Mr Tharoor,

Professor Göring,

Mr Saran,

Mr Meier-Klodt,

Ladies and Gentlemen,

I feel very honoured to have been invited to speak to you here at the Asian Forum on Global Governance. 

In this wonderful city of New Delhi! Besides being one of the most important centres of modern India, it also ranks among the ten most popular cities in the world. And rightly so.

I have already greatly enjoyed discovering the city and its special architectural and cultural features for myself. At least a few of them, because time has been very short so far. 

And now to the Asian Forum on Global Governance. Its main topic this year is the Asian region and the challenges facing the world community. It offers you young executives from Asia, Australia, America and Europe an excellent platform for discussion and an opportunity to exchange views with high-level representatives of political, business and scientific circles. And to contribute ideas of your own.

And these we need. For of course the current development in Europe I shall be talking about today is not a purely European issue, and naturally suggestions and input from all parts of the world are extremely welcome. 

I especially wish to thank Mr Shashi Tharoor, the patron of the Asian Forum. From your own outstanding scientific and political career, Mr Tharoor, you are more familiar than many others with the worldwide interrelations that exist in our globalized economy and which we can and will never reverse.

Ladies and Gentlemen,

As you know, the Asian Forum on Global Governance is organized annually by the ZEIT-Stiftung Ebelin und Gerd Bucerius and the Observer Research Foundation. I know that the ORF is an important think tank” founded in 1990, with its headquarters here in New Delhi. To my mind this is a very presentable example of cooperation between Germany and India, particularly in the scientific field.

So let me try to do justice to this claim and my own task. And reflect on the question: What can Germany do in order to strengthen the multilateral framework in the European crisis? A great deal depends on finding the right answers to this question, for my city of Hamburg too. 

Because Hamburg is an international trading metropolis; Hamburg is the busiest hub of trade in north-eastern Europe, and the European centre of trade with what we generally think of as the Far East. 

Our port is the region’s most powerful locomotive of growth. Without the port the present economic significance of the whole metropolitan region would be inconceivable. Hamburg has one of the most modern container terminals in the world. And that has to work to capacity. Nothing is more painful to the people of Hamburg as a community than to see container gantry cranes idle, with no goods to load, or the port without its usual bustling activity.

And Hamburg is a european city. It is the nucleus of a metropolitan region which has five million inhabitants. That is to say, one per cent of the European Union citizens.

And I’m telling you, as economic experts, nothing new when I admit that the years of two-digit growth rates for the handling of cargo in the port of Hamburg had finally come under pressure as a result of the European and worldwide financial crisis. 

So in our own interests we had, and still have, every reason to respond to the crisis with wise policy. Because the efficient terminals of the port of Hamburg and the traditional trade relations that have emerged over the course of centuries form the basis on which the economy of Germany’s biggest maritime city are able to grow and flourish. 

We have kept our nerve, and have been able to do so because our economy is diversified. For Hamburg is an important industrial location, too; in fact it’s one of Europe’s biggest industrial cities. Trade and commerce has a strong industrial basis. That is one reason why we view the coming years with confidence. 

Ladies and Gentlemen,

I shall come back to this in more detail later, but let me at last mention the word euro”, which has inevitably featured in every editorial and every discussion forum in Europe and Germany for months as you can imagine. 

In order to understand the current problems of the eurozone you have to remember how the common European currency came about. 

The technical” background was that in the Maastricht Treaty of 1992 the member states of the European Union agreed to create an economic and monetary union by the 1st of January 1999. 

Even at that point there was much discussion as to whether a common currency should mark the final stage of a joint economic and financial policy or whether, conversely, a common currency would result in a joint economic and financial policy. 

But whatever the standpoint of the people involved, one thing was quite clear, and I consider that just as important now as at the time: the introduction of the euro was a political project. It was intended to serve the purpose of European integration and take it a step forward. 

And that has succeeded! Every schoolchild now knows that Europe is more than the sum of its various parts. We can all experience that with our senses, for example when we travel to countries that were hard to enter and even seemed sinister to many of us just twenty years ago, and with which Germany now enjoys good, friendly relations.

