Agenda: 
1. Welcome
2. Overview of Election Results
3. Analysis of Key Trends and Patterns
4. Implications for European Policy and Governance
5. Opportunities and Challenges Ahead
6. Open Discussion and Q&A

We look forward to your active participation and meaningful contributions to this important conversation.

Recent electoral outcomes have been disheartening in Europe, marked by the rise of populist forces challenging the very foundation of the European Union. Two decades ago, Europe stood as the most innovative continent, but today it faces a stark reality: proficiency in regulation, yet a glaring deficit in its implementation.

Energy Security, Supply Chain Dependencies, Innovation, and Energy Prices have become paramount concerns for major European capitals, particularly Paris and Berlin. The question of dependency looms large, highlighting the critical role of nuclear and gas in sustaining energy-intensive industries.
Recommendation 1: As Germany and the rest of Europe navigate this landscape, a strategic and smart industrial policy becomes imperative: Europe is positioned ahead in innovative grid systems, and this presents a unique opportunity to lead in technology and software.

Furthermore, the Franco-German relationship emerged as a linchpin for European success. Surprisingly, the most consequential election for Europe is not the European Elections but the US election, as the potential return of Trump 2.0 looms large. In the face of those shifting dynamics in the US, Europe must act strategically.

Recommendation 2: While not all policies need Europeanization, energy policy demands a united front. Here, a stronger voice from the energy sector is crucial, to keep pushing policymakers towards a European approach. The shift toward renewable energy production in Europe’s peripheries must be a key focus for the next commission. By connecting regions with abundant resources in the south and the north with industrial hubs in the centre, Europe can optimize energy distribution, and supply chain dependency, promoting unity and resilience in the face of global challenges.

As Germany, France, and Brussels are unprepared, concerns about the ability to support neighbours like Ukraine in crisis are rising. The war in Ukraine transcended regional conflicts, shaping the rules of 21st-century Europe. Russia’s attempt to reintroduce imperial rules created a half-circle of instability around the European Union, affecting countries from the Sahel to the Baltics.

Recommendation 3: The potential re-election of Trump in 2024 adds complexity and emphasizes the need for a genuine European defence market and investment in military mobility. To address Europe’s strategic capability gaps, the establishment of an EU Defense Advanced Research Projects Agency is needed and finally, the outdated antagonism between the European Union and NATO must be overcome.

Inspired by the recent United Europe CEO Lunch in Paris.

With Germany’s State Secretary for Economic and Financial Affairs, Dr Jörg Kukies, Dr Jörg Wojahn, Head of the EU Representation in Berlin, Dr Manuel Kallweit, Chief Economist at the German Association of the Automotive Industry (VDA), Eva Chamizo, General Secretary European Affairs at Iberdrola, Dr Julia Reuss, Director of Public Policy at Meta, Simone Menne, President of the American Chamber of Commerce and other Representatives of United Europe’s corporate members such as Covalis Capital, BASF, Enedis, GMH, Ernst & Young, Würth Group etc, United Europe’s President Günther H. Oettinger discussed industrial transformation and how to strengthen Europe as a business location.

United Europe’s President Günther H. Oettinger emphasized the need for a strong Europe in the face of various crises. Europe is currently lagging behind in terms of competitiveness and efforts need to be stepped up on a regional, national, European, and continental level.  Günther H. Oettinger underlined the importance of bridging: “We have to optimize our bridges: Bridging automotive to energy to digital, the European Commission’s work to the work of governments in Germany and France and other member states, public to private. We need more bridges between business and government. Commissioners need to talk more to their economic counterparts,” Günther H Oettinger concluded.

We would like to thank the Representation of the European Commission in Germany, our corporate member Covalis Capital and our Board Member Paulius Kuncinas for their contribution and support of the event.

Interventions

Dr Jörg Wojahn, the Head of EU Representation in Germany, gave a briefing on the European Commission’s current work and priorities. One of the key topics discussed was the US Inflation Reduction Act, which has been welcomed by the European Commission as it shows a significant commitment by the US to make its economy climate-ready and serves as a clear indication that a climate-friendly economy is good for business. However, not everyone has grasped this concept yet, as some people are still trying to “rescue the horse-carriage”. 

To respond to the IRA, the European Union has established the Net-Zero Industry Act. Under this act, permitting will be accelerated and member states will set up regulatory sandboxes to test innovative net-zero technologies. The act also allows for tax breaks and provides more flexibility in accessing EU funds. Another important area of focus for the European Commission is the Critical Raw Materials Act. The Commission recognizes the need to secure Europe’s supply of critical raw materials, particularly given China’s current dominance in the market. The Commission is exploring several ways to achieve this, including trade agreements, the creation of a critical raw materials club with like-minded countries, and increasing mining, processing, and recycling capacity within the EU.

Trade agreements are a high priority on the policy agenda, according to Dr Jörg Kukies, Germany’s State Secretary for Economic and Financial Affairs. He discussed efforts to diversify away from China and explore opportunities in other regions such as India, Australia, New Zealand, Argentina, Chile and the Western Balkans. Kukies stressed the importance of critical minerals and the need to create processing capacity in the European Union while also offering source countries a proposal for higher added value in their own country.

Kukies also highlighted the importance of interconnectedness and cooperation among member states in achieving the goal of 100% renewable energy. He noted that the German government has a clear advanced economic strategy to achieve the goal of 20% global semiconductor production, with Dresden already a hot spot for semiconductor investment.

