19 March 2020

Germany is at war with coronavirus

Negoiţă Sorin

Germany is lately facing an aggressive evolution of the coronavirus epidemic and has to develop a series of emergency measures, which will lead to serious restrictions on people’s social life, in order to avoid the increasingly spread of coronavirus. Given the magnitude of the crisis the Europe’s biggest economy will face, the German federal government stated that it is ready to return to the “unbreakable” zero budget deficit and it has prepared a consistent “financial package” to face the “hidden enemy”. Aware of the seriousness of the situation, the German chancellor Angela Merkel has addressed the nation, Tuesday 18th, showing transparency and pragmatism in a delicate moment for Germany as a state and has “begged” the German people to be serious about the evolution and possible effects of the epidemic. Also, she asked everyone to follow Berlin government’s further measures.

Image source: Mediafax

The coronavirus epidemic develops exponentially in Germany

For the past three weeks, the number of people infected with coronavirus continued to grow in Germany, reaching, on March 18th, according to official numbers, more than 12.000 cases, with an increase rate that indicates, in the last days, 2.500 people per day. Such alarming numbers puts Germany on the third place, after Italy and Spain, among the affected European countries. According to the State Health Office, most of the diseases are recorded in North Rhine- Westphalia, which has almost 4.000 cases, followed by Bavaria (around 1. 800) and Baden- Wurttemberg (more than 1.600). However, the German authorities are glad that only 28 people died so far because of COVID-19: 12 in North Rhine- Westphalia, 7 in Baden – Wurttemberg, 6 in Bavaria and one in Hamburg, Schleswig-Holstein and Hesse.

The president of Robert Koch Institute (RKI), Lothar Wieler, warned on a scenario which could involve around 10 million of people infected with coronavirus in Germany, in a few months. This may happen if they will not follow the measures imposed by the Federal Government, stating that „We are facing an exponential epidemic”. To that end, Wieler called on people to reduce their social contacts, as the virus is quite aggressive and gets transmitted really quickly from one individual to another.

Given the quick number of coronavirus diseases, the Deutsche Telekom market leader provides science people from RKI anonymous information of its clients, in order to use their data from their cell phone to evaluate the situation. Therefore, according to a company’s spokesperson, they will be able to use the information of almost 46 million clients to set up their movements fluxes map and foresee the Covid-19 spread in Germany. The information can be deducted nationally and even in terms of lands or regions. Wieler seemed optimistic that this will make possible the detection of virus’s infection focuses. The same spokesperson of Deutsche Telekom stated, Tuesday night (March 17th), that they have already sent to RKI 5 GB of data, saying that “This is a special situation. We are glad to help for free”.

In order to limit the epidemic’s spread, Germany has temporarily introduced controls on its borders with Austria, Switzerland, France, Luxembourg and Denmark, starting Monday (March 16th). At the same time, schools and kindergartens were closed until after the Easter holidays (the end of April), and from March 18, in Germany, there were taken measures to close shops (except groceries), restaurants, bars, clubs, cinemas, cinemas and concerts, carrying out checks and applying fines, in case of non-observance of the rules.

Also, the Federal Ministry of Foreign Affairs issued a general travel alert abroad, and the head of diplomacy, Heiko Maas, announced the launch of a program to bring all German citizens stranded on holiday abroad (around 100 thousand) at home, by making available, in the following days, some scheduled flights or charter flights and an amount of about 50 million Euro to that end.

Germany offers "unlimited cash" to companies affected by the coronavirus pandemic

Seriously affected by the coronavirus crisis, Germany is radically changing the way it has acted so far in the economic field, where in recent years it has promoted a balanced policy to maintain the zero budget deficit. Given this context, on Friday, March 13th, the federal government announced the largest post-World War II aid package, worth of at least € 550 billion, to support German companies affected by the coronavirus epidemic. As reported by the Financial Times, this action was described by German finance minister Olaf Scholz as a "bazooka[1]" necessary to prevent the crisis from developing into the largest economy in the euro area, an export-oriented economy and, thus, dependent on international trade relations.

 According to Scholz, these companies will receive "unlimited cash" and will have the possibility to postpone the payment of taxes and fees to avoid liquidation problems and bankruptcies, which is "a safety net". In this regard, the German politician pointed out that "there is no upper limit to the loans offered by KfW[2]”. Moreover, the Minister of Economy, Peter Altmeier, who is also the acting chairman of the KfW Supervisory Board, stated that "We have promised that we will not fail due to lack of money and political will. This means that no viable company, no workplace should face problems”.

When presenting the plan against the economic consequences of Covid-19, the two ministers said they would "do their best from the beginning" and calmed German companies and employees, stating that German budgetary stability allows the use of public sector savings during crises times. In fact, Germany has a budget surplus since 2014, which shows financial stability that can be a positive example for the international financial sector, according to information held by the Süddeutsche Zeitung daily, until the end of 2019, federal funds, state and social security reserves amounted to nearly 200 billion euro, as Scholz said, thanks to sound budgetary policy, "enough money" is available to protect people's health and to secure jobs and business.

Currently, the German budget guarantees KfW a financial framework of 460 billion euro, but there are assurances that this amount could be increased by another 100 billion Euro. However, it is not excluded that, if required, the federal government will be able to access new loans, given that in recent years they have not had to appeal to such practices. To that end, the German Chancellor Merkel said that ending the spread of coronavirus comes "first", before the compliance with the budgetary rules enshrined in the Constitution[3].

