Speakers discuss the impact of the coronavirus pandemic on the European economy and the European Commission's proposed recovery plan.
SCHMEMANN: Good afternoon and welcome to today’s Council on Foreign Relations virtual meeting with Monsieur Philippe Étienne, the ambassador of France to the United States; Frau Emily Haber, the ambassador of Germany; and Mr. Stavros Lambrinidis, the ambassador of the European Union. All have long and rich experience in the global arena, and so I look forward to a keen discussion.
My name is Serge Schmemann. I’m a member of the Editorial Board of the New York Times, and I will be presiding over the discussion.
We have more than three hundred people registered for this virtual meeting and we’ll do our best to get to as many questions as possible during the Q&A. So let’s get rolling.
I don’t need to explain how important our topic is. The coronavirus has shaken our world to its roots, disrupting our health systems, our economies, our lives, our thoughts. Just consider how we’re meeting; I bet most of you never heard of Zoom three months ago.
Now, the European Union, which these ambassadors represent, faces the deepest recession of its entire history. I think economists expect a slump of at least 9 percent this year. And what your countries and what your union do to keep their economies afloat is probably a generational challenge of our times, and nobody has any idea where all this is headed. The European Central Bank—(inaudible, technical difficulties)—each individual country—(inaudible, technical difficulties)—plans, and the EU is now looking at a joint recovery plan called Next Generation EU—(inaudible, technical difficulties)—amounting to 750 billion (euros), of which roughly 500 billion (euros) would be in grants, 250 billion (euros) in loans.
Now, from a distance it would seem to be that this is what the EU is all about. But already we have the usual arguments and divisions—north and south, east and west, rich and poor, frugal and the rest—and a major source of resistance is that, to many—(inaudible, technical difficulties)—the large-scale joint borrowing looks like a step towards—(inaudible, technical difficulties)—federalization.
Let me start by asking you, Ambassador Haber. Your government was originally skeptical, but now supports the plan, Next Generation EU. Why the change of heart? You already have a huge German stimulus package—130 billion (euros), I understand—so why is this common pot so important? Why aren’t you with the frugal four: the Netherlands, Denmark, Sweden, and Austria?
HABER: (Off mic)—crisis. Actually, you described the existential character of it quite well. It affects lives. It affects (our ?) health. It affects the economy. It affects democracy. It affects all of us. And I believe that the iconographic imagery of this crisis were the coffins that you saw in Bergamo very early on, which for a moment—the moment of a couple of weeks, I should say—seemed to determine the narrative that could have governed the crisis. And that is the biggest existential crisis in the history of the European Union, and countries calling—pleading for help and not receiving help. This was what the first few weeks looked like because every country reacted in a very inward-looking way, not least because health care is in the purview of the nation-states.
But we quickly realized that this would come with a huge price tag and probably affect the future of the entirety of the European project because at its root is a sense and awareness of—(inaudible)—of the urgency of solidarity. And we quickly corrected the course, not only by the economic program that you alluded to, but also by supporting—by taking in patients, by sending health-care people—doctors, by sending medical equipment. And other European countries did too because we all realized this was going to be huge.
It’s also different from other crises because it has—it’s not consequent of policy decisions or the lack of policy decisions. This was a crisis that really hit us all—in different ways, that’s true, but it hit us all—and there’s no single responsibility for this development.
So that’s why we decided to correct course and to drop our former, shall we say, orthodoxies that we’ve always held in high regard, among which is the capacity of the European Union to raise money on the financial markets, and to hand out both grants and credits and loans to European member states. This is not, as you seemed to indicate, a mutualization of debt forever. It is, in a very specific situation, the acknowledgement that this is something that has to be confronted by all European states according to their economic and fiscal capacities. These debts and grants will be paid back, albeit by all European states and to the degree of their role and proportion in the general budget.
So, yes, we’ve changed course. We’ve dropped orthodoxy, but we did it tailor made to a specific situation, to an enormous sense or urgency, and realizing if we don’t do it, well, it’s going to revisit us, not only in political terms but also in economic and in health-care terms. This is big and we need to confront it together. Otherwise, the European Union will undermine the very ground it stands on.
SCHMEMANN: Could I just ask you a very specific and technical question that I haven’t fully understood? Your constitutional court has ruled about the bonds. Can you explain what this means, and how this will be overcome, and whether this is a serious handicap? This is sort of a side thought, and if you could address it—
HABER: It doesn’t relate to the present crisis and it doesn’t relate to bonds. It related to an earlier program of the ECB, and the only thing the constitutional court did was question whether the ECB had done what is—was in the purview of its responsibilities, and that is scrutinizing the proper proportionality of any such credit program that it implements. So it’s not related to the present crisis. It is related to a specific earlier lending program, and it is just asking questions on proportionality of—economic proportionality. This was something where an answer will actually solve the problem.
