CARLOS SEGOVIASpecial Envoy Davos

Davos Special Envoy

Updated Friday, January 19, 2024-21:13

"Germany is not sick, it is tired after a bad night and now needs a good coffee," German Finance Minister

Christian Lindner summed up the situation before the audience.

The blow of the recession to the first European economy after its energy problems due to the war in Ukraine has been one of the concerns at the annual meeting of the World Economic Forum closed this Friday and Lindner wanted to come forward without hiding that a good dose of coffee will be needed and not only to Germany, but to the entire European Union.

The reason is that in addition to the geopolitical problems due to the wars in Gaza and Ukraine, economic fragmentation and the danger of debt, a new threat looms over the European economy, the return to the White House of Donald

Trump.

The American is perceived as a risk for the European economy due to its protectionist policy and encouraging relocations to its territory and a breakdown of energy transition agreements in which the EU could be left even more alone and with possible loss of investments.

The possible return of the Republican is a particular complication for governments like that of

Pedro Sánchez

, not only due to the deterioration of relations, but because it forces him to take more measures to make the economy more competitive, use European funds efficiently and clean up the accounts. with an additional reason than the return of fiscal rules to the EU.

"We are talking too much about Trump

. What we have to do in the EU is our duties and improve our competitiveness. We have to be more attractive for investment," said the liberal Lindner.

In the same debate - which is the traditional one on economic perspective with which the Forum closes its week - the president of the European Central Bank,

Christine Lagarde

, was happy to be given the floor right after the German.

"I love following what Christian says."

And he maintained, along the same lines, that in the face of Trump's return

"the best defense is a good attack"

by the EU and appealed to strengthen the single market and finally achieve a single European capital market so that those who save of pensioners do not go to other latitudes.

Lindner called for a new wave of structural reforms starting in his own country.

"

This is a competitive disadvantage compared to the United States

," she stressed.

TOWARDS "NONORMALITY"

The minister highlighted the resilience of the German economy "after reinventing itself in 18 months" due to the loss of its main energy supplier, Russia, and assured that his country is now preparing for "a new normal" in which, in addition to war conflicts and the setback in trade liberalization due to bloc politics, the rise of artificial intelligence must be managed, the great challenge of the moment at the Davos Forum.

"The economy is normalizing but it is heading towards non-normality,"

Lagarde ironically alluded to the fact that what she expects will be different from what is known.

By that he was not referring to monetary policy, because he made it clear at the beginning that he is in a period of silence on the ECB's rate policy because next week it celebrates a new reaction.

"I am a strange panelist because I cannot talk about the work I do," stressed the Frenchwoman.

Lindner insisted that, although the horizon is different from the one experienced, we must adapt.

"It is a new normal for which we have to be prepared

," Lindner highlighted, also recalling the need to resolve the debt levels that have skyrocketed after the pandemic in the EU and the resulting loss of budgetary margin for the necessary economic transformation.

For the latter, he was against the idea that, before Trump or any other US president, the EU should avoid a race for subsidies so as not to lose industries to the US.

"We have to avoid a race for subsidies. We cannot afford it," he said without alluding to the fact that he himself is providing subsidies that are difficult for European partners to beat to attract investment to his country.

For Lindner, "doing your homework" also includes increasing military spending.

"Being an attractive partner and at the same eye level when it comes to the economic situation and when it comes

to fair burden sharing under the NATO roof

is the best thing we can do to maintain a good partnership with the United States," he defended.

The prospect that Trump will be president again is clear at the Davos Forum.

The co-president and founder of the Carlyle group,

David Rubenstein,

virtually assured the Republican's victory by being strong in the states that he considers key.

On the energy level, his effect is more limited, because his mandate cannot exceed four years, but Trump's shadow is also long over the Alpine town.