German government still has balanced budget on its radar

After earmarking up to €750 billion for emergency spending due to the growing coronavirus crisis, the government plans to return to its controversial policy of no new debt as soon as the pandemic is over.

The German government would return to its savings policy once the coronavirus pandemic crisis was over, Economy Minister Peter Altmaier told the country's ZDF broadcaster on Tuesday, adding that Europe's largest economy had committed to paying debt back from 2023 onward.

"Once the crisis is over, and we hope this will be the case in a few months, we will return to our austerity policy and, as soon as possible, to the balanced budget policy," Altmaier said.

Only the day before, the government in Berlin agreed to a comprehensive package worth up to €750 billion ($812 billion) to mitigate the damage of the coronavirus outbreak on the economy. It is the first time the country is set to take on new debt since 2013 and the background to Altmaier's comments.

Come what may

The country's ambition of always having a balanced budget has been controversial and criticized from many sides for spending too little. Now that Germany is taking a huge economic hit from the ongoing coronavirus crisis, the criticism is only increasing.

The government expects the pandemic to plunge the economy into recession. Finance Minister Olaf Scholz has said his newest budget plans are based on predictions that gross domestic product (GDP) will shrink by roughly 5% this year.

The government has announced a range of measures to cushion the blow for companies during the crisis. Trying to reassure firms and freelancer workers, Altmaier said by next week it should be clear where they can obtain aid to help tide them over during the crisis and that German authorities were trying to avoid bottlenecks.

"It should be as unbureaucratic as possible," he said, reiterating that the government was doing what it could to ensure that coronavirus does not lead to job losses.

Altmaier emphasized that with the billions in aid approved by the cabinet that there were "tailor-made" offers for companies of all sizes. However, he couldn't issue a job guarantee, saying it was the decision of private employers whether they accepted the government offers "or whether they decided to lay off workers."

The big if

As a last resort Altmaier also said the government was prepared to buy stakes in companies in order to keep them from going out of business or protect them against takeovers, but only in special and extreme cases.

"This is only the very last resort and only conceivable as an emergency solution when companies get into trouble and this also endangers German vital interests," he said.

It was a warning shot against speculators or foreign investors that there were no "bargains" to be had in the country at the moment.

tr/hg (Reuters/AFP)

tral Bank has unlocked €750 billion to keep the euro afloat. And that's not counting the hundreds of billions pledged by EU member states.

Read more - Coronavirus shock vs. global financial crisis

Robert Dingwall, a sociologist and public health expert at Nottingham Trent University in the UK, said it's likely too early to even broach the subject of a clean energy revolution for many people.

"At present I think the big concern is economic survival and ensuring that viable businesses are not killed off by the sudden shock," he said in an email to DW.

"It is very much about the immediate and unprecedented threat," added Dingwall —a global health threat not seen since the 1918 Spanish flu pandemic, combined with stock market losses that have brought back bad memories of the 2008 financial crash.

The need to prioritize concerns also rings true with Katharina van Bronswijk of Psychologists for Future, an inter-institutional group focused on climate change.

"Psychologically, we do have a 'finite pool of worry' — so we can't worry about everything all the time," she said. But, she pointed out, just because the coronavirus is dominating the world's attention right now doesn't mean discussion has stopped. While online debate continues, she says "it's just become less visible at the moment."

Both Dingwall and van Bronswijk say it's easier "to mentally distance ourselves from the possible outcomes of climate crisis" than it is from the COVID-19 outbreak, with its frantic daily updates and the knowledge that we, or people close to us, could get sick and die.

Climate change doesn't elicit the same response, said Dingwall, because "weather-related threats are very familiar and we have difficulty seeing them as aspects of long-term climate change."

Climate-friendly policies still scarce

German economist Claudia

Kemfert notes that green investments were already on shaky ground before the outbreak.

"Even before the [COVID-19] crisis we had an investment delay in many important areas," said Kemfert, an expert in energy economics and sustainability with the German Institute of Economic Research (DIW).

As recently as November, an analysis by the UK-based think tank InfluenceMap found that the world's largest investment funds were still underinvesting in renewables and other green tech, instead favoring companies using "brown technologies" — $8.2 trillion of holdings in oil and gas, coal mining, car manufacturing and electric power.

Kemfert told DW that governments could instead use targeted stimulus packages to back climate-friendly fuels and infrastructure, and to encourage existing industries to switch over.

But, she stressed, these funds must be tied to conditions ensuring that they go toward "futureproof, climate-friendly and sustainable investments."

However, it might be hard to sell that idea to lawmakers and bureaucrats in Brussels, who earlier this year were all set to begin realizing the EU's highly touted €1-trillion Green Deal over the next decade. Instead, they'll be doing whatever they can to soften the economic crash in their home countries.

Business as usual or a new path?

Even if climate change policies do get put on hold, psychologist van Bronswijk sees an overlap between the two crises that could prove useful to finding future climate solutions.

She said both the outbreak and the climate crisis require us to slow down, work together, and focus on finding creative solutions to our common problems

In recent weeks we've seen health care systems strained to the point of collapse, a chaotic situation that reverberates in our overstressed ecosystems.

"Crisis management in both cases relies very much on listening to scientific advice and acting thoughtfully and with solidarity," said van Bronswijk.

Winfried Hoke, executive secretary at the European Climate Research Alliance, agrees.

The outbreak has exposed the "vulnerabilities of our society," said Hoke, suggesting that "more knowledge about the interdependencies of our systems and subsystems, as well as environmental and physical limits," would help the EU "understand and prepare for future emergencies" like the climate crisis.

As for the United States, one of the world's worst polluters, Chatterjee of US Climate Action said that the priority once the outbreak is over, after health and well-being, would likely be some form of stimulus — and she thinks it could lead the US to greener pastures.

"Anything is possible if it helps get us out of this emergency situation," she said.

"Fossil fuel executives will have to either admit that they are not capitalists and that they require huge and regular government bailouts, or the market will take them down because their economics just don't work anymore."

away because they are afraid," he told DW.

"But studies show that in the times of catastrophe, man is very resilient. After an initial panic reaction, people tend to stand together in solidarity."

At least cashier Henda should be living proof of that. She has threatened to no longer show up for work, but it seems unlikely she will really go through with her threat. "I am scared every day at work," she said. "But I also know that the country needs us. We can't just close the supermarkets — where would people buy food then?" She only hopes that her employers now regularly provide for face masks and gloves. That would make her feel at least a little less exposed.

And maybe, her supermarket will heed the example of retail chain Auchan, which has announced it will pay many of its employees some extra €1,000 as a sign of gratitude for the job they've been doing.

*Henda doesn't want to reveal her last name.