Bloomberg News

German Industry Chiefs Unite to Save Euro as Lawmakers Fight

September 29, 2011

(Updates with parliamentary approval in second paragraph.)

Sept. 29 (Bloomberg) -- German executives and industry leaders joined forces in the fight to save the euro as lawmakers quarreled over the stakes, drawing the battle lines before a parliamentary vote on a second Greek bailout.

Germany’s lower house, the Bundestag, approved an expansion of Europe’s temporary rescue fund, the European Financial Stability Facility, in a ballot that split Chancellor Angela Merkel’s government.

Germany, Europe’s largest economy and the single biggest contributor to the aid, sends more than 40 percent of its exports to euro-region countries and has the most to gain from an intact monetary union. Lobby groups, led by the BDI Federation of German Industries and labor unions under the umbrella of the Confederation of German Trade Unions, or DGB, made a last-ditch appeal to lawmakers this week to back the changes.

“The end of the currency union would cause immense, incalculable damage to Germany,” Hans-Peter Keitel, the BDI’s president, said at a Sept. 27 conference in Berlin attended by Merkel and Greek Prime Minister George Papandreou.

“For this reason, it’s short-sighted to talk only about the costs” of sovereign rescues, Keitel said. “One thing that’s needed is political responsibility” and readiness to make sacrifices, he said.

‘Yes to Europe’

Kurt Bock, chief executive officer of BASF SE, the world’s biggest chemical maker; Martin Blessing, the CEO of Commerzbank AG, Germany’s second-largest lender; and SAP AG’s Jim Hagemann Snabe, co-CEO of the world’s largest business software maker, were among the executives of more than 100,000 companies that the BDI represents who attended the meeting.

On the same day, the DGB took out ads in several of the country’s regional newspapers with the headline: “Yes to Europe! Yes to the euro!”

“Our mothers and fathers have built a peaceful Europe out of the ruins of World War II,” the ad read. “Today, we face the danger of retreating back into national demarcations and losing sight of what binds us together. Europe needs Germany and Germany needs Europe, which is why we’re campaigning for approval of the EFSF umbrella.”

Merkel needed 311 ballots in favor of the changes from the 620 lawmakers sitting in parliament’s lower chamber. Her Christian Democratic bloc and Free Democratic Party coalition partner comprise 330 voteholders. The opposition Social Democrats and the Greens had previously indicated they would support the bill, assuring passage. A total of 523 votes were cast in favor and 85 against in the final tally.

Undermine Confidence

Reliance on the opposition to approve the package may have undermined confidence in Merkel’s government at a time when public support for the FDP has sunk to 2 percent, according to the weekly Stern-RTL poll published yesterday.

Frank Schaeffler, the FDP’s parliamentary finance spokesman, said he planned to vote no to the changes because the mechanics of secondary-market bond purchases by the EFSF haven’t been discussed in detail.

“I’m a euro realist, not a euro romantic,” Schaeffler said in a Sept. 27 interview on Phoenix television. “As a parliamentarian, I see it as necessary to know all the facets before casting my vote.”

Merkel won a “very clear” majority in her coalition, according to Peter Altmaier, the parliamentary whip in Merkel’s Christian Democratic Union. “In the end, the unity of the coalition was stronger than the dissent,” Altmaier told ZDF television today after the vote.

‘High Time’

“The situation is serious and it’s high time we did something about it,” said Franz Fehrenbach, CEO of auto supplier Robert Bosch GmbH, in an e-mail. “This isn’t just the task of politicians. The business community and other responsible leaders have to take a stand. What’s lacking in the public debate is a clear commitment to the European ideal and to the euro. We have to make it clear to the people what advantages, consequences and possible burdens that these bring with them.”

German companies were among the greatest advocates of the single currency at its inception in 1999, having contended for decades with a surging deutsche mark that hammered exports every time European neighbors devalued their way out of recession.

Export Market

The euro area is Germany’s biggest export market. Shipments of German cars, high-speed trains and chemicals have more than doubled since the single currency was introduced, helping Siemens AG, BASF and Daimler AG to bounce back from the financial crisis stronger than their European counterparts.

Exports led the German economy to its strongest growth in two decades last year, in turn pushing down joblessness to a 20- year low.

Seventy-five percent of Germans oppose expanding the EFSF, according to a FG Wahlen poll published Sept. 23. At the same time, 68 percent of respondents said a Greek default would harm the German economy. The Sept. 20-22 poll of 1,229 people for ZDF television has a margin of error of as many as three percentage points.

“The European economy needs the euro,” Peter Loescher, CEO of Siemens, said in a Sept. 14 television interview. “It’s a hugely important stabilizing factor for Europe’s economic development. If we in Europe want to have any worldwide standing, politically or economically, then we are all dependent on a strong domestic market and the euro is a very, very important basis for that,” he said in the interview aired on Sueddeutsche Zeitung’s website.

--With assistance from Richard Weiss and Angela Cullen in Frankfurt and Alan Crawford and Patrick Donahue in Berlin. Editors: Angela Cullen, Tim Quinson

To contact the reporters on this story: Sheenagh Matthews in Frankfurt at smatthews6@bloomberg.net; Tony Czuczka in Berlin at aczuczka@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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