic strategies to re-shape the world order, while others, like Russia, are resorting to military means. But there are also young power states in the making, such as India and the young Africa which will soon be staking their claim.

All this creates increasing uncertainty. The US’s unilateral withdrawal from the nuclear deal with Iran is a harbinger of things to come, as it broke with a fundamental principle of law in the Western world: pacta sunt servanda – agreements must be kept. And it shows us Europeans how little we now matter to what used to be our most important ally.

The repeal of the Joint Comprehensive Plan of Action (also known as the Iran nuclear deal), with no thought of us Europeans, is the third tremor going through the transatlantic partnership. Withdrawing from the Paris climate agreement and bringing trade protectionism into play by threatening Europe with sanctions are two more bricks that the US has removed from our comfortable multilateral world order.

The consequences for Europe cannot be overestimated. Because what is at stake is the dismantling of everything we understand when we say “The West”.

Which is: An alliance built on shared values and interests, which are used as a point of reference the world over.

At the moment, we Europeans are facing a downright unsolvable dilemma: we cannot live with Trump but we cannot do without the US either. Caught between a rock and a hard place is an uneasy situation to be in. Without massive investment into uniting Europe on issues such as politics, the economy and security policy, we may get trapped there. And if that happens, we may lament developments as much as we like, but we will be unable to change them.

In the meantime, new power players, particularly China, are filling the void left in the wake of the US’s withdrawal. China’s sizable expectations are not surprising considering its formidability in every respect. Its proposal to develop a 21st century “Silk Route” – the One-Belt-One-Road-Initiative – is not a nostalgic trip down Marco Polo’s lane but a tangible geo-economic strategy. In fact, China seems to be the only country in the world which currently has a tangible geo-economic strategy in place. That is not something we can criticise them for. What does deserve criticism is that we Europeans have failed to develop our own strategy.

China presents a particularly exacting challenge to us Europeans. Greece has been experiencing this first-hand ever since it had to open the door to Chinese investors when it sold its harbour, Piraeus. (As you know, that harbour was sold on the strong urging of donor countries. It is now in Chinese ownership, who are investing heavily. Piraeus looks set to be China’s economic springboard to Central Eastern Europe. It could also mean China gains a foothold in local politics). The fact that China’s Silk Route Initiative is motivated not just by economic concerns but also by political considerations – and maybe even long-term military ones – can be illustrated by a brief example: When the European Council attempted to adopt last year’s ruling by the International Tribunal for the Law of the Sea regarding the “Freedom of Navigation” in the South China Sea, it no longer managed to do so unanimously: if I remember correctly, Greece abstained. Of course, no one would dream of taking this as a sign of anything being amiss. But it might give pause for thought to all those in Europe who cajoled Greece into selling its harbour in Piraeus as fast as possible, thus forcing them into the hands of the Chinese.

There are, of course, other powers trying to fill the political vacuum left by the US and – with it – the West. Among them are Russia, Iran and Greece’s restless neighbour, Turkey, as well as India, the country with the world’s highest population density, and Africa.

All of them are flexing their muscles in a bid to shift the existing axis of power.

And where is Europe in all of this? Europe is watching all these developments from the sidelines. As a spectator! And while we are looking on and seeing wars and conflicts mushrooming around us in neighbouring states, the world’s global players no longer even ask for our take on these developments. The sad truth is that in the arena of international politics our influence is negligible.

And yet the consequences of these conflicts are far from negligible. While the exodus of hundreds of thousands of people, fleeing the war in Syria and landing in Europe, was a risk coolly disregarded by Assad and his allies, it has had a profound impact on Europe, politically as well as socially. Your country, Greece, is more aware than most of the cost of dealing with the backlash from such a conflict.

Now, with summer on its way, it is your islands in the Aegean sea (Chios, Samos, Kos and Leros) that are once again sought out as safe havens by refugees from the Middle East, causing dramatic social tensions on your shores.

