00:00Can Germany do reform? That's currently at stake as the German Parliament debates the first draft for the next federal
00:09budgets.
00:10There's record debt, there are not as many cuts as promised, and there's the open question how Germany can cut
00:18its spending to match the promises of this coalition government.
00:22I speak to Johannes Volkmann, a conservative CDU MP of Friedrich Merz's conservative bloc, and I speak to him about
00:33what he, as part of the younger generation, expects from this coalition government,
00:38and whether Germany will be able to fulfil its role as the country that demonstrates that it can cut its
00:46spending against the backdrop of strategic threats like the war on Ukraine and pressure by China.
00:54Mr. Volkmann, we've just seen the first draft of the next budget, and the whole world is asking itself, can
01:00Germany do reform? Can it cut spending?
01:03What we're looking at right now is record debt in the next budget, more than 200 billion euros potentially, and
01:12still a lot of details that are open,
01:14a far cry from the big reform programme that Germany had promised itself. Where does that leave the current government?
01:22Well, there is some economic consolidation happening in the budget, but most importantly,
01:27Germany is investing, like never before, in its armed forces and its commitment to NATO and EU alliances.
01:34We have an unprecedented threat situation with Russian aggression to Ukraine and to our alliance,
01:40and we want to be a credible partner to our friends in Eastern Europe.
01:43Now, you are a representative from the younger generation of the Conservatives, but of Germany as a whole.
01:49It will be your generation who will be footing the bill for the spending package for defence,
01:55but also it's almost a quarter of the German federal budget that is currently going into propping up the current
02:02pension system.
02:04How far has this government come, and how far can it get in actually delivering on those fundamental reforms?
02:11Pension reform needs to be our foremost priority.
02:14You rightly said, one quarter of all federal spending is on our pension system, and it's getting out of control.
02:22We have 33 reform proposals by a pension reform commission, and we want to see those implemented as soon as
02:30possible.
02:30We have a historic chance of putting our pension system on firm ground with these reforms, and we should use
02:36that chance.
02:38But the current budget draft doesn't look like there is any major shift in terms of actually cutting spending.
02:46That's also something that Germany is currently demanding from its European partners when we're talking about the next longer-term
02:53budget of the EU.
02:54Well, we've just heard from German Chancellor Friedrich Merz that he expects all partners to pay for Ukraine,
03:00and he also demands a fundamental restructuring of that budget.
03:05So, will Germany live up to its own standards here?
03:08We want to do our homework, and that includes cutting back on red tape, but that also includes consolidating the
03:14number of civil servants.
03:16We've seen a ballooning of public service in recent years, more and more government hires,
03:21and we've agreed in the coalition on a 2% annual decrease in the number of civil servants in Germany.
03:28So, we're cutting back on the workforce using AI, making it more efficient, but also cutting back on red tape
03:33to help unburden our businesses.
03:37So, still a lot of progress that needs to be made there.
03:39We know that the coalition will be meeting over the next coming days to consolidate this current budget as well.
03:46Let's look at the bigger picture, the threat that Europe is facing at this moment in time.
03:51What would be your overall headline for the challenge that the German government is facing in looking at European security?
04:00Well, the headline would be freedom and peace are at stake, and it's our choice whether or not to defend
04:06it.
04:07Europe needs to be responsible for its own security.
04:09I think our transatlantic partners are very right in asking us to do more for our own safety.
04:14We are the second largest economy as European Union worldwide, and hence we have a huge responsibility for our own
04:23defense.
04:24We've not honored that in the past.
04:26We're now drastically changing that, re-arming Europe, and that's important because, quite frankly,
04:31Russia's colonial war in Ukraine, the outrageous human rights violations that we see most recently in towns like Oleschki,
04:39there are grounds for great concern, and our security here is at stake.
04:43Now, the Europeans are now to be secured a seat at the table.
04:47That's what we've heard from Derek Kushner, the son-in-law of the U.S. president and the special negotiator
04:53as well on Ukraine.
04:56Who do you expect to take that seat on the European side?
05:00If it went according to spending, all arrows would be pointing at the German chancellor.
05:06We also heard from Vladimir Zelensky, Ukraine's president, basically also saying that the freedom in Europe depends on Germany.
05:16I do think that it's important that we find common European agreement on that.
05:21No individual European country should talk on behalf of other Europeans without a mandate.
