WEBVTT - Olaf Scholz Talks European Security 0:00:02.520 --> 0:00:07.000 Bloomberg Audio Studios, podcasts, radio news. 0:00:08.320 --> 0:00:11.119 Chancellor, thank you very much for joining us. I'm going 0:00:11.119 --> 0:00:13.520 to ask you about the things that you would expect 0:00:13.520 --> 0:00:18.480 me to ask about European security and some of the 0:00:18.520 --> 0:00:24.240 announcements around Tariff's But I wanted to start by making 0:00:24.280 --> 0:00:27.520 an observation about the last few weeks in Washington that 0:00:27.560 --> 0:00:31.840 we have watched this whirlwind of the new administration and 0:00:31.920 --> 0:00:33.879 the impact it's had, not just in the world, but 0:00:34.000 --> 0:00:39.400 in Washington and Elon Musk's Department of Government Efficiency DOGE 0:00:39.880 --> 0:00:42.720 has turned the federal government upside down in the time 0:00:42.760 --> 0:00:47.559 it takes to read Marrio Druggies report on European Competitiveness, 0:00:47.640 --> 0:00:50.400 let alone start to implement it. So I just wondered, 0:00:50.960 --> 0:00:53.120 when you look at the state of the European economy 0:00:53.159 --> 0:00:57.160 and you look at the pace of change now in Washington, 0:00:57.760 --> 0:01:00.400 does Europe need a DOGE of its own. 0:01:01.080 --> 0:01:06.000 No, we need a lot of changes when everyone needs them. 0:01:06.319 --> 0:01:09.640 So we have to work against red tape, against bureaucracy, 0:01:10.000 --> 0:01:14.040 all this, and there is a strong willingness to succeed 0:01:14.200 --> 0:01:22.000 with attempts about working against planning restrictions that make it 0:01:22.040 --> 0:01:25.240 too difficult to invest, and things like that, and it 0:01:25.360 --> 0:01:29.160 was my initiative, together with the French President, to ask 0:01:29.200 --> 0:01:33.959 the Commission to make proposals about a better European Union 0:01:34.000 --> 0:01:37.840 and to get written of red tape and bureaucracy, and 0:01:38.120 --> 0:01:40.880 they do so. I'm really confident that we will do 0:01:41.000 --> 0:01:45.360 our task and hopefully sensible things. 0:01:46.000 --> 0:01:48.800 But lots of sensible things have been said for years, 0:01:48.880 --> 0:01:50.480 and most of the things that were in the Mario 0:01:50.560 --> 0:01:54.400 Dragon Report have been said many times before. But the 0:01:54.440 --> 0:01:56.920 pace of change is so slow. And meanwhile, you have 0:01:57.000 --> 0:02:00.320 an economy that has been has not grown in the 0:02:00.320 --> 0:02:03.040 time that you've been Chancellor, while the US economy has 0:02:03.080 --> 0:02:06.000 grown seven percent. So don't you sometimes think that a 0:02:06.120 --> 0:02:10.040 kind of radical throwing up of things, a radical change, 0:02:10.400 --> 0:02:14.119 might be needed rather than same old statements. 0:02:14.400 --> 0:02:16.959 As you know, I'm a progressive, I'm a social democrat, 0:02:17.000 --> 0:02:19.519 so I'm in favor of change. But all the time, 0:02:19.560 --> 0:02:21.799 the question is what sort of change it is about. 0:02:21.919 --> 0:02:26.120 And yes, it is necessary that we work hard to 0:02:26.200 --> 0:02:29.040 make it easy to invest in Europe and to get 0:02:29.120 --> 0:02:32.600 rid of some of the regulations that are hindering investments 0:02:32.639 --> 0:02:36.440 to be done very fast. But on the other side, 0:02:36.480 --> 0:02:39.160 I think we have good chances for Europe to grow 0:02:39.760 --> 0:02:43.359 and we have the best in Germany. Yes, it is 0:02:43.400 --> 0:02:46.760 true that we faced a really heavy storm after the 0:02:46.880 --> 0:02:51.760 Russian aggression against Ukraine and all the consequences has had 0:02:51.840 --> 0:02:56.760 for the energy supply to Germany, for prices and many 0:02:56.800 --> 0:02:57.320 other things. 0:02:57.360 --> 0:03:01.799 But we are now behind all the biggest difficulties. 