When will Europe be asked to re-join the group of global players trying to solve this problem? Most likely, we will only be asked once talk turns to the rebuilding of Syria.

We have to realise that the world considers Europe to be rich but weak – which is a dangerous way to be seen, and one which should alarm us.

Because we must not be anybody’s pawn, not ever – not the Americans’ nor anybody else’s. What we therefore need, more than ever before, are models of cooperation with which we can redress the balance of power during this 21st century. It means that Europe needs to bundle its many forces to create a powerful tool in terms of economic, developmental and security – maybe even military – strategies. But that is something from which we are still a long way off. Currently, we are irrelevant. We are not taken note of. We are not being heard. We are vegetarians in a world of carnivores.

Europe will only be able to assert itself and defend its values, its interests and its position in the world, if we learn to act in a way we haven’t needed to act before. We need to take responsibility and get up on that global stage. Up until now there has been no need for that, as Europe was conceived as a very inward-looking construction. External affairs were something best left to the members of the UN Security Council, to France, the UK and – first and foremost – the US. Today that is no longer an option.

Ladies and gentlemen,

The inner and external challenges outlined here require the will to act. And they require more unity. Both are currently and sadly in short supply in Europe.

So, what I say is: We need is a powerful reversal thrust. Otherwise we may find ourselves standing before the ruins of the European Union in a few years from now, helplessly exposed to the world.

We have taken a first few steps in the right direction: Joint action in the field of defence, jointly securing Europe’s outer borders.

But more steps will need to be taken, particularly regarding the economic and monetary union. I believe that having one currency and 19 different economic policies is not a viable approach in the long run.

The most daring suggestions are currently being made by France. Germany’s response, in contrast, is embarrassing. France now seems to have at least a ten nil advantage in the “How-to-strengthen-Europe”-game. It’s high time we changed that score.

Emmanuell Macron recognises what is at stake. Never before has a French president dared to put “L’Europe” so firmly first as he has done, making it clear that Europe’s sovereignty takes precedence over that of France. That’s what I call true courage, particularly when keeping in mind French tradition. Germany mustn’t keep avoiding this issue. This political ball passing game must stop. Because if not even France and Germany manage to agree, how should Europe as a whole ever develop an authoritative standing in the world?

It is time that we finally completed the banking union, including adopting a common backstop. And to avoid a bank run in the case of a crisis, it would also make sense to adopt a European deposit insurance scheme, as long as there are stringent risk management rules in place.

I also believe that we need a European stabilising pact which can be triggered in an emergency, thus protecting investments which are always the first area to suffer.

But we also have to face another uncomfortable truth: We need to continue with our structural reforms in order to strengthen productivity and potential growth. And we need to develop the Capital Markets Union, another tool capable of cushioning any potential financial crises.

Only if – and of this I am utterly convinced – only if we Europeans come together as a group of equals, of equal standing, will Europe manage to overcome its internal and external challenges.

Little Malta and large Germany; France with its decidedly western European heritage and Poland with its central European outlook; economic highflyer Finland and economic underdog Greece. We are all part of what makes Europe. The stronger countries together with the weaker ones, the larger together with the smaller ones. Each as valuable as the other.

When we strive towards uniting Europe, we need to keep this in mind. We need to remember to step into the shoes of the most “vulnerable” country and look at things from their perspective.

If talking security policy, we need to look at the points of view of the Baltic nations and Poland.

If talking monetary and economic policy, it’s the southern European countries whose perspective we need to take.

And if talking about refugee policy, we need to keep Italy’s concerns foremost in mind.

It seems hypocritical if we moan about the “America First” concept and then turn around and follow that same line of thinking in our home country.

Of course, just because you understand a weaker country’s viewpoint, doesn’t mean that you have to adopt it.

But you can respect it. Which will then lead to mutual respect, mutual trust and the will to search for common ground. This goes for all strong countries, but in particular for the strongest country in Europe.