05:27And that is, I think, the difference between us and the way some others are conducting these negotiations.
05:33We want to be inclusive in our approach because our joint security is at stake.
05:37It's not just about Germany and Ukraine.
05:39This is also very much about Poland, about the Baltics, about Finland, about Romania,
05:43so many countries who right now are threatened by Russian imperialism,
05:47and hence we have to find a joint approach.
05:49Now, it's not just Russia.
05:51We're actually seeing a reordering of the global power balance right now.
05:55You are very much someone who works on Germany's China policy as well.
06:01Just paint me a bigger picture of what would be your to-do list in terms of strategic threats that
06:08Germany and Europe face,
06:10Europe being the second largest economy, but Germany alone being the third largest economy in the world.
06:15Germany is affected by deindustrialization.
06:17We're losing about 12,000 to 15,000 industrial jobs a month,
06:21and that has a lot to do with the increasing trade imbalance with China.
06:25We have a trade deficit of more than 1 billion euros a day between the European Union and China,
06:31and quite frankly, that's unsustainable.
06:33We also see that that trade imbalance has its origins in currency manipulation.
06:38There are some researchers here in Europe who are alleging that up to 30% of the Chinese pricing advantage
06:44is due to currency manipulation.
06:46And so we have to address that with reciprocal tariffs and with a new settlement
06:50that seeks to create a fair trade relationship with the PRC.
06:55I think it is in our core prosperity interest not to repeat the policy mistakes of the China Shock 1
07:01.0.
07:01Now we are in a basically China Shock 2.0.
07:04So how similar or how different should this be from the Trump-style approach to tariffs?
07:09Well, the thing about the current American administration's approach to tariffs
07:14is that those tariffs seek to prevent competition.
07:17We want to restore fair competition with a reciprocal tariff that equalizes currency manipulation
07:23and other non-WTO-compliant subsidies in the Chinese market.
07:29We want to see more trade.
07:31We want to see more fair competition.
07:33But unfortunately, at the moment, the playing field is distorted
07:36and we have to take measures to restore a level playing field.
07:40Now, there's a lot of individual aspects, a lot of point scoring going on in the current German budget.
07:47And I just want to return to that briefly because this is also about the dynamism of the economy.
07:52The United States seems to be doing better, seems to be more stable through its own dynamism,
07:59despite the fact that it has twice the rate of public debt as Germany has.
08:05So how is this coalition, this government, going to effectively tackle this,
08:10when at the moment we are seeing very much a tit-for-tap even between the coalition partners on minor
08:16issues?
08:16Well, I mean, one element, one key difference between the United States and Europe is the demography.
08:22The United States, through immigration but also through a younger population,
08:25just has a higher baseline growth expectation than we have.
08:29But you're absolutely right.
08:30We have a lot of policy constraints on economic growth at the moment.
08:33And we have very high taxation burdens, also our additional welfare costs that we burden onto our companies.
08:41And if we want to address the question of economic growth, which I think we need to do,
08:46we need to lower that through reforms.
08:49And that should be one of our priorities next year.
08:52As also one of the young group of MPs within the Conservative Party, Friedrich Merz's party,
08:59Friedrich Merz has been through a couple of crises questioning his authority within his own party.
09:05What is your expectation for renewal, for the Conservative project as a big tent party
09:12and a tent that is shrinking currently in the polls with a far-right alternative for Germany
09:17now polling strongest in the German context?
09:21What is your expectation of your own Conservative bloc there?
09:24Well, I think we need to prove over the next couple of months
09:27that we are the ones who have the answers to the policy crisis that Germany is facing at the moment,
09:33whether it's on deindustrialization, whether it's on making sure that we preserve peace in Europe,
09:38but also in solving some domestic issues, for example, on migration,
09:42where we still have a very heated debate and where I think we need to have, as a big tent
09:47party,
09:48an approach to solving the problem of illegal migration of those who are not loyal to our constitutional order
09:54but live within our own country.
09:55And so there are lots of tasks ahead
09:57and I think the CDU historically has always been best when it showed resolve in solving these questions
10:03and not revolve itself around personnel discussions and the kind of daily hiccups of politics.
10:10Johannes Volkmann from the Conservative CDU Party, thank you very much for talking to Deutsche Welle.
10:15I appreciate your time. Thank you.
