Merkel pledges to boost Gulf trade as regional tour begins; Iran, Mideast peace also addressedBy Adam Schreck, AP
Tuesday, May 25, 2010
German leader seeks to boost trade with Gulf
ABU DHABI, United Arab Emirates — The German chancellor pledged Tuesday to boost trade across the Gulf region, even as the euro zone struggles with its most serious economic crisis.
German cars and consumer goods have a major presence in the Gulf, but efforts to further expand economic ties were underscored by the high-level business delegation accompanying Angela Merkel on her four-nation trip.
Yet Merkel’s promises of greater German investment were shadowed by the mounting debt troubles in the 16-nation euro zone. Fears over the European Union’s ability to prop up battered economies such as Greece and Spain have sent global markets tumbling and pushed the euro to a four-year low last week.
The euro zone’s tailspin is also closely watched across the Gulf as a possible cautionary tale for governments backing a possible common currency across the region.
Merkel said Gulf leaders have “a very good understanding” of the need to control deficits under a shared currency. She noted, however, that the region’s oil and gas wealth allow it to “invest in the future.”
“But one does know as well that we (the EU) have to improve our competitiveness. And this is the German position,” she told reporters during her first full day of talks on the trip.
A member of Merkel’s delegation, Bernd Pfaffenbach, state secretary of Germany’s Federal Ministry of Economics and Technology, defended the EU’s handling of the debt crisis and stressed that the “stability of the euro is essential.”
“We … demonstrated our willingness and our conviction that we had to take care of this crisis, which we did,” he told reporters in the Emirati capital, Abu Dhabi.
Merkel tried to keep the focus on bolstering economic links with the region — repeatedly noting Germany’s interest in expanding the estimated 60 billion euros ($74 billion) in two-way trade between Germany and the entire Middle East.
“While political ties and initiatives are important, it ultimately comes down to creating investment opportunities,” she said.
On Monday, the head of Wintershall Holding GmbH signed a pact with the Abu Dhabi National Oil Co. for possible joint exploration and development of a gas and condensate field.
No financial terms were disclosed, but a statement from Wintershall called it “an important step” in long-term cooperation between Germany and oil-rich Abu Dhabi. Wintershall, part of German chemical company BASF SE, has projects in other parts of the United Arab Emirates.
Merkel’s talks in the region also are expected to address the Middle East peace process and Iran’s nuclear program — a significant concern for Gulf nations that count on the U.S. and Western allies for protection.
Germany and the five permanent U.N. Security Council members have appealed to Iran to resume talks over uranium enrichment and other nuclear issues or face possible harsher sanctions.
In Abu Dhabi, Merkel toured a special zone set up to study and test renewable energy sources. She was scheduled to travel later Tuesday to Saudi Arabia and then to Qatar and Bahrain.
Germany, Europe’s export powerhouse and largest economy, has emerged as a key destination for Gulf oil wealth in recent years.
An investment company backed by Abu Dhabi last year paid about $2.6 billion for a 9.1 percent stake in Mercedes-Benz parent Daimler AG, making it that automaker’s biggest shareholder. That put it just ahead of a sovereign wealth fund controlled by another Gulf state, Kuwait.
Nearby Qatar has amassed a 17 percent voting stake in Germany’s Volkswagen AG, making it the automaker’s No. 3 shareholder, after the state of Lower Saxony, where VW is located, and the Porsche and Piech families, which control subsidiary Porsche SE.
In November, an investment firm owned by Qatar’s sovereign wealth fund signed a $26 billion deal with German national railway operator Deutsche Bahn AG to establish a railroad network in the tiny natural gas-rich country.
Tags: Abu Dhabi, Europe, Germany, Iran, Middle East, Qatar, Saudi Arabia, United Arab Emirates, Western Europe