Just how difficult it is to take into account somebody else’s perspective, could be witnessed here in Greece in recent years. And that’s putting it mildly.

Your country knows only too well what it means to be at the receiving end of the national selfishness of other European states, Germany top among them. On the other hand, it has to be said that Greece rarely seemed to even try to understand the point of view of Northern Europe and Germany. Now – and I am repeating myself –  please keep in mind that just because you are putting yourself in somebody else’s shoes, does not mean that this particular pair is the perfect fit for you. It might not be. But before you disregard it as unsuitable, trying it on might help in finding a third option that solves the problem and allows you to walk on common ground.

Because although Greece does have a point when it criticises many a condition imposed on it and many a mistake made by the Troika or the European Union –it’s worth remembering that there has been and continues to be a lot of solidarity with Greece. The European part of the rescue package has, after all, amounted to 220 billion Euros.

Since repayment will most probably occur over a long period of time and debt relief looks probable – and even necessary -, this show of solidarity is quite impressive. And – like I said – well-worth appreciating.

However, that’s no reason for us Germans to feel high-and-mighty. After World War Two, we – like no other country before – had the good fortune to experience this kind of inter-European solidarity, much to our economic, political and moral benefit. Which, incidentally, is very much due to the US, without whom Germany’s reconstruction and reintegration within Europe would not have been possible. Back then it was in America’s interest to ensure that Europe would never again slide back into the nationalistic and reactionary era of the first half of the 20th century. For the US, Europe was therefore not just any old project but, in fact, more of a pet project. Perhaps it is time to show the current US President the Marshall Plan hanging in a room in the White House named after its author. It might remind him of how this plan benefitted both Germany and the US. And maybe this would show the President that we are friend, not foe.

The prosperity Germany achieved – as much by virtue of other nations’ help, as by our own hard work – should not blind us to the achievements of others – in this case Greece’s achievement.

Within Europe, Greece is unique in its acceptance of a historical reform programme which includes significant structural reforms, tax increases, austerity measures and privatisation of its economic and social system.

These reforms were harsh to the point of causing hardship, because they set close to impossible demands. Examples include raising the retirement age and a range of tax increases, such as hiking VAT up to 24 per cent.

Then there were the cuts to the minimum wage, cuts to the health system; curtailing the freedom to strike, not to mention the privatisation of state property. As you know there are many other points I could list here.

Yet, there were reasons for taking these measures, and they should not be forgotten – not so that we can apportion blame, but to prevent making similar mistakes in future. Take real wage growth: In Greece it exceeded what was reasonable (factoring in productivity and inflation) over many years. (Between 2000 and 2008 – just before the beginning of the crisis – real wages in Greece rose by 40% – higher than in any other of the other 15 “original” member countries. During the same period in Germany, real wages fell).

There can be no doubt that the price to overcome the crisis was and still is high. Not just on an economic and social level but also on a political one, as it has led to the strengthening of radical parties and radical trends.

We therefore need to take our hat off to Greece and acknowledge that you have gone the famous extra mile. Compared to what Greece has been shouldering for years, Germany’s social reforms undertaken between 2003 and 2010 were a walk in the park.

And although there remains a lot to be done, the conclusion of the (third) programme review of the (third) support programme suggests that Greece is on the right track.

Today, we can see that Greece’s efforts in dealing with those cuts, are beginning to pay off – although it is a very slow process.

It is true that Greece has not overcome the crisis entirely.

Its economic strength is still only at 75% of its pre-crisis level.

Another enormous strain on Greek society and its social welfare system is the country’s overall unemployment rate of almost 20%, with youth unemployment as high as 40%. (Statistically, this makes Greece the second poorest country in the EU, after Bulgaria).

A state deficit of almost 180% (176.6%) represents a heavy future burden for the country to shoulder.