0:03:01.800 --> 0:03:05.559 Inflation is down again and this will also help investments, 0:03:06.040 --> 0:03:08.880 especially when it comes to housing. So I'm quite confident 0:03:09.000 --> 0:03:13.240 that with some extra activities we will have a chance 0:03:13.320 --> 0:03:16.000 to speed up growth. One of the proposs I make 0:03:16.120 --> 0:03:18.480 will be very similar to things you are used to 0:03:19.160 --> 0:03:23.079 in the United States. So it is about the text 0:03:23.160 --> 0:03:27.320 credit which you get for investments in Germany easily to 0:03:27.360 --> 0:03:30.760 be handled and something that will boost investment. 0:03:31.120 --> 0:03:34.480 But if you're a German voter, how can you expect 0:03:34.560 --> 0:03:36.680 change to come out of this election? If you think 0:03:36.680 --> 0:03:41.200 of the possible range of outcomes, when you look at 0:03:41.200 --> 0:03:44.320 the scale of the problems and the stagnation in Europe, 0:03:44.560 --> 0:03:47.680 do you understand the people who think we need radical 0:03:47.760 --> 0:03:49.600 change and we're not going to get it from any 0:03:49.800 --> 0:03:51.520 coalition that comes out of this election. 0:03:52.760 --> 0:03:55.200 I think there will be a good chance for better 0:03:55.240 --> 0:03:59.000 growth when you vote for a social democratic party in Germany. 0:03:59.360 --> 0:04:01.880 So this is I propose others will do a different one, 0:04:01.880 --> 0:04:02.480 but there is. 0:04:02.480 --> 0:04:04.840 Always hasn't been any since you became chancellor. 0:04:05.320 --> 0:04:06.839 We had a crisis, there is a war. 0:04:07.200 --> 0:04:10.440 I was not the one that started the aggression against 0:04:10.520 --> 0:04:15.800 Ukraine at Putin, and we worked against him and his aggression. 0:04:15.920 --> 0:04:19.640 We supported Ukraine, we increased our spending for defense, and 0:04:19.839 --> 0:04:23.599 we organized our economy in a way that it was 0:04:23.720 --> 0:04:26.680 able to live with all these radical changes that. 0:04:26.720 --> 0:04:28.560 Came to us. So now we are at a good 0:04:28.600 --> 0:04:29.440 starting point. 0:04:30.640 --> 0:04:34.360 Coming back to the Union, I'd say the biggest thing 0:04:34.440 --> 0:04:38.279 we have to achieve is to develop the Capital Markets Union, 0:04:38.839 --> 0:04:42.000 which has to come from a question of finance ministers 0:04:42.040 --> 0:04:45.760 to a question of leaders because it is obvious also 0:04:45.760 --> 0:04:47.880 when you look at the Dragon report, that this is 0:04:47.920 --> 0:04:51.760 the main question for better growth in Europe, and so 0:04:51.800 --> 0:04:53.800 we have to do it and not to speak just 0:04:53.839 --> 0:04:54.720 about it and. 0:04:54.680 --> 0:04:56.880 Will there be meaningful progress on that in the next 0:04:57.120 --> 0:04:57.680 few months. 0:04:58.240 --> 0:05:01.359 I've spoken to many and also that this is a 0:05:01.440 --> 0:05:04.640 leadership question, and this means that many have to. 0:05:06.560 --> 0:05:09.680 Be ready to accept that not all these small. 0:05:09.400 --> 0:05:12.799 Advantages of the one country and the other one country 0:05:12.839 --> 0:05:16.719 could continue. It is better to have a capital market 0:05:16.760 --> 0:05:20.919 in Europe that is ready to find the growth of 0:05:21.000 --> 0:05:24.279 companies from the equity market. And that's what we are 0:05:24.560 --> 0:05:27.839 having to do. And that's the big difference between the 0:05:27.960 --> 0:05:31.560 United States and Europe. Though we have even more money 0:05:31.720 --> 0:05:34.000 for investment in Europe. 0:05:34.560 --> 0:05:37.120 Donald Trump does seem to be President Trump seems to 0:05:37.120 --> 0:05:41.960 be in a hurry to put tariffs on European cars. 0:05:42.600 --> 0:05:46.120 Should the European Union might happen as soon as April. 0:05:46.279 --> 0:05:50.640 Should the European Union be cutting their tariffs in advance 0:05:50.680 --> 0:05:51.719 of that? To avoid that? 0:05:53.080 --> 0:05:57.120 First, I have to admit that I'm in favor of 0:05:57.320 --> 0:06:00.719 free trade. I think this is a big advantage we 0:06:00.800 --> 0:06:03.679 have in the world, and that many of the wealth 0:06:03.760 --> 0:06:07.640 and the growth we have in the world is because 0:06:07.680 --> 0:06:11.559 of free trade. So it must be fair free trade. Trade, yes, 0:06:11.600 --> 0:06:15.640 but free trade is better than tariffs and protectionism. 