But in a Europe that is drawing together, the euro is more than just an arbitrary means of payment.  The euro is our own currency, in seventeen countries so far. Europe is a grand vision, and the euro has already made a substantial contribution to European integration. 

The euro is ultimately the foundation of prosperity in all the European countries, but in Germany especially.

And the crisis we are experiencing is not a currency crisis. It is a crisis of confidence. There are reasons for that. Investors and markets no longer believe some states can cope with the debts they have accumulated and restructure their still declining national finances by their own efforts.

But this distrust on the part of the financial markets is exaggerated. In spite of the difficulties we are all aware of, these economies are powerful enough to meet the obligations they have entered. 

In some of these states, in fact, the national debt is smaller than in certain economies in other parts of the world. 

That becomes even more evident when we consider the European Union as a whole. The GDP of the eurozone is currently 9,413,000 million euros, and the GDP of the whole of Europe is 12,638,000 million. An international comparison of the national debts of all states shows that the USA currently has a debt of 100 percent and Japan of about 230 percent. By contrast the percentage for the eurozone is 87.2 and for the European Union as a whole it is 82.5 percent. These are remarkable differences.

And yet there is this crisis of confidence. We must restore the confidence that is lacking with clear vision and vigorous action. And it’s my conviction that precisely in this point Germany must lead the way in strengthening the multilateral framework.

Help for countries that are finding themselves in heavy weather in this crisis of confidence is not easy to organize in the Europe we have at present.

We do not yet have a strong European government, and there is no institution that has the same scope for action as a national state in a crisis of this kind. The debates about the future assignment of certain powers of the national governments to the EU and possible referendums on the issue have rubbed salt into this wound.

This is a legitimate topic for discussion, and we must go on discussing it. But such debate will not change the European constitution in the near future. What we have had to achieve so far, and must establish more firmly, is pan-European consensus on the fundamental question of fiscal governance, of sound financial policy on the part of the governments of Europe.

We are on the right course now. Part of the consensus that we have to defend Europe and its currency was general agreement that all the European countries need financial stability and sound budgets. A European fiscal pact was concluded in the summer of 2012. After careful consideration we got the fiscal pact and the European Stability Mechanism off the ground, for the benefit of all.

This was an extremely important message to the financial markets: we will and can defend our currency! Solidarity within the EU is not just idle talk by the member states; it reveals itself in concrete, practical action.

Ladies and Gentlemen,

Just before an important debate in the German Bundesrat the chamber in which the individual states of our federation are represented a leading German news magazine asked its readers rhetorically whether we were about to experience the demolition of the European Dream. 

My answer was and still is definitely not! For a start, dreams can’t be demolished. And secondly, I’m certain that all the countries will realize that it is worth every effort to give concrete and permanent shape to European integration this dream which has come true. And such effort also involves identifying mistakes and agreeing on sensible changes of course.

That is why the fiscal pact and the European Stability Mechanism had to be established. And that was possible because it was clear in 2012 that the European Union is not just a union of member states; it is also a mutually supportive community, and Europe is determined to defend the eurozone by all the means available to it.

In 1992 Europe had not yet reached this stage, in spite of all the declarations of intent. True: in order to join the eurozone the member states had to meet a number of convergence criteria such as exchange rate and price stability, and more.

This standard established under the Treaty of Maastricht was termed the Stability and Growth Pact.

When the euro was introduced as a means of payment on the 1st of January 2002, twelve member states met the convergence criteria. With the exception of Denmark, Sweden and the United Kingdom, all the states that were members of the EU at that time introduced the euro as their common currency. 

After further accessions to the eurozone by Slovenia, Malta, Cyprus, Slovakia and Estonia in the years 2007 to 2011, the monetary union now comprises 17 of today’s 27 member states of the European Union. And in addition, the euro is the official currency of the Vatican State, San Marino, Andorra and Monaco. 

Over 330 of a total of 500 million people now pay with the euro and use it as their everyday currency. And sooner or later all new EU member states will introduce the euro. 

