“As German Chancellor I want to be able to cope with the merger of the real and digital economy”, Angela Merkel from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

Angela Merkel at World Economic Forum 2015 in Davos (WEF, 22/01/2015)

Angela Merkel at World Economic Forum 2015 in Davos (WEF, 22/01/2015)

At the second day of the World Economic Forum 2015 in Davos the world was expecting the German Chancellor, Mrs Angela Merkel, in one of the most awaited sessions, titled “Global responsibilities in a digital age”. Mrs Merkel’s speech was warm and stimulating covering the hot issues of the European political agenda. To a disappointment though of the “digi-enthusiasts” who attended the main congress hall of the Davos congress centre, the only thing from the German politician’s speech that talked digital was the title of the session.

Indeed the “revealing insights” on digital growth inside Mrs Merkel’s speech in Davos were not substantial. Nevertheless, it is well worth it here to analyse her speech and show how more than often “digital” is used mostly as a trendy word by politicians to divert attention to other significant topics of their agenda. The reader will be able to understand quickly that what the Prime Minister of the greatest European economy talks about digital economy is rather common knowledge.

First, Professor Klaus Schwab, founder of the World Economic Forum, welcomed the German leader very warmly and with much honour. He said “you really belong here to the family in Davos!”. There is definitely no warmer regard to be addressed than that. Mr Schwab also gave her the stimulus of the day, the ECB’s decision for Quantitative Easing, which was on its way from Frankfurt.

Terrorism in Europe

Mrs Merkel, as Francois Hollande also did one day later, she introduced us to her thoughts with a reference to the Paris’ horrible attacks earlier in the month. The German Chancellor treated the issue of terrorism and security fears in Europe in a very rigid manner. “We are facing challenges that do not stop at the borders of Europe”, she stressed. Exactly like Mr Hollande, who had probably studied very well Mrs Merkel speech before landing in Davos, she mentioned the solidarity demonstration in Paris, where millions of citizens took part. Mrs Merkel, argued that in Europe lately we had to fight for and defend the things that we take for granted, like freedom of expression or freedom of press; some perennial values of the European culture.

Ukraine

From Paris the experienced politician passed on to Kiev, where she talked about the Ukrainian crisis that hit last year Europe. She actually admitted that the Russian attack was rather unexpected. The very principles of European peaceful coexistence were violated, she underlined, with the illegal annexation of Crimea. Nevertheless, she made it clear that Europe has learned its lessons from world war conflicts and thus a military response to Russia would not be successful. Hence, she argued in favour of sanctions against Russia as the only peaceful European way to react on this imminent threat. She also confirmed that Europe is already ready to lift them but “we are not there yet”. Instead, Mrs Merkel said that Germany together with France are trying to bring a diplomatic solution to the table.

Black or White

Interestingly and relatively fast the German “Iron Lady” went on by speaking about the European economy. She acknowledged that still Europe is facing some great challenges, particularly referring to the crisis in the euro area. Trust is not yet earned towards the eyes of investors in the Old Continent. Further, she made a very interesting point on the Austerity Vs. Growth debate. She insightfully argued that there is no black or white in life and neither in politics. She said she was convinced about the need for what seems to be a hybrid “growth oriented sound fiscal policy”. So, in short, Mrs Merkel revealed to the world here that austerity can be growth oriented as well. Having gained the sharp interest of her audience she continued by pointing out that we need in Europe investments by the state but most of all an “environment for private investors”.

Germany does not influence ECB

Answering to Professor Schawb’s relevant remark about the position of Germany on Quantitative Easing, Mrs Merkel being perfectly diplomatic underlined that the ECB is an independent institution and will always be. What she meant with that is that Germany has nothing to do with ECB’s decisions, namely the much awaited QE (Quantitative Easing) that was to be launched on that very same day. Apparently many senior participants of the World Economic Forum this year would disagree with her. For instance a senior executive of an international organisation said to us unofficially during a coffee break at the conference: “Better late than ever! QE should have been launched at least one year ago, but Germany did not allow that”.

Overlooking the theoretical commitment of Germany to ECB’s independence, whose Board of Governors by the way is heavily represented by the strongest European economy, the German Chancellor spoke about the simultaneous need for reforms. She certainly welcomed all the European member states that have been all the way down that road like Italy, Greece and France soon to follow, as she reassured.

Digital Growth

It was then finally the first time in her speech that Mrs Merkel mentioned the word “digital”. As we were all expecting for her to fulfil the essence of the session’s title, “Global Responsibilities in a Digital Age”, we saw that for Mrs Merkel “digital” means primarily quality employment. Describing “digitisation” as a phenomenon, the important politician expressed her open content that the Commission is giving the importance it should on the “digital agenda”. While we know many people in Brussels who would heavily argue on that, Mrs Merkel did acknowledge that the EU is lagging behind on digital economy compared to the USA and some asian markets.

Moreover, the German Chancellor interestingly commented that “we need to find the right mix between protection of the data but also freedom to use that data to develop new products”. After trying to set the boundaries of “data protection” in one sentence, a rather complex matter in Europe today, she added: “as German Chancellor i want our economy to be able to cope with the merger of the real and digital economy”. She went on by saying that if Europe does not adjust to this digital era, it will use its competitiveness. She closed this brief “digital chapter” of her political discourse by stressing that the potential of digital economy in Europe is massive, “with our huge single market”. But Europe needs to become “more rapid”, “more competitive” and “less regulated”. We are sure many digital single market evangelists in Brussels would like to shake her hand after this last statement.

Germany does not spend

“Some people accuse us of being too tight with our money as regards to budgetary policy”, Mrs Merkel continued. She clearly wanted to explain to the people that “accuse” her why she does not like to spend the German taxpayer’s money for the internal economy to grow. Mrs Merkel argues that everybody should remember that Germany is the biggest European labour market, with 43 million people, out of a total of 80 million inhabitants, active working force. She also said that more than 6 million people will go to pension in Germany. “If we are not solid with our money and try to keep our debts down, then we will leave a very heavy burden to the next generation”. That would be simply “irresponsible” she stressed. For Mrs Merkel, like that Germany is able to increase internal consumption of its citizens and be competitive in the world.

All in all, the leading politician of Germany made a very relevant and interesting speech at the second day of the World Economic Forum in Davos. However, touching a number of hot issues in the agenda, she did not devote a good part on the “digital age” that the title of the session would by default require to do so.

A general remark is that the word “digital” should be cautiously used in political discourse, not as a trendy stimulus to attract interest towards hot issues like the “Ukranian conflict” etc, but rather as in depth analysis of any digital policy matter per se.

Stay tuned at the European Sting, the only Brussels media that effectively broke the “Brussels bubble” and made it to Davos with live critical coverage of the most important sessions of the World Economic Forum 2015.

You can view her full speech from Davos here:

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