0:06:15.680 --> 0:06:16.600 I don't think that this. 0:06:16.640 --> 0:06:21.440 Will work when it comes to the European Union. I 0:06:21.480 --> 0:06:24.400 think everyone knows that we are a big economic area 0:06:24.880 --> 0:06:28.440 with a lot of strength, where policy about tariffs is 0:06:28.480 --> 0:06:31.599 something that is our common policy. So we are strong 0:06:31.720 --> 0:06:35.919 enough to react to everything that is harming European economy. 0:06:36.279 --> 0:06:39.880 But we should and we should react always, but in 0:06:39.920 --> 0:06:44.240 a way that is always offering the chance for an 0:06:44.240 --> 0:06:49.960 agreement because it's better for all parties involved, especially on 0:06:50.000 --> 0:06:51.640 the both sides of the Atlantic. 0:06:51.680 --> 0:06:55.000 But it is the Opini Union considering cutting tariffs before 0:06:55.040 --> 0:06:57.039 any announcement on cars. 0:06:57.320 --> 0:07:02.240 We invite the United States to discuss with the responsible 0:07:02.279 --> 0:07:06.560 authorities about what we can do for a better progress 0:07:07.279 --> 0:07:08.880 that serves all of us. 0:07:09.000 --> 0:07:11.040 There is a willingness, and. 0:07:12.720 --> 0:07:18.360 So I'm sure it's better if we agree to something 0:07:18.440 --> 0:07:22.400 that helps all of us. And it is good to 0:07:22.480 --> 0:07:25.720 know that Europe is strong enough to act and to react. 0:07:25.880 --> 0:07:29.119 You talk about it being a common project, but Donald 0:07:29.160 --> 0:07:32.239 Trump has made clear that he wants to do reciprocal tariffs. 0:07:32.280 --> 0:07:35.640 He doesn't want a wto approach where all the rules 0:07:35.640 --> 0:07:38.360 are on the same countries, And even with the European Union, 0:07:38.400 --> 0:07:42.240 he might want to have a different tariff regime for 0:07:42.280 --> 0:07:45.920 France and Italy and Germany. What would you do? Then? 0:07:46.240 --> 0:07:50.320 The European Union is a unified economy and has there's 0:07:50.360 --> 0:07:52.200 nothing to stop the US doing that, but it has 0:07:52.240 --> 0:07:57.560 common tariffs and we act together and we will stick together, 0:07:57.680 --> 0:08:01.280 which I think is also important. And so I'm quite 0:08:01.320 --> 0:08:05.440 confident that a good solution is feasible and everyone should 0:08:05.520 --> 0:08:07.240 work or make it happen. 0:08:07.800 --> 0:08:11.040 You spoke this morning very clearly about what you need 0:08:11.080 --> 0:08:14.240 to do to increase defense spending above two percent of 0:08:14.280 --> 0:08:20.000 GDP and suspending the debt break just for that additional 0:08:20.200 --> 0:08:24.480 defense spending, but for many countries it will want to 0:08:24.520 --> 0:08:27.560 also have joint debt issuance for Europe as a whole 0:08:27.600 --> 0:08:29.680 to be able to invest enough in defense. Would you 0:08:29.720 --> 0:08:32.400 consider that given everything that's happened in the last few. 0:08:32.200 --> 0:08:35.280 Weeks, I think there are three things we can do 0:08:35.440 --> 0:08:38.959 in this very moment. The first is that we agree 0:08:39.000 --> 0:08:43.640 in Germany that supporting Ukraine is something of an extra effort, 0:08:44.040 --> 0:08:48.239 so we should have extra room for maneuver also financing 0:08:48.360 --> 0:08:52.880 this support to Ukraine, which when it comes to the figures, 0:08:53.000 --> 0:08:55.440 Germany is doing the most. We are the biggest support 0:08:55.480 --> 0:08:57.920 of Ukraine in Europe, the second biggest in the world, 0:08:57.960 --> 0:09:02.120 and this has to continue. We cannot pay for it 0:09:02.160 --> 0:09:06.880 with cuttings in pension schemes or in the health sector, 0:09:06.960 --> 0:09:11.079 or in cuttings in the investment into streets and railways 0:09:11.320 --> 0:09:13.840 and so on. So I think it's