Q&A with Werner Hoyer

Amid the COVID-19 crisis, we asked key policymakers from across the European Union for their insights and views on policy priorities and outlook for Europe’s economic recovery.

“This crisis has revealed so many obvious weaknesses in our economies. When we begin rebuilding them, we will have the chance to eradicate these mistakes. And climate is one of the key areas.”

Werner Hoyer

About Werner Hoyer

What is one of your career highlights?

On November 9, 1989, when I was a relatively young member of the Bundestag, the news of the fall of the Berlin Wall arrived. I was coordinating the work in the plenary of the Bundestag that evening, and the next day I took off to Berlin and met Chancellor Kohl, who was in Warsaw at the time but immediately broke away from his state visit. Following our meeting, I had the pleasure of joining Chancellor Kohl who continued his state visit to Poland against all expectations of the international community. This was very important for him, as it was a symbol of overcoming not only the division of Germany, but also the division of Europe. Being witness to that in my early career is something for which I will forever be grateful.

How do you unwind?

I work in Luxembourg but my family is in Cologne. This has always been the case. While I worked in Berlin or in Bonn, or other parts of the world, the family was always in Cologne. So for me, it is normal to go to Cologne and be with the family when I am out of the office. I try to switch off from work, as soon as I jump into the car on Friday evening to go home.

What inspires you?

When you are active in politics, you meet genuinely inspiring figures: people in my country, like Hans-Dietrich Genscher – one of my heroes – Helmut Kohl and Willy Brandt. These are people who give you guidance even long after they have passed.

In addition, I am driven by the idea of the freedoms we enjoy and the democracies we live in. It saddens me that these are, in my view, at risk. We take them for granted but that is a big mistake.

“We help provide a level playing field across the Union, ensuring Europe acts in solidarity with impactful investments.”

Werner Hoyer

The outlook for Europe

How has Europe responded to Covid-19?

I was surprised that it took people so long to realize that this is a completely different crisis from all those we experienced during peacetime since the Great Depression. We were taken by surprise. Everything we do needs to be calculated not only against the risk, but also against uncertainty. Whatever we do requires resolve and caution at the same time.

We have mastered the first phase of the crisis relatively well in Europe, with a number of ambitious, swift initiatives, but we need to make sure we are doing all we can in terms of encouraging research, development and innovation. As important is the principle of solidarity. I worry sometimes we lose sight of that. We cannot. It underpins everything we do in the EU.

What is the role of the European Investment Bank (EIB)?

The European Investment Bank and its subsidiary the European Investment Fund target support to the real economy. The EIB is the largest multilateral investment bank in the world by assets. Our statutes require us to finance projects around the world that are economically viable and sustainable in line with EU policy. Beyond the humanitarian aspects, the COVID crisis is first and foremost a crisis of the real economy, affecting many sound, solvent companies struggling to cope with massive disruption. This is where an institution like the EIB has a huge role to play. We help provide a level playing field across the Union, ensuring Europe acts in solidarity with impactful investments.

In addition, we are also heavily engaged in supporting the health sector. Our pipeline of projects this year is around EUR 5 billion. We are very active in research for vaccines and treatment for COVID-19 — working with over 20 companies in this field.

How can we build economic resiliance?

I see those who have never been too excited about the climate issue now using COVID-19 as a pretext not to pursue our ambitious climate objectives. We should clearly work against this.

This crisis has revealed so many obvious weaknesses in our economies. When we begin rebuilding them, we will have the chance to eradicate these mistakes. And climate is one of the key areas. We need to keep putting conditions on lending activities and ensure we do not invest into fossil-fuel based products, while making sure that companies get incentives towards green projects. On the digital front, the crisis has also shown us that a courageous restart of the digitalization agenda is unavoidable.

How can Europe remain competitive on the global stage?

We in Europe have missed our innovation targets for many years. That must change; otherwise, we will lose our competitiveness in the world. Restarting the innovation engine is key.

As we have done in the context of the EU’s so-called Juncker Plan, it is important to develop new instruments that enable the financing of riskier projects with a high socioeconomic return that might otherwise not take place. This will need the combined firepower of the public and private sector, because public sector money alone will not be able to cope with the big challenges of the coming decades.

It will need what we call in the EU context a combination of “lending, blending, and advising”. Lending to incentivize economically sound investments, blending EU funds to reduce the costs of these investments, and advising in less developed markets to provide the knowhow to make these investments possible.

” There has been a terrible tendency to renationalize or even to back away from the basic values of what we used to call the West. ”

Werner Hoyer

What’s on the horizon?

What do you percieve as the biggest risk for the economy in the coming years?

The big risk in the coming years is the potential weakening of multilateralism and globalization. This both debilitates our economic wellbeing and our ability to tackle the most pressing challenges of our time, including climate change. The global division of labor is one of the key sources of our economic prosperity. We should not throw the baby out with the bathwater.

I am worried about the impact recent developments will have on multilateral institutions. There has been a terrible tendency to renationalize or even to back away from the basic values of what we used to call the West. We run the risk of losing our way of life if we overreact now.

As a bank, we are only one piece of a much larger puzzle but we have a role to play.

For instance, the EIB has recently strengthened its cooperation with the United Nations, combining opportunities for international action with financing. This is something we really need to embrace with open arms.

What are your goals for the next few years?

We can be market makers. For instance, in 2007 the EIB was the first institution to go to the capital markets and collect money for so-called “green projects”. It was considered a lunatic idea at that time but this has been a great success. The market is now in excess of USD 1 trillion.

Having pioneered the Green Bonds, in a similar vein, we recently came up with Sustainable Awareness Bonds to support the Sustainable Development Goals of the United Nations, which will never be financed through taxpayers’ money alone.

How can we stay connected?

Our lives have changed so dramatically. I have not been outside of Europe for 12 weeks but I still feel remarkably connected. Indeed, the crisis has kick-started digitalization in a manner that policymakers can normally only dream of. Videoconferencing and digital communication are the name of the game – and EIB staff have risen to the challenge! We have found out, to our own surprise, that we can function with 99.9% of our staff working from home. At times of crisis, we need to innovate and we need to pull together. But nothing replaces being able to see people in person. And I am looking forward to physically meeting my colleagues and friends again.