SCHMEMANN: OK. Thank you.
Ambassador Étienne, your president, Monsieur Macron, has been a very strong advocate of joint action and, in fact, of Eurobonds, and perhaps of the very mutualization of debt of which Frau Haber spoke. There is an almost instinctive resistance in many EU members that smacks of creeping fiscal union. Do you see this recover—this package as a vindication of President Macron’s visage—vision? Is this a Hamiltonian moment for Europe, as some have called it?
ÉTIENNE: Thank you. Thank you, Serge, for the question.
I don’t think it is about vindication, or it’s—every time, you know, these—and especially when difficult decisions have to be taken by all member states—(inaudible, technical difficulties)—on the basis of Commission’s proposals, everybody has a voice in it. And it is true that President Macron made a strong appeal. Even in his electoral campaign, Europe was at the core of his proposals. And after being elected, he made a clear appeal to more—to more European integration and the core issues of—including everything which can be more conducive of what he called European sovereignty. And in this—in this respect, what has been proposed by Chancellor Merkel and President Macron, what has been proposed now by the European Commission, what is being indeed now discussed among all member states, which has been positively welcomed by the European Parliament, is I would say something which is both very—which has very much to do both with solidarity and with sovereignty.
We are in together, of course, as European member states. And this idea of a recovery instrument based on loans on behalf of the EU to finance a recovery, to help the most severely-hit sectors and regions in Europe, is absolutely necessary to—in a spirit of solidarity, but also to reach results and to avoid a divergence of the European economies and regimes which would be really very, very detrimental to all of us—all of us—because we have a common currency. We have the euro. We have an internal market. And we must absolutely be sure that the recovery in all our regions/economic sectors will be strong enough to avoid distortions/divergencies, which would be absolutely dangerous for the—for the survival of the European Union. Though it’s true that President Macron—he mentioned it to the Financial Times in an interview a couple of weeks ago—has indeed invested much capital, but again, it’s only through an agreement with Germany that we can move things. Which doesn’t mean that the others have not now to shape together with all of us the future decision on the basis of what the Commission has proposed.
And just a word about the second key notion for me, which is sovereignty, which was the basis of President Macron’s proposals in his Sorbonne speech. It’s also a condition for the Europeans to remain masters of their—of their future. We need to overcome this crisis to be—to be able to shape, together with our American allies and in the world, our future. It is a reason why in the French-German proposals there is, of course—(inaudible, technical difficulties)—but there is also a set of other proposals considering a(n) EU health strategy, because like Emily said it was not a—it is not a(n) EU legal competence. But also, to base—to have this recovery based on digital and green transitions—the green strategy is absolutely crucial—and about the idea of economic and industrial sovereignty, which is absolutely crucial for the future of our economies.
So you must see the whole package, and the two words of “solidarity” and “sovereignty” are for me the key—the key notions.
SCHMEMANN: Well, I’d like to get back to that green element later.
But first, let me ask Ambassador Lambrinidis. This crisis, I think, as both ambassadors have already mentioned, is—what has become clear to all of us—is truly global, and it would seem logical for the world to come together to search for solutions. Yet, in many ways we’re seeing the opposite. We see borders closing, countries competing for resources, and I suppose we see this very strongly in Washington. We see Washington pulling its troops out of Germany, itself out of the World Health Organization. Can the European Union persuade its own members and the United States that this is not only Europe’s moment, but perhaps the world’s moment? How would you persuade the United States that this is a time to seek greater cooperation, not more competition necessarily?
LAMBRINIDIS: Well, I would do it by focusing on the challenges COVID has revealed to us and on the best way that we can possibly address them.
One challenge is an economic one, without any question, and it relates both with the way that our economies have been structured and are working internally, but also in the—in the way that the international trade system works itself. The EU and the U.S. are the—are each other’s biggest trade and investment partners by far, and probably the biggest artery for the world economy as well. Back in the financial crisis, we came out of the crisis as fast as we did because international trade was boosted. And there’s no way we’re going to get out of this crisis and recover as we all want to, especially given how interdependent our two economies are, unless we manage to do it again through openness, both in our own trade but also in the world trade.
