Securing Profits

BERLIN/CAIRO/TUNIS (Own report) - By sending so-called transformation teams to Egypt and Tunisia, Berlin is seeking to enhance its economic influence in North Africa. German Minister of the Economy Philipp Roesler recently announced that retired German functionaries would assist in "establishing economic administrations" in these two countries in the midst of transformation. In light of the continuing social protests and strikes, German companies in North Africa are worried that the region could become insecure for their low-wage investments. The German government's most recent initiative should dispel these apprehensions. The initiative dovetails perfectly with Berlin's foreign policy initiatives aimed at reinforcing German standing in North Africa, which were launched just after the beginning of the "Arab Spring" in 2011.

Transformation Teams

The German Ministries for the Economy (BMWi) and for Economic Cooperation and Development (BMZ) are dispatching so-called transformation teams to Egypt and Tunisia. This was announced February 28, in Berlin by the Minister of the Economy, Philipp Roesler (FDP) together with the Minister for Development, Dirk Niebel (FDP). These "transformation teams," recruited from retired German functionaries, are to assist these North African countries in "setting up their economics administrations." The FDP politician, Walter Hirche, former minister of the economy in both Lower Saxony and Brandenburg, is due to head the mission. According to Roesler, the primary objective of this measure is the establishment of free competition, the reduction of subventions and bureaucracy and new stimulation for small and medium-sized enterprises. The German initiative is due to officially begin at a conference in Cairo in March.[1]

Need for Credit

Whether the social upheavals taking place in these North African countries, particularly in Egypt, can be harnessed to fit the schemes of German economic interests is yet uncertain. Following last year's slump in economic growth, the economy of Egypt, the most populated country in North Africa, has only hesitantly begun to get back on track. For example, foreign investments in the country have suffered a serious setback because of the instable political relations. In addition, various observers estimate the high national budget deficit to be at eleven percent of the country's GDP for 2011/2012. The transitional government under Prime Minister Kamal al Ganzouri has already asked for financial assistance from various international institutions, such as the IMF and the World Bank. The country needs an estimated US $10 - $15 billion in credits.

Austerity Programs

These loans would be conditional upon the usual austerity measures. The IMF, for example, is demanding an economic program with broad support "from the spectrum of newly formed parties."[2] The western side considers it essential that the government drastically reduce its subventions, amounting currently to 27 percent of the national budget. This would primarily affect the impoverished sector of the population. It remains uncertain whether the future Egyptian government will implement such an austerity program. The Muslim Brotherhood affiliated Freedom and Justice Party (FJP), and the Salafist affiliated Al Nour Party, which have emerged as the grand winners of the last elections, have already announced that they, under no circumstances, would support these measures, if they enter the government.

Extended Workbench

In Tunisia, Berlin does not see the situation quite as bleak. Even before the political upheavals in 2011, the country was seen as exemplary for North Africa because of its comparatively high economic productivity. This has remained the case even after Ben Ali's regime was overthrown. Tunisia's industrial production primarily serves as an extended workbench for European companies, specializing in the production of components, subcontracting for automotive industries and the textile industry. In spite of the political turmoil, manufacturing industries' exports increased by 10.3 percent during the first eleven months of last year. German companies are significantly represented in Tunisia. For example, the Leoni automobile components supplier, headquartered in Nuremberg, is the largest private employer in the country. Altogether, German companies invested 18.3 million Euros in Tunisia in 2011, ranking third among foreign investors. German exports to this North African nation remain constant - even slightly increasing through August of last year, according to the Federal Statistical Office of Germany.[3]

Workers' Struggles

The investors are worrying about Tunisia's numerous workers' struggles. There are regularly strikes and plant occupations, with which workers are punctuating their demands for higher wages and better working conditions. Mohamed Labi Rouis, Leoni's director of operations in Tunisia, complains, for example, that in the Leoni plants in Mateur, in the north, there are "repeated rebellions and wildcat strikes."[4] Leoni is threatening to transfer some of its production sectors to Eastern Europe. On the other hand, Dagmar Ossenbrink, Managing Directrice of the German-Tunisian Chamber of Industry and Commerce, complains that in many of the country's plants, sit-ins are staged by the unemployed seeking work. The police do not intervene. A spokesperson for TyssenKrupp, headquartered in Essen, which is engaged in plant construction in Tunisia, demands a rapid "stabilization" of the relations as a primary prerequisite for a better investment atmosphere.[5]

With German Financial Aid

Already back in the spring of 2011, immediately following the overthrow of the previous rulers in Tunisia and Egypt, Berlin launched its first foreign policy initiatives, working at various levels, to establish a favorable framework for continued profitable business for German companies. For example, in May 2011, the BMZ established three funds earmarked for activities in the framework of the North African transformation processes. One is the so-called democratization fund of six million Euros, for promoting the creation of political parties. A second, a qualification and employment fund, of approx. eight million Euros, and together with the German Development Bank (KFW), the SANAD Fund of 52 million Euros. The SANAD Fund is earmarked for aid to small and medium enterprises. Within the framework of so-called transformation partnerships, the Foreign Ministry, for its part, has earmarked 50 million Euros in financial aid for the years 2012 and 2013, for each of for the countries of the "Arab Spring".

German Model

Besides this financial support, Germany is intervening in the North African developments by using training programs and lobbying at the levels of the ministerial bureaucracy. In cooperation with the German party-affiliated foundations, interest groups of German industry are offering workshops, wherein local employers and employees can learn about the German model of the "collective bargaining process." In this context, Katrin Laskowski, the German African Business Association's consultant for North Africa, explained at last year's German-Arab Economic Forum, "it was first necessary to inform the people that there is such a thing as a negotiated renunciation of strikes." ( reported.[6]) This accommodates public complaints of German employers in Tunisia about the Tunisian workers' struggles. Berlin's most recent venture - of sending "transformation teams" to Egypt and Tunisia - dovetails snuggly into these plans.

More information about German foreign policy towards Egypt and Tunisia at The Turkish Model, Forces of the old Regime. Red Lines and Rivalry with Tradition.

[1] Entsendung Transformationsteams nach Ägypten; 28.02.2012
[2] Ägyptens Wirtschaft wartet auf die Politik; 02.02.2012
[3] Tunesische Exporte überraschend stark; 16.12.2011
[4], [5] Die unvollendete Revolte des Hungers; 16.02.2012
[6] see also Herausforderung Liberalisierung