As it is, the euro is one of the world’s most important currencies already. And thanks to the prudent action of the European Central Bank it has guaranteed inflation rates of less than three percent throughout the eurozone for the last decade.

Incidentally, when the European Central Bank had decided to defend the euro by all means, a noticeable slow-down prevailed. The ECB  guarantees Eurosystem’s outright transactions in secondary sovereign bond markets that aim at safeguarding an appropriate monetary policy transmission and the singleness of the monetary policy.

It is not only the member states themselves that benefit by the euro; companies and Europe’s individual citizens also profit from low interest rates for government bonds, private loans and loans to businesses.

Companies operating internationally also reap considerable benefit from the monetary union because they can conduct transactions in the eurozone without the risk of exchange rate fluctuations. This is especially true of German companies because of their strong export orientation. 

So was that a false move, back in 2002? There is no denying that the rules for maintaining budgetary stability have not been applied as strictly as they should have been. 

But the overall situation changed fundamentally with the collapse of the US American bank Lehman Brothers and the resulting financial crisis. 

Not only did the financial crisis trigger one of the most serious economic crises since 1929. States had to provide hitherto unheard-of sums in order to save the banks and support the economy with stimulus programmes. In Germany alone we launched an economic stimulus package of over 50 billion euros. And it proved successful, as the country’s rapid economic recovery has shown. 

As a rule, these measures were financed by increasing the national debt. The level of debt therefore rose again considerably in many countries.

It was not then the euro itself on which the financial markets then focussed their attention; it was the excessive national debts of certain members of the eurozone. Even though as I mentioned before compared on an international level these debts often are not above average. And thus the question of the sustainability of public finances! That was and still is the problem, not the euro as such.

It is a fact, though, that Greece, for example, has lost all control of its national debt. Other governments had bitten off more than they could chew in the past and waited too long before taking counter-measures.

But it is also a fact that crises in Europe have always been used as an opportunity. This is a central and constant feature of the European movement.

And: compared with the state of the Economic and Monetary Union before the outbreak of the financial crisis, major progress has been made progress, too, in respect of European integration. So maybe the crisis has some positive aspects as well.

The survival of Greece is ensured; a temporary euro safety net with a volume of 440 billion euros has been created. Other countries have accepted help too, and have had to implement adjustment programmes. Spain, currently in the headlines, has a basically stable industrial foundation and will emerge stronger from this crisis.

In September 2010 a new procedure for coordinating economic and budgetary policy throughout the European Union was also introduced for the first time. The national budgets are presented to the EU Commission before being adopted by the parliaments. In other words: they are examined for compliance with the goals of the EU. 

To achieve long-term stability it is necessary to strengthen the preventive component. The Euro Plus Pact, a voluntary self-commitment of the euro states to cooperate more closely in the field of economic, financial and fiscal policy, was one step; the permanent European Stability Mechanism I have already mentioned, with a lending volume of 500 billion euros, is an important and major further step. 

Ladies and Gentlemen,

The most important lesson to be learned from all this is: we need a shared, common canon of values for sustainable public finance. Only then can we achieve long-term stability in Europe and the eurozone.

The historic national debt, which has accumulated in some countries over the course of decades, must not increase any further. That is why it is so important that many countries have now undertaken to ensure structurally balanced budgets. 

Is this undertaking sufficient? To my mind we also need a strategy which will enable the European Union to enforce the brake on debt”, as we call it in Germany; in other words, enable it to implement sustainable financial policy in the individual member states should it be necessary. 

In view of the diversity within Europe, this cannot be done by regulating all aspects of economic and social life uniformly from the headquarters in Brussels. That was never the objective of the European Union.

The objective must rather be to boost the competitiveness of all the members of the eurozone, and not to punish those that serve as a supporting pillar of the European Union. 

We need continued progress in coordinating financial, economic and social policy in Europe. We must bring the Economic and Monetary Union to life and here I emphasize both components: the economic and the monetary also by means of joint regulatory initiatives where necessary. 

