 Mrs. Chancellor, the applause just shows how much you have been expected and I am of course delighted, particularly delighted that you have chosen to join us. You really belong to the family here in Davos. The last time you addressed us was mainly during the years of the crisis and as many have said to me, your presence helped to calm things very much because you were able to show us clearly that Europe is not completely without any leadership. Well, we have reached a critical point in time again, that is a general sentiment. We are faced with a very important decision taken by the ECB today, so I am really very, very interested and hanging on your lips to hear what you have to say to us. A very warm welcome, Madam Chancellor. Well, Professor Schwab, ladies and gentlemen, let me say that I am delighted to be able to be here this year again. Last year, unfortunately, I was not able to attend the World Economic Forum and to answer questions. May I also point out the fact that there are a number of members of my cabinet present here today and I think this clearly shows that Germany is more than ready and willing to engage in international debates and discussions you have, as you always have a very ambitious motto committed to improving the state of the world. I think quite a lot needs to be done if one takes this too hard and this year has actually started with a bang that woke up all us up and shook us to the core with this terrible attack against Jewish citizens and also against the journalists in Paris, against the police forces. That shows us all that we are facing challenges that stop not at the borders of Europe, not at the borders of the United States, but that is indeed a global fight, the fight against Islamist terror. And these attacks I think have woken us up thoroughly and we have seen this very impressive demonstration in the streets of Paris with millions of French men and French citizens and I think it has shown very clearly how much we felt with the relatives of those who were killed but we also stood up for our values, for our values of freedom of the press, of freedom of democracy, freedom of religion, freedom of expression and we also had to learn, as we had to learn during the year 2014, that those matters that we have always taken for granted also in Europe, also in the democracies of the West needs to be fought for time and again, needs to be defended time and again and this may well be one of the most important messages that we need to bring to citizens, that we need to discuss with our citizens. This vibrant principle of democracy must be our answer to repression and to terrorism but it is not something that can be imposed from above this principle of democracy, it has to be filled with life through the freedoms that the citizens have because freedom does not mean being free of something but to be free to do something, to shoulder responsibility, each and every one where he or she stands and in this 25th year of German unity that is something that is particularly important to us. We will celebrate the 25th anniversary of German unity this year and we will not only pay lip service to this tenet, we will try to fill this principle with life. Last year we were confronted in quite a different way with problems that we had not actually expected to quite this extent, the conflict between Russia and Ukraine, you had the Ukrainian president here, he addressed you, he explained how he sees the situation from his vantage point and let me say on behalf of my government and as German Chancellor there is one thing that we hold very important, namely the fact that this here elementary principles of the European peaceful order were violated, the annexation of Crimea is not just any kind of annexation but it is a clear and flagrant violation of what has made us live peacefully and coexes peacefully together in Europe after the war, namely respect of our borders and respect of the territorial integrity of our partner countries and this is so important because Ukraine after all gave up its nuclear arsenal because there was a Budapest memorandum, guarantee powers such as UK, Russia and the United States stood guarantor for the territorial integrity of Ukraine, which other country would then follow that example to give up its nuclear arsenal if it has this example before its very eyes, if you give that up then you are making yourself weaker and more vulnerable to this kind of attack, but we've also learned from the World Wars here in Europe that a military response to such a challenge cannot be successful, there is no military solution to this and this is why sanctions were unavoidable, they are not an ending in the cells and they can also be lifted if the reasons for why they have been imposed in the first place are no longer there, but we're not there yet. I would like to underline here that the whole of Europe, but particularly we in Germany, time and again together with the French president try in the so-called Normandy format to bring about a diplomatic solution, the foreign ministers of this Normandy format met yesterday, there are certain small steps towards progress, although there are many setbacks as well, the Minsk agreement at any rate is the basis on which these negotiations take place and we try to find a solution. Ladies and gentlemen, apart from these global challenges, there are also challenges of an economic nature and challenges to our societies as a whole. This year, Germany is in the chair of the G7 and those issues that we consider to be of prime importance for the long-term and sustainable development of our world is something that we wish to work on, protection of the climate, reduction of poverty, fight against anti-microbial resistance and also I take this issue particularly to heart, empowerment of women to set up their own businesses. What is also important is to make them more stronger economically speaking. Europe continues to be confronted by great challenges. We quite often talked about the sovereign debt crisis, about