But our economies have been hit and revealed other things as well. There have been economic inequalities that have hit us through globalization that COVID came and sat on. You know, we’re doing this through Zoom, but you know, there are not too many blue-collar workers here in the U.S. or in Europe that could do Zoom because their jobs weren’t based on discussions; they were based on actual production. They were most hit. In this country, you know, blacks, other minorities, because they have many of these jobs, were hit more than others. If you look at the small and medium enterprises, they were particularly hard hit. And if we’re going to get out of this recovery effectively, we’ve got to be able to support them. More than 80 percent of our economy is based on SMEs and there’s no way that we’re going to be recovering if they’re—if they’re going to be going bankrupt. So there’s a lot to work there.
Then you come to the world. And I think that’s also very important because a second argument that I use when I talk to my U.S. counterparts is that, you know, there are many people running around the world today acting like Mother Theresas and trying to show the world that presumably or presumptively they are the ones caring about the rest of the world. But in fact, it is our collective response to COVID that has been, including supporting the WHO and other multilateral organizations that have made the real difference. The WHO is out there on the frontlines because of EU funding and because of U.S. funding, among others—they are the biggest funders—to ensure that in some of the countries where the health system is collapsed that people will not be dying. We, as Europeans, have set up a Team Europe—you know, both the European Union and all the member states together—a Team Europe approach. More than—at this stage, as we speak, more than thirty-five billion euros are being allocated around the world to support not just people from dying, but also the economic recovery of other countries. We have a responsibility at this moment of leadership.
And finally, let me say on this question our values have also been hit. There are discussions and narratives out there that are trying to convince the world that democracies are messy, ineffective, selfish, incapable of working together. Look at the Americans and the Europeans, they’re fighting all the time over trade, over this, over that. Come to us, the authoritarians. We are nicer. Yes, the freedom is not there that much, but you know what? At least you are calm. You’re not fighting. You know, we care for you. All that has to be debunked, and there’s no way it’s going to be debunked unless the EU and the U.S.—the two most—the two biggest, most open, freest economies and societies in the world—get together and collectively send that message on values.
You know, as I’m looking at all the tracing apps that we absolutely need if we’re going to be coming and opening up effectively—and Europe is beginning to do so—I’m thinking not just of the great promise of them, but also the great potential downside. We have never seen and would never see surveillance at the scale of tracing apps being in the wrongs hands of the wrong governments or companies. Do we or do we not, as democrats around the world, have a responsibility to set the standards for the use of artificial intelligence that will be taking over our lives for decades to come? Or are we going to let it into the hands of China, for example? And we’ve seen what it’s doing in Xinjiang with the Uighurs.
So you’re asking me how I’m convincing our American allies and friends? These are some of the arguments that I’m using. It’s a very serious business as we’re coming out now. And what we have done in Europe—and I’m sure we’ll get a chance to talk more about the details of the unprecedented European economic package for recovery—but what we have done is critical for the U.S. as well. If the European economy rebounds—and it will—our predictions is for 7.7 percent drop in GDP in 2020. In the U.S., that prediction is about 6.5 percent. But of course, we started from different levels. Next year, we’ll recover—predictions are, again—perhaps a little more than the U.S. In the end of the day we will both be, by the end of 2021, about 1 ½ percent below the GDP we had before COVID. OK. So given how important for U.S. business is a strong European economy—that’s where they invest more than anywhere else and they make most of the profits in the world—given how important it is for us to have a strong U.S. economy—more than 60 percent of all foreign investment in this country, jobs created in America, come from European Union companies—given how important that is, Europe coming out of the economic crisis effectively is the hugest boost the U.S. economy can have, and vice versa.
We are in this together. We are not in this alone. And if at the beginning we made the mistake of thinking we were, I think we’re quite woke—(laughs)—as it were, to the fact that that’s not the case anymore.
SCHMEMANN: Yeah, yeah. Now let me follow up on one of those points with you, Ambassador Haber. You said—Ambassador Lambrinidis, you said that the values in democracy in the whole world have taken a hit, and I was going to ask you, Ambassador Haber—I think it was Churchill who said that we should never waste a good crisis, and this one is about as good as they get if we want to change something.
Is there a silver lining here? Is there a possibility that we’ll come out of this stronger or are we watching all of our consensus and all of our institutions being permanently shaken?
HABER: I think European countries took a moment, as I pointed out before, but then quickly realized what was at stake. And as Stavros pointed out, the bilateral trade relationship is the single largest trade relationship in the world. If we say about Europeans we could work—we’ll be only—we’ll only fare well if all of us do, I think the same can be said about the transatlantic relationship, too, and that is we will only—Europeans will only fare well to the degree that the United States will, too. So this is something that we need to—we need to be aware of.