clear that we 0:09:13.920 --> 0:09:16.640 have to do this. And the second is that we 0:09:16.760 --> 0:09:22.040 have to agree how we will continue with the spending 0:09:22.120 --> 0:09:27.520 of more than two percent of our GDP for defense, 0:09:27.679 --> 0:09:31.640 which we achieved because of an extra fund which I 0:09:31.800 --> 0:09:36.280 managed to get through the parliament. But for the future 0:09:36.320 --> 0:09:39.280 we need a new decision about this and this is 0:09:39.920 --> 0:09:46.280 for continuing with this two percent plus already thirty billion 0:09:46.320 --> 0:09:50.240 a year. So also this will not work with tax 0:09:50.360 --> 0:09:56.800 increases or cuttings and spending in the different areas of 0:09:56.920 --> 0:10:01.680 the German budget. When it comes to do more, which 0:10:01.760 --> 0:10:06.000 will be obviously necessary when we look at what NATO 0:10:06.120 --> 0:10:12.160 is discussing, then it especially means that we do something 0:10:12.240 --> 0:10:17.280 for this activities which gives us in Germany the opportunity 0:10:17.320 --> 0:10:18.240 to spend even more. 0:10:18.280 --> 0:10:19.839 And this has also to do with. 0:10:19.840 --> 0:10:25.040 The reform of the debt regulation in Germany. When it 0:10:25.080 --> 0:10:28.280 comes to Europe, I think we should help every country 0:10:28.880 --> 0:10:32.040 if it spends more than two percent, to be not 0:10:32.200 --> 0:10:35.520 hindered by the European regulation on treating. 0:10:35.360 --> 0:10:37.800 Changing the stability. 0:10:37.840 --> 0:10:40.600 We have to change these agreements so that this is 0:10:40.640 --> 0:10:42.240 feasible for a country to do. 0:10:42.720 --> 0:10:45.640 But for many countries, I mean, for Germany has very 0:10:45.679 --> 0:10:47.439 low debt relative to other countries. 0:10:47.440 --> 0:10:49.040 As we might say that we are going down to 0:10:49.080 --> 0:10:49.840 sixty percent. 0:10:50.559 --> 0:10:53.840 Other countries will find it very difficult to keep issuing 0:10:53.880 --> 0:10:56.080 more and more debt because, as you pointed out, they're 0:10:56.160 --> 0:10:58.440 over one hundred percent, maybe over one hundred and forty 0:10:58.440 --> 0:11:01.360 percent of GDP. You don't think this is a time 0:11:02.320 --> 0:11:06.120 for joint debt issuance. All of the things that have happened. 0:11:06.440 --> 0:11:10.280 It's a very difficult question to go into it. 0:11:10.360 --> 0:11:14.200 And I was the. 0:11:13.120 --> 0:11:16.800 Designer of the Recovery Fund, which we had after the 0:11:16.840 --> 0:11:20.200 Corona crisis, or during the Corona crisis to go through 0:11:20.200 --> 0:11:25.160 this very difficult times, and the idea was that we 0:11:25.240 --> 0:11:30.000 have something which is giving direct support to countries and 0:11:30.440 --> 0:11:33.960 other aspects, which is just another way of taking money 0:11:33.960 --> 0:11:37.360 from the market. So my view is that the first 0:11:37.400 --> 0:11:40.720 thing to do is now to give room for acting 0:11:41.080 --> 0:11:42.840 to the different member states, and. 0:11:42.920 --> 0:11:45.520 It sounds like that could be a model for expanding 0:11:45.520 --> 0:11:48.079 defense spending in the future for Europe. I think this 0:11:48.160 --> 0:11:49.200 is the Recovery Fund. 0:11:49.760 --> 0:11:52.199 No, no, no, this is not the model. 0:11:52.400 --> 0:11:55.960 I was really precise this morning saying that what I 0:11:56.080 --> 0:12:00.880 propose is to give the countries the room for extra spending. 0:12:01.600 --> 0:12:03.960 In this debates about Ukraine, I they we're running out 0:12:04.000 --> 0:12:08.440 of time. But did you know that US and Russian 0:12:08.440 --> 0:12:11.360 officials will be meeting in Saudi Arabia next week? Were 0:12:11.400 --> 0:12:13.960 you informed of that before the news broke that they 0:12:14.000 --> 0:12:15.760 were meeting to discuss Ukraine. 0:12:16.240 --> 0:12:19.440 It's absolutely clear that there will be debates between Russia 0:12:19.480 --> 0:12:22.320 and the United States about this question. I spoke to 0:12:22.360 --> 0:12:25.959 President Trump very early about how to support Ukraine. 