 cost of green technologies. Flanked by financial support, this could reduce global emissions in a cost-effective manner.
- Leverage health policy for ethical and economic leadership
Health policy and pandemic control should also become one of the central pillars of German foreign policy, not only because of their economic relevance. To be sure, there has been significant progress in pandemic control. But the global economy remains vulnerable and worldwide the number of COVID-19 infections remains high, while new pandemics and other health risks could appear.
This presents a major economic opportunity for Germany and Europe because of their strong healthcare sectors. The EU could expand its role as a key global producer of essential medical goods. From a foreign policy perspective, most important is the global reputation that a leading role in pandemic response would bring to the EU and Germany. It is a moral imperative to deal with the health crisis as quickly as possible. The financial and technological capacity exists, and the EU should play a major part. The world cannot be safe as long as high levels of infection continue and new variants of the virus can emerge.
Towards a strategy
In times of major geopolitical tension and severe economic crisis, there is a political tendency to try to solve problems through protectionism. This is rarely successful. In Germany in particular, it would entail considerable risks for the export-oriented middle class and workers. Historical evidence even suggests that it is precisely severe economic crisis that could usher in a new golden age of globalisation. Germany and the EU can and should remain open, even if Germany’s current account surplus is closing.
Germany should therefore focus on managing globalisation and economic interdependencies rather than aiming for decoupling. Economic interdependence, however, also means vulnerability to political pressure from abroad. Three guidelines are therefore of central importance:
- In order to credibly enforce its positions, the EU needs stronger instruments, such as a strengthened investment review process and a subsidy review process. These can increase the stability and openness of globalisation because they can act as a deterrent to other trading powers and push them to comply with global trade rules. The multilateral system will be strengthened if Germany and the EU are maintained as a strong pillar alongside the US and China.
- The appropriate framework for action is the EU. Germany has neither the economic nor the political power to resist pressure from China or the US by itself. It is a significant inconsistency that in an integrated single market, the instruments of external protection, for example against hostile takeovers in key technologies, reside mainly at national level, while investments, once made, allow access to the entire single market. Germany should support EU initiatives that provide for greater centralisation of such decisions. In the area of foreign policy, it would be advisable to reconsider the unanimity principle.
- In economic areas of outstanding strategic importance, it is necessary to increase the resilience of value chains. This means that dependencies on individual producers, for example of modern digital technologies, must be reduced through a diversification strategy. Mention should be made here of key technologies including computer chips and essential raw materials for the production of green technologies.
Implementing the proposals in the four specific fields of action discussed above – resilience, technology, climate and health – would bring clear benefits to Germany and the EU. Strengthening the European economy and European decision-making structures will benefit the economy while creating room for manoeuvre relative to international partners and competitors. Support for, and reinforcement of, global public goods is a strength of the EU and Germany.
The new German government cannot be a neutral bystander. While the transatlantic relationship is of central importance, the EU cannot rely on the US to 