Schröder, German Mission Seek Business Contacts

The trip of Gerhard Schröder to the Persian Gulf is described as the largest-ever official German mission to the region. The visit focussed on three topics: political talks, the support of democracy and economic cooperation. Peter Zimmermann reports

Germany is struggling economically. Unemployment is at a post-war record high. Public debt is also at a peak in local and state budgets. Both consumer- and public spending is as low as ever, markets are stagnant, economists are calling for economic growth to improve the country's labour market.

But simply calling for "growth" doesn't help. German commerce and industry are depending on the export-market to increase their turnover. When chancellor Schröder flew to the Persian Gulf last Sunday, his seven-day-tour to Saudi Arabia, Kuwait, Qatar, Bahrain, Yemen, Oman and the United Arab Emirates, therefore, had German business interests high on the agenda.

It's an unusual sight on chancellor Schröder's tour agenda: two riders from Germany's Olympic equestrian team – Paul Schockemöle and Ludger Behrbaum – are shown around the Saudi Arabian Equestrian Association's farm. They watch the demonstration of Arab horses carefully.

And the three-time European Show Jumping Champion Paul Schockemöhle isn't shy when asked for comment by the press: "Our German horses are the best in the world. And so it is normal that people in development countries like the Gulf States call us for advice. And sometimes, they even come and buy a horse from us."

Focus on winning industrial contracts

Chancellor Schröder hasn't come as a horse-trader, though. But his seven-day-tour is heavily focussed on winning industrial contracts. 190 German firms had applied to accompany the German chancellor to the Gulf. Eventually, 70 German business leaders managed to get a seat on Schroeder's plane – amongst them Siemens-executive director Rudi Lamprecht, MAN-Ferrostaal-chief Matthias Mitscherlich and Thomas Enders, co-director of the European Aeronautic Defence and Space Company (EADS).

Speaking at a German-Saudi economic forum to mark the 75th anniversary of the German-Saudi friendship treaty, the chancellor urged his audience to consider Germany – and especially the country's eastern regions – as a place to invest their money, he told the Press: "Saudi Arabia is a country with unbelievable opportunities and a country of incredible wealth. I would like to promote Germany as an excellent place for investment. The German economy is definitely waiting for you to become active as our friends and partners. And I believe the message is being heard."

German specialists to improve Saudi infrastructure

At the same time, Schröder also expressed his belief that "enormous possibilities" exist for German business in Saudi Arabia in the future. The chancellor said Germany had first-class engineers and architects that could help to improve Saudi infrastructure.

He added that German companies working abroad did a lot to train young local employees. Meanwhile, a number of German business people were already able to sign contracts totalling 18 million euro for telecommunications and consulting services as well as the expansion of an airport.

Much larger deals are expected to be finalised when Schröder visits the United Arab Emirates in the coming days. In Dubai, for example, traffic jams are blocking the desert's Sheikh Zayed Road daily. To improve public transport, a 2.5 billion euro "Dubai Light Train" is planned to cross the city by 2009. Four consortiums applying for the contract involve German building contractors Bilfinger-Berger and Dywidag, Siemens and Deutsche Bahn.

"It would be great to help in the construction of such a train," Schröder said. And indeed, an effort needs to be made to bring about more vigorous trade between Saudi Arabia and Germany. Trade volume has decreased by 16 percent in the past two years and is now only 24 billion euro annually.

Fear of terrorism has detrimental effect on economy

Much of the new attention paid to German and European industry in recent months came about after the 9/11 attacks on New York's World Trade Center in 2001. The United States accused its key Gulf ally Saudi Arabia of housing Bin Laden's terrorists. Since then, the US-economic influence in the region has dropped considerably.

But German management consultant Hans Dieter von Löbecke feels the fear of terror has had a detrimental effect on German business in the Gulf region as well: "I'm alarmed to see that our businessmen have lost their guts! Germans always used to engage themselves around the world! And all of a sudden they pull back – they simply sit and wait! That's not the pioneering spirit we used to have with people like Humboldt and the like…"

Remarkable therefore, that German investments and projects in the seven countries are now valued at four billion euros. One of the biggest is a 985-million-euro petro-chemical plant in Bahrain set to be built in a joint venture involving Germany's Linde Group. Engineering giant Siemens signed a 70 million Euro contract for transformers to Kuwait. Furthermore, the Saudis and other Arab Governments have expressed interest in German defence industry products including armoured vehicles, helicopters and submarines.

Schröder: Democratisation does not go far enough

After talks with Saudi Crown Prince Abdullah, Schröder praised the "cautious democratisation process" under way in the country but said it did "not go far enough". Schröder also urged Persian Gulf countries to lower oil prices by increasing their output. And in Riyadh, Schröder emphasised diplomatic efforts on the part of Germany, France and Britain to resolve the conflict over Iran's nuclear program.

Joost Claasen, director-general of German energy-giant EnBW, is happy with Schröder's subtle combination of high level diplomacy and salesmanship: "These high-level talks are door-openers for particular projects which mean turnover, investments and new jobs. And the goodwill created in certain countries can result in further business contacts in the future. I personally believe, chancellor Schröder is fulfilling an appropriate and exemplary task from which the German economy will benefit."

Chancellor Schröder is, once again, on good terms with German industry. But as long as unemployment figures in Germany are soaring, critics at home are suggesting, the chancellor is going to have to travel a whole lot more in the months to come.

Peter Zimmermann