the crisis in the Euro area. We have this somewhat under control now, but we are not out of the woods yet. We have not overcome it and Europe more essentially hasn't really regained sufficient trust, hasn't regained sufficient competitiveness. I am always for not painting matters in black and white. Quite often, so-called austerity is pitted against a so-called growth model. I think that this is totally wrong. We need a growth-oriented sound fiscal policy. We need investments. We need investments by the state, but we first and foremost need an environment which encourages private investors to take out investments. If today, in these very minutes, we expect a decision by the European Central Bank, then this will be a decision that will be taken totally independent. Let me state this very clearly. We in Germany, as you know, have this long tradition of time and again stressing that the ECB is independent and should be independent, but as a politician, no matter what, I would say no matter what sort of decision the ECB will take. We should not become diverted by from the fact that we need to put as politicians the necessary framework conditions in place for recovery. We have progress in quite a number of countries, particularly the so-called program countries. We have very clear reform efforts, for example, also in Italy. I say finally, we have the Italian Prime Minister here addressing you. These are very important signs. In France, there is a new course that is clearly growth-oriented, which is a very good message and very good news, but time is of the essence because every day, these adjustment mechanisms are not done and that we sort of wait until we improve our competitiveness is a lost day. We need jobs and these jobs have to be created in those areas. Which promise long-term, highly qualified employment. So digitization and how we react in Europe to digitization and this phenomenon, it will be essential. Germany is very pleased that it is our commissioner, the German commissioner who is responsible for this particular industry and it is, I think, a very good sign that the European Commission has not only launched an investment program, but is also looking at the political framework conditions. But a sober look at the digital agenda of Europe and the role of the United States and also of a number of Asian countries very clearly shows that we lag behind. We have to try to close that gap. We're not leading the development here. So we need to put the political framework condition in place. As I said, we need to find the right mix, the right balance of protection of the data of the individual, but also freedom to use those data to develop new products. And as German federal chancellor, I want a strong German economy to be able to actually cope with this merger of the so-called real economy and the digital economy to what is commonly called industry 4.0. And because otherwise, we will lose our competition in the competition. And we, I think, enter into this competition with self-confidence, but we haven't yet won that. I think we have in Europe with this huge single market that we have very good opportunities, but Europe must become more rapid, must become faster, must become more competitive and less regulated. I am very pleased that this commission has set itself the goal to do that. For the first time, we have this trilogue between the European Commission, the European Parliament and the European Council. And I think if we work on this basis of this new agenda that we have given ourselves, we have a very good opportunity, very good chance of getting stronger out of this crisis, out of this European crisis that we went in. And the examples of Spain, Portugal, of Ireland, and also in parts of Greece show that actually reforms are well worth your while. They are efficient and growth can return. What does Germany do? In this competition, Germany wants to play a responsible role. I think we've shown that growth-oriented sound fiscal consolation is possible in 2014. For the first time for 40 years, we have not any new net boring in our budget. And I know that some people accuse us of being too tight with our money as regards our budgetary policy. But let me remind you that Germany has a massive demographic challenge, as probably no other European country has. More than 6 million people will be lost to our market who are now gainfully employed because they retire. And if we're not solid in the way that we do our business and try to keep our debts down, then we will leave a very heavy burden to the next generation. They will simply not have the necessary breathing space. And I think that this would be irresponsible. Well, one of the few member countries of the European Union that spends 3% of its GDP on research and development, I think, were attractive to others because of that for research and development. Our consumption has increased. It is actually carrying and boosting economic growth. The growth has been 1.5%, which maybe compared to the U.S. is somewhat modest, but for us it is quite respectable. We want to continue this course. We also want to continue this course of increasing employment. We have as many people in jobs gainfully in gainful employment as we have ever had during our history. And those are very, very good figures that we have in this area, particularly 43 million people in gainful employment of 80 million inhabitants. And we want to remain a stable anchor in Europe. Ladies and gentlemen, we all know we cannot shut ourselves off against the rest of the world. And we shouldn't do this. So let me plead for the European Union being an open-minded place for agreeing on free trade investments. The CETA, for example, the Free Trade Agreement with Canada is almost there. It needs to be finalized. TTIP is currently under negotiation. The American President has committed himself to these negotiations. And I think that is a unique chance for Europe that it should seize. Opportunities for growth can in this way be speeded up through less obstacles