Bureaucracy and risk aversion undermine Merkel’s legacy of innovation

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By Andreas Rinke and Michael Nienaber / Berlin

It was one of Chancellor Angela Merkel’s most radical ideas during her last term: a new agency that would bring to market a groundbreaking German innovation such as a way to clean up the world’s oceans and a therapy for Alzheimer’s disease.
But two years after the launch of the project by Merkel, motivated both by her own scientific background and by the fear that Europe is falling behind, the SPRIN-D agency for disruptive innovation is struggling under the weight. institutional, cultural and budgetary constraints.
Summarizing some of the frustration expressed by Merkel herself, the agency’s director, Rafael Laguna de la Vera, told Reuters: “There is a valley of death that every innovative technology has to pass through before it can be turned into a marketable product.
“In Germany, this valley of death is particularly long.
The concept is to identify and support potentially revolutionary technologies in niche areas – outside the vast R&D landscape with which Germany has long been associated in the automotive industry and engineering – in order to develop new areas. activity to secure the jobs of the future.
It takes a two-pronged approach to hunt down ideas.
Inventors can submit projects without any deadline to receive funding. Additionally, the agency issues challenges to motivate creative minds to develop solutions to specific problems. The first “SPRIN-D challenge” invites the inventors to find a new drug to fight against viral diseases.
One of Germany’s most famous innovations, the BioNTech Covid-19 vaccine, developed with US pharmaceutical giant Pfizer, was created outside the agency structure, although it received a grant from the ministry. of Sciences of 375 million euros.
Some of SPRIN-D’s early projects include developing a treatment for Alzheimer’s disease, a way to rid the oceans of microplastics, and an analog computer that is faster and less power hungry than its digital competitors.
The early stage projects have yet to produce any breakthrough from the Leipzig-based agency which employs 36 people. Without changes, Merkel and Laguna fear there will never be any and that the lost opportunities of the past may be repeated.
The MP3 encoding format for digital audio, for example, was invented by scientists at the German state-funded Fraunhofer Institute in the 1980s. But it took companies from Asia and America to realize its business potential and transform it into cutting-edge applications and devices such as the Apple iPod.
SPRIN-D has an annual budget of 100 million euros – a fraction of the 9 billion euros of support for start-ups in general in Germany and of the 3 billion euros of the budget of the US Defense Advanced Research Projects Agency on which it is modeled.
The small budget is in part due to a decision by Merkel’s ruling coalition to ban SPRIN-D from supporting military candidacies, as the co-governing center-left Social Democrats have insisted on a purely civilian character of the agency.
“This means the jumps have still been pretty weak so far,” Merkel said at a research summit in May, not hiding her frustration when she added that this anti-military approach seemed to her. very German “.
His remarks show the limited influence that even a chancellor with 16 years in power has on Germany’s deep-rooted pacifism, following the national trauma of starting two world wars.
Thomas Jarzombek, a member of Merkel’s conservatives and Berlin’s aerospace policy coordinator and head of start-ups, told Reuters the decision to separate end-use weakened SPRIN-D as it was often difficult to tell from the start what kind of product an idea might lead to.
Another reason for the small budget is Germany’s long tradition of fiscal prudence and accountability, with strong veto powers in parliament and a separate body responsible for reviewing state spending, the Federal Accounts Office.
The general obsession with avoiding risk and preventing failure puts SPRIN-D in an unusually tight budget corset.
Due to the nature of innovation, Laguna said, sometimes nine out of 10 ideas go nowhere while the 10th could result in a revolutionary product or application.
“What we would like to do and should do is give money to inventors and tell them, go ahead,” he said.
Common EU state aid and public procurement rules also limit its potential.
“If we want to fund a project 100%, we have to set up a 100% subsidiary of SPRIN-D which then has to get a loan from the government,” Laguna said, a step that involves a closer look at the budget from the part. legislators.
To enable SPRIN-D to promote breakthrough innovations more effectively, Laguna wants the next government to exempt its projects from competition rules in start-up funding, allow support also through minority stakes and get the green light for higher wages to compete with wages in the private sector.
The conservative CDU / CSU bloc as well as the pro-business Free Democrats are aiming for a reform that would give the agency more fiscal and political independence.
The Greens’ manifesto for the legislative elections of September 26, after which Merkel withdraws, pledges to make SPRIN-D “more flexible”.
The SPD, on the other hand, places more emphasis on state-owned KfW bank, which it wants to see play a more active role as a driver of innovation. “Product developments must be able to rely on the State as an entrepreneur,” he explains.
In the medium term, the problems can only be solved with a European agency for disruptive innovation, said Wolf-Dieter Lukas, secretary of state at the conservative-led science ministry, adding that large public orders are often needed to support new technologies.
However, efforts by Merkel and French President Emmanuel Macron to launch a joint Franco-German innovation agency, as a step towards a larger multinational agency, failed due to differences of opinion between Berlin and Paris.
“The United States and China have very large domestic markets. So for us the equivalent can only be the EU single market, we cannot limit ourselves to Germany, ”said Lukas. – Reuters


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