Dr Manuel Kallweit, Chief Economist at the German Association of the Automotive Sector, discussed the global nature of the German automotive industry and the need to look beyond Europe. The automotive industry is a global market with significant competition, and while Europe has traditionally been a dominant player, the role of the continent is declining. Kallweit emphasized that the Chinese market has grown significantly and now has a market share equal to the US and Europe combined. Germany, in particular, has been a significant automotive manufacturer, but other regions now produce more. A VDA survey found that around 90% of automotive supply companies consider Germany an uncompetitive business location due to energy prices and labour force challenges. Electromobility is crucial to achieving climate targets, but not all countries have the necessary infrastructure for electrified cars. Battery production has started, but the raw material issue is a significant concern, especially in Europe.

The opinions of our guests:

Eva Chamizo, General Secretary of European Affairs at Iberdrola, emphasized the importance of analyzing recent developments in both Europe and the US. With operations in multiple countries on both sides of the Atlantic, Iberdrola has a unique perspective on the ongoing efforts and challenges towards decarbonization. Chamizo noted that Europe has been taking action towards decarbonization for several years now, and it is encouraging to see the US beginning to recognize the importance of this issue as well. However, Chamizo raised an important concern about regulatory stability. Investors in capital-intensive industries prefer stable and predictable regulations, as constant changes make it difficult to plan and invest in projects. Chamizo suggested that if Europe continues to rapidly changing regulations, it may discourage investors.

While it is encouraging to see progress being made on both sides of the Atlantic, policymakers and regulators should consider the impact of their actions on investors and businesses by finding ways to balance environmental goals with regulatory stability.  

Simone Menne, the President of the American Chambers of Commerce in Germany, highlighted the need for cooperation between Europe and the US, rather than European protectionism. Menne pointed out that Europe should learn from the US, particularly when it comes to bureaucracy. By working together, the US and Europe could form a huge market volume that could compete with China and set global standards. However, Menne also said that Germany is losing its attractiveness as a location for businesses due to high energy costs, taxes, bureaucracy, inefficient digital infrastructure, and a lack of pragmatism on sustainability incentives. Menne suggested that Europe could learn from the US in these areas, as well.

Dr Julia Reuss, the Director of Public Policy at Meta, echoed Menne’s sentiment about the need for a more pragmatic approach to data use in Europe. Reuss pointed out that while big companies like Meta can hire dozens of lawyers to navigate the bureaucracy surrounding data use, small and medium-sized enterprises (SMEs) cannot. This creates a barrier to entry for SMEs that want to build business models around data. 

Reuss also noted that there is a general perception in Europe that data is something to be protected at all costs, rather than something that can be used to drive business efficiency and growth. While data protection is important, Reuss argued that this mindset is limiting Europe’s ability to compete with China in the data market. To compete globally, Europe needs a more pragmatic approach to data use that balances the need for protection with the potential for business growth. By working with the US and adopting some of its approaches to bureaucracy, Europe could create a huge market volume that could compete with China and set global standards.

According to Christian Schubert, Head of Corporate Government Relations at BASF,  the Green Deal lacks an economic rationale and may not lead to the desired outcomes. BASF is currently reviewing over 14.000 pages of regulation, and the full impact of the Green Deal on the chemical industry is yet to be seen. While the Green Deal aims to achieve zero emissions, BASF argues that Europe needs smart regulations that incentivizes businesses rather than imposing regulations. Schubert pointed to the IRA as a better alternative.

The IRA focuses on creating business opportunities and incentivizing companies to invest in clean energy and reduce emissions.

Christian Buchel, a board member at Enedis, highlighted the need for over 400 billion Euros in investment to achieve an energy transition by 2030, noting that all 40 member states of Europe are seeking transformers at the same time, but the continent not having the industry capacity to produce them on a massive scale.  This is what is called a bottleneck in the supply chain – not caused by the Covid-19 pandemic. Buchel called for stability and less naivete to address the issue.

Kunal Sinha, Head of Recycling at Glencore, underlined that the energy transition is leading to a need for repurposing sites and shortening supply chains.

While recycling helps, it is not enough on its own to solve the raw material challenges that come with the energy transition. Friendshoring and global trade agreements can help ensure access to natural resources. Incentivizing processing capacity can be achieved through effective carbon pricing, investment incentives and regulation/directives. Europe has made progress in this area through carbon pricing but the US may not reach the same level of advancement. Overall, managing the transition to electrification will be a complex and time-consuming process, Kunal Sinha concluded.

We want to thank our speakers and guests for participating in the Working Dinner and especially our corporate member Covalis Capital for supporting this activity.

On-site in Brussels, we will discuss the following points with high-level experts from the European energy industry:

• The impact on energy transition, addressing the future of coal, gas, and renewables in the energy mix.
• Taxonomy and the proposed inclusion of nuclear and gas as ‘transition fuels’. What does that mean for European CO2 targets and alternative energy?

Our panelists are:

Virginijus Sinkevičius, EU Commissioner for Environment, Oceans, and Fisheries
Leonhard Birnbaum, CEO and Chairman of the Board of management of E.ON SE
Armando Martínez, Business CEO of the Iberdrola Group
Markus Rauramo, CEO of Fortum
Michael Müller, Chief Financial Officer of RWE AG
Zach Mecelis, CIO of Covalis Capital

The panel will be moderated by Günther H. Oettinger, President of United Europe.

