On a recent Global Counsel digital event, Lord Mandelson and German Vice Chancellor, Olaf Scholz, discussed the work of the German presidency, the EU’s strategic autonomy and German politics.
Mr Scholz said that he thought there was a solution to the deadlock on the EU’s long-term budget negotiations, after chairing a meeting of EU finance ministers this morning. He also explained how questions of “digital sovereignty” went to the heart of the role of the state (and of the EU) in the economy, and offered his views on the future of the trans-Atlantic partnership. Looking ahead to the federal elections in 2021, where Mr Scholz will be the SPD’s candidate for Chancellor, he and Lord Mandelson explored how the political offer of the centre-left parties needed to evolve and reflect changes in society and the economy.
Mr Scholz broadly supported the European Commission in arguing that, in order to reach the 2050 net zero target, the EU needed to be more ambitious than its current 2030 target of a 40 per cent cut to greenhouse gas emissions from 1990 levels.
Mr Scholz emphasised the importance of the recovery fund and the need to pay for it with new own resources (EU taxes). He believed Poland’s and Hungary’s vetoes were “not surprising” and that while no compromises over the rule of law were on the table, there is “a chance for a solution” without undermining core European values. He avoided taking sides over Lagarde’s proposal to make the recovery fund a permanent fiscal tool and instead focused on the importance of the own resources decision and how this would be beneficial for Europe as a permanent tool.
The discussion of EU strategic autonomy settled on a definition similar to the US’s traditional economic model: support for successful industries rooted in a rules-based global order. It meant being able to do things for yourself but did not preclude competition from others. Mr Scholz argued that strategic autonomy is a concept that works effectively when aligned with active state policies such as procurement, and in sectors where markets depend on public policy for their development. Examples cited were the potential for regulation to support a transition in the EU’s energy mix towards hydrogen, and a harmonised European payments system. The role of competition policy should be relevant only when it benefited the whole of the EU. Meanwhile the related concept of “digital sovereignty” could be supported through development of infrastructure and stabilising European market fragmentation – this should involve member states recognising the “need to increase investments in research and development by 3%” to compete with the US, China and Japan.
Regarding expectations of businesses, Mr Scholz argued that companies in the EU who want to support its strategic autonomy should raise spending on R&D and set out their own plans for supporting the green transition.
Discussion of the general election next year focussed on how Germany’s social democracy can “re-establish respect” with its traditional supporters, and restoring the importance of meritocracy in the economy. A further essential task was to offer a positive agenda tying together policies that support technology, the economy, climate actoin and the future of Europe.
You can watch the full video of the discussion below.