0:12:26.880 --> 0:12:29.480 My plea is that there. 0:12:29.320 --> 0:12:32.920 Should be first the message to put in that Europe 0:12:32.920 --> 0:12:37.400 and the United States will continue with their support to Ukraine, 0:12:37.440 --> 0:12:41.160 because he has to understand that he cannot hope that 0:12:41.240 --> 0:12:43.640 we stop our support. 0:12:43.760 --> 0:12:46.160 But the US officials at this meeting have made clear 0:12:46.200 --> 0:12:48.040 that Europe's not going to be at the table in 0:12:48.080 --> 0:12:50.880 any of the important conversations. How can you you're not. 0:12:51.200 --> 0:12:55.080 I'm sure that there will be no solution possible over 0:12:55.120 --> 0:12:58.800 the heads of the Ukrainians. And obviously, if someone wants 0:12:58.800 --> 0:13:02.600 Europe to be involved in the structures of peace in 0:13:02.679 --> 0:13:08.320 the future, it is necessary and to discuss with Europe 0:13:08.400 --> 0:13:13.000 and to implement the European leaders into this decision making processes. 0:13:13.559 --> 0:13:16.440 President Trump only seems to want to talk to one person. 0:13:16.679 --> 0:13:18.680 He doesn't want to talk to Europe. So who should 0:13:18.720 --> 0:13:22.560 be that one person shouldn't be nominated person to talk 0:13:22.600 --> 0:13:25.000 to Donald Trump y as how he likes to do business. 0:13:25.600 --> 0:13:28.440 I think that the European Union has its own bodies 0:13:28.480 --> 0:13:30.960 for acting. And on the other hand, I will be 0:13:31.080 --> 0:13:34.800 very clear it is Europe that spends even more as 0:13:34.840 --> 0:13:37.800 the United States in the support of Ukraine. And this 0:13:37.960 --> 0:13:43.199 is the basis for saying that everyone should count with us. 0:13:43.720 --> 0:13:46.040 When we spoke a few years ago, we were talking 0:13:46.040 --> 0:13:49.640 about this before we started that when it was seemed 0:13:49.720 --> 0:13:53.280 very unlikely in an election campaign where it seemed very 0:13:53.360 --> 0:13:55.400 unlikely that you would end up as chancellor, and then 0:13:55.440 --> 0:13:58.440 you were proved right and the doubters were wrong. Do 0:13:58.520 --> 0:14:01.600 you have a rabbit your sleeve for the next week 0:14:01.800 --> 0:14:04.719 because the polls you started off far behind and they 0:14:04.720 --> 0:14:05.959 have not got any better. 0:14:06.960 --> 0:14:10.640 I'm sure that that will happen again. What we are rabbit, 0:14:12.000 --> 0:14:16.040 It will happen again that the Social Democratic Party and 0:14:16.640 --> 0:14:19.440 myself will get the vote from the people to continue 0:14:19.480 --> 0:14:21.200 with leading the government. 0:14:21.280 --> 0:14:23.360 As it was the case. 0:14:22.800 --> 0:14:24.640 What evidence for that, Chancellor? 0:14:25.080 --> 0:14:27.400 The people are wondering who is the right one to 0:14:27.440 --> 0:14:30.240 do this, and they are not decided yet. If we 0:14:30.320 --> 0:14:32.720 look at the many that have not made up their 0:14:32.760 --> 0:14:36.120 mind and many things are happening, so it is obvious 0:14:36.200 --> 0:14:39.440 that in this time the real decision will really happen 0:14:39.600 --> 0:14:43.120 in the places where the people give up their vote. 0:14:43.360 --> 0:14:45.440 What do you think they would need to be deciding 0:14:45.760 --> 0:14:49.920 on thinking about most in order to change their minds 0:14:49.920 --> 0:14:50.560 of vote for you? 0:14:51.160 --> 0:14:55.480 One important question is One important question is defense and 0:14:55.560 --> 0:14:59.560 security and peace in Europe. I think they can trust 0:14:59.640 --> 0:15:05.480 the Antler when it comes to the handling of problems dealing. 0:15:05.080 --> 0:15:08.480 With peace and security. It's about growth. I have a 0:15:08.600 --> 0:15:08.800 very 0:15:08.840 --> 0:15:12.200 Concrete proposal how we can increase growth in Germany and 0:15:12.240 --> 0:15:13.880 it's about social cohesion.