Silver lining? Well, the jury is still out there as far as the European Union is concerned. I think there is a general sense that not only do we depend on each other, but the rest of the world and the capacity of other countries to fight the virus will have an effect on us as well. So indeed there is the part of global responsibility, something that EU member states and the European Union have acknowledged when taking the initiative in shaping a global response, in seeking vaccines, in seeking therapeutics, in seeking diagnostics, and in shaping a coalition of more than forty countries, and a great number of NGOs, and organizations to take their share. So I think that is a silver lining because it shows that bilateralism, to some extent, has retained a boost.
I would observe, though, that while the United States participates in a lot of—let me call it correlated action in order to—seeking transparency on how to move forward, it is not actively participating in the multilateral effort to seek progress for vaccines, therapeutics, and so forth.
So in a way, multilateralism has gained a boost; in a way, it is under attack, the point that—you have mentioned it before—leaving the WHO at the height of a global health crisis, leaving international institutions or organizations at this time and stage may also turn out to undermine the very system that allows us to shape collective responses. So you see an accelerant for multilateral cooperation and an accelerant for going into—(inaudible).
SCHMEMANN: Thank you.
Just following up on that, I’d like to come back to you, Ambassador Étienne. You had mentioned the fundamental aspect of the European plan. In this—it’s another major difference with the whole American approach. In America it’s to get businesses cranking up again, including the oil and gas industry. It seems to me that Europe is using this opportunity also to add incentives for the broader green strategy.
Could you—could you explain a bit how this came so strongly into the European recovery plan—the whole green element?
ÉTIENNE: Yes, with pleasure. Of course it is not new. Before the COVID-19 outbreak, we had already agreed—many of us—on a very strong strategy aimed at carbon neutrality in 2050. And now, of course, we have this—and here you quoted Winston Churchill and, indeed, a crisis must not be wasted. It’s an opportunity for the European Union, as it is deciding on its recovery policies, to put this green strategy at the core of it because also we are not only aware, but also convinced that it is an opportunity for jobs, for innovation for jobs, and it is not only a necessity to combat CO2 emissions, greenhouse gases emission.
So here the EU has had in the past already a leadership role, and we need of course to have everybody on board. But I think it’s really a strong consensus in spite of all differences between national economies in the EU that we must lead and—because we think it’s really good for—not only for our societies but also for our economies and for the innovation capacities of our countries.
SCHMEMANN: Thank you.
Well, we’re getting very close to question time, and I’m really anxious to hear what people have to ask. But let me ask you first, Ambassador Lambrinidis, could you tell us what we, as Europe, in let’s say three years from now, five years from now, what is going to emerge from this? Where are we headed?
LAMBRINIDIS: In the European Union I think we are headed to a reignition of solidarity, which is one of the fundamental pillars of what we have been created on. And that solidarity will make the internal market much stronger and more cohesive, which means that our economies are going to be coming out of this crisis with difficulties, as the U.S. one will be, but in a much more solid footing than before.
You will see an emphasis, as Philippe said, on green recovery, and on sustainable development, that to us will be a humongous economic boost—a new growth strategy—but also an emphasis on digital—the digital economy. We’ve seen it through this crisis. How many of us, in fact, are working much closer to our computers than to our colleagues very often. The digital economy cannot be ignored any more, and you’ll see a boost there as well.
You will see a Europe that has a renewed confidence and approach to the rest of the world; a confidence that comes from the fact that even in our deepest crisis now, we’ve found it in us to be at the front lines of leading the world’s support, as Emily mentioned, including in issues such as vaccines.
We did not get out there trying to hoard anything, but we got out there trying to ensure that we collect the money to give to all the international organizations who developed this so that there can be an equitable distribution of those vaccines everywhere around the world. It’s not new for the EU, but we’ve always been seen as a soft power on this. But if you consider that 8 percent of the world’s population, which is the European Union, and about 22 percent of the world’s economy only, provides already before COVID more than 57 percent of all development aid in the world, building bridges, and schools, and hospitals, and bringing water in places where people otherwise are dying, you will see that you are dealing with a superpower of sorts that is much more open to the world—our economy is, our values are.
Together with the U.S., if we manage to forge that kind of benevolent coalition, we will go to a world, I think, in a few years’ time that is going to be a much more stable one. Now, will it be one with no conflict? No. I think the values conflict is there. I think the fact that some economies are developing with a very strong footprint of the public sector, of the government, or the economy, as opposed to our economies that are open economies—I think that those conflicts will be out there, and again, the question will be how can we best bring equity to the world economy. Will it be fighting it out alone in our shells or together? My answer is together.