The view that digitization and machines are a big threat to employment and society at large is overly pessimistic and very dangerous. Many experts are predicting that people will become redundant and obsolete. According to an extreme forecast, up to 70% of jobs will vanish as we won’t need e.g. accountants, lorry or taxi drivers anymore in the future. Humans will be replaced by machines. At worst, some studies say, only software engineers, designers and scientists will be safe while the rest of us will be unemployed or doing low-level jobs.

Technology is not about replacing everyone with robots. Digitization and Artificial Intelligence could be harnessed for the greater good. They have enormous potential for doing good in all aspects of life and in all sectors of the economy. There is a clear need everywhere, not just in Central and Eastern Europe – in Western Europe, North America, and Japan as well to upgrade our skills in technology and not to scare people off with bleak forecasts.

In Europe, with Central and Eastern Europe no exception, and also in Asia, we have a massive demographic issue. Population is aging thus we are more likely to run out of people before we run out of jobs. New technology will help us address many of the challenges we are facing as a result of slowing population growth. We need technology to compensate for the declining number of people in the workforce – to keep up our productivity and to keep our economies growing – at least by 1-2% in the developed countries and 3-4% in Central and Eastern Europe as the region is in the process of catching up.

New technologies will also help integrate many more people into the economy, allowing them to become healthier, learn faster and be more productive. This is why we need to embrace technology as an enabler, and Artificial Intelligence, in particular, has the potential to help us solve some of the biggest challenges of all. Technology is set to enhance our capabilities thus public discourse should center not on the issue of technology versus people, but on people AND technology. It is the combination of people with technology that truly enables progress and higher productivity.

In Hungary and elsewhere in Central and Eastern Europe there is a tendency to be very self-critical. It is not bad to be critical or self-critical, but it is a mistake to say that Central and Eastern Europe is far behind in many ways, including technology. There are some very strong corporate players present in Hungary – some are Hungarians and local companies, some are the subsidiaries of foreign companies. And they are not just here because of low wages, but they are here because there are good technical skills and there is quite a lot of talent here: engineers, technicians, scientists and those make digitalization possible. You cannot implant Industry 4.0 or Artificial Intelligence if there are no people to make it work. Some of the German motor companies are here and they digitize and automate all their factories to make sure that quality is truly top notch. You cannot say “We do the smart stuff in Germany and we do the dumb stuff in Hungary.”

This is a strong foundation and if developed further and built on wisely, technology could serve as a springboard for Central and Eastern Europe. The region could use its talent base to catch up in certain fields while also to surpass the Western Europe in innovation in other fields.
The region’s importance has been increasing since it is a deeply integrated part of the European economy, and a steadily attractive target for investment. Its economic growth has been twice as fast as that of the European Union and its educated workforce is growing – it has added some 7 million graduates in the last ten years. Meanwhile, its cost advantage is forecast to persist. These factors have helped boost investment so far, but mostly in labor-intensive sectors such as manufacturing and service nearshoring. But routine jobs can be expected to be largely automated as a result of digitization. Therefore, Central and Eastern Europe needs to accelerate its digital development – it needs to grow from workshop into smart supplier.

A lot of things are happening in the area of digitalization, but there is always a lot more to do. To reach the next level, Central and Eastern Europe needs to keep up with global digitalization trends at the national level. Without suggesting that these examples could simply be emulated, let us point out some digitalization leaders such as Estonia, South Korea, the Nordics and Singapore. Accelerating the digital maturity of the economy, educating the workforce of the future to enable them to have digital skills, pushing STEM – science, technology, engineering and mathematics education, language skills, and refocusing incentives to digital investments could be measures adopted and pursued by government, corporate and social players alike to lead the region closer to becoming a smart supplier.

As the Hungarian Minister for Innovation and Technology, László Palkovics drew up at a recent conference The future “Made in CEE”, Hungary is in the process of ‘attacking’ digitalization from all fronts, ranging from developing e-government through supporting startups to fostering Industry 4.0 to mention a few. That overachieving approach is commendable and sure to generate results. Still, his ministry should not be discouraged if not all of the initiatives underway will bear fruit – just like at startups, an Agile attitude would help it to move on if one such drive slips to focus on the next one.

Companies may also risk falling victim to the need of digitalization if it is done without some strategic thinking. Fighting off the lure of some less closer-to-home and thus seemingly more attractive digitalization projects, they may need first to focus on their core activities when modernizing and digitizing. Putting their core activity in the center may be more genuine, profitable and less risky.

Last but not least, digitalization is also a massive issue for the individual. Upgrading our digital skills may be hard but it will make us stronger. It may require life-long learning since we live longer. And as people live longer, enabling them to work with machines will help ensure that they could work longer, prolonging their productive life. We need to expect to work longer, which is also good because people who work are also more open, less lonely, remain more engaged and stay healthier. So having more robots and more technology is a positive both for the people and for the companies. We may even take care of an aging society with the use of more machines and robots because finding enough caretakers is already not easy. Some people may think it terrible to have machines a part in taking care of people. Technology could be our way of making life better, but it requires people to be more open.

When governments, companies or even individuals are facing up to the push of digitization, one thing they all need to accept and possess is openness to change. As Johannes Teyssen, E.ON chairman and CEO, pointed out in this publication recently, the people of Central and Eastern Europe, due to their exposure to change over the past 30 years, are poised to embrace new things and adapt to new circumstances faster than people elsewhere. We all need to be open to change and technology and we should not be afraid of being replaced or becoming obsolete. The worst thing is to create anxieties. It is important that we do embrace the future in a positive way. Even in the specter of low growth, climate change, and digital disruption, we need to say that we can solve these problems while we all need to play our role in that. We all have a responsibility for ourselves, our families, the companies in which we operate, and the society in which we live.

