Speech by Chancellor Gerhard Schröder at the World Economic Forum 2002 in New York

New York
February 1, 2002

Professor Schwab,
Honored heads of state and government,
Honored representatives of non-governmental organizations,
Ladies and gentlemen,

As Professor Schwab has already mentioned, and I feel the same way, it was a good and important decision to hold the forum here in New York. New York is not only a symbol of freedom and tolerance as well as of a flourishing world economy, it is also a symbol of refuge from persecution and hardship for large numbers of people from different parts of the world. New York was attacked by inhuman terrorists as a symbol of the civilized world as a whole.

These attacks were not just an attack on the United States, they were also an attack on the values that we all hold dear. This means, at the same time, that not just as a result of September 11, but also for this reason, we can and must know that no country in the world is able any longer to guarantee the security of its citizens without an increasing measure of international cooperation. Instability in a part of the world, the collapse of entire economies or countries, and the erosion of cultural and national identities pose threats to stability and security that extend beyond individual countries, indeed beyond individual continents.

This means that internal and external security are no longer separable from one another in today's world. This also means that security is the foundation on which a supportive and just society is built. Without security there is no fairness, no participation in social development, indeed no peaceful social development at all. As such, without security there are no peaceful prospects for mankind at all.

This forum offers us the unique opportunity to bring together the debate on shaping globalization, which began long before September 11, and the debate on improving security in the world, which has been conducted with greater intensity since September 11. As such, this forum can provide the impetus needed to resume dialogue on global security and global justice. Without global justice we will never achieve global security and without comprehensive security any attempts to develop global justice will be doomed to failure.

We need to provide new answers to the threat to stability and security at the national level and in international cooperation. The danger of a traditional type of military conflict between nations has been eliminated in many parts of the world. The greatest challenge of our time arises from what has been referred to as the "privatized" violence of international terrorism. It is important to recognize that this terrorism is not a consequence of globalization. Quite on the contrary. The sense of insecurity as to one's own identity and prospects for the future that create a breeding ground for terrorism arises especially in those regions of the world that are not participating in the globalization process.

I am certain that the fight against terrorism will only have lasting success if it is conducted under the banner of greater global justice. We will achieve security in a very comprehensive sense only in an interplay of material, social, ecological, and legal security and also, I would hasten to add, only in a climate in which there is an assertion of different and differentiated cultural identities.

When there is a lack of security worldwide the economy is the first to feel it. This emerged once again very clearly in the wake of September 11. Prior to the attacks we said: "Economic development requires peace, and peace requires economic development," and that was certainly correct. Today we would add: Security promotes development, but development also promotes security. The beginning of the 21st century has been overshadowed by a horrible tragedy, the destruction of the twin towers. But I think that a new international awareness and, as such, new international cooperation has arisen out of the ruins of "ground zero".

We are aware that joint international action is more important than ever given the growing level of integration between our economies. The ties that exist between us in this sector have become much more than just international trade. International direct investments and the related interpenetration of corporate structures have gained considerably in importance over the past decade. An example of this: Today, sales generated from German holdings in the United States are six times greater than German exports to the US. As a result of this fact a downturn in economic growth, such as in the American economy, has a direct effect - not just indirect as a result of declining exports - on Europe and, as such, of course also on Germany, and the same applies vice versa.

There are signs of beginning recovery in the United States and, at the same time, there are positive signs that the economic situation will improve in the euro zone and thus in Germany in the course of this year.

I am certain that in a world of close economic interdependence there is a need for strong international institutions to solve joint transboundary problems. For this reason we need to continue to strengthen the work of the World Bank, the International Monetary Fund, the World Trade Organization, and not least the United Nations. We have experienced the fact that internal and external security can no longer be separated from one another anywhere in the world, but we cannot separate internal and external development from one another either. There is a lot of truth in the well known phrase "think globally - act locally" and what this involves in every instance is the relationship between national policy and international cooperation.

With this in mind it is true that Germany is the only country in the world that has managed to merge the two separate states, into which our people was divided, to form a common state. It is also true that this was possible despite the fact that one of the two states, i.e. the former GDR, was literally bankrupt as a result of having had a centrally controlled economy.
I say this in particular to the non-German participants in the forum. We are very proud of the fact that we found the strength to complete the task, not least since there were many national and international partners and competitors who said: "Completing this task will involve such a huge effort that the Germans will become weaker as competitors on many international markets or will drop out altogether." When we take stock of the situation today and do so fairly and honestly, we find that just the opposite has occurred. The German economy is increasing its share of international markets and is, today, stronger than ever with regard to competitiveness, despite the enormous effort we had to undertake to integrate the country.
I feel it is important to underscore this enormous achievement, which illustrates the strength of the German economy, since I believe there are few countries in the world that would have been able to sustain an integration effort of this kind and, above all, whose economy would have been able to sustain an integration effort of this kind.

Incidentally, we succeeded in completing this integration effort without violating the European stability criteria we agreed on for the introduction of the single European currency, even if this is sometimes seen differently in certain bureaucracies. Despite this enormous burden we have not increased the government debt and, on the contrary, have pursued a policy of systematic budget consolidation.

