Moody’s Credit Trends 2021 Germany & Austria

“As last year has shown, a global pandemic can turn everything upside down,” says Jens Schmidt-Bürgel in an interview with Sigmar Gabriel and starts talking about the greatest challenges facing the new administration in the USA. Sigmar Gabriel is the keynote speaker at Moody’s conference “Credit Trends 2021 Germany & Austria edition “.

Sigmar Gabriel sees measures to lead America back into the world of its partners. Joe Biden wants to show that Americans are back in international politics. There were never any true allies of China or Russia, but the United States was able to forge alliances. Joe Biden knows that even a country as large as the USA needs partners. Sigmar Gabriel sees this as an opportunity for international organizations as well.

Jens Schmidt-Bürgel questions whether Joe Biden will be able to reunite the country. The split in American society did not begin with Donald Trump, says Sigmar Gabriel. He sees Donald Trump more as a symptom of this split, which began earlier. Even with a four-year term in office, this split cannot simply be reversed. If the president is too absorbed in domestic affairs, he cannot appear in foreign affairs the way he used to.

The country with the “American dream” now has the lowest social mobility. In order to predict the life path of a child, it is now sufficient to look at the life path of the parents. The worst sentence by Hillary Clinton in her election campaign was to speak of the “deplorables“, which showed a contempt for people that accelerated the influx of Trump.

The USA sees China as its big competitor. The Europeans, on the other hand, see the Chinese as the “frienimies”, friends and opponents at the same time. In all policital parties in the USA, however, China is seen as the strategic opponent for US supremacy in the world. 600 years of centering on Europe are over, the axes of power have shifted. Barrack Obama spoke of the transpacific, instead of the transaltantic nation USA. The US aircraft carrier departed from the Atlantic for the Pacific.

Not Europe, not the Europeans, are filling the power vacuum left by the USA in the Middle East or North Africa, but authoritarian regimes. The American perspective has changed and it remains that way. Europeans have a different view of China, as Europeans also criticize unfair trade. For the US, however, trade liberalization resulted in the rise of China. Most of the people live in the Indo-Pacific region, and most of the world’s national product is generated. This is another reason why the USA is concentrating on this area and less on Europe.

In order to take relations with the USA to a new level, Europe must stop holding the USA responsible for everything. Sigmar Gabriel suggests that under the Trump administration it was easy to put the blame for all of the grievances on the United States. Many of Europe’s problems have nothing to do with the USA. Europe needed more effort. It could not be that French soldiers fight while German soldiers just take photos.

Why don’t we do a big joint project on hydrogen technology, asks Sigmar Gabriel. North stream, but also other pipeline deals with Russia were repeatedly sanctioned by the USA. Ronald Reagan, on the other hand, had the foresight not to burden relations with Europe because of this dispute. How do you deal with Iran? Could new disarmament offers be made with Russia? This is where the Europeans themselves should take the initiative.

Jens Schmidt-Bürgel asks about Europe’s lack of presence on the world stage. Sigmar Gabriel doubts that there is already an awareness in Europe of what is at stake for Europe. A new Federal Chancellor must first work out his standing. As in France, the German Chancellor would also be preoccupied with himself in the next few years. Sigmar Gabriel therefore warns against the hope that the two leading nations in Europe would quickly change the situation. The European Recovery Program, which requires more common policies, is within the realm of possibility. That is much more than a European army if the euro can be turned into an international reserve currency. If Europe continues to depend on the US dollar, there will be no sovereignty. A European Security Council could take a common look at the world. Sigmar Gabriel gives the example of Libya, where European partners support different parts of the civil war. Working together is important. Emmanuel Macron even suggested including the British, even though they were not part of the European Union. Central and Eastern European partners must be shown that the Europeans jointly take responsibility for the security of these countries.

Sigmar Gabriel recalls the agreement with Iran. The USA forbade business with Iran, so that not even a small Volksbank would have dared to do even one euro deal with Iran, because ultimately everyone was refinanced in US dollars. Sigmar Gabriel believes that security policy can sooner be made in the fiscal union. The dependence on the US dollar is a bigger problem than the risk of debt. The model of Switzerland, economically successful, politically neutral, is unthinkable for Europe as a whole.

Jens Schmidt-Bürgel addresses the delay in digitization and asks whether Europe is prepared for the challenges. Sigmar Gabriel sees the economic success model that Germany produces the best machines as no longer sufficient, because now it depends on the data. The classic, export-oriented model no longer works, so that Germany degenerates into a mere workbench. The increased complexity of planning processes in Germany is a problem. Africans criticize that at the time when Germans are building a cycle path in Africa, China has already completed two airports for Africa. If the whole world becomes poorer as a result of the pandemic, the damage will not be made good by the state doing everything somehow, but it depends on the private sector. The framework conditions would have to be set accordingly.