in transatlantic trade. But what's also important is we have very high standards in consumer protection and general industrial production as well. So we could do something in order to be standard setters globally. And we can only do that if we do that together with the United States. And this is why I will come out very strongly in favor of this. And we'll work for it tirelessly. Ladies and gentlemen, we're challenged not only economically speaking but also as regards standing up for our values. The digital world creates a situation where there are no secrets anymore, no uncharted waters as it were. The civil societies want to know what's happening. They want to know how the world is governed. They want transparency. We're looking forward to this kind of challenge. We don't want to always talk about the risks as so many people do. We want to see the opportunities. We want to be a good partner in Europe and in the world. Thank you very much. A warm thank you, Madam Chancellor. Perhaps I may come back very briefly to the key parts of your presentation. Maybe you spoke about the conflicts, conflict situations that are prevailing. And if I could just touch upon the Ukraine, I'd say that the first objective must be to implement the Minsk agreement or protocol. But what do you think is the long-term outlook? You are in contact permanently so with the main actors in this conflict. What is the way out of this conflict? Well, in order to solve a conflict, you always need to. And let me assure you that we shall not relent in our efforts to bring this conflict to a solution. Our objective is to uphold the territorial integrity of Ukraine. It needs to be restored. It needs to be restored. It needs to be restored. It needs to be restored. It needs to be restored. It needs to be restored. It needs to be restored. Short-term, first in the Lugansk and Donetsk area. But Crimea, obviously, is not forgotten. But Lugansk and Donetsk are very urgent, very pressing. Our demand is, and that is something that was a positive experience for our country, that a country needs to be able to determine freely where it wants to go. It's also true that there are very close linkages, particularly in the economic area between Russia and Ukraine. So it would be desirable to be able, on the basis of the Minsk agreement, to first restore some kind of stability. And then later on, in a bigger picture between the European Union and the Eurasian Union, try to explore possibilities of cooperation in an economic area that President Putin himself called from Vladivostok to Lisbon and to cooperate. And after all, it needs to be our objective. I hope that opportunities will present themselves. And I think maybe once we have that, then these discussions about association difficulties between Russia and Ukraine may well be solved. And also the EU, sorry, and Ukraine. But we are ready to do that. But we have to have a ceasefire. We have to have a regaining of control of Ukraine along the border with Russia. And this process has to be initiated. There are too many lives that have been lost. May I then just follow up when the wall came down? A lot was said about this common European house. Is this principle still valid? Oh, of course. Of course it is still valid. You see, we have actually created quite a lot of avenues for cooperation. There is this NATO-Russia Founding Act. There are economic ties between the European Union and Russia. Russia, through this Eurasian Union, wants those to be lifted and extended to EU-Eurasian Union. We, as Germany, have a strategic partnership with Russia. And part and parcel of that, a very important part of that, was diversification of the economy. They helped them. So I think there were efforts, very good efforts. And I also, in the first grand coalition we had, worked together with our German Foreign Minister as probably the only boys in Europe that we don't want to have a too hasty rapprochement of Ukraine and Georgia to NATO, because we know about the sensitivity of Russia. And we know that this may well be difficult for them. I now am, in a way, being accused of that and said, people tell to me, but what has that brought? And now I'm, again, saying, don't cut off the bridges that we built. We have good will, but you will understand a continent that has known in its history so many shifting of borders and has such a painful memory of that, simply cannot simply gloss over violation of the territorial integrity. I think there's a general understanding for that. Yes, but the question is sometimes, what are we ready to actually do to put on the table, because when people are talking about imposing of sanctions or even making them stronger, then people say, but we have disadvantages. And I say yes, but disadvantages are even greater and the legal certainty is no longer there. One has to defend one's convictions and stand by them. This brings me to the second key point of your speech and that is European stability. We have a feeling in the last few months that there were like two different schools of thought or two religions and you touched upon this. The decision to be is going to take a decision today, but we don't know what this decision is going to be, but we feel that maybe one stream of thought or school will have one, but you were indicating that both could be combined, but now the doors seem to be wide open. I think our life experience tells us that there's very rarely a black and white solution. I always say to my people that a process and the euro crisis is an ongoing process, has been going on for quite some time, never to look at such a crisis only in small slices. I very well remember those times when the spreads for state bonds were beyond four and five percent and this at debt rates of 80, 90 percent is a very unpleasant situation for a country. At the time we thought that it may well be a message of trust to the financial markets when we say this whole sovereign debt needs to be drawn down step by step and what we said then, nothing continues to be