Germany's relationship with the US raises questions

Given that Germany's transatlantic relationship has recently been affected by a cooling of relations between leaders in Berlin and Washington, the fight to combat and limit the aftermath of the coronavirus epidemic seems to deepen this "break". Thus, according to information published in Sunday's edition of the German daily Die Welt, US President Donald Trump would have sought to gain exclusive access to an experimental vaccine against Covid-19 developed by the German company CureVac [4], in Tübingen, the Land of Thuringia. According to the document, the Washington leader would has offered "a large amount of money" and tried to persuade the company's management to ensure the US-only vaccine production activity.

Both the US ambassador to Berlin, Richard Grenell, and the CureVac leadership denied the information that appeared in the Die Welt material. Therefore, the interim head of the company, Franz-Werner Haas, said that "There was no offer for takeover, neither for technology, nor for the company as such". This was also confirmed by former company CEO Daniel Menichella, who was invited to the White House, in early March, and participated to talks with Donald Trump, his vice president Mike Pence, and representatives of pharmaceutical companies working to identify a “response” to the coronavirus outbreak.

Several German government officials had different perspectives though, especially the federal minister of the internal affairs, Horst Seehofer (CSU) and the foreign minister, Heiko Maas (SPD), who confirmed that the US showed interest in the German company. Also, the German Ministry of Health acknowledged that Washington was trying to provide financial incentives to the pharmaceutical company, citing a ministry spokesman, who said that Berlin "is interested in ensuring that the vaccine and its active substances against coronavirus are developed in Germany and Europe”.

In the meantime, the change of CureVac company’s CEO draw a lot of attention, only 9 days after the discussions that took place in Washington (March 11), with the founder Ingmar Hoerr, who returned to office after two years, wherein he held the position of chairman of the Supervisory Board. The dilemma is partly elucidated by Minister Haas himself, who considers the change of leadership shortly after Menichella's trip to the US only "pure coincidence". The argument would be that Hoerr does a better job as manager in the fight against coronavirus, although there have been enough praises for Menichella so far. So the sequence of events earlier this month raises obvious questions.

Meanwhile, the European Commission has offered a loan of 80 million euro to the German company to support it in developing a coronavirus vaccine. Thus, Chancellor Merkel considers the topic as "resolved", saying in a press conference (March 16th) that the federal government "took care of it very early", which confirms somewhat the existence of an "external offer".

The German Chancellor calls on the population to take the Coronavirus seriously

In a televised speech, broadcast on the evening of March 18th by all public and private television stations in Germany, German Chancellor Angela Merkel called strongly on her own population to take seriously the situation created by the coronavirus epidemic, which changed dramatically the lives of this country’s inhabitants and the entire planet in the last period and to join forces to limit its consequences. Referring to this matter, the German leader stated that "Our idea of ​​normality, public life, social interaction - all of them are tested as never before", but he strongly believes "we can pass this test if all citizens see it truly as their mission".

The Chancellor stated that since the Second World War there have been no challenges for her country where mutual solidarity has gained such importance. She also stressed that Germany is a democracy: “We do not live by coercion, but by mutual knowledge and involvement. This is a historical task and can only be accomplished together".

As there is currently no vaccine and no medicines to fight the virus, Merkel said that it is now more important than ever for anyone to contribute to slowing the spread of the virus. "We must limit, as much as we can, the risk of getting infected”. Therefore, it is essential for the population to "stop" their social life as much as possible, "with reason and judgment". "For someone like me, for whom freedom of travel and movement were a hard-earned right, such restrictions can only be justified in absolute necessity. At the moment, these are necessary to save lives”, Merkel emphasized.

According to the Chancellor, even if Germany has a well-established health system, hospitals would be completely overwhelmed if too many patients were hospitalized in a very short time, suffering from a severe form of coronavirus infection. She also stressed that "These are not just abstract numbers in statistics, but they represent a father or a grandfather, a mother or grandmother, a partner, they are people”.

The German Chancellor also referred to the need to extend the spread of coronavirus over a period of several months, in order to save the time needed, allowing researchers to develop a drug and vaccine and, "especially, for those who are ill to receive the best possible care”. Merkel added that all the governmental measures that will be taken will lead nowhere "if we did not use the most effective means of preventing the rapid spread of the virus: it is within our power".

Also, the Berlin leader thanked all health and supermarket employees for their efforts, reassuring the population about food supplies, which is guaranteed all the time: "If the shelves are emptied one day, they will be refilled".

Through this speech to the German nation, Angela Merkel proved pragmatism and transparency, which can be considered a communication example from a state leader during crisis situations.

Translated by Andreea Soare

[1] Bazooka is the common name for a man-portable recoilless anti-tank rocket launcher weapon, widely deployed by the United States Army. The term "bazooka" still sees informal use as a generic term referring to any ground-to-ground shoulder-fired missile weapon.

[2] KfW Bankengruppe (KfW Banking Group), initially Kreditanstalt für Wiederaufbau ("Credit Institute for Reconstruction") - is the Development Bank whereing the German state owns 80% of the shares, based in Frankfurt. It was estabished in 1948, after the Second World War, as part of the Marshall Plan. As of 2018, it is the third largest bank in Germany according to the balance sheet. The chairman and deputy chairman of the Supervisory Board are the German federal ministers of finance and economic affairs, with positions alternating between them annually.

[3] According to the Federal Constitution, a new federal debt of over 0.35% of GDP ("Schuldenbremse" - Debt Brake) and the commitment of a balanced federal budget ("Schwarze null" - black zero) are not allowed. However, these rules also provide for derogations in the event of an economic crisis, a natural catastrophe or an extraordinary emergency.

[4] CureVac company founded in 2000 by Dr. Ingmar Hoerr, based in Tübingen, Germany and two other scientific centers in Frankfurt and Boston, develops cancer treatments and prophylactic vaccines, antibody-based therapies, as well as treatment for rare diseases. https://www.curevac.com/about-curevac