Speech by Wolfgang Schäuble at the Council on Foreign relations in Washington D.C., 11 April 2014.
Above and beyond all of the irritations in Germany that the three letters “NSA” stand for, this fact remains true: Like no two other actors on the global stage, the United States and Europe – what we call the Western world – share common values, common strengths, and common interests when it comes to shaping the global order of the 21st century.
What conditions do we face together today? Globalisation keeps marching forward. Digitalisation is bringing many different places together into one world. The global balance is shifting. International politics are taking on a new shape. Power is moving to the non-Western world. Although the emerging countries are currently experiencing short-term difficulties, in the long term, global power relations will continue to shift towards the emerging regions of the world.
This is a challenge that Europe and the US face together. How should we react to this development? How should we deal with it?
What does it mean for our conviction in the West that we have built a way of life that can work as a model for the rest of the world?
Some things haven’t changed. Like our values – liberty, equality, and fraternity, solidarity with the weak, human rights, and the principles of democracy, rule of law and separation of powers.
We fought for these values in the two Atlantic revolutions of the late 18th century – the American and the French – and they form the core of our Western self-image. We come from the same Judaeo-Christian tradition. From the same European enlightenment.
We stand on the same foundations of ancient philosophy and politics, which were built in Athens, Rome and Jerusalem. That is the West.
And we regard our values as universal. Freedom from persecution and torture, not being at the mercy of despotism, but being protected by laws that apply equally to everyone – that’s what people want. These are human rights that are independent of culture or religion.
However, the attempts made since the French revolutionary wars to forcefully impose these values in other places have often ended in failure. And this has caused some people to attack the optimism about freedom and the vision of spreading democracy around the world, and to abandon the notion of universalism altogether. I think this is going too far. But in light of changing global power relations, we would indeed be well-advised to adopt a more realistic and more modest stance – today, and even more so in the future.
I also don’t pay much attention to theories of decline, like those of Niall Ferguson, who talks about the “great degeneration” of the West. But it is true that Europe today is not in a position where it can achieve very much by giving moralistic lectures – and this also applies to the West as a whole.
Since World War Two, people have taken for granted that the West functions well. But since the collapse of Lehman Brothers six years ago, and the resulting financial and economic crisis, the functionality of the Western economic and social order as a whole has been called into question. Systemic problems have become visible. Not least, decision-making mechanisms need to be reformed. That’s something we have learned, and not only from the years of crisis in Europe. Recent developments in the United States have shown us the same thing.
If the most powerful nation in the world can be at risk of going bankrupt over a period of weeks – and this can only be prevented at the last moment – then the creditworthiness of the West as a whole is in question – not just in financial and economic terms, but also in the political sense.
And if we want to achieve something in this fast-changing and challenging world of the 21st century, then we must, above all, remain credible. It doesn’t help the West’s interests if we focus only on our moral strengths but fail to ensure that we maintain effective institutions and strong economies.
Today, our ambition should first of all be targeted at ourselves. We have to concentrate on making sure that we can get things done. And that we stay competitive and attractive on the global stage.
The conditions for achieving this are better than people sometimes think. Some important trends indicate that the West’s values and position in the world will remain strong in the future:
For example, I am confident that economic growth will foster democracy in many developing and emerging countries. Economic modernisation leads to growing demands for democracy. It fosters a mentality that calls for democracy.
When people succeed in their own, independent commercial activities, their desire for self-determination – and for a voice in public affairs – grows.
Here is another example: The US economy has gained new strength in the past couple of years. And in Europe, the past five years started a process to put the continent on a more solid foundation. In economic terms, Europe is no longer the world’s main cause for concern. Despite all the shifts in the global economy, the US and Europe still account for almost half of global GDP.
When I say that the West’s position in the world will remain strong in the future, I don’t mean a “unipolar moment”, and definitely not an imperial one. The only word in these concepts that has turned out to be true is the word “moment”.
Today’s process of globalisation has made it impossible to build empires in the traditional sense. We no longer have a situation where traditional centres of power dominate the countries in their periphery. Instead, the countries in the periphery are building their own centres, which exert a lot of influence on traditional power centres. These emerging countries are becoming stronger economically, and their self-confidence is rising. And this is causing fundamental change in the architecture of power.
For this reason, globalisation can be successfully shaped only on the basis of integration, cooperation, and the recognition that our partners are our equals, not on the basis of hegemonic or imperial attitudes and actions. If we want freedom, democracy and the rule of law to be spread on a sustainable basis, the best way to do this is through integration, not intervention.
Globalisation and empires don’t go together. Globalisation – in contrast to empires – is a global phenomenon, not a regional one. This makes globalisation a much more powerful and long-lasting mega-trend. Because of this, Russia’s current imperial moment will remain just a moment, especially since it’s already based on a shaky foundation.
In a globalised world, soft power has decisive significance. And by this I mean an attractive social model underpinned by a strong economy. These long-term factors don’t favour powers like Russia. Instead, these factors put the West in a good position, if we continue to do our homework.
A recent study by the European Union Institute for Security Studies shows that EU countries are considered to have the largest amount of soft power in the world.
In my view, Russia does not currently offer a very attractive model for emerging countries. And Russia’s economic outlook is rather gloomy as well.
The Russian economy suffers from the fact it is increasingly dominated by commodities, and its industrial sector is in decline. Today, Russia’s economy is much less diversified than it was under the Soviet Union. Today, oil and gas exports make up 70 percent of Russia’s total exports.
