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Signora Presidente Marcegaglia,
Ladies and Gentlemen,
This morning I arrived to Milan from Berlin. In the heart of Berlin, on the former no-man's land between East and West where the Berlin Wall tore Germany apart for 40 years, the new centre of the city has emerged: , the “Potsdam square”, Potsdamer Platz. Millions of visitors from all over the world marvel at the modern lightness of its 21st century architecture. Millions of tourists come, but hardly any of them know that while the Potsdamer Platz lies in the heart of Berlin, it is in fact Italian.
The square and its modern architecture are the masterpiece of the two gifted architects Renzo Piano and Aldo Rossi. Two Italians, graduates of the university here in Milan. So it is Italian architecture that has lent today's Berlin the cosmopolitan elegance for which it is admired all over the world.
Sono molto contento di poter essere oggi nella patria dello stile e dell'eleganza. È un onore essere qui con voi. Cara Presidente Marcegaglia, La ringrazio per l'invito.
Ladies and Gentlemen,
The governments and parliaments of Europe are presently embroiled in heated debate on the future financial and economic structure of the EU. Also the German parliament. Under a new fiscal compact, economic and monetary policy in Europe is to be more strongly coordinated in the future – and hopefully stabilised. With the fiscal compact, a new course is being charted for the future of Europe. But not everyone in Germany says this course is the right one.
Ladies and Gentlemen,
we find ourselves at a historic crossroad. In this precise moment, we Germans must never dare forget what this Europe means for us.
Berlin's new centre is just a stone's throw from the German Bundestag and the Brandenburg Gate. 23 years ago, the Brandenburg Gate was the scene of Germany's celebration of unity, peace, democracy and freedom. On that cold November night when the most horrific symbol of the Cold War fell: the Berlin Wall. The images of people dancing for joy on the ruins of the fallen Wall became part of the world's collective memory. Everything seemed possible. Europe embarked on a new era.
Back then, Italy genuinely rejoiced with us at the fall of the Wall. The people in Bologna, Naples and Bari were among the first to warmly welcome the people from East Germany to Europe. We have not forgotten this.
Ladies and Gentlemen,
That was more than 20 years ago. In the meantime, the European Union has undergone a tremendous surge in development – in political and economic terms. The Union has enlarged itself towards Europe’s East. And with the Euro, it has given itself a common currency for the common economic space.
In the past 60 years, the European Union became an extraordinary success story: in society, culture, politics and the economy. Like no other continent, Europe has come to stand for peace, freedom and prosperity in the eyes of the world.
Today, despite this splendid success, the European Union finds itself in the midst of its greatest crisis since its founding. We are faced with a crucial question: Are we strong enough to continue the success story of European unification? Or are we on the verge of a relapse into nationalism and particularism? I do not want to sound overly dramatic, but I am convinced that more than half a century of European integration is at risk!
Ladies and Gentlemen,
More than any other country, Germany has benefited from continuous European integration. Especially at the economic level! The lion's share of our exports does not go to East Asia or America: 60% go to our neighbours right here in Europe, and only 6% to China. Hence it is eminently clear: Germany cannot do well if Europe is doing poorly!
We depend on our neighbours. Therefore, we cannot be indifferent to their distress. National egoism, not to mention arrogance, are short-sighted and dangerous.
Germany as the most populous Member State and the strongest economy, cannot retreat from its European responsibility. We must instead convincingly bring our own weight to bear in order to stabilise the common currency and reinforce the political union.
If this is what we want, we must now lay the foundations for ensuring that the European economy remains globally competitive in the future. This calls for discipline. We must slash new indebtedness and cut spending even more. All this is true. But it is not the whole truth. If 27 European states tighten their belts at the same time, Europe will starve to death!
The all too simplistic prescriptions of an uninspired cost-cutting policy seem to me much like bleeding a dying patient. The therapy for Europe calls for more imagination and greater economic expertise.
I am convinced that the route to stabilisation of this Union is not via contraction of state budgets alone. Instead – and above all – through new dynamics and new growth. And I know that I am not alone in this conviction. I know that important parts of business in Italy are thinking exactly the same.
