Question:

Ms Baerbock, Europe is mortal, as French President Emmanuel Macron recently warned. Is that true not only politically but also for the European internal market which is lagging behind the United States and China?

Annalena Baerbock:

Our union of peace did not come about overnight. So in these times when the war of aggression has returned to the European continent, strengthening NATO’s European pillar is vital. And also given the fierce global competition, I endorse the words of the French President on two counts: both as a warning and as a call for a strong Europe. The stronger the European internal market, the stronger Europe’s appeal.

Question:

But with all the bureaucracy and regulation, it’s more a case of Europe losing its lustre.

Annalena Baerbock:

Absolutely not. It is clearer today than ever before that the EU is our life insurance policy for peace and freedom built on the foundation of our rule-of-law principles – on values and rules. Yet this must not be allowed to impede us in times of crisis. In other words, streamlining bureaucracy in our European internal market is important – but so are clear and fair rules. When it comes to strengthening European competitiveness, we have other homework to do ...

Question:

And that would be?

Annalena Baerbock:

Fully tapping the advantages of our internal market. We finally need the Capital Markets Union so we can make up ground on our competitiveness. When it comes to environmental and biotechnology, but also semiconductors and artificial intelligence, European firms are in the global vanguard. But particularly in these key sectors, we don’t have enough venture capital.

Question:

So the glass is half empty?

Annalena Baerbock:

Definitely not. Europe is strong and innovative. In Germany alone, we have got more than 6000 start-ups in the AI field. However, venture capital in this sector totalled less than 4 billion dollars in the EU. The United States chalked up 30 billion in the same period. We are pulling out all the stops to improve here – particularly together with France. Increasing European investment in future technologies – that’s the name of the game.

Question:

Are you perhaps taking Airbus as a blueprint, the largest aeronautics and space company?

Annalena Baerbock:

Yes, in critical key industries we do need to pool our resources more – for example, also on defence we need to push for more Europe. Airbus is one example of how it was possible to set up a consortium within the framework of EU competition rules. When it comes to industrial policy, Europe must not be bogged down by internal competition but needs to hold its own globally also against the major players.

Question:

Macron is calling for a European industrial strategy. Is he right?

Annalena Baerbock:

What we need to do is follow a European industrial strategy instead of narrow-minded national interests. Even Germany as the world’s third-largest economic nation can only hold its own in competition with the US and China if we use the clout we have as Europeans. That is why we are currently working on a European industrial strategy in which EU players do not work against each other but with each other. Our internal market is the world’s largest integrated market. If we use this to our advantage, we wield global economic power, also when it comes to the critical and sensitive future technologies.

Question:

Because Germany alone would be too small?

Annalena Baerbock:

Large-scale production always brings down prices, of course. And if you have a big market, you can produce big quantities, as we are seeing in China. At the same time, their production costs are much lower. If we fail to keep up in Europe by cooperating with each other, we are going to lose out.

Question:

You were one of the first who warned against dependence on Russian gas. Is Germany making the same mistake with China?

Annalena Baerbock:

In a completely interconnected world, economic policy is also security policy. After all, one-sided dependencies make us vulnerable. Our National Security Strategy and our Strategy on China reflect this. We need an economic security policy which, parallel to the crucial tasks of strengthening European competitiveness and protecting the European internal market, also takes in extending our global partnerships as a third pillar. We are talking here about diversification and de-risking, not about isolation.

Question:

Diversification is, however, a very slow process. Particularly regarding the dependency on imports of critical raw materials from China, hardly anything has happened thus far. Would you like to see increased engagement here, also on the part of German businesses?

Annalena Baerbock:

In both politics and business, the spectrum is broad. Years ago, the Federation of German Industries warned against one-sided dependencies in critical areas, in particular with regard to China. And that is precisely what we are working to counter now in the EU. We are making sure that when it comes to critical raw materials no more than 65 percent of imports of a given resource come from an individual third state and we are developing alternatives by forging new trade partnerships and alliances around the world. However, we cannot fix decades of neglect of economic partners overnight. The policy of focussing on just a few markets meant that before I took office no German Foreign Minister had visited Malaysia since 2005 or been to Australia for 13 years. Then it is no wonder that we are now in the absurd situation of drawing Australian lithium almost exclusively through China. And that is what the Federal Government is now changing – together with German businesses.

Question:

Diversification is one aspect, protecting companies in domestic markets the other. The European Commission is considering imposing tariffs on imports of Chinese electric vehicles. Is that a good move?

Annalena Baerbock:

First of all, if China were not engaged in dumping in breach of WTO rules, we would not need to take action. The UEFA European Championship is about to kick off. Just like in sport, competition stimulates business. As a major exporter, Germany thrives on free trade. Protectionism is to our detriment. However, we cannot afford to be naive. If others do not play by the rules, it damages Germany as a location for business and investment. And if serious fouls are committed, just like in football, there have to be consequences. Otherwise we lose.

Question:

What does that mean in concrete terms?

Annalena Baerbock:

If we want to protect German and European interests, we cannot simply turn a blind eye if others use unfair methods. No matter whether it is China or the US. There are clear rules dictating that states are not allowed to provide such high subsidies without justification resulting in dumping and huge distortion of competition. The European Commission is currently examining whether this is the case for electric vehicles. After all, also in other spheres, China has made plain that it wants to combat its economic slump with at the very least an expansive if not even an aggressive export drive. While WTO rules are not being respected, we would be pretty stupid not to take steps to protect ourselves so as to prevent market distortions to the detriment of European industry.