I feel it is important to show that Germany has changed far beyond this over the past three years. We were faced with the enormous task - amid the process of achieving not just political unification but also economic and social unification - of keeping up with the changes in the world described by the term "globalization" and of staying in the lead in our response to the changed conditions in the economic underpinnings of our society. We were confronted simultaneously with the enormous task of social and political modernization and this both internally and externally.

I feel it is important to express in an international forum the extent to which we have broken with the traditions of the old Federal Republic in foreign and security policy matters. A very good tradition, in light of the events of the Second World War and fascism in Germany, was the pursuit of a foreign and security policy that ruled out involvement in military interventions. That was, as it were, an element of consensus in the old Federal Republic, which we referred to somewhat affectionately as the "Bonn Republic".

The changes that have taken place in the world have forced us to think anew about this question. The excuse that a divided country could not assume full responsibility at the international level was no longer available to us. We were pleased by it. As a consequence we had to change our foreign and security policy; our partners in Europe and everywhere in the world expected solidarity in an unrestricted sense and expected, as a last resort to be sure, but also without restrictions, our participation in joint military interventions.

I hope this makes clear the extent to which change in operative policy has become possible, but also the extent to which change in the thinking of the people is both a prerequisite and a consequence of this. We have done this with our partners - first and foremost with our French partners - in certain areas of foreign and security policy. In Kosovo, later in Macedonia, and now in Afghanistan in the United Nations framework, but also through our willingness to participate actively in Operation Enduring Freedom and, as such, in the military action being undertaken against terrorism. That was, as it were, the foreign and security policy aspect of our response and adjustment to changed conditions in the world.

We have taken into account the need for more internationalism in national policies, the right response to globalization, doing so in policies relating to the economic underpinnings of our society as well as to cultural and social "superstructures". Here, too, a few examples so that things don't get too abstract:

We have carried out a tax reform - in particular a corporate tax reform - that makes Germany a highly attractive place for investments of all kinds, both financial investments and business investments.

We have begun - not least of all in response to changes in the age pyramid in our society - to change the social security systems in Germany, from head to toe as it were, as a consequence of changed economic conditions, but also as a consequence of changed conditions in the age structure of our society. In addition to the traditional form of retirement pension - based on pension contributions paid in by employees and employers - we have established the principle of fully funded private pensions and in doing so have achieved two things: on the one hand a bit more security for those who are older and, on the other - just as necessary and determined - expanded options for creating a market in the private sector to address the question of financial security in old age. This market has been created and is growing at breath-taking speed.

I think both examples show that we are in the process of adjusting very rapidly in the domestic context to changes that have taken place at the international level as a result of globalization.

I have also pointed out that we have done and will continue to do the same thing in that which is referred to as the "superstructure" of society. What is involved here, again, is an increase in internationalism. We have created new citizenship laws and are in the process of creating immigration laws that make it clear that Germany sees itself as an open country, as a country that wants to be attractive to the world's best minds, and wants to afford them opportunities to do research and to work as well as opportunities for investment. The so-called "Green Card" program we introduced is only one aspect of this necessary and important change.

In the process that is now following we intend to focus on the educational system - which is quite fair as it stands but needs to be made more efficient - as well as on the question of career training for people whose past training had been outdated by economic progress.
These examples are intended to show that in economic and social matters we see ourselves as a country whose response to globalization is "more internationalism" and whose policies are and will continue to be directed towards more international cooperation.

As I approach the end of my statement - and I look forward to the ensuing discussion with you - I would like to mention one further factor that is part of this. When we ask what is the right response to the changes taking place in global economic base - in other words to globalization - then from our standpoint the answer is, indeed it must be that: "This Europe must be enlarged and, at the same time, it must become more integrated." Expressed differently: "Europe" and "more Europe" are our responses to the challenge posed by globalization. This is the reason why we, together with our partners, support enlargement of the European Union. not only to make markets in Eastern Europe more available, but also because we are pursuing a vision - that of making Europe - all of Europe - a place of sustained economic prosperity and above all a place of lasting peace. This can be achieved only through enlargement, on the one hand, and, with a view to keeping this enlarged Europe politically manageable, through more - and not less - integration, on the other. I feel it is important to say it is our firm conviction that our vision for Europe is not a model that others would be able to adopt sight unseen but rather our specific response to the challenges associated with globalization.

There is one last thing that is important to me in this connection. It is important to me that we draw the right conclusion from the tragedy with which the 21st century began - I made reference to September 11 - namely the conclusion that we need to create more international cooperation, since we know that joint international action is more important than ever, given the growing level of integration between our economies and since we know that we are linked a lot more through economic cooperation than we are sometimes aware of in our everyday lives.

What I would like to see and what I think is becoming clear at this forum is that a comprehensive security concept that brings together government, civil society, and the economy is the right response to the challenges being faced. What I wish you, and all of us, is a successful 2002, not just in an economic sense but also in terms of the ideal of promoting peace; it is for the purpose of strengthening this ideal that we have gathered here.