Ladies and Gentlemen,
austerity versus growth. Consolidation versus structural change. For many in Europe, these are irreconcilable objectives. And at first glance they would indeed appear to be contradictory, precisely in times marked by scarce public resources and high indebtedness. And I know what I am talking about.
Ten years ago, Germany embarked upon this contradictory path. We ranked behind in all growth statistics. Back then, the cover page of The Economist read: "The sick man of Europe". And meant was Germany. That is not long ago.
At that time, German businesses grasped this more quickly than politics. The companies knew that only massive restructuring could preserve Germany's economic competitiveness on the global market. And they took action. The restructuring of the industry resolved the problem of competitiveness on the companies’s level. But it had a downside effect on society as unemployment increased.
In those days I myself was head of the chancellery in the cabinet of Chancellor Gerhard Schröder. It was clear to us that it was time for politics to make a change as well if we were to save the good tradition of Germany’s economic success as well as the benefits of the welfare state.
We had to cut state spending. And at the same time we had to develop structures that would enable our economy to grow again.
The reforms in the areas of social security were tough – pensions, health care, the labour market. But today’s strength of Germany's economy proves us right in the end.
Ladies and Gentlemen,
Italy is embarking on a similar course these days. The Italian government under Mario Monti and the people in the Belpaese are shouldering these challenges with great discipline and impressive resolve. I’d like to pay my respect and acknowledgment to your efforts.
In Germany we have not forgotten how hard and painful our own experience of structural change was. In retrospect, I have above all learned four things:
Firstly: We needed ten years for the turnaround, under far easier conditions! I don't want to discourage you by saying this – quite the contrary! But what I mean is: Change takes time, and it takes patience and perseverance! This is something the financial markets must finally realize as well!
Secondly: Change entails great pain and deprivation for the people. They cause doubt and despair. We must not have any illusions about this. Now, more than ever, politicians must be open and straightforward. If we wish to convince the people of the necessity of change, we must be able to offer sound reasons, transparent action and credible explanations.
Thirdly: Such profound changes have little prospect of success if politicians and businesses are on collision-course. A challenge of this magnitude to society calls for sensible, cooperative action by both sides. I have great respect for Confindustria for its exemplary approach here.
And, last but not least: We need to refocus on the real economy. For far too long, manufacturing has been considered a relic of the past in Europe. People said: "That's the Old Economy". Services and financial services were the doctrine of salvation proclaimed in London and Davos. Don't get me wrong! A modern economy needs a financial sector, but as support and not as an end in itself.
I was happy to see Il Sole/24 Ore just recently introduced a new section of the paper devoted to the real economy. I applaud the editor-in-chief, Roberto Napoletano, for focusing on those – I quote – "businesses, places and faces who every day fight to produce things that can be seen, touched and sold around the world".
A fine definition of the real economy! And precisely here, in front of you as entrepreneurs, I therefore say: All throughout Europe we need more respect for the hard process of real value adding. Far more than for the process of value-skimming!
Ladies and Gentlemen,
Today's strong German economy draws its strength from a strong Europe! And there cannot be a strong Europe without a strong Italy. There cannot be a strong euro without a healthy Italian economy! Italy is not the periphery but the heart of Europe.
Your country is a national microcosm of the challenges confronting Europe: First and foremost, there is the large productivity gap between North and South, an imbalance that has existed for centuries.
I know that my esteemed colleague "Super-Mario" Monti will not be able to solve such a deeply entrenched problem with a snap of his fingers. But Mario Monti has rightly said that the development of the Mezzogiorno is crucial for sustainable growth not only in Italy but also in the whole of Europe.
Secondly, there is the difficult investment situation affecting many businesses in Europe's South. Also here in Italy. The situation is dramatic. Instead of growth, the states of the South are threatened with a wave of corporate insolvencies. The number of corporate insolvencies has increased in Spain by 19% in 2011, in Italy by 17%. We urgently need an effective solution to the dangerous credit crunch that is presently strangling many businesses.
Thirdly, there is the high level of youth unemployment. Today a young person in the EU is more than twice as likely to become unemployed than the rest of the workforce. Here in Italy, young people call themselves "la generazione perduta", the lost generation. The newspapers are full of reports about the "fuga dei cervelli", the brain drain – young engineers, scientists and doctors who are leaving their country. This is not only a shame; it must also come to an end because it is disastrous for the future of any economy if rising generations are leaving the country!