Question:

The automotive industry is worried that this will trigger a counter-reaction meaning China will also impose tariffs. What is your message to these companies who are worried about a car trade war?

Annalena Baerbock:

Neither trade conflicts nor disproportionate tariffs are in Germany’s interest. However, shying away from or closing our eyes to reality is not going to save us either. It’s all about defending both market principles and free and fair world trade for the benefit of all. This also holds true for the German and European automotive industry. Of course we need to protect our interests here.

After all, we have seen once with Russia that presuming that “nothing awful is going to happen” did not save people from worrying about winter and about Germany not having enough heating and energy supplies.

Question:

But the automotive industry isn’t responsible for energy supplies...

Annalena Baerbock:

No, but we shouldn’t make the same mistake twice. The automotive industry is the backbone of our economy providing millions of jobs. We had a similar situation with steel in 2018. Here, too, China was providing massive subsidies to squeeze European producers out of the market. So the EU made plain to China that if this happens with electric vehicles and thus with key technologies such as batteries, we will again launch protective measures in the EU. We are also seeing similar tactics in the field of critical raw materials. Gallium was once manufactured near Hamburg. Chinese competitors forced prices down dramatically. The German company gave up. And since last year, China has only been exporting gallium – it’s needed for smartphones – if an export licence has been granted. If China were suddenly to halt supplies, we would not have any gallium. Japan had the same experience with rare earths in 2010. That’s why I warn against being naive. Our foreign policy is all about economic realpolitik.

Question:

The Chancellor is more reserved when it comes to tariffs.

Annalena Baerbock:

Let me say again, tariffs are not an end in themselves. Not for me either. I just don’t want a repeat of a situation in which others brutally take advantage of our naivety. And then we, the politicians, have to pour in billions to prop up the economy. Even a strong country like Germany cannot afford to do that twice. So, as the saying goes, better safe than sorry.

Question:

For months, the Federal Government has been putting off taking a decision on removing Chinese technology from the German 5G network. Who is holding it up?

Annalena Baerbock:

5G networks are now the central nerve system of our modern societies. Looking to the future, no car, mobile phone or job will be able to function without mobile networks. There are not many spheres which require as much protection as this critical infrastructure. If attacked here, we can be paralysed from within. It is thus no coincidence that many countries of the world, first and foremost those with strong economies, are taking precautions. The US, the UK, Sweden, Australia and also China have special security arrangements in place for their communication networks.

Question:

China, too?

Annalena Baerbock:

Yes. The Chinese Government is restricting foreign technologies in its mobile network. Why? Because they obviously know what can be done through espionage and sabotage. Just as China is claiming its right to protect critical key technologies, we as Europeans, as Germans, should set up the best possible protection.

Question:

So when will there be a decision?

Annalena Baerbock:

When we announce it.

Question:

You are considered one of the most China-critical voices in the Federal Government. You once called the Chinese President and Party Head Xi Jinping a dictator. Why? It’s surely not going to make the Chinese leadership any easier to deal with.

Annalena Baerbock:

You need a range of registers for good diplomacy – to be able to act quietly behind closed doors but also not paint too rosy a picture all the time in public. No-one takes you seriously otherwise. You need to hear, to listen, but also make yourself heard.

Question:

Shows of strength are something you need to be able to afford. The German economy is stagnating so the tough line isn’t achieving much.

Annalena Baerbock:

You are only strong if you have many partners – what is more, partners you can rely on because they share your interests and values. Unfortunately in the last two and a half years, I had to learn how many of our “natural” partners in the world we have offended in the past by not taking their concerns seriously. Take the whole of Eastern Europe, for example, in the face of the threat emanating from Russia. At the start of the Russian war, I began phoning around the world because we needed partners all over the world to protect our European peace order.

Question:

How did they react?

Annalena Baerbock:

What I often heard was: where were you when we needed you? Why don’t you do anything about our concerns. And some of those countries were right.

Question:

Turning to Taiwan, how seriously do you take the threats of the Chinese leadership to take the island by force if necessary?

Annalena Baerbock:

Not just myself but many others with me have identified a new rhetoric from Beijing in recent years in its dealings with many neighbours but above all with Taiwan. The Chinese leadership is threatening with war ships and planes and simulating a blockade of Taiwan. Other small states in the region are, naturally, concerned. Forward-looking security policy has the job of making plain together with all other states that we cannot tolerate a unilateral shift in the status quo and are committed to freedom of navigation. Also based on our own economic interests. Every second container ship in the world passes through the Taiwan Strait at least once a year.

Question:

It seems almost as if your Green Party colleague Robert Habeck is lining himself up to be the party’s candidate for chancellor. You don’t seem to be doing much in this direction. Have you given up on that one?

Annalena Baerbock:

The same holds true for Robert Habeck as it does for me: times are too turbulent to waste time on personnel issues a year and a half before the Bundestag election, particularly just before such a crucial European election. We all know that the world has not got more peaceful with the dreadful conflict in the Middle East. So as Foreign Minister I am doing even more travelling and am thus giving fewer interviews than my cabinet colleagues.

Interview: Dana Heide and Thomas Sigmund

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