Habeck State Secretary Brantner: "We will not lose the economic war"

High energy prices cause enormous problems for companies and private consumers.

Habeck State Secretary Brantner: "We will not lose the economic war"

High energy prices cause enormous problems for companies and private consumers. Secretary of State for Economic Affairs Franziska Brantner told ntv.de that Russia's President Putin is using Germany's dependence on Russian gas as a weapon. This mistake must not be repeated when dealing with China.

"We have the chance to promote real globalization," said the Green politician. But the Federal Republic must say goodbye to the "cheap, cheap - no matter how it is produced and what dependencies we become" model.

ntv.de: Your minister, Robert Habeck, has appealed to the Canadian government for the delivery of a serviced Siemens Energy gas turbine so that Russia does not use its absence as an excuse for a permanent gas supply stop. The turbine is now being brought to Russia via Germany. Is Germany thus undermining the sanctions regime?

Franziska Brantner: As you know, gas is not sanctioned in the EU. Our main concern is to take away from Putin any excuse he would otherwise use to say, "That's why I'm not supplying you with gas anymore." We have to show that the current cuts have a purely political basis and not a technical one. Putin is waging an economic war against Germany over gas. We have to stand up to that, that's the goal. And with this in mind, the Federal Government spoke and negotiated with Canada - the EU Commission was also involved in the talks.

If this is an economic war, who is doing better now? We pay more money for gas, get less of it, but we have economic and social problems. Meanwhile, Russia's revenues are bubbling up. Shouldn't the sanctions make Russia suffer more than the West?

Now that's one of the pernicious effects of Germany's gas dependency that we've been talking about for months: Putin is sending less gas, and the prices for what's left are rising. That was the case even before the war began: In the months before, deliveries had been curtailed, and after February 24, large quantities suddenly flowed, but at extremely high prices. It's terrible, which is why we do everything we can every day to free Germany from these dependencies. That's why we're building LNG terminals, that's why we have to save gas, that's why we're ready to restart coal-fired power plants, and that's why we're now drastically accelerating the expansion of renewable energies.

Is there a danger that the West will lose this economic war with Russia?

The agreed sanctions packages are hitting Putin and the Russian economy hard. We expect a sharp collapse in Russia's gross domestic product and a massive increase in inflation. We are already seeing that investment has collapsed by 34 percent. The country has a shortage of numerous high-tech products and intermediate goods, industrial production is declining. But of course the situation is difficult. We have been preparing for months to mitigate the consequences of this conflict, especially for consumers. We have launched two relief packages with a volume of 30 billion, which will noticeably relieve the burden on citizens and will continue to do so. But it's not that we don't feel the consequences at all. However, we will not lose this economic war.

Another aspect of this trial of strength are the import sanctions against Russian raw materials such as ores and rare earths, which you are responsible for, among other things, in the ministry. How has the German economy progressed in the transition to new supplier countries?

The prices of individual raw materials such as copper have fallen again and we are seeing signs of relaxation on the market. Not only are Russian raw materials lost, but also products from eastern Ukraine, where it will take years to rebuild production facilities. There is also the problem of disrupted supply chains from China due to the country's corona policy, which is causing difficulties for our economy. My impression is that many companies are very conscious of where they can source raw materials and processed raw materials in the future.

How can the Federal Ministry of Economics help in this situation?

We support by building bridges and paving the way to countries that own raw materials. That's part of my job, so I was in Latin America in mid-June and held talks in different countries so that Germany could get a foot in the door. There, however, I had to realize that German companies have not accepted offers that were definitely good in the past, which does not strengthen our negotiating position in the current phase. We try to compensate for this penalty by offering higher standards in terms of water and energy consumption, pollution, but also by involving the local and indigenous population. In this way we can make a difference to Chinese buyers, which is quite desirable in some countries. In addition to the diversification of the countries of origin, we can no longer throw away the materials that are already here so carelessly, but have to reuse them.

As the?

Recycling and the circular economy are the order of the day. In addition, there is substitution, i.e. research into how other, more readily available materials can be used. For example, you can't build a solar cell without silver. There is a 100 percent dependency on China in the processing step - and silver is finite. As part of the start-up program, the BMWK supports a spin-off that I visited a few days ago in Freiburg, which also produces solar cells with much more widely available copper. When it comes to recycling, our contribution also consists of legal foundations such as the regulation on batteries, including recycling. We also need standards for imported products, otherwise there will be dumping and the competitiveness of domestic manufacturers will be unfairly reduced. These are all things that you don't change overnight, but we'll start with them.

For years, the German economy has benefited from cheap raw materials from Russia and made substantial profits. Now the energy company Uniper is faltering and needs state aid because of the high gas prices. does this annoy you?

We have to acknowledge that a lot of prosperity has also been generated in recent years, not just at BASF and Uniper, but for entire regions. But the model was: "Cheap, cheap, cheap - it doesn't matter how it's produced and what dependencies we have." That annoys me in the sense that I have always warned against dependence on Russia because Vladimir Putin uses economic ties as a weapon. But it doesn't help. We need to be smart about it now and set the right incentives so that not everyone is buying from China again in a year when prices fall, but that the diversification is long-term.

That is the question: Is the German business model of the German export nation, which is based on cheap raw materials, at the end? Or do companies not feel obliged to buy as cheaply as possible again after the end of the war and the Corona crisis?

