‘State of the World’ Special Address by President von der Leyen at the World Economic Forum, via videoconference

Danke Klaus,

Ladies and Gentlemen,

There is a question lingering out there since the start of the pandemic: Are our democracies strong and fast enough to face the incredible challenge of COVID-19? Can democracies deliver? I have no doubt. The pandemic has not only demonstrated our democracies’ ability to act, it has also shown that democracies are the more powerful, the more resilient and the more sustainable form of government. We have not conquered COVID-19 yet, but if we are on our way to finally end this pandemic, it is because we have mRNA vaccines developed by European scientists. This is thanks to our values that these scientific breakthroughs have been possible. Values such as liberties of research, freedom of science, and independent choices for investors. All of this means that we are much better equipped today to fight this virus than two years ago. Europe has delivered a total of over 1.2 billion doses of vaccines to its citizens. Over 80% of adults in Europe are double vaccinated. But what is even more important: We are the only region in the world that has continued to export or donate to other countries. From the beginning, and throughout the whole pandemic. A total of 1.6 billion doses made in Europe have been delivered to 150 countries. And with industry producing more than 300 million doses of vaccine every month in Europe, there will be more to come. This shows that we can trust in democracy to deliver.

And this word ‘trust’ has always been a thread that runs through all editions of the World Economic Forum. Davos has always been about building trust among leaders and, most importantly, earning the trust of future generations, with responsible leadership. But this year, like never before, trust is the most valuable currency when we speak about the ‘state of the world’. Trust in science and vaccines can make a difference between life and death. Trust among countries can tilt the balance of international affairs towards cooperation instead of conflict. Trust in functioning societies based on the rule of law channels higher levels of long-term private investment, giving these societies an edge over competitors. And this trust is also essential to all of Europe’s main ambitions. Trust is essential for citizens to embrace the green and digital transformation or to attract young talents. The point is that the recovery – be it in Europe or globally – can only be built on trust and confidence. And this is what I want to talk about today.

In the economic and financial crisis, a decade ago, Member States did not entrust the European level with finding a European solution. The result were intergovernmental solutions with deep divisions between Member States. But this time with the pandemic’s economic crisis, the 27 Member States trusted the European level. They backed the European Commission to raise capital on the market and to invest it – mainly in our two priorities: the European Green Deal and digitalisation. This is NextGenerationEU, our recovery programme of EUR 800 billion. NextGenerationEU includes by far the largest green bond programme ever. We will invest close to 40% of NextGenerationEU in green projects. That is up to EUR 300 billion. So far, all the bonds we issued to finance these investments were heavily oversubscribed. And over one third of our bonds were bought by investors from outside the European Union. This is a clear sign of confidence and trust in Europe from the rest of the world.

Yet we must do more. Public investments will not work miracles unless they are matched by strong private investments. Europe alone will need to invest an additional EUR 360 billion for transforming its energy system – every year. That is a staggering figure, yet it is entirely within our reach, but the private sector must come on board and governments have to create the conditions for this to happen. And this is what we have been putting into place, brick by brick. We now have the first ever European Climate Law, ensuring that our climate targets are not just an ambition, but a legal obligation. We have now proposed a detailed legal framework to ensure that we can reduce our emissions by at least 55% by 2030. This is our roadmap for the next decade. This provides certainty and trust for investors that, if they put their money in clean and climate-friendly projects, they can rely on the fact that policy makers will stay the course.

Or take the critical sector of semiconductors. Demand for them is skyrocketing. Today, we have microchips, not only in our PCs and smartphones, but also in our cars, in the heating system of our homes, in our hospitals, in life-saving ventilators. There is no digital without chips. And the European need for chips will double in the next decade. This is why we need to radically raise Europe’s game on the development, production and use of this key technology.

Europe is strong in some specific areas, such as the design of components for power electronics, or chips for the automotive and manufacturing industries. Europe is the world’s centre for semiconductor research. And Europe is also very well positioned in terms of the materials and equipment that are needed to run large chip manufacturing plants. But Europe’s global semiconductors market share is only 10% and today most of our supplies come from a handful of producers outside Europe. This is a dependency and uncertainty we simply cannot afford. By 2030, 20% of the world’s microchips production should be in Europe. Keep in mind that the world’s production itself will double. This means quadrupling today’s European production. We have no time to loose. This is why I can announce that we will propose our European Chips Act in early February. It will help us to make progress across five areas. First, we will strengthen our world-class research and innovation capacity in Europe. Secondly, we will focus on ensuring European leadership in design and manufacturing. Thirdly, we will further adapt our state aid rules under a set of strict conditions. This will allow public support for European ‘first of a kind’ production facilities that benefit all of Europe. Fourthly, we will improve our toolbox to anticipate and respond to shortages and crises in this sector to shore up our security of supply. And fifth, we will support smaller, innovative companies, in accessing advanced skills, industrial partners and equity finance. I want to be clear; Europe will always work to keep global markets open and connected. It is in the world’s interest, and in our own. But we do need to tackle the bottlenecks that slow down our own growth. This will help us become a strong player, not just in some niches, but throughout the whole value chain. To conclude, we will promote diversification among like-minded partners. We will create more balanced interdependencies. And we will build supply chains we can trust by avoiding single points of failure.

