EIB President Werner Hoyer's speech to the London School of Economics, German Symposium, 4 February 2021
Check against delivery
Ladies and Gentlemen,
It was roughly 26 years ago when Chancellor Helmut Kohl asked me – to my great surprise at the time – to become Minister of State in the Foreign Office.
Kohl had the opportunity to appoint someone to represent Germany in the Reflection Group that was to prepare the Treaty of Amsterdam.
This was the next major European treaty after Maastricht and therefore a matter for the Chancellor.
I was very flattered by his offer – and found the idea to immerse myself once again in questions regarding the future of Europe fascinating.
A key insight that I gained from this time is that, at the end of the day, European integration is nothing less than the organisation of the self-assertion of we Europeans, in an ever more globalised world.
This idea still holds a lot of relevance today in my view. In fact, if I have one criticism, it is that we have somewhat lost track of it in recent years – and that we often conduct European policy in a rather un-strategic way.
After all, we have to ask ourselves: how should we as Germans, French, or Poles position ourselves between the great powers going forward: the United States, China and Russia? We must not underestimate the challenge.
We can only do this together – as Europeans.
Emmanuel Macron's phrase, which he borrowed from the former Belgian Prime Minister Paul-Henri Spaak, comes to mind in this context: “There are only two types of state in Europe: small states and small states that have not yet noticed that they are small.”
This brings me to the first point of my speech: a strong European Union is more important today than ever – if we want to make sure that our values and interests carry sufficient weight in a globalised world.
At the same time, this in itself will not be enough to maintain the EU in its current shape and form.
Only if Europe also addresses the concerns of its citizens will we be able to effectively combat the growing Euroscepticism of recent years - and ensure a strong Europe going forward.
This applies not only to the EU, by the way, but to democracies all over the world. The events on Capitol Hill in Washington DC a few weeks ago are sad proof of this.
The number one policy priority is, at the moment, without any doubt, the fight against the pandemic. Until we have beaten the virus by vaccinating a large part of our population, there will be no real recovery, but merely, an economy in perpetual stop-start mode.
At the EIB, we have been aware of this since the early stages of the pandemic: that is why we have invested so heavily in R&D activities in the life sciences sector over the past months.
We were, for example, one of the first to support the development of BioNTech's vaccine, a company with whom we had already worked closely before the onset of COVID-19 in the context of its cancer research.
But BioNTech is not the only company that we have supported. Our engineers rightly insisted from the beginning that a solution to the problem could only be found in a mix of different technologies.
This is not just about managing investment risks through diversification - we knew very early on that BioNTech would probably win the race for the first licensed vaccine - but it is about being able to meet different needs (in terms of infrastructure) and ensure sufficient quantities of vaccines quickly.
Our health experts at the EIB have also been working intensively on an impressive portfolio of treatments to counter the virus.
People tend to forget that many people are far from being vaccinated. In some cases, due to pre-existing conditions, they never will be. For them, tailor-made treatments are essential.
I am confident that these and other investments will contribute to our progress in the fight against the pandemic and allow for a steady transition to a more "normal" life and economy very soon.
As important as the fight against the pandemic is, we must not forget about the other problems that have contributed to the rise of populist forces on both sides of the Atlantic - often long before the coronavirus pandemic, by the way - just think of Brexit!
These problems will not magically be swept away once the virus disappears.
It is therefore important that, in addition to responding to the COVID-19 pandemic, we urgently provide answers to the other major challenges of our time.
In my view there are at least four:
- First, weak growth combined with rising asset prices, especially real estate.
- Secondly, the feeling many people have in parts of Europe of being left behind.
- Thirdly, the fear of migration and terrorism - which calls into question the basic idea of a Europe without borders.
- And finally, the fight against climate change.
It is beyond the scope of this discussion to go into each of these in detail. So let me just say, they all have one thing in common. We will not overcome any of them as long as we do not manage to trigger more private-sector investments - especially in the areas of digitalisation, climate technologies and in structurally weak regions.
Our starting position is actually rather good: whether digitalisation, robotics or synthetic biology - the technical revolution is in full swing. And artificial intelligence, cloud computing, 5G and the Internet of Things will lead to further technological leaps in the coming years.
If we invest well, these technologies could help us strengthen Europe's economic position, create jobs and at the same time help us become carbon-neutral by 2050.
I deliberately say they "could" because what we are currently seeing is not very encouraging. Many firms are cutting back their investment activities – in particular in the area of digitalisation and clean tech.
For them, short-term viability through de-leveraging trumps investments in long-term competitiveness.
While understandable from an individual point of view, the consequence is that, while we are likely to see a rebound in GDP growth in the second half of the year – aggregate investment activities will likely remain weak for years to come.
We must counteract this tendency urgently. We simply cannot afford another lost decade in terms of investment.
To this end, it will be crucial that we improve the economic framework conditions in Europe. This is a basic prerequisite for more investment activities in the future.
The best European growth policy is and remains the strengthening of the internal market.
This about the digital market or capital market, whereas the US and China each have a single digital market and a common capital market. We have 27 in Europe. That is an enormous competitive disadvantage.
We also need more innovators with entrepreneurial spirit to tackle the current challenges. Only they can provide the decisive impetus to change course. Markus Steilemann is an excellent example of this. I am very glad that he is here today and willing to share a few thoughts with us later on.
We in Europe need an economic stimulus package that helps companies to implement their investment plans – even under difficult circumstances. Public investment is necessary – in particular in areas such as classical infrastructure.
But all other investments belong in the hands of the private sector, which must also bear the entrepreneurial risks.
At the EIB, we have had a very good experience with the so-called Juncker Plan in which we took on limited investment risks of the private sector to incentivise firms to engage in more strategic investments.
I think we can and should learn from this initiative when it comes to kick-starting private investment after the pandemic.
Let me conclude by saying a few word about the US – echoing something that Ralph Brinkhaus recently said that while it is only natural that in times of crisis like this, everybody focuses on themselves. But we must not forget what is happening further afield.
We will only defeat this pandemic by working together at the international level; the same goes for the fight against climate change and other ‘problems without passports’ as Kofi Annan once called issues of with global dimensions.
A key element in all of this is the transatlantic teamwork that has ensured peace and prosperity in Europe for so many decades.
With the election of President Biden, we can pick up where we left off. We have so much to gain from a close collaboration with the US.
What is important, however, is that Europe no longer hides behind America. If we want transatlantic relations to work – and the idea of a rules-based, enlightened, democratic West to be re-vitalised – then Europe must finally become an ally on an equal footing.
European strategic autonomy and transatlantic partnership are not contradictory, as is so often suggested. One requires the other.
As the EU Bank, we already contribute to the EU's global visibility.
In recent months, for example, we have not only financed the development of BioNTech's vaccine, but with the help of the European Commission and the so-called COVAX Facility, are also supporting the deployment of a vaccine against COVID-19 in middle and low-income countries.
And as the EU Climate Bank, we are not just financing the development of cutting-edge climate technologies in Europe, but are actively contributing to the implementation of the goals of the Paris Climate Agreement worldwide.
This brings me to the end of my intervention.
If we want to secure and promote our interests and values in the world, then we depend on working closely together in Europe – and also hand-in-hand with our partners globally.
And we must deliver on the ambitious goals that we have set ourselves, especially in terms of productivity growth, cohesion, climate change and development cooperation.
With this in mind, let's get to work. I look forward to your ideas and our discussion.