Russia’s back-slide into patterns of behaviour from the previous century has caused the US and Europe to move closer together. President Obama was just in Brussels for the first time. I am confident that the Ukraine crisis will help us to strengthen transatlantic ties and to rediscover our common interests.
We’re looking at possibilities for more cooperation in the energy sector. And we are closely coordinating our actions on the basis of diplomacy and sanctions. At the same time, this crisis is also showing us how important it remains to maintain hard power. Europe is currently experiencing this right on its doorstep. But – like soft power – hard power also has to be underpinned by a strong economy.
I am seeing how recent crises are leading us towards a new culture of seriousness and focus. Even more than before, the West must be ready to set priorities and to avoid side-shows. We have to talk about what’s really important.
The global crisis that followed the collapse of Lehman Brothers was a first loud wake-up call. The Ukraine crisis is another one. Two decades ago, the notion of the “end of history” became fashionable, first here in the US and then in the rest of the world. Looking back now, this idea was completely ahistorical.
Europe and the US have to work together to build common strategies for a world that continues to struggle for stability.
For me, a guiding principle here is the notion of reciprocity. This starts with the regulation of financial markets. For example, we Europeans think it is counter-productive for the US to place higher regulatory requirements on the US-based activities of foreign banks.
We think this poses the risk of discrimination, weaker regulatory cooperation, and the fragmentation of regulatory laws.
Of course, reciprocity doesn’t end with financial market regulation. The US has a global responsibility to lead. But in our multilateral world, this responsibility to lead can only be carried out in multilateral frameworks. And this calls for reciprocity in every area of policy.
For example, for a long time now it’s clear that foreign and security policy can’t work on a unilateral basis. It can succeed only when partners work together closely, and as equals.
In addition, the universality of human rights must be observed in actual fact, and must be reflected in our own actions. When it comes to civil rights and data protection, everyone in the world must enjoy the same rights.
By the way, in my view, the problem with the NSA is not in the first place an intelligence services issue. It’s a problem of how the innovation of technology changes efforts and requirements to protect civil rights, and I think this discussion is much more important, namely: how we can protect our values – civil rights, privacy, freedom, democracy – in the internet age, which is changing the world. That’s a discussion we have to start in the western world – and as always the US should take the lead in this discussion. It’s not a matter of intelligence services looking for information where they can get it. It’s a little bit ridiculous to think information should be open to everyone except the intelligence services – in that case, we shouldn’t be spending money on intelligence services.
So having said this, for decades, soft power was one of the central pillars of America’s strength around the world – my generation has grown up under the soft power of the United States to be very clear. If this pillar is to remain intact, and if the US wants to ensure that it does not lose power overall, then it must do much more to exercise its leadership responsibility within the framework of multilateral relations. As a token of their good will, the US should finally ratify the IMF reforms to give the rising powers of the 21st century a say in the Fund’s affairs. This would strengthen the Fund’s legitimacy as well as its capacity to act – not only in times of crisis but also in its day-to-day decision-making.
Viewed from a short-term perspective, non-reciprocal behaviour sometimes seems to bring benefits. But in the long term, it causes major self-inflicted damage.
This is a basic issue for transatlantic relations in particular. If reciprocity doesn’t succeed between both sides of the Atlantic, then it certainly wouldn’t succeed on a global basis. And when there’s visible damage between friends, you can be sure that it’s going to be even worse in the rest of the world.
We Europeans worry that the soft power of the US is eroding because of its unilateral actions. But soft and hard power go hand in hand. As much as Europe needs a strong US, the US needs a reliable Europe. To strengthen global governance in the 21st century we, Europe and the US, need to be reliable partners.
Therefore, it is the task of the US to strengthen its soft power. And it is the Europeans’ job to strengthen their hard power. If both, Europe and the US, do their homework we will set a new standard for our transatlantic partnership.
We also need reciprocity when it comes to the “global commons” – places that up to now have been used on a joint basis, or have not yet been exploited, where there is no clear ownership, and no globally binding rules for use. These global commons include space, the seas, the poles, and the internet – especially the internet, and the taxation of companies operating on the internet. We are already seeing conflicts and rivalries here.
The world is looking for global rules in these areas and for new forms of international cooperation, or let’s say global governance. The US and Europe should pave the way forward here. Working together with as many partners as possible, we should develop and implement new forms of international governance.
European integration, and the European model of cross-border cooperation, are being carefully observed in Latin America and Asia. People there are paying a lot of attention to whether or not the European project succeeds. In Latin America, Asia, and in Africa too, decision-makers are thinking about carrying out similar projects if Europe achieves long-term success.
The Transatlantic Trade and Investment Partnership is another area that holds key opportunities for sending signals to the rest of the world.
That’s why we need to negotiate patiently, and to proceed from the assumption that we respect the same values, for example in the areas of environmental and labour standards. The TTIP will give a major boost to transatlantic relations. It’s the most important transatlantic project for the foreseeable future.
Concluding this agreement together will improve our ability to counter challenges from outside, challenges that face companies and research centres in both Europe and the United States. Challenges like forced technology transfer, cyber-spying, discriminatory patent systems, unfair practices in setting standards, and the violation of intellectual property rights. China, Russia and India are not global models in any of these areas.
We also need the Transatlantic Trade and Investment Partnership to set a key example for freedom in the world – an example of how freedom and globalisation can lead to shared prosperity in the world of the 21st century.
Our transatlantic agreement would provide powerful momentum for a global trade agreement, which of all possible trade agreements would of course be first best.
The transatlantic partnership needs a renaissance. And there’s no better time than now, because the shared challenges we face are greater than ever. We’ve had plenty of wake-up calls, so let us join forces and tackle these challenges together!