Serge, here’s the thing. I feel that what we have done in the past few months is remarkable in many ways. It’s remarkable in the magnitude of the financial support that we managed to collect. Yes, it’s about 1.8 trillion, what you’re going to be seeing as a recovery fund, together with the new EU budget, which is about 13.5 percent of the whole EU-27 GDP. That is unprecedented. Yes, it has been more than 3.5 trillion just up to now in the immediate aid that we gave, including government guarantees and other things, and more than a trillion—about a trillion-three euro by the European Central Bank, so that is the monetary element coming in together with the fiscal one. That is unprecedented.
The fact that we managed to agree—I mean, we will have an agreement I expect very soon at the heads of state level as well—on a recovery fund that gets backed by all EU member states and does not simply include loans, but also includes investment funds. You say grants; I say investment funds—funds that will be collected in order to invest in the joint European economic security, and development, and growth, especially in the areas of the environment and of digital. That is very hopeful.
So you know what? I don’t like to sound like a cheerleader. I really don’t. But sometimes I feel rather good about what we have achieved, especially in light of what I have suffered over the years. Virtually every crisis that has come along is one more indication that the EU will collapse. In the financial crisis—there it is; it will collapse. Migration crisis, aha, that’s it; the EU is gone. Brexit; that’s it, it’s over. Everyone will be leaving. On the contrary, many more people in the EU in every single member state say today that they think the EU is better for their lives than they did three years ago. And now this. So I have a right to be, I think, optimistic about this, and I have the right—and we have the right—to be working on this.
The final reason I’m optimistic. I think that Emily and Philippe will tell you this better than I do: some people say, oh, you know, Germany and France came together, and they announced mid-May this idea of the package, you know, that eventually became the European Commission’s proposal more or less, et cetera. You know what? This doesn’t happen because Germany and France always agree on things. It happens because the EU is a very diverse place, and often Germany and France, together, bring the most collective view of the EU, and that’s not always to agree on. When it does happen, that is strength. And when it happened here, that is tremendous strength. The markets around the world, the moment that Germany and France announced their proposal, even before the European Commission came out with its own, rebounded. The euro has become stronger, not less strong compared to the dollar, even after the latest employment statistics that came out. Of course they were reversed since then, but still. So—
SCHMEMANN: I don’t want to interrupt you here, but we—
LAMBRINIDIS: No, I’m—interrupt. I’m done.
SCHMEMANN: —many people, many out there waiting to ask questions, but I must say your optimism is very contagious. I already feel much, much better.
So at this time let’s invite some members to join our conversation. I want to remind you all that this virtual meeting is on the record, so staff will now take it away.
STAFF: (Gives queuing instructions.)
We’ll take the first question from Arshad Mohammed.
Q: Thank you very much for doing this.
I’m sorry to pull you away to another topic. My question is for the German ambassador. President Trump has just said publicly that the United States will cut its number of troops in Germany to twenty-five thousand, confirming the media reports that emerged about ten days ago. I believe this is the first official confirmation of that intent. What does your government think about his publicly announced decision to do this? Have you been consulted about this? Do you have any idea when and how this may take place?
HABER: Thank you. We’ve been informed about this step. We know that the Pentagon has been tasked with working out the details of the step. What my government has said is basically our cooperation on military and security matters has always been very close and will remain so.
Setting that aside, I would observe that U.S. troops that are in Germany are not there to defend Germany; they are there to defend the transatlantic security. And beyond there—beyond that and beyond the tasks in the Euro-Atlantic space, they are also there to project American power in Africa, in Asia for interventions the Americans—the American military has undertaken in other parts of the world. So I would just underscore that this is about transatlantic security but also about American security.
STAFF: We’ll take the next question from Herman Cohen.
Q: Good afternoon, and thank you for your presentations.
One of the manifestations of the crisis in the U.S. was that there were millions of fully employed people who revealed that they were living paycheck to paycheck, so the loss of one month’s pay—they had no savings. So my question is, is this a phenomenon that appeared in Europe as well? And if that is the case, doesn’t that represent a failure of Western capitalism by not sharing enough wealth with the employee class?
LAMBRINIDIS: I can jump in and just say very quickly the following on this. There is a difference between the EU and the U.S. when it comes to unemployment figures. Part of that is based on, in fact, the starting points. So in Europe you have automatic stabilizers in place. When it comes to universal health care, for example, that of course by definition adds to a person’s income irrespective of what their actual salary is. But when it comes to laws in place that make it more difficult to lay off people and the policies to support people staying in employment in times of crises, you will see that the kind of support that we gave triggered those stabilizers automatically where already government funding was going while it gave the opportunity to bring new funding in things that we could more profitably invest in, such as, for example, a new instrument to support companies keeping people in employment.