Debates on regulation of the financial markets are in full swing, and of course regulation is a source of controversy within Europe and between the political parties. But I have the impression that one thing is gradually becoming clear to more and more Europeans: namely that the international capital flows lack the necessary cultural, social and also political background. Without a certain amount of regulation, without a common overall framework, markets and market processes acquire a momentum of their own.

That inevitably causes hardship and not only to individuals who lose their money: real businesses and real production processes suffer too. 

Two consequences of the crisis are remarkable:

Firstly, we are witnessing the development of a European job market. 220 millions of Europeans have the legal right to look for work anywhere in Europe.  Due to the varied traditions in Europe this has not yet fully arrived in the European consciousness so that less use is being made of this opportunity than for instance in countries like the United States. Or India. But the trans-border job market is slowly evolving in European minds and changing the culture. This protects our economy and our currency. Because this European job market is indispensable in a unified currency zone.   

Secondly: No one is really questioning Europe. Despite all the debates about the current situation, no one will be so self-serving as to leave the EU. It’s the other way around: Many countries would like to join. And one thing is certain: If we all keep believing in Europe, even if times are difficult, we will not have to worry about the future of the EU.  

I said I would come back to the city of Hamburg again, and its strong industrial basis; to the real economy that is much more vitally important and more useful to us than any speculation on developments that may be triggered by shifting figures around on computer monitors.

Hamburg’s cluster policy comprises the fields of logistics, aviation and renewable energy sources, life sciences, the maritime economy, the creative industries and the health sector. We hold a strong position in all of these. The aeronautical industry, for example, employs nearly 40,000 people in the metropolitan region.

Energy management is a major issue. As you know, Germany decided last year to abandon the use of nuclear power. In Hamburg as elsewhere the question of how to make better use of renewable energy sources is becoming increasingly important. This has both environmental and considerable economic significance for us, and there I see interesting possibilities of closer cooperation with Indian companies. Suzlon is already very active in this field in Hamburg, as you probably know.

Using wind energy is the center piece of our strategy onshore and offshore. Today, more headquarters of wind energy companies are hosted in Hamburg than in any other area in Germany, Europe and possibly anywhere.  

The media and IT sector is one of the industries with central importance for Hamburg’s economy. It employs about 110,000 people in over 21,000 companies in the city.

Germany introduced the debt limit the brake on debt” into its constitution in 2009. Hamburg has done so too. That is a good thing. And we are not seeking to comply with the limit through symbolic cost cuts and gigantic efforts; what we want to achieve is moderate development of expenditure. The two together economic policy geared to real value-added and financial policy directed consistently towards reducing debt will ensure that Hamburg and the euro remain good partners. 

Ladies and Gentlemen,

The relations between Germany and India which has long become an important industrialized country and is still on its way up are based on a long tradition of cultural interest, economic cooperation and mutual trust. They are intensive, and they are developing vigorously. 

That is very important for both sides. Especially in times when the capital markets and the real economy are being shaken by severe turbulence and the European and global economy are faced with considerable risks. 

With the world economy as interwoven as it is today both the real and the financial economy I hardly need to emphasize the need for trusting cooperation. It goes far beyond the field of container shipping which I mentioned at the beginning, and which is so vital for Hamburg. 

The Asian markets are no longer just production locations for Europe and America; the whole of Asia is a huge, dynamic economic region. And a glance out of every window here in New Delhi, too, shows just how dynamic it is. 

Everywhere in Asia, local demand is growing. Inner-Asian trade is increasing by leaps and bounds. And that is one of the greatest chances of economic development for us in Europe too. 

As booming markets for capital and consumer goods and as partners for cooperation, the Asian countries offer companies that are able to compete internationally totally new opportunities of growth and investment. Globalization through a worldwide division of labour boosts overall economic performance. Flourishing world trade that reaches all the corners of the earth brings new work and prosperity to many people.

But all this will only function in the long term if our politicians take on and maintain a formative role: if we make use of the economic opportunities offered by global work division while minimizing risks and correcting undesirable developments.

Where that is concerned we are ultimately all balancing on the same tightrope. The financial markets will lose their balance again and again if we let them walk the tightrope alone. Let us accept joint responsibility for realizing in good time where we have to spread the safety net. 

Thank you.