Elmar Brok (CDU Federal Executive Committee, Union of European Federalists), Dr. Jürgen Großmann (founder United Europe), Steffen Kampeter (Managing Director of the Federation of German Employers’ Associations, BDA), Dr. Wolfgang Schüssel (President United Europe), Marina Tcharnetsky (Managing Director CEBCON Technologies GmbH, Vice President Club of European Women Entrepreneurs e.V.) and Dr. Marie-Theres Thiell (CEO innogy Hungary) discussed the issue.
The lively, pointed and controversial discussion was moderated by Gordon Repinski (Deputy Editor-in-Chief, RND Network).

The discussion began with a speech by Manfred Kurz, Berlin and Brussels representative of the Würth Group, host of the event in its beautiful representative office in the capital at Schwanenwerder.
A mere continuation ‘like this’ will certainly not suffice for the new EU Commission, Kurz said. A new self-conception will be necessary “which puts the individual citizen with all his creativity, his efforts and his competition at the centre”. The EU should not only grow, but above all must unite more closely politically. Size should not be confused with efficiency. Kurz pointed out that the different views on Europe between North and South, West and East could no longer be ignored and that, from his point of view, a reorganisation of the European Constitution was indispensable.
With the tectonic shifts of geo-economic weights towards Asia, the increasing authoritarian systems that threaten our democratic ideal of society, and climate change, the new EU Commission faces epochal challenges that Europe alone cannot master. It is now more important than ever for all European citizens to “consolidate our understanding of ourselves and lead us to a good future”, said Kurz. Würth professes his support for the European idea “because the European future in freedom and peace is our territory.”

In the following debate, the question was discussed of whether von der Leyen’s agenda on climate change is realistic and whether economic feasibility should not be more clearly in the foreground. Only countries with a strong economy are in a position to finance the costs of technological change and climate change and to develop innovative alternatives. That needs more support. There was the impression that von der Leyen had so far ignored the business world; so far there were no answers to questions from companies in her concept, for example, how to proceed with the European internal market and how to deal with the trade war with China. Nor is climate policy a market approach and geared not to innovation but to regulation.

The interests of the CEE countries must also be given greater consideration by the new Commission. Only in this way will it be possible to deepen European integration with the aim of creating a truly united Europe capable of meeting the challenges of the times, particularly in new technologies and climate change. Here, basic work still has to be done, as Western Europe has too often been the focus of attention in the past. The economic importance of the countries of Eastern Europe is increasing rapidly. They are increasingly emancipating themselves economically from the role of the “extended workbench” and increasingly contributing to innovation and growth in the EU.

The achievement of the set goals can only succeed with a common European spirit, a common basis, by intensively promoting the dialogue between East and West. Otherwise it would be difficult for the new Commission to cope with the tasks and challenges ahead.

It was stressed that the European Member States must learn that the great challenges such as terrorism, migration, climate change etc. can no longer be met by one state alone. To this end, cooperation and a willingness to compromise on the part of all countries are a basic prerequisite and essential. Although there has been enormous progress in European integration over the last three decades, the current political pace is too slow to meet the challenges ahead. On the whole, Brussels policy focuses too much on regulation and bans rather than on innovation. It would be better, according to one of the opinions, if the Commission did not focus all its energy solely on making Europe climate-neutral in 2050, but on tackling the problem globally and investing in Africa and South America in order to reduce emissions worldwide in the long term.

The question also arose as to whether it was right to opt out of nuclear power and coal energy at the same time without having a convincing concept for alternatives. The energy that keeps people, industry, our whole existence alive must come from somewhere. Points of complaints included the lack of realism in politics and that people and the economy are regulated too much. As a further point of criticism regarding politics it was brought up that constantly higher demands for even more taxpayer’s money and even more subsidies are oftentimes not very efficient and that politics should concentrate more on creating the adequate framework conditions for innovations, entrepreneurs and company founders who take calculated market risks. It remains to be seen whether the new EU Commission under Ursula von der Leyen will succeed in catching up and mastering the challenges ahead.

The discussion took place under Chatham House Rules.

The countries of the Central and Eastern European (CEE) region are becoming more and more economically emancipated from their role as an “extended workbench” and are increasingly contributing to innovation and growth in the EU. Current technological changes can give the region an additional impetus. These are the key statements made at our CEO Roundtable “The Future ‘Made in CEE'”, held in Budapest on Thursday, 31th October.

The speakers at the conference, including Hungary’s Minister of Innovation and Technology László Palkovics and top managers from Germany and the region, agreed that the CEE region is already an indispensable partner in the European value chains and that its weight will continue to grow in the coming years. In doing so, they could benefit from the opportunities and possibilities arising from the rapid technological changes of the present, such as digitisation or the trend towards “Industry 4.0”.

The conference made it clear that for this changed role, the competitiveness of the region must be increased and that digitisation can make a significant contribution to this.

Marie-Theres Thiell, Managing Director at Innogy Hungary and Vice President of the DUIHK, presented the most important statements from a roundtable discussion at which about 25 top managers had exchanged their views on the opportunities and challenges of the region immediately before the conference. The focus was on the status and opportunities of the region in terms of international competitiveness as well as on the tasks that companies, the state and the education system still have to master. According to the managers, the latter in particular is of great importance, but the state must also ensure a regulatory environment that is open to innovation and competition.

