We need an active raw materials foreign policy – ​​otherwise there is a risk of a massive loss of prosperity

The German automotive industry condemns this war in the strongest possible terms. Manufacturers and suppliers in our industry immediately took action and stopped doing business in and with Russia. They have taken a clear position and stand united behind the economic sanctions imposed on Russia by the EU. Politics, business and society must now work closely together.

With every picture, with every look at the great suffering of the Ukrainian population, as recently became visible in Bucha, the desperate desire to put an immediate end to the murder and horror grows. And that’s why it’s right that the EU Commission wants to react with further sanctions. It is therefore all the more important now to make strategically good decisions that are responsible in the long term and, last but not least, economically smart. Measures that, in case of doubt, we can and must hold out longer than we all hope. This is the only way we can effectively counter Russian aggression.

Our economic strength is one of our most influential levers. Our economic model is indispensable for prosperity and thus for social peace in Europe. Many companies are global. They have production facilities in many countries, they serve sales markets from different locations and thus ensure growth and prosperity far beyond our borders. If security of supply were no longer guaranteed in Germany through our own political actions, this would destabilize us and could result in migration to other regions of the world. Our economic model and our prosperity would be endangered, the (social) consequences unpredictable, and our global influence would be declining – at all levels.

We are faced with a dilemma when we consider “banning the import of gas from Russia”. One thing is clear: Germany must become independent of Russian energy. And every company has to prepare for a possible delivery stop. The federal government, however, rightly did not immediately impose an import ban on Russian natural gas. Rather, it is working intensively on solutions that will reduce our dependence on Russian gas as quickly as possible and increase and ensure European security of supply.

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It is now important to relieve the economy quickly and precisely

The individual industries should not be viewed independently of one another. This is especially true for the gas supply. Even if the automotive industry is less gas-intensive than other industries, we are of course dependent on their products.

At the same time, the already rising (energy) prices are pushing more and more people and companies in Germany to the limits of their resilience. With the second relief package, the federal government has placed a focus on quick and concrete relief for citizens. This helps to reduce costs for mobility and energy. The government is thus sending an important signal: mobility means participation and must remain affordable for everyone at all times.

It is now important to relieve the economy quickly and precisely. The transformation engine for more climate protection must not stutter despite the challenging times – on the contrary, it must be boosted even more. The effort required for this was immense even before the war.

Even in view of the current challenges, the automotive industry remains committed to climate-neutral mobility. We are shaping it with vigour, and we are convinced that the transformation is now even more the right way. To this end, the companies are converting plants and investing around 220 billion euros in research and development by 2026 alone. This transformation is nevertheless a task for society as a whole. Everyone involved – companies, politicians and social partners – must work together towards this goal. Only then will it become a success.

The framework conditions have to be right for this. We have to learn from crises. We have to make courageous decisions – and not only when there is no other choice. The corona pandemic once again clearly revealed the many weaknesses and the need for reform in Germany: Our country is not competitive when it comes to digitization. In addition, there are far too slow processes and procedures, outdated administrative structures and an excess of bureaucracy. Adjustments were made here and there – but: an economic nation like ours can no longer afford progress at a snail’s pace. A permanent loss of growth and, as a result, loss of prosperity would be the bitter consequence.

Against the background of geostrategic developments, the reforms are all the more urgent. The consequences of the war hit the European economic area more directly than, for example, the USA or the Asia-Pacific region. If we continue to persist, effects on the willingness to invest are foreseeable both on the part of the real economy and on the part of investors.

Germany threatens to massively lose competitiveness

As a result of the triad of rising inflation, the challenge on important procurement markets and restrictions on export markets, we are now in a situation in which Europe, but especially Germany, is threatened with massive loss of competitiveness.

We must quickly draw conclusions from the crises. This applies to the development and expansion of the digital infrastructure as well as to the need for faster planning and approval procedures and in particular to the local conditions with taxes, levies and levies, which must finally become competitive again in international comparison. This is the only way we can achieve the necessary efficiency and resilience to remain geostrategically relevant and secure our prosperity.

Other European countries and regions of the world are also more independent due to different requirements. And we are in competition with these countries. Due to the existing high dependency on resource imports from these countries and world regions, it is therefore all the more important to set the political course in a technology-neutral manner.

The international framework conditions must also be set faster and more decisively. Germany and Europe need more commitment to free and fair trade. Trade and investment agreements not only contribute to growth and prosperity, they also support joint efforts to protect the climate, social standards and human rights.

We also need an active raw materials foreign policy and new energy partnerships. We must not allow the markets to be distributed without us. Here Germany, here Europe must act faster.

The international division of labor is a successful model that has brought prosperity and long-lasting peace to Germany, Europe and internationally. This model has not failed. Russia’s breach of international law must encourage us all the more to seek peaceful exchanges with other countries. Nevertheless, the industry will also learn from the current situation and will have to further diversify its supply chains, review risks and revise strategies. All of us – politics, business and society – are challenged.

The author: Hildegard Müller is President of the German Association of the Automotive Industry (VDA)

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