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Defence merger row overshadows Berlin industry talks


Defence merger row overshadows Berlin industry talks


A possible defence industry merger has cast a shadow over industrial co-operation talks in Berlin between German Economy Minister Wolfgang Clement and his French counterpart Nicolas Sarkozy. Clement, speaking after the meeting, tried to accentuate the positive. He played up the one area of agreement as he said: “We both agree that we need to keep equal conditions of competition in Europe concerning fiscal policy and subsidies.”

The two only briefly discussed the contentious possible defence deal between EADS and the French military contractor Thales. If that were to go ahead it would create the world’s biggest aerospace group. But it would also weaken German influences within EADS, which was created four years ago through a merger of leading aerospace firms in France, Germany and Spain. The French government owns 31% of Thales and has wanted a tie-up for some time, though the company’s own chief executive is opposed. Relations between Germany and France are strained over what Chancellor Gerhard Schröder has called Sarkozy’s “nationalistic” industry policy.

Germany opposed France’s decision to bail out heavy engineering group Alstom and there were disagreements over the merger of French pharmaceuticals firm Sanofi with Franco-German firm, Aventis. The defence merger is seen as unlikely in the near term, it would be difficult without the agreement of the German government and major EADS shareholder DaimlerChrysler.
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