In his keynote speech, Johannes Teyssen, CEO of the German energy company E.ON SE, stated that the world had once again entered a phase – as it did during industrialisation in the 19th century – in which technology would play a decisive role in the global distribution of wealth. Europe has to play catch up in this area. In his opinion, innovation arises where people with diverse personal, cultural and professional backgrounds can freely and openly exchange ideas. Teyssen was confident that this could be done in Europe, also with regard to digitisation. According to Teyssen, however, a successful digital transformation also requires a corresponding culture, and above all employees must be encouraged to acquire digital knowledge. Since everything that is digitised is also connected with electricity, Teyssen also discussed in detail the energy implications of digitisation, e.g. the digitisation of the energy industry itself.

In a subsequent panel discussion, attended by Minister Palkovics, Johannes Teyssen, Thomas Narbeshuber, Vice President Central and Southeast Europe of BASF, and Hans-Paul Bürkner, Chairman of the Boston Consulting Group, it was repeatedly demonstrated that digitisation will transform all sectors of industry without exception.

Hans-Paul Bürkner was convinced that the Central and Eastern European region would, in future, develop from a region of labour-intensive assembly companies into a location for “smart suppliers”, i.e. innovative suppliers. The region is already showing dynamic growth, with a well-educated workforce and a still considerable cost advantage. However, digitisation will change this economic model, and this will require increased efforts in digitisation. Above all, the digital transformation of the economy must be accelerated, employees must be prepared for this new era, and investments in digitisation must be encouraged. According to Bürkner, this could also mitigate demographic risks.

Thomas Narbeshuber stressed that digitisation offers Europe and the region a unique opportunity to compete in the global competition for innovative sustainable solutions. However, this would require a framework that companies and governments alike would have to work to implement. According to Narbeshuber, this includes, above all, trust in digital technologies, which make an opportunity-based regulatory environment possible in the first place. First-class connectivity, such as a nationwide and cost-effective expansion of 5G technology and significantly improved access to data, could make it easier for structurally weak regions and SMEs to participate in the innovation competition. Narbeshuber sees opportunities for the region, in particular, through targeted promotion of the areas of Industry 4.0, artificial intelligence and B2B industry platforms.

The event was moderated by Michal Kobosko, Senior Advisor at Atlantic Council in Warsaw.

We thank BCG and the Austrian Embassy in Hungary for their generous support!

Please find more information about Netzwerk Digital here: www.netzwerk-digital.hu

• Europe needs to change its approach and attitude to Africa. Africa does not need aid but help for self-help. It is rich in natural resources and a young population with talented entrepreneurs and an emerging middle class.

• Africa needs fair trading relationships. The common agricultural policy has not been an example of fairness towards Africa at all.

• In order to convince young people to stay and engage in their country’s education and community building along the value chain need to be supported by various stakeholders.

• Focus on local sector investments next to foreign direct investment. 20 Million jobs which need to be created in Africa each year can only be created by the local sector.

• Connecting the new African generation closer with the younger generation of Europe.

• The “Fund Africa Connect” shall provide European SMEs an easier path for investment in Africa.

• Oblige big companies actively in Africa to install corporate citizenship to ensure that money is invested invested in the communities where they are producing their goods to close the gap.

• European development financing should develop a more coherent European approach, accompanied by effective working country platforms and take 1 percent of this amount and create a fund that invests in African SMEs. In addition, European involvement comes with good governance, environmental and social standards, that are crucial features for every investment.

• Development of job creation and training for private investment knowledge.

• The pension funds of Africa today are over 400 billion US dollars and growing fast. So, the chance that social security in the European sense can be achieved in Africa is possible.

• Establishing a system in Brussels as one focal point for Africa, for example a commissioner on Africa, who is responsible for foreign policy, trade competences, development assistance etc.

• More focus on Europe’s and Africa’s business interests. We need to use the financial instruments to guarantee facilities not only for local business but also European business and joint ventures.

• The extension of the EBRD mandate. The EBRD, which has a mandate for North Africa, has lost 50 % of their profits due to the sanctions on Russia. This could be a chance to focus on new business and new areas in Africa. The EBRD has an excellent toolset for advising SMEs in establishing good relations with civil society and that is exactly needed in these countries (unfortunately stake- and shareholders of EBRD recently didn’t agree to that).

• We have to understand the Chinese and their goals to 2049 to understand the BRI and their Africa strategy. If we cannot beat China, we should join them. For instance, by building value chains and using their infrastructure.

• European private and public sectors are investing six times more in Africa than China. But nobody knows it because every European country is investing under its own flag. If we use the European flag consequently, additionally to the national flags, we can make the European engagement more visible and get a European investment brand in Africa.

• Rename the Marshall Plan to Africa into EASI: European African Sustainable Investment.

The whole summary of the discussion is to be found here.

The business community across Europe and Africa has much to gain from a new approach towards joint business. This would need to lead to more cooperation; more proactive and holistic joint problem solving, resulting in truly win-win economic partnerships between Africa and Europe. This new approach can and should not rely on governments to set the pace and shoulder all risks.

But how can this be achieved with a politically weakened and more inward-looking Europe and a highly fragmented African continent of 55 countries with insignificant levels of intra-African trade which is only now moving ahead to operationalise a Continental Free Trade Area? Due to the recent history of political and economic instability and poor governance, many players in the European private sector – understandably – keep perceiving Africa as a highly risky business environment. How should and could Europe support Africa’s further development in a spirit of true partnership? To what extent is there still a demand for European engagement as China is enticing many African governments with its Belt and Road Initiative?

