International institutions founded after World War II must be modernised rather than created anew, German Chancellor Angela Merkel told the World Economic Forum in Davos, Switzerland on January 23, a statement that was seen as a direct rebuke of US Secretary of State Mike Pompeo‘s earlier remarks to the annual gathering that the Donald J. Trump administration was only in favour of globalisation if it served the United States’ national interests.
Merkel argued that global challenges – climate change, terrorism, natural disasters, and cyber-attacks – require an integrated approach to global governance. However, she did acknowledge the need for reform.
“We have to accept new realities and reforms, and a new approach that will address those who harbour doubts about the international system,” Merkel said.
Recognising that global governance requires a willingness to compromise, Merkel cautioned that “multilateralism is not all that easy, but I always have to think of the possible alternatives: we have populist and nationalist challenges and we have to stand up against them.”
Merkel confidently asserted that globalisation has helped lift millions out of extreme poverty, suggesting that this challenge may be overcome by 2030.
For Germany, the Eurozone’s biggest economy pointed to three big challenges ahead – a transition to a carbon neutral economy, the modernisation of its digital platforms and e-governance by 2025, as well as adapting to demographic changes caused by the movement of labour and forced migration.
In dealing with these challenges, Germany must be committed to multilateralism, as “anything else will lead us into destruction,” Merkel noted.
When addressing the issue of global economic governance, Merkel called for a return to “normality,” urging the European Central Bank to remain on course to tighten monetary policy. She also demanded that “disruptions and uncertainties” – including the ongoing trade dispute between the US and China – need to come to an end. Merkel also reasserted her position that the EU needs to a more ambitious presence in global economic governance.
“Of course, that raises the question of how we in the euro area can become dominant enough that we can also weigh in with our economic strength,” Merkel noted in a nod to French President Emmanuel Macron’s calls for political unification.