Nonetheless, there are robust signs of positive developments and the return to economic growth in Greece.

In 2017, the Greek economy experienced sustained growth rates during all 4 quarters of the year for the first time since 2006 – thanks largely to the tourism and logistics industries.

This year, the country’s growth is projected to lie above 2% (The OECD/EU’s estimated 2.5% might be slightly too optimistic), and in 2019 this trend is expected to continue – which is also in line with EU Commission and OECD expectations.

Even unemployment rates – although still exceedingly high – give cause for cautious optimism when compared to the worst years of the crisis. Back then, the number of people without jobs was another 8% higher.

All this is evidence of Greece’s remarkable performance. And these improved conditions are important criteria when considering the conclusion of the support programmes which are due to end at the end of August. However, as we all know: the last few metres of a marathon can be the hardest!

The next few months will therefore be spent crafting a financial but also political framework for the era after the end of the support programmes which is realistic, sustainable and fair.

I believe there should be a very real and final end to the support programmes, and not a “fake exit” that really amounts to a fourth programme for Greece.

We have to praise the citizens of Greece because despite all that suffering during the last years they are still committed Europeans. It is easy to be a committed European in good times. It is much harder during tough times. In that respect Greece is more European than many other EU Memberstates“.

During the meeting of the EU’s finance minister in Sofia, this April, there was common consensus that Greece had made good progress.

There are, however, three key issues where substantial progress still needs to be made: The 88 prior actions need to be implemented in full, a consensus on debt reduction needs to be reached, and a fair deal for the post-support programme era needs to be found.

In fact, the Greek government has already begun to prepare intensively for the time after the end of the support programmes, looking hard at how to implement the “key deliverables”. Their efforts aim to:

  • Devise a strategy for long-term growth. Greece is currently discussing this with Brussels. This is vital. For far too long, the main topic has been fiscal. It’s high time that the real economy took centre stage.
  • Build up a “cash buffer” (of about 18 billion Euros) as security for investors in Greece’s financial markets.
  • Generate a stable primary surplus of 3.5% annually. Greece has already exceeded expectations twice in this respect.
  • Advance administrative reforms in areas such as the development of a digitalised register of residents and a public land registry.
  • Liberalise energy markets and reform property tax. In both these areas there is the need for action.

As far as debt relief is concerned, we should take a pragmatic approach.

I like the idea of flexible repayment terms based on economic growth, allowing Greece to re-pay more in years of plenty and less in more difficult years.

The debtor countries now need to make good on their word. Because in principle, they have already agreed to debt relief – “if necessary”. And as the IMF, among others, has been pointing out for years, it’s a fact that debt relief is definitely “necessary”.

So the idea is good. Now it needs to be translated into viable practice. It should not come attached with too many conditions (a possible option would be to settle for a state-contingent debt instrument rather than a policy-contingent one).

But let’s face it, Greece’s economic future will not be determined by a flurry of paragraphs. That would be a technocratic illusion.

When all is said and done I firmly believe that it will come down to two fundamental issues which will require all parties involved to make a supreme and momentous effort that might even change the course of history.

The first will be to ensure there is a change of paradigm in Greece, leading to a stable, dynamic and growth-oriented national economy with a strong focus on the real economy.

For this, the hard won reforms need to be absolutely irreversible, thereby preventing the country ever again sliding back into old habits.

Such a change of paradigm cannot be imposed by Brussels. It needs to become an inherent part of Greek politics and economic activity.

The other fundamental aspect is Europe’s role. The EU, and Germany, will need to be prepared to invest in Greece, and to trust Greece.

At the same time there needs to be a fundamentally new approach in its European policy.
We need investment, not austerity. With the corresponding budget, of course.

We need social minimum standards and basic social security.

We need a pan-European fiscal policy that is co-ordinated at European level.

We need the banking union to be completed.

We also need a more resilient economic and monetary union – but since I’ve talked about this elsewhere, I will not elaborate here.