The increasing sums invested in Africa by the EU, North America and Asia are remarkable. However, the scale of the growth of China’s activities in the African markets in recent years is still more impressive. China exports more than 90 billion dollars to and imports more than 50 billion dollars from African countries. Although it’s still less than the investment of all European countries together (in 2018 the EU exported goods to the value of 115 billion US dollars and has imported more than 130 Billion US dollars, plus about 30 billion dollars from non-EU European countries), Chinese trade with Africa today is 20 times higher than it was in 2000. Chinese President Xi Jinping has visited Africa nine times last year, a measure of the importance of Africa for the Chinese government.

The message is clear: Europe has to change its view on Africa and how it operates on that continent. Africa has become one of the most dynamic continents in the world. Europeans used to see Africa mostly as a continent of crisis, wars and corruption. This is in many parts still true today, however it doesn’t tell the whole story of Africa. Africa is diverse and different, like Europe with manifold levels of development and education, cultures, threats and dangers, but also hopes and opportunities. Both are immensely affected by each other in many ways: trade, natural resources, migration.

In contrast to Europe, whose population on current trends is aging fast, Africa is the most dynamic continent, with the number of its citizens doubling from today’s 1.3 billion people to an estimated 2.5 billion by 2050. How Africa and the world as a whole responds to this by providing sufficient jobs, education and investment in general, will shape the continents future and will be a major challenge. Demography and economics are the key elements that will shape the next thirty years of Africa’s future…and thus Europe’s as well.

Africa needs to create about 20 million new jobs per year in order to give Africa’s young and growing population opportunities for the future and the chance to build a life in their home countries.

This is why the German Ministry for Economic Cooperation and Development (BMZ) has developed the cornerstones for a “Marshall Plan with Africa.”

Germany has used the G20 Presidency (1.12.2016 – 30.11.2017) to highlight and support the importance of a new partnership with Africa focussing on investments and job creation. At the G20 Africa Summit in Berlin, the “Compact with Africa” was launched as an offer for every African country to improve its macroeconomics and economic governance. The Ivory Coast, Ghana, Morocco, Senegal, Rwanda, Ethiopia and Tunisia were the seven countries that initially applied for the “compact”. In the meantime, a total of 12 countries became members of the compact. Besides the countries mentioned, Burkina Faso, Guinea, Benin, Togo and Egypt were also admitted. Of these the BMZ negotiated and concluded “Reform and Investment Partnerships” with the Ivory Coast, Ghana and Tunisia – a specific instrument developed to support reforms in priority reform areas which compact countries identified in their compact application. Negotiations for three more “Reform and Investment Partnerships” are underway with Morocco, Senegal and Ethiopia.

The aim of the partnerships is to strengthen the framework conditions for sustainable private investment and incentivise public investment in infrastructure, economic participation and employment in African countries. These partnerships are only offered to partners which are willing to commit themselves above-average and able to present a good track record in creating a favourable business climate. It is necessary to mobilize own resources to contribute to the initiative and using funds of the Official Development Assistance (ODA) as a catalyst to mobilize private investment and support the local economy, as the required 20 million jobs will only be created in the local sector. African citizens must be enabled to mobilize own resources and build up private investment pension funds.

Over the next five years, the BMZ’s new Special Initiative on Training and Job Creation aims to strengthen 15 business clusters in selected Compact with Africa countries, creating up to 15,000 jobs per cluster. Recently Germany announced a development investment package of about one billion euros to trigger and encourage private investment in African countries.
More than 200 business partnerships will help to create about one million jobs.

I. BASELINE & CHALLENGES

• Since 2017 there has been a significant uptick in the commitment towards Africa. We see improved business conditions in the field of traditional instruments like Hermes guarantees, export guarantees and traditional investment guarantees. More Prime Ministers travel to Africa, companies invest more, and there is more interest of European industries in Africa. For small companies though, the risk of investing in African countries is still very significant.
• Innovative finance is still lacking
• Africa is mainly associated with three factors: crisis, war and corruption. Participants from Africa stressed that these factors should be changed into the values of diversity, creativity and opportunity.
• Most of the conversation around Africa in Europe is about the topic of migration. The fear of migration causes the opportunities Africa represents to be underestimated. Beware: Making rash, short term decisions will cause difficulties in the long term.
• Europe has so far failed to transform its traditional aid architecture approach into a real political (and economical) partnership.
• Africa’s opportunities lie in its culture and young people who want to build up their nations. One example of successful developments is Nairobi, known as Silicon Savannah, where young people are working on new ideas and founding start-ups in different areas, for example on food. Only few people in Europe are aware that Africa is the home of healthy eating.
• 80 % of jobs in Africa come from the SME (Small and Medium Enterprises) sector. But companies are typically stuck at sub-optimal size and don’t grow. African SMEs need solutions as to how they can grow up the quality and value chain.
• China has no strategy for Africa. China has a strategy only for China.