So there is perhaps a difference when it comes to that. The automatic stabilizers in our two systems are different.
HABER: May I add to that? In the financial crisis of 2008, in my country we had set up a system of a short-term working allowance which now could be used immediately when this crisis erupted, which means that we compensated employers for the salaries even if their employees couldn’t work anymore or could only work short hours. We made sure that they retained their jobs and the government would step in by guaranteeing a large part of the salaries.
I think one data is quite interesting and that is, while in 2008 we had had 1.4 million people in Germany requesting support of a short-term working allowance, in this year, during the COVID-19 crisis, it has been over ten million people, which shows you to what extent unemployment would have risen, wouldn’t we have had the social infrastructure in place, making sure that people would retain their jobs, even in this crisis.
ÉTIENNE: If I may add myself something, of course we have those two differences. First, the social safety net is I think stronger in Europe, but also we have decided—like in Germany—to give in France quite a lot of public support, too, so that companies keep their people at their jobs, which is absolutely crucial when the recovery will start to—not to lose too many jobs.
But of course the question was a bit larger, I think, about capitalism, and I just want to draw your attention to one—to the fact that the G-7 presidency, which was chaired by France last year, has had a fight against inequalities as a core subject of our presidency. And one of the subjects which we have discussed was also the attitude of the business community. And one interesting initiative which was presented to our leaders, called Business for Inclusive Growth, has shown that there is, in Europe—but I am sure also the United States—a part of the business community which is now looking seriously at ways to address these problems of inequalities, both inside the companies but also across society. So it is a tendency, it is a trend which I find also worth being quoted.
SCHMEMANN: Thank you. Is there another question?
LAMBRINIDIS: Can I say that I don’t seem to be able to have my video working? Can someone help unlock it from there—the host?
STAFF: Ambassador, our A/V manager is contacting your assistant to assist you.
LAMBRINIDIS: Thank you.
STAFF: We’ll take the next question from Diana Lady Dougan.
Q: Good afternoon.
I have actually the verboten two questions, but they both deal with how the EU is approaching China. One of the things that has been sort of drowned out in recent weeks because of COVID-19, and the Black Lives Matter initiative, and with racism around the world is the issue of Hong Kong.
So my first question: Does the EU have any position on Hong Kong? And is there any—and I know no one wants to offend the Chinese, but it seems very sad when you have a bastion of free press, free enterprise, and freedom of speech that is a very important manifestation in Hong Kong—not taking anything away from all the racial issues that we have in various countries—I wonder, one, what is its—does it have any policies or is looking to create any kind of—not punitive, but some kind of incentive or pushback for the Chinese?
And the second one is about maritime. I think it has become rather starkly surprising how much the Chinese have moved into ownership and control of ports in various parts of the world, and I think one of the ones more recently is in Greece. And I wondered if the EU has any policies on issues of ownership of ports in Europe.
LAMBRINIDIS: I’d be happy to jump in initially on this if OK. The second question is a broader one and it has to do with foreign investments, including—(inaudible, technical difficulties)—in Europe understood and made it very clear, including in amendments to our regulations and laws, that countries that do not provide equal access to European companies in their own markets cannot hope to have the same kind of access to our own markets. So just in the past year or so we have amended our foreign investment screening laws. We have screening laws in place today, such as CFIUS here in the U.S., to ensure that investments that could threaten the national security of the member states and the EU more broadly are screened, and do not take place without mitigating for those dangers.
We also have changed our trade and procurement rules. We don’t allow foreign countries such as China that have fully subsidized companies to be able to come in with cheap money and publicly—and participate in public procurements in the EU. So generally speaking, we are changing those laws and that approach. We are very careful about this.
We are also not at all careful about offending, as you said, these other countries, including China, when it violates values or international legal principles. We have said that China is a very important partner in some issues, global issues, indeed. It has to be on board when it comes to combating climate change and moving to sustainable economy. The Chinese economy is the most polluting one in the world today. So we have to work with China on this, but we’ve also said that China is a systemic rival of the EU when it comes to values, and that is a decision that was taken by all twenty-eight at the time with the U.K. as well, and heads of state and government of the EU.
So we’re not at all naïve about China, but we also are very realistic about the relationship. We have to be able to have China and other countries together, including the U.S. Emily, I believe, mentioned before the importance of working together with the U.S. and international organizations. In our view, it doesn’t help to be moving away from the table because then the black hole left is filled by others. We don’t like them to fill it. Being at the table, whether it’s at WHO or the WTO, the World Trade Organization, everywhere else being constructive, having joint positions—Americans, Europeans—because we do share values, and then trying to move them to the rest of the world is the way to go.