Greece’s future in Europe and Europe’s future in the world will not be an overnight success story.

On the contrary: Success will only be realised through hard work and the willingness to embrace radical, even painful change in outlook and direction.

But the times where we could move in the slipstream of others, trust others to shape our foreign and security policy, our economic and our fiscal policies, they are a thing of the past. For Greece and for Europe.

We will have to take an honest and hard look at some facts regarding policies and the economy. We will have to solve contradictions and reject easy solutions.

We will all need to learn to be economical with those resources with which we used to be generous: time and money.

In my country, managing the structural change triggered after World War Two required many decades of enormous dedication and effort.

You only need to think of the mining industry in the Ruhr area. At the end of this year, the last coal mine (known as “Prosper Haniel”, which is located in a place called Bottrop) will close for good.

It marks the end of an era. Germany’s economic miracle would not have been possible without the Ruhr coal mines, and some might say that the European Coal and Steel Community can be called the cradle of European integration. Coal mining brought prosperity and a sense of identity. Thanks also to the hard work of thousands of Greek coal miners.

In the 1950s, almost half a million people were working underground. Yet, even then – more than 60 years ago – the reverberations of the industry’s decline could be felt when the first mine closed.

Over the following decades, the area received no less than 150 billion Euros in subsidies, intended to socially cushion the structural change. It did not prevent dashed hopes nor disappointment.

Today, to be sure, things are different: We do not have that kind of money, nor the same amount of time for handling the structural changes we need today: ensuring that Europe can take control of its own foreign policy and managing the digital revolution.

Nobody is going to hand us 5 decades and many billions in subsidies. Change has become relentless and fast-paced.

All this is happening against the backdrop of increased pressure by populists who seem set to continue to try and capitalise on the hardship – and even suffering caused by this situation – to gain votes.

In the past eight years, Greece has been more exposed to this scenario than any other country on the continent. Greece has inadvertently become a pioneer.

We will only manage to keep our European societies democratic and stable if we remember to combine economic success with social security. Every person who feels a loser from globalisation is a potential voter for populist and anti-democratic parties.

Just as social security requires economic success, economic achievement requires social security and social cohesion. They are not opposites, they are two sides of the same coin.

So I say that social capitalism should not be confined to the pages of our economy textbooks and to lofty speeches by politicians. People need to experience it first hand in their daily lives. Which is why we will need to further address social inequality within our countries and also within member states. Donald Trump’s election holds an important lesson: Politicians who lose the votes of the rust belt’s workers will not be saved by California’s hipsters.

And we need socially stable societies in Europe to be able to stand united on a global stage and face a world that has become increasingly uncomfortable. In face of the challenges ahead, our unity is more crucial than ever. It will determine whether our children will have a voice or no voice in tomorrow’s world. Even strong Germany will drift into political insignificance, although it might remain economically interesting. Without Europe, Germany’s best-case status will equal that of Switzerland: interesting from an economic point of view but totally insignificant on international political level.

Will we succeed in creating unity within Europe? I don’t know. All I do know is that the decisions ahead of us today are only made once every few hundred years.

Some 600 years ago, at a time when European sailors set off into the unknown to discover the sea passage to India, the Chinese commanded the most powerful fleet in the world. But while the Portuguese Prince, Henry the Navigator, was sending out his fleet along the coast of Africa in search of a sea passage to India, Emperor Hongxi decided to let his fleet fall into disrepair in 1433, despite its magnificence and the fact that it had spent the previous 300 years exploring the world. He believed his empire to have more pressing problems. It was the beginning of China’s withdrawal from the global stage which it would not return to for another 600 years, while Europe set out to dominate the world on every continent.

Which begs the question: What will historians, 600 years from now, say about the early 21st century? Are we seeing the dawn of a new China-dominated era, with Europe gently fading into oblivion?

The historian’s answer will depend on us.
Thank you for listening.

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