II. CONCEPTS PRESENTED AT THE ROUNDTABLE

1. Marshall Plan with Africa
Impulse by Stefan Oswald, German Ministry for Economic Cooperation and Development, Department Marshall Plan with Africa, Flight, and Migration
The Cornerstones for a Marshall Plan with Africa are the strategic umbrella and framework for the Africa policy of the German Federal Ministry for Economic Cooperation and Development (BMZ). The document offers assistance to the African Union and its members in implementing the Agenda 2063 and focuses on the key challenge that the African continent is facing: the creation of about 20 million new jobs per year, in order to give Africa’s young and growing population opportunities for the future. Since these jobs are mainly created in the local economy, only looking at foreign direct investment is not the right strategy.
Hence the BMZ wants to focus its development cooperation more on economic cooperation. This requires peace, stability and security, and efforts by our partners on the ground to improve the investment environment. The Marshall Plan is therefore based on three pillars that rest on the foundations of our cooperation to date:
1. Economic Activity, Trade and Employment
2. Peace and Security
3. Democracy and the Rule of Law

Despite the similar name, the Marshall Plan with Africa is not comparable with the Marshall Plan for Europe to reconstruct Europe after World War II. The term is only used to indicate the size of the challenge before us.

One element of the new partnership with Africa – besides the Marshall Plan with Africa – Africa is the Compact with Africa, which was launched at the G20 Africa Summit in 2018 in Berlin to promote private investment in Africa, including in infrastructure. The aim of this compact is to strengthen Africa as a location for investment and to establish fair trade relations between Europe and Africa. It is also intended as an instrument to support the Agenda 2063, a strategic concept for the socio-economic transformation of the African continent over the next 50 years.
For Africa it is necessary to mobilize its own resources, and it is necessary to use funds in a way that they are having a catalytic impact.

The Marshall Plan is not a fund. It shall present new guiding principles that are intended to help optimise the existing programmes and budget lines. Additional resources are made available for the Reform and Investment Partnerships and special Initiatives like the one on training and job creation. The BMZ is already supporting activities with African partner countries in the areas mentioned – under bilateral official cooperation alone the volume of such activities is more than 1.7 billion euros in average commitments per year. After the first initial presentation of the Marshall Plan for Africa, the level of commitments reached 2.1 billion euros for the first time in 2017. This existing portfolio is continuously being brought into line with the guiding principles of the Marshall Plan which are:

1. We need a pact for the future between Europe and Africa, now
2. Africa needs African solutions – AU Agenda 2063
3. Prioritising jobs and opportunities for young people
4. Investment in entrepreneurship
5. Value creation, not exploitation
6. Demanding the right political environment and supporting its development
7. Reform partnerships, not a blanket approach
8. Equitable global structures and institutions
9. ODA cannot provide all the answers
10. We will leave no one behind

2. European-African Development Bank
Impulse by Dr. Albrecht Conze, German Ambassador to Uganda
Ambassador Albrecht Conze emphasized that charity is the wrong attitude towards Africa. The USA for example is investing billions without satisfactory results.
He stated that European embassies in Africa are ringing alarm bells about the growing dependence of the continent on China. A few years from now, a second sovereign debt crisis is likely to annihilate the successful debt relief which most African countries had been granted since the turn of the century under the HIPC initiative, initiated by the G8 and implemented by the World Bank and the IMF. Western countries and institutions are unlikely to come to Africa’s rescue for a second time, as most of the continent’s recent debt is now being owed to China.
A new sovereign debt crisis could jeopardize Europe’s attempts to address the root causes of irregular migration. If we limit ourselves to reactive emergency measures, we will fail. Europe needs to adopt a comprehensive and holistic policy towards Africa, based on geopolitical considerations and equipped with effective instruments. Without such a policy, the delicate balance between Europe and Africa cannot be maintained and mass migration risks not being contained. It should be conceived by diplomats and economists and quickly become a centrepiece of Europe’s foreign policy. As such, it should not be left to the traditional “development community”.

Conze recommends a European-African Development Bank modelled after the European Bank for Reconstruction and Development (EBRD) which has done much useful work since 1991 should become the foremost instrument of Europe’s indispensable new strategic pivot to Africa.
He stated that Europe and Africa are much closer to each other than China and Africa. Strengthening the links across the Mediterranean is a geopolitical necessity. Exploiting all potential synergies will be to the geo-economic advantage of both continents. Both continents have been linked by history for centuries, not to say millenniums which means that Europeans are culturally closer to Africans than anyone else.

It is not in Europe’s interest to attempt a new scramble for Africa. But we should do everything to prevent others to engage in such a new scramble.
A gradual transition towards interest-based partnership will be beneficial for the intercontinental relations in the long run, and certainly enhance honesty on both sides.
Unless we decide to react vigorously, the Belt and Road Initiative, promoted by Beijing with much energy, is going to further shift the geopolitical and geo-economic balance in China’s favour.

China’s presence in Africa may thus soon become a problem for Europe since the migration pressure towards Europe could grow further as Chinese domination slows down African emergence.

The recent European initiatives could be bundled into a powerful instrument by which China’s challenge could be effectively addressed. It is time for a European-African Development Bank.
Two options are on the table for shaping this new instrument:
1. Extension of the current mandate of the EBRD
2. Foundation of a new European-African Development Bank
If Europe manages to constitute its political determination, it will be able to offer Africa an alternative to China’s aggressive takeover attempt.
(Please find the detailed paper here)

3. The Social Dimension: Sharing the Wealth and Security
Impulse by Martin Schoeller, State Chairman Family Entrepreneurs Bavaria, Germany
Linking of social (and ecological) standards with trade treaties and cooperation agreements, especially with developing countries

Migration and its causes are a joint challenge. The current growth rate of the population is doubling every 30 years, causes a threat to peace and human rights (4 bn people in 2100) while on the other hand if Africa develops well with European help, it offers the biggest potential. 1 bn Africans today correspond to a market size of China 35 years ago. If we can learn from China’s development, the African market can become tremendous while the continent gains prosperity.
There is a correlation between low income and high birth rates of women. Increasing population again increases scarcity, hunger, civil wars, and poverty.