You know, sticking our heads in the sand, saying we don’t like what China or anyone else is doing so we’re just going to be disassociating and going it on our own, most likely simply opens the door for China and others to be filling up that space. So, you know, strategy does matter. It’s not just the way we analyze the world; it’s also working in a smart way to ensure we’ll bring the change that we need, and there Europeans, including the state of—in the case of Hong Kong, stand by international law, stand by international agreements. We do not believe that a world where might is right is a world that is of any interest to the European Union or United States. We are a society of law who rebuilt after the worst war in the world, the worst international human rights violation, which is the Holocaust. We didn’t build ourselves as a kumbaya society; we built ourselves as the biggest, strongest, most open, most prosperous, and peaceful region in the world by standing by international law and the rule of law within the EU. And that is what we believe the solution is for the rest of the world as well.
SCHMEMANN: Thank you.
Do we have another question then?
STAFF: We’ll take the next question from Ryan Kaminski.
Q: Thank you. Thank you very much to CFR and the ambassadors for convening this meeting. On the—my name is Ryan Kaminski. I’m with the World Benchmarking Alliance.
On the green recovery, it’s great to hear the commitment to this. Just to get a little more granular on the topic of conditionality, is there thinking—or where is the efforts in this regard towards potential conditionality on either companies who are accepting aid, adopting green new policies or even assistance of states focused on climate conditionality or alignment with the sustainable development goals? Thank you very much.
ÉTIENNE: Well, maybe I can try to give an answer. The conditionalities in this recovery plan will not be of the kind they were in—through the previous crisis, after the financial crisis. But it’s a matter of good coordination, and we have a coordination of economic policies which is called—it’s a bit of a jargon—the European Semester, so it’s of course advisable, and I think it has been proposed to compare notes and to have a coordination of our policies also in the framework of this recovery plan.
What is important to understand—I think that Stavros has mentioned the word investment. Here we invest in the future, and the green priorities of sustainable development issue will be, of course, one of the main priorities of the spending. It doesn’t mean that there will be a micro-granular conditionality, but every program of the European Union has its own rules, and we will follow the rules of every program under which this extra funding will fall.
So the green priority is there to secure that, in every policy, including the agricultural policy, we will have a clear orientation, a clear priority for a green policy. And on the top of that, we will have this close cooperation when implementing the recovery instrument.
SCHMEMANN: Thank you. I think we have time for a couple more.
STAFF: We’ll take the next question from Damian Bednarz.
Q: Hi. Thank you very much for the opportunity to ask a question and for addressing all these points.
A very similar line of thinking as the last question regarding the green recovery, I was just wondering what the views are in terms of bridging that divide between the countries and the members that are climate ambitious, let’s say, and those that are maybe climate cautious—let’s call them Central and Eastern Europe. Has that divide continued? Do you see that there has been an improvement in that divide? And if so, what policies or what negotiations are going to take place over the next few months to bridge that divide to get everyone on the same page with the green recovery? And I’m wondering kind of more about the mechanisms, which is interesting. Thank you.
SCHMEMANN: Perhaps Ambassador Haber?
HABER: There are always divides in the European Union. That’s normal. It’s an organization of twenty-seven states with very different experiences, very different histories, very different national fabrics, very different economics, very different economies. That’s normal.
One of the reasons why the French-German agreement usually is important in the European Union is that we come from different vantage points, and if we manage to agree, for example, on economics and on debts, then it’s usually a template for the differences that other countries may have as well.
Yes, you are right. On climate and on environment policies you will find different traditions and you will find different positions, but in the present crisis I think a consensus has emerged that focusing on climate and focusing on environment will actually be a boost for the recovery. And that is the way ahead.
LAMBRINIDIS: Serge, if I may jump in just for a second to say the following: there is no question that a transition to a sustainable economy in Europe will be a huge growth booster, but also will leave some people behind. I mean people who work in coal today—obviously as we transit to what Philippe said, the 2050 carbon neutrality goal—will have on themselves and their communities great consequences, which is precisely why—and even in the recovery package that was just announced, you will see that the EU is setting up a transition fund. We are setting up a fund—a multi-billion-dollar fund precisely to be able to target European support to those areas of the economy that will be most hit in the transition to a cleaner economy, to a circular economy because if we don’t make sure that economy, that transition is fair for everyone, it will fail.
