Posted on 07/31/2007 11:51:41 PM PDT by bruinbirdman
Germany’s leading industry lobbyist warned Berlin on Tuesday not to follow France’s lead in raising the state’s influence on the economy in response to the challenges of globalisation.
Jürgen Thumann, the chairman of the BDI industry federation, told the FT in an interview the “economic patriotism” championed by Nicolas Sarkozy, the French president, was among the factors fuelling a protectionist zeitgeist in Europe.
“This zeitgeist exists. But I do not have to follow the zeitgeist. On the contrary, it encourages me even more to fight the temptation of protectionist measures.”
“We cannot on the one hand call for the liberalisation and deregulation of European energy markets while on the other hand granting France an exemption,” Mr Thumann said, alluding to EDF, France’s state-owned electricity utility, which enjoys a monopoly at home but has been acquisitive abroad.
Mr Sarkozy’s protectionist tone, his hands-on industry policy and his free-riding foreign policy moves have ruffled feathers in Berlin. German officials this week called his offer, last week, to provide up to three nuclear reactors to Libya “immoral”.
Yet the challenges of globalisation, which inspires as much fear in the German public as in the French, have led to contradictions.
That was illustrated by Mr Thumann’s endorsement of Chancellor Angela Merkel’s plans to shield industry from investments by cash-rich foreign governments, raising the likelihood of a decision on erecting such protective measures next month.
Mr Thumann said the government should set up a mechanism modelled on the Committee on Foreign Investments in the United States, which vets foreign acquisitions of potentially strategic US assets.
Business leaders have had difficulties squaring their calls for state protection against unwelcome investors with their rejection of protectionism in principle.
Mr Thumann, whose family business, Heitkamp & Thumann Group, controls more than 50 per cent of the world market for battery components, is keenly aware of the importance of open markets to Germany’s powerful export-led recovery.
“We support the free movement of capital and oppose all barriers to investment. Our motto is: no protectionism,” he says.
“The only thing I’m saying is that when state funds, for example from Russia and China but not only from these countries, seek to invest in key industries or companies in Germany and other countries, then I can understand that the government sees a certain need for control.”
Mr Thumann is less preoccupied with potential threats to national security and more concerned about foreign states siphoning off know-how and patents.
“We cannot rule out the possibility that states may have other interests than private investors and do not follow the rules of the market,” he says.
Flushed with currencies from their booming exports, China, Russia and other emerging countries have created state-controlled funds holding an estimated $2,500bn (€1,800bn, £1,200bn), according to Morgan Stanley. The danger, Mr Thumann says, is that while private-sector investors seek high returns, states are guided by political motives.
Politicians have focused on the risks posed by sovereign wealth funds. But Mr Thumann says state-owned companies are equally problematic. A large German investment by Gazprom, the Kremlin-controlled gas giant, would be acceptable only “as long as we are convinced that Gazprom acts like a company and is being managed as a company and not exclusively and directly as an instrument of the Russian government”.
The “universe” of sectors that enjoy protection should “be kept small” and should not include banks or even energy companies. “What should be clear is that we are not talking about industrial policies à la française.”
Interesting stuff. BUMP!
Sarko is a busy bee and he needs to be told to buzz of time by time when he is to close to the forbidden nectar.
Otherwise he’s good for france since he might get those lazy guys onto their frog legs.
I think Sarkozy is making a mistake if he increases protectionist economic policies. What France needs is a dose of free market capitalism. Protectionism is the exact opposite.
Wow, it has risen to the level of a “zeitgeist.” It’s probably on the verge of becoming a “meme.”
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