The question is how is cheap defined? The lowest price is often cheap in the short term, but not in the medium term, as we are now seeing. The state will always save and support, but in return there are also expectations that companies will reduce their dependencies on raw materials and supply chains. Individual raw materials are often distributed all over the world, but the first processing step then takes place exclusively in China. You have to think about what can happen in our country or in other countries in the future? We are also experiencing this rethinking in the USA, France and other EU countries. Japan and South Korea are miles ahead of us. Studies also show that prices fall on average in countries where there is an active raw materials policy and companies are better able to weather crises. We are therefore revising our raw materials strategy and want to support new projects with investment guarantees. I will continue to travel in search of partners and try to bring actors together. That will have an impact in 10, 15, 20 years, but we have to set the course now.

It's not just about the resilience and success of the economy. The traffic light has also taken up the cause of making economic relations more sustainable and fairer. Are companies going along with this, especially in such difficult times?

My impression is that many companies are happy that Germany now has an active trade policy again, that we are turning to the world and finally working for a fair and free trade policy, that we are getting trade agreements like the agreement with New Zealand off the ground and that our voice can be heard in Brussels is. De facto there is no German trade policy, but an EU trade policy. I am happy when German companies start trading with more countries than the previous narrow circle, and when we facilitate this through trade agreements. But that has to be more sustainable. Saving the last ton of CO2 here in Germany, but tearing it down again through a trade agreement with rainforest deforestation, that must not happen either. There must be no self-introduced climate dumping at the expense of our companies, i.e. giving trade facilitation to countries that do not comply with climate protection standards. Sustainability is the essence of trade, it must contribute to climate protection.

Your party, the Greens, has struggled with trade deals in the past. In particular with the European-Canadian free trade agreement CETA, which is now pushing the traffic light.

In the joint committee, we want to eliminate one of the legitimate main concerns: the arbitration proceedings. We want to limit the scope for interpretation when it comes to indirect expropriations and what is known as "fair and equitable treatment", so that no complaints are made about our climate protection policy and we end up paying billions of euros in taxpayers' money. Past experience shows that otherwise foreign companies are better off than domestic ones. We also want to implement new sustainability standards as part of the review clause. We also want to implement the requirements of the Federal Constitutional Court for participation in the Bundestag and thus take account of some concerns from civil society. We not only want to strengthen the Bundestag, but also the European Parliament, but other countries must also join in.

The accusations from environmental groups and trade unions are nevertheless fierce. There is talk of a coup de main and parallel justice by the arbitral tribunals. Do you understand these allegations?

That is a procedural and a substantive criticism. After the first reading in the Bundestag, the second and third readings are to take place in the autumn. So there is still plenty of time for hearings. So this is not an urgent procedure. The text of the CETA agreement has also been known for years. I can understand that civil society actors want to wait for the joint declaration that we are negotiating with Canada. First of all, I am proud that it is the joint position of the Federal Government that we want this. Now we have to get it right with the EU and the Canadians too.

With all agreement to the remaining content, the criticism of the arbitral tribunals remains. Why is it even needed? Canadian and European courts in particular should be able to provide sufficient investor protection, shouldn't they?

It should be recognized that the CETA arbitral tribunals are quite different from those in Germany's older bilateral trade agreements. There are no ad hoc paid judges, so that judges are not always appointed who have already awarded large sums to companies in the past. As I said, it must still be banned that foreign companies are better off than local ones. The difficulty is that more than half of the states involved have already ratified the treaty. If the arbitral tribunals were removed afterwards, you would have to start all over again, which could make things difficult in some countries.

What about the standards in dealing with China? Take Volkswagens, for example, which manufacture in Xinjiang, China, where local Uyghurs are sent to re-education camps, forced labor and otherwise oppressed. Does this example show that we must continue to make compromises when it comes to human rights?

For this reason, the Federal Ministry of Economics has refused Volkswagen the extension of investment guarantees for this region. This is a good and important step.

Do you expect conflicts with China if the federal government no longer fully promotes these trade relations?

None of us say, "No trade with China!" But: "Please pay attention to where the dangers are and where and how you produce." And: "We have to get off the over-dependencies." This is also far from decoupling, but a sign of a more far-sighted policy appropriate to the geopolitical situation. It's all about this. We are already seeing that China has regularly abused economic relations against smaller EU countries, Australia and New Zealand. It would be negligent if we didn't prepare for it.

However, ECB chief Lagarde and US Federal Reserve chief Powell recently warned against the formation of economic blocs in world trade. Will globalization come to an end there?

For the first time we have the chance to advance a new, fair and sustainable globalization involving many countries in Latin America, Africa and Asia, instead of mainly China. This is actually a plus in trade and exchange. Also: I know the argument "If we're not nice enough now, it will be difficult" from the last few decades to Putin. People trusted that Putin would treat Germany differently from Lithuania if there was any doubt. Should we now trust that Xi Jinping treats Germany differently from Lithuania? Our European friends will perhaps forgive us once again for not being able to act as we should due to Germany's dependency on dealings with Russia. But I don't think our transatlantic friends would forgive us if we once again ignored all warnings just to gain short-term benefits. Germany is lucky with its generous friends, but we shouldn't risk making the same mistake twice.

Sebastian Huld and Jan ganger spoke with Franziska Brantner