The point is that there will always be times when we need to address wider issues in our economies. And today’s global energy pressure is a case in point. We will soon mark 50 years since the start of the oil crisis in the 1970s. Some of us will remember vividly the impact of the crisis on our economy but also on our lives. Some countries banned driving on Sundays or set lower speed limits on the motorways. Others rationed gasoline or told people to heat only one room in the house. And many of you know the debates it caused on the limits of growth. The world is a different place today and parallels can seem a bit tenuous, but there is a cautionary tale for us as we face today’s gas crisis and as we have our own debates on the limits of fossil fuel growth. At the time, our response was not to look at alternative sources of energy but rather to look at alternative sources of production. Oil exploration spread far and wide – from Alaska to Siberia or from the Caspian Sea to the Caucasus. The good news is that we have far more options at our disposal today than we did back then. Back then, less than 1% of electricity was generated from renewable sources worldwide. Today, this figure has jumped up to close to one third. Today, we know much more about the climate imperative. And today, we have the technologies we need to make the transition from a fossil fuel system to a clean energy system. In the short term, we have to address the very real impact this gas crisis is having on households and businesses. My Commission has put forward a toolbox of measures that Member States are using to rapidly mitigate the impact of price rises. But fundamentally, today’s gas crisis must serve to accelerate the transition to clean energy. It must provide the impetus we need to further integrate our energy market. And we must ensure that there are no energy islands or regions of Europe that are cut off from our network. We are working on all these points – but most importantly, we have to manage this necessary transition carefully. And this comes back to this central question of trust. Because people need to trust that the transition will support the most vulnerable. Businesses need to trust that the transition will improve their competitiveness. And investors need to trust that we will stay the course whenever there are bumps on the road. There will never be a linear shift from a fossil fuel-based system to a clean energy system. We must be upfront about that. But the direction is clear – and so is our commitment. As we respond to this gas crisis, we will focus on protecting those most affected, we will accelerate the transition and we will ensure that we have the reliable suppliers we need.

This leads me to my last point, that is trust in the international arena. At this moment in time, the world needs trust in democracy as much as trust between democracies. Because tragically, we are once again faced with the interference of some powers in their neighbours’ affairs. We will not go back to the old logic of competition and spheres of influence, where entire countries were treated as possessions or backyards. We have intense days of diplomacy in different formats, with and without Russia. Russia has made its proposals. We made our proposals. And it is good that we engage in dialogue. But we do not accept Russian attempts to divide Europe into spheres of influence. For us, the fundamental principles underpinning European security remain valid in the Helsinki Final Act and the Paris Charter, both signed by Russia. And we reaffirm our solidarity with Ukraine and our European partners that are threatened by Russia. And of course, we continue to stand behind the fundamental principle that Ukraine is free to decide as a sovereign state. To be clear: We want this dialogue; we want conflicts to be solved in the bodies that have been formed for this purpose. But if the situation deteriorates, if there are any further attacks on the territorial integrity of Ukraine, we will respond with massive economic and financial sanctions. The transatlantic community stands firm on this. The EU is by far Russia’s biggest trading partner, and by far the largest investor. And yes, this trading relationship is important to us, but it is far more important to Russia. We hope an attack will not happen, but if it does, we are prepared. And what I want us never to forget is the following: Russia and Europe share geography, culture and history. We also want a common future. Our difficulties are not with Russia nor with its people. Our difficulties are with the dangerous policies of the Kremlin. It is the re-enactment of familiar patterns of autocratic behaviour that underscores the old truth: Where trust is lacking, force and coercion cannot replace it.

Europe’s approach is completely different. We believe that trust and confidence are more sustainable than control and coercion. It is the attractiveness of our liberal democracies that the autocrats fear – our economic success, our civil liberties, and the freedom of speech and ideas. We must step up to defend these most valuable treasures of our democracies.

Again, thanks for having me. Happy to take your questions.