Ladies and Gentlemen,
Europe needs a programme that brings hope to these millions of jobless young people and that offer them a real future.
Can the fiscal compact bring this hope? Can it lead us out of the crisis? Surely not if dogmatism leads us into a recession. Therefore: Our alternatives are not simply austerity or investment – instead it must be, consolidation and investment is the way to go. Intelligent consolidation in the euro zone means cutting back, but also investing where future growth will be generated.
I am convinced that Europe needs common sense, innovation and real value added. After decades of deindustrialisation we need a strategy of industrial renewal. Strengthening our continent's industrial base is the key to Europe's renewed economic upswing!
I believe that the sovereign debt crisis is in essence a crisis of competitiveness on the part of many states. We quickly need a strategy to strengthen our economies again. Therefore my group, the Socialdemocrats in the German parliament are working on an industrial renewal programme for Europe following the line: Investment in modernisation, promotion of research and development as well as expansion and improvement of the infrastructure will be on the agenda of this program.
Ladies and Gentlemen,
The economic revitalisation and reindustriali¬sation of Europe will not be possible without solidarity. And solidarity is more than just the fiscal compact.
We must establish binding rules for financial policy! That is the first essential step in order to remedy the design flaw of the monetary union. There must be binding debt ceilings and sanctions, clearly treaty-based, never without parliamentary control. And, where necessary, also entailing the transfer of sovereign rights. But this will not be enough!
A genuine financial, monetary and economic union of the kind we need goes far beyond this: It calls for a common consolidated corporate tax base for instance, as well as the common fight against tax dumping.
Furthermore, we must restore order in the financial markets. This includes a European financial market regulation regime that is worthy of the name. This also includes from my point of view the introduction of a financial transaction tax. It is only fair regarding the taxation practice in the real economy. And it makes perfect sense to directly invest the funds raised through this tax in the revamping of the European economy.
And last but not least we also need solidarity when it comes to the high sovereign debt. The previous practice of securing debt through ever higher indebtedness has proven to be terribly wrong. We need new ideas.
I have long been championing for instance for a proposal of the German Experts Council for economics. The proposal suggest the creation of a European Debt Repayment Fund. I am firmly convinced that such an instrument is in the long run necessary!. The idea is to pool the accumulated sovereign debt of the euro zone member states exceeding the 60% debt-to-GDP threshold into a common redemption fund with joint liability. A consolidation road map would then be drawn up for each highly indebted state, according to which the "outsourced" debt would be repaid within 20 to 25 years. The uniquely attractive feature is this: Every member state is responsible for its national debt. But: Thanks to the joint liability during the redemption phase, the participating states would enjoy an interest rate advantage on the debt held in the fund, which would simultaneously be used to redeem the debt.
We have to overcome the yoke of the debt burden in Europe. The European family must not allow itself to be divided by this issue.
Ladies and Gentlemen,
As founding states of the European Union and as Europe’s leading economies, Germany and Italy bear responsibility. Europe has always been strong when we have jointly lived up to this responsibility. This was the case 30 years ago, when Europe was in distress and Italy and Germany helped to master the crisis with the joint initiative for a Single European Act. And this will also be the case again today.
At the “Berlin International Film Festival” one month ago, the South Tyrolean director Gustav Hofer presented a moving film entitled Italy – love it or leave it. This film is not only a tribute to your country. It is a tribute to the love of the Italians for Italy.
Tomorrow, Italy will celebrate the 151st anniversary of its national unification. Congratulations on this anniversary!.
We Germans admire not only those 151 years but also the more than two thousand years of Italian history and culture. Time and again over the past two thousand years, European history has started in Italy. Has received key impetus from here in Italy. And time and again, Italy has pulled itself back up from the crisis. I am confident:
Per quanto si dificile, ce la faremo. Non c'é un'unica strada per uscire dalla crisi. Qualche cosa possiamo imparare dal passato. Ma dobbiamo anche prendere delle strade nuove. E sono sicuro: Tra qualche anno impariamo da voi – e dalla strada che ha preso l'Italia!
Grazie!