So we understand this, and we have no problem saying that sometimes the markets do not take care of those inequalities as changes happen, and we don’t care; eventually people will find a way. No. We think that we have to show European solidarity right now also to those people who will be losing jobs, and that will make the transition more fair and more politically acceptable to everyone.
SCHMEMANN: Thank you. I think we have time for one more.
STAFF: We’ll take the next question from Ezra Suleiman.
Mr. Suleiman, please unmute yourself.
Q: Yeah, we are in a terrible crisis now for a number of reasons. We know them. The pandemic is going to take us not—we will not be, as some people have suggested—it will be over once people start buying, and working, and so on and so forth. We are, of course, taking a hit, as has the United States, a big hit, and I think it will take a while to get back to where we are.
This calls for all the more—this cooperation among Europeans that some of you have just talked about—which I fully agree with—I think for the time being we have to count out the United States, which I think is also an opportunity for Europe to band together. And I think that Europe can actually play a much bigger role than it has. It has been somewhat reluctant to play a more interventionist role, a political role, and so on and so forth. But I think the United States leaves a wide gap, and there is no reason why Europe should not be able to—I mean, when was it? A few months ago or a couple of months ago, Joschka Fischer said, let’s count out NATO. United States is not going to be in NATO, et cetera, et cetera.
I don’t think he’s wrong assuming Trump gets reelected in November. I think yes, absolutely. Europe will take a big hit from the United States if Trump is reelected. It’s not looking so good for him now, but who knows what will happen in the next five months.
But I think that this—there are a lot of opportunities—a lot of challenges and a lot of opportunities for Europe which maybe finally it will seize—and I very much hope that it will seize the opportunity, and come to play a really important role, and see itself as a superpower in the sense—a sensible superpower, if I may say so, if this can happen.
HABER: May I react and voice my disagreement—(laughs)—not with the role of the European Union but with what you said about the United States. The United States is our single most important partner outside of the European Union, and there’s no doubt. And believe me, there are a lot of actors which will be observing very closely to what degree we convey a sense of alienation or a lack of cooperation. It will empower those actors that no one—none of us wants to empower.
The world is changing dramatically, and we’ve seen the balance of the world changing not in our favor, but in the favor of China, for example, but not only China, and there we’re carefully scrutinized to what extent they see fissures, or differences, or different strategies between ourselves. And should we reinforce that view, and should we reinforce that assessment, actually we are weakening ourselves because our collective clout to stand our ground in this changing world, with actors not entirely benign, it depends on our capacity to leverage European power, collective power. So counting the United States out is really a downhill road in weakening ourselves.
That being said, of course the European Union needs to become stronger. Of course it needs to be less vulnerable to threats and challenges. Of course it needs to be more capable to answer, and it needs to be at times—(inaudible)—take the lead in shaping policies as well. But this is not the case because of the United States. It’s the case because the world is changing, and sometimes American attention is focused on other regions of the world that are more of a challenge to American security than Europe is these days.
So we need to do actually both. We need to retain and work on the transatlantic alliance, and we need to work on European capacity to stand its ground on its own—both.
SCHMEMANN: Philippe, do you have a one-minute addendum?
ÉTIENNE: Yes. Well, I fundamentally agree with what Emily has said, but I join what Professor Suleiman has said in his question in saying that, while we need the U.S. indeed—here I approve what Stavros and Emily have said—if we want to shape together the world according to our values. And we need a common engagement in the multilateral organizations. We need to be together with the U.S. to reform the WTO—not only the WHO, but also the WTO—to have a level playing field.
This being said, we also need a stronger European Union, of course, and this stronger European Union needs to take for this—to reach this goal its own policies in its hand; for instance—which has also been the goal of some initiatives by France and Germany in the recent years in the field of defense and security policy, or in the field of digital and technological sectors, or in the field of energy.
So I see, like Emily, a future where—behind our cheerleader, Stavros, who has given the good outlook of what our future should be—I see a future where the EU and the United States should be really—(laughs)—thank you, Stavros—
LAMBRINIDIS: Give me an E! Give me a U! (Laughter.)
ÉTIENNE: —should be really together, and where the U.S. would understand that it needs a stronger Europe. A stronger Europe would be good for the prosperity, the security of the U.S., but we need also—as Emily said—that the U.S. remains involved because we have to work together.
SCHMEMANN: Great. Well, listen. Thank you very much. Thank everybody out there for joining today’s virtual meeting. I know everybody will join me in thanking Emily, Philippe, and Stavros for a very interesting and optimistic discussion.
One note: The audio and transcript of this call will be posted on the CFR website.
So all of you, stay safe.
LAMBRINIDIS: Thank you.