We have the goal that trade also helps prevent poverty. We should start linking trade contracts and also cooperation contracts such as the nascent African- European contract with standards not only from our point of view but also from the African point of view.

1. The “Soziale Marktwirtschaft” (social market economy) provides prosperity for everybody
The concept is not sufficiently defined in the Anglo-Saxon thinking and should be fostered as the “European economic model” all over the world.
2. A promising translation proposal: “The European economic model” (“EEM”)
A combination of the liberal and capitalistic market model with a solidary social support system protecting the low-income group, the unemployed and others who are not protected by their families, could be called the “European economic model”.
3. Market failure happens when the price is not able to regulate a stable balance between supply and demand.
As it is with water and air, there is also an apparent over-supply of unskilled labor in countries that don’t offer a social net of benefits. Consequently, there will be no adequate payment for the work of unskilled labor. In many countries the remuneration is at 1 USD/day and less (see the book “The 1 Dollar Revolution”, they propose 1$/h which we think needs to go in steps and needs an enforcement strategy).
Focused measures are needed how to increase the minimum wages and how to provide social protection system.
4. “The European economic model” guarantees: every worker can support a family
5. The „European economic model“ is not based on redistribution and weakening of the capital generation by high taxes on companies and enterprises, but is based on a solidarity contribution of every employees’ salaries and workers as well as on the VAT
6. First step in the European relation to Africa should be the introduction of unemployment support
7. First goal of promoting the EEM is to achieve a salary of 100 USD/month in the poorest countries
8. Implementation of the unemployment support by linking the trade and corporation treaties with an according, mandatory commitment for its introduction by the partner country.
9. The unemployment support defines a minimum wage because the employer has to pay more than the unemployment support in order to motivate the employee.
10. The income increases for the poorest will immediately turn into consumption and growth
11. The GIZ can consult the public authorities how to introduce within companies a minimum solidarity contribution of 10 – 30 % on the salaries and how to pass this contribution on to job seekers.
12. Building infrastructure by government spending and by PPPs needs more intelligent financing supported by Europe and linked to the EEM (social protection systems and minimum wages)

III. RECOMMENDATIONS FROM THE DISCUSSION
• Europe needs to change its approach and attitude to Africa. Africa does not need aid but help for self-help. It is rich in natural resources and a young population with talented entrepreneurs and an emerging middle class.

• Africa needs fair trading relationships. The common agricultural policy has not been an example of fairness towards Africa at all.

• In order to convince young people to stay and engage in their country’s education and community building along the value chain need to be supported by various stakeholders.

• Focus on local sector investments next to foreign direct investment. 20 Million jobs which need to be created in Africa each year can only be created by the local sector.

• Connecting the new African generation closer with the younger generation of Europe.

• The “Fund Africa Connect” shall provide European SMEs an easier path for investment in Africa.

• Oblige big companies actively in Africa to install corporate citizenship to ensure that money is invested in the communities where they are producing their goods to close the gap.

• European development financing should develop a more coherent European approach, accompanied by effective working country platforms and take 1 percent of this amount and create a fund that invests in African SMEs. In addition, European involvement comes with good governance, environmental and social standards, that are crucial features for every investment.

• Development of job creation and training for private investment knowledge.

• The pension funds of Africa today are over 400 billion US dollars and growing fast. So, the chance that social security in the European sense can be achieved in Africa is possible.

• Establishing a system in Brussels as one focal point for Africa, for example a commissioner on Africa, who is responsible for foreign policy, trade competences, development assistance etc.

• More focus on Europe’s and Africa’s business interests. We need to use the financial instruments to guarantee facilities not only for local business but also European business and joint ventures.

• The extension of the EBRD mandate. The EBRD, which has a mandate for North Africa, has lost 50 % of their profits due to the sanctions on Russia. This could be a chance to focus on new business and new areas in Africa. The EBRD has an excellent toolset for advising SMEs in establishing good relations with civil society and that is exactly needed in these countries (unfortunately stake- and shareholders of EBRD recently didn’t agree to that).

• We have to understand the Chinese and their goals to 2049 to understand the BRI and their Africa strategy. If we cannot beat China, we should join them. For instance, by building value chains and using their infrastructure.

• European private and public sectors are investing six times more in Africa than China. But nobody knows it because every European country is investing under its own flag. If we use the European flag consequently, additionally to the national flags, we can make the European engagement more visible and get a European investment brand in Africa.

• Rename the Marshall Plan to Africa into EASI: European African Sustainable Investment.

***

Participants included Feven Ahlers (Solino), Dr. Elke Baumann (BMF), Dagmar Bottenbruch (Business Angel), Dr. Albrecht Conze (German Ambassador to Uganda), Cédric Filet (Aldelia), Dr. Jürgen Großmann (United Europe), Lauren A. Johnston (Mercator Institute for Chinese Studies), Brenda Katwesigye (Wazi Vision, Uganda), Dr. Michael Köhler (European Commission), Dr. Frannie Léautier (The Southern and Eastern Trade and Development Bank (TDB), Tansania), Dr. Stefan Oswald (BMZ), Martin Schoeller (Schoeller Holding), Dr. Wolfgang Schüssel (United Europe), Beate Wedekind (TheNewEthopia/Journal of Change), and Martin B. Wiesmann (JP Morgan), amongst others.
The roundtable was moderated by Maximilian Jarret (Abundenta Divina (Media) Ltd., UK).