valid, but nobody said that this works very well when you have no growth. Everyone knows, I mean it's conventional wisdom that this works very well when you have growth. Now how does one generate growth? There are different opinions over this. Quite often people talk about the state needing to do more, needing to invest more. That plays an important role, but it's not the most crucial role when you don't have at the same time matching private investments. Now we have a situation where there's so much liquidity in the markets that I am very certain that the spreads for state bonds cannot be dramatically cheaper. So if you are not able to remain within the bounds of your budget now and have three, four percent deficit per year, I don't know what's going to happen to you once the interest rates and the spreads are going up again. So now is the time to do your homework as regards your fiscal consolidation through these very, in these times of very low interest rates. The ECB, let me underline this yet again very clearly, is an independent organization but as a politician because so many people seem to mix so many things. I think it is most important that we are even more stringent in the way we do business than allowing ourselves to be tempted to buy time and not do structural reforms. Let me say yet again, Italy is doing very ambitious reforms and France is on the way to do that and others have already done it. Of course, it's a controversial debate also within the ECB as we know. I'm not surprised about that because the world actually has quite a high level of liquidity at its disposal and this supply of liquidity a little bit, well, sort of erect a smoke screen so you don't quite know who is actually competitive and who's not. We don't get a clear picture of our true capacities and of our true and genuine economic strength and at some point in time when this smoke screen has lifted it will become apparent again. We've seen that when we saw the decision of the Swiss central bank, all of a sudden there is a difference, a very market difference between the Swiss Frank and the Euro and we must prepare for this day and then nobody can say oh, I didn't know about that. That is the only point where I try to say to people we don't as yet have as conducive and as positive an environment as we needed, for example, for investment in the digital area I know that there's a broad-based discussion here in Davos and I think we would be well advised to be better prepared for this innovation. Madam Chancellor, at the end of this week there's going to be events, elections in Greece and there's been a lot of talk and worry about the so-called Grexit and I'm quite sure that European solidarity will stand fast but perhaps you would like to say something briefly about this? Well, the elections will only take place on Sunday so I certainly will not preempt that result but we hear from from Greece, sorry, that the vast majority in Greece wishes to remain in the Euro area and likes to be in the Euro area and ever since that crisis started I've always said that everything we do politically is oriented towards Greece remaining part of the Euro area and there are two things that need to be in place we need to show solidarity and we will continue to show solidarity coupled with the readiness to shoulder one's own responsibility I'm convinced that Greece will continue to show that sense of responsibility and what then happens after the elections is something that we will discuss then we and that is after all the experience of the European policy and European route through that Euro crisis we've always found a European solution but always based on these two matching sides of the coin, solidarity and own responsibility Madam Chancellor, if I may put a more personal question we have spoken a lot here about the lack of confidence which is linked to the fact that there may not be much leadership where leadership we can in the world of politics in general of course there are exceptions and I will name no names but this means that the greater pressure on you, more expectations way on you and on Germany how do you see that? I think if you look at the European Union as a whole there are 28 member states 19 of them now members of the Eurozone and at the level of heads of state and government we can only ever take unanimous decisions so no matter whether I'm a small country I'm a big country whether I feel more important or less important doesn't matter in the end each and everyone has to be convinced of one and the same thing and that we've always been able, even in the most difficult times, sometimes under time pressure sometimes a bit too slow sometimes perhaps not only in a perfect way that we've always been able to do that I think is a very convincing statement I think she was using the English time statement that speaks to our strength so I think we're quite a good institution compared to others in the world let's say if we were able to do a bit more to be a bit more curious towards what happens in another part of the world engage in a little less naval gazing, a little less parochial policies I think we can be even better and I must say I'm very pleased and a little bit proud to be part of the European Union but Madame Chancellor for strong leadership you also need coordination, vision and within this meaning I would like to congratulate you for this vision of a digital Europe we have to play the role that we can and that is within the possibilities and the means of Europe I'm sure that we'll have the opportunity of discussing this more later on today but thank you so very much for having joined us today I would also like to include in my thanks the members of your cabinet and on behalf of all the participants here I would like to wish you all success for everything that you're doing and also all the best for the period of the presidency of the G7 and may I may I also invite you to stay seated we have a very small celebration now which will take about five minutes so please remain seated