Saturday, February 24, 2024
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HomeOpinionCommentaryInflection point

Inflection point

  • Remarks by Deputy Secretary of the Treasury Wally Adeyemo at the Industry 2023 Conference in Berlin, Germany

By Wally Adeyemo

President Biden has clearly articulated, we are at an inflection point. More so now than any time in recent memory, democracy and the values we hold dear are under sustained attack.

To the east, the Kremlin seeks to squelch democracy. Russia’s unprovoked invasion of Ukraine has stretched over 20 months now. The war has claimed the lives of thousands of innocent civilians. Millions more have been displaced.

To the south, Hamas aims to demolish the democratic State of Israel and destabilize the region. That destructive impulse inspired its brutal attack three weeks ago. Now Hamas uses civilians in Gaza as a shield as it continues to plot attacks. And while our democracies face these threats, humanity also faces an existential threat.

The mounting toll of climate change presents a clear and present danger not only to our public health and to our environment, but also to our economies.

With two months still left in the year, the United States has already set a new record for the number of extreme weather events that have cost us at least $1 billion. You have seen the same here in Germany, from flooding in the Ahr Valley and the diminishing water levels of the Rhine to the extreme heat that is becoming an unfortunate hallmark of German summers.

America and Germany are not outliers. Climate change knows no borders. Its destructive nature has begun destabilizing our economies and it is a collective issue for the world, with the poorest countries often hit the hardest.

When president Biden came to office, he was focused on two objectives – strengthening our economy and reinvigorating our alliances – in order to address the challenges we face.

Economic revitalization

It is important to remember that less than two years ago, a gathering like this was impossible because a global pandemic threatened our lives and stalled our economies.

The solution to the public health crisis came in the form of an mRNA vaccine first developed by a partnership between an American and German company. An example of the partnership between our private sectors with assistance from our governments.

The economic challenges we faced also required both of our governments to provide support to our businesses and citizens in extraordinary ways.

As part of our economic recovery from the pandemic, president Biden knew that in order for the United States to be a strong partner to our allies, we needed to make investments at home to unlock the potential of the US economy.

Over the course of the first two years of the president’s administration we passed an infrastructure package, which allowed us to modernize our crumbling infrastructure and increase its resilience; the CHIPS and Science Act, which mobilizes funding into US semiconductor production to build greater supply chain resilience, and the Inflation Reduction Act, which provides us with the tools to make the largest investment in addressing climate change in US history.

Last week the president proposed a $50 billion investment in the American defense industrial base, which will help us meet the needs of our partners in Ukraine but also put us in a better position to meet the collective needs of our NATO allies as well as our other partners across the globe.

I would like to spend the remainder of my remarks talking about how the IRA enhances our collective efforts to address the climate crisis and promote energy security, as well as touching on how our investment in our military-industrial base is part of a broader strategy to confront Russia.

Inflation Reduction Act

As deep as our partnership is, collective action does not happen on its own. It is built upon the shared values of our people, the connections between our business community, and of course intense diplomacy.

I’m especially happy to be here today at Industry 2023 in that vein. The United States has a historic opportunity to work hand-in-hand with the people in this room and across Europe to address climate change, but we must be clear-eyed about both the opportunity we have and the challenges we face.

A misrepresentation I’ve often heard is that the IRA signals a turn toward American protectionism or the start of a subsidy race-to-the-bottom.

I want to be clear: It does neither.

Our political system is different than yours and requires us to use different tools to accomplish the same goals.

The IRA incentives are aimed at unlocking America’s ability to meet our climate goals – which is critical to the well-being of our planet – while driving down the cost of green technologies.

The IRA investments could potentially reduce the cost of certain clean technology by up to 25 percent. This would dramatically reduce the cost of adoption by developing and emerging economies. The investments in clean hydrogen and carbon neutral technology development will also provide us with an opportunity to produce clean energy that, like American LNG, will be available to our allies like Germany.

The United States knows that it is impossible to meet our climate and energy security goals without working with Europe and without a strong European industrial base with Germany at its core. Even as we spur American production, we recognize the need to build a resilient supply chain that includes our allies.

In building these supply chains, coordination is necessary. One example of such coordination is the critical minerals agreements we are negotiating with the European Union.

Through such agreements and partnerships, we will help ensure that both the United States and Europe have access to the critical raw materials that are needed in the production of electric vehicle batteries and to power the renewable energy economy.

We will scale up manufacturing of clean energy in the United States and Europe.

We will deepen energy security for us both, by ensuring our supply chains are constructed with each other, and avoid overreliance on trade partners that don’t share our values.

Our collective effort going forward must spark a race to the top in order to avoid mistakes of the past.

For decades, autocrats have built and maintained leverage in the world by weaponizing their control over global energy resources. It’s a big part of the reason Putin thought he could dictate the terms of his war to an energy-dependent Europe. But we’ve demonstrated that we can break free of these dependencies. By building the clean energy economy, we can regain economic autonomy while also taking the steps needed to keep our planet habitable for generations to come.

Our common defense

The approach we take to addressing the climate crisis must be similar to the approach we have taken to addressing Russia’s illegal invasion of Ukraine and other challenges to democracy and our shared values from terrorist groups.

When Putin chose to invade Ukraine, he overestimated his ability to overthrow democracy in Kyiv and underestimated the response of global democracies. Within weeks, we formed a coalition of more than 30 countries to enforce unprecedented economic and financial sanctions on Russia. These actions have constrained the Kremlin’s ability to earn revenues and to use their money for the war effort.

One way we have restricted Russia is by shrinking its global market. The size of our coalition, which represents over half of the global economy, has forced other nations to decide whether to deepen economic ties with us or with Russia.

We know that the Kremlin has tasked Russia’s intelligence services with finding ways to circumvent our sanctions and export controls. This is why it remains critical that we continue our efforts to use our tools to disrupt Russia’s ability to build the weapons it needs to fight this disastrous war of choice. 

We also seek to work with members of our coalition to cut off terrorists from access to the financial system.

Alongside the European Union and U.K.’s long-standing asset-freezing sanctions on Hamas, the United States recently imposed sanctions on key Hamas members, operatives, and financiers to degrade the group’s ability to access the formal financial system and use digital currencies for fundraising.

At the same time, the United States and Europe have been steadfast in our commitment to Israel’s defense. We must take up the call of our leaders to form a coalition to go after the financing of Hamas and other terrorist groups. And, continue humanitarian effort like the European Union’s tripling its humanitarian funding to Gaza coupled with the United States pledging $100 million in aid to civilians in the Palestinian territories.

US-German partnership

At the heart of all this work is the strength of the US-Germany partnership, which has guided us time and time again in overcoming threats to our values and our security.

We called on each other 70 years ago. When 300,000 Berliners gathered at the Reichstag in September 1948 to protest the Soviet blockade and we engineered airlifts together to overcome the block. Soon an American plane landed in Tempelhof with food, supplies, and a promise of sustained support, and nearly 200,000 more American planes followed.

We call on each other in this era. When the Kremlin threatened the ability of Germans to heat their homes and the ability of industry to power the Germany economy, we transformed each of our LNG markets to absorb the shock. We proved to the world once more, that together we are stronger than the sum of our parts.

At no time in history has our partnership been more important than it is today.

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