De-Risking

It's summertime, and journalists tend to fill the upcoming Sommerloch (summer slump) with attractive news of minor importance.

In Germany, a discussion flared up about the notion of de-risking. Who coined the term first?

Ursula and Olaf in Munich on February 18 (©Anna Szilagyi)

Was it the president of the EU Commission, Ursula von der Leyen, or German Chancellor Olaf Scholz? And being of German mother tongues, how dare they invent an English word?

Our chancellor used the word first at the end of last year, "And that is the policy we need to start now. Building resilience, diversifying in our economic and trade relations; de-risking, to put it this way," and he meant China.

Von der Leyen was second in her Mercator speech on March 30 when she stated, "Our relationship with China is neither black nor white. That's why Europe needs to focus on de-risking rather than decoupling."

So Scholz was first, but he did not invent "de-risking." For some time, the term has been used in the finance sector when banks or investors restrict or completely terminate business relationships to minimize the risk of default.

The US was a long-time advocate of decoupling its economy from China. However, three weeks after von der Leyen's Brussels speech, Treasury Secretary Janet Yellen left the strict US line, "We don't want to decouple our economy from China's; a complete separation of our two economies would be disastrous for both countries."

Although a decoupling will be less disastrous for the US than for Europe, two weeks later, National Security adviser Jake Sullivan had another go, "The US is for 'de-risking,' not 'decoupling,'" and he emphasized, "as President von der Leyen recently put it."

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