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German report
by Euro Reporter
2014-08-27 12:38:13
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Russia sanctions take toll on Germany

German industry is predicting a drop in exports to Russia of 20-25 per cent over the course of this year, compounding gloom over the health of Europe’s biggest economy. A business lobby group representing German companies trading in Eastern Europe complained that “significant uncertainties” over embargo provisions were resulting in delays to deliveries of German machine parts. German exports to Russia fell by 15.5 per cent year on year in the first half, while exports to Ukraine dropped by 32 per cent, according to official figures. The decline in exports to Russia was equivalent to €2.8 billion, while the drop in exports to Ukraine was worth €880m. Though exports to Russia make up about 3 per cent of total German exports, the Committee on Eastern European Economic Relations said the negative trend in exports endangered 50,000 jobs in Germany. While most economists believe the downturn in Germany will be temporary, tensions with Russia have increased uncertainty about the chances of a rebound in the second half of 2014.

German chancellor Angela Merkel acknowledged on Monday that the Ukraine crisis was having an impact on the economy. At a press conference in Spain she said: “There are, however, some uncertainties, I don't want to conceal that. The whole Ukraine-Russia situation shows that we of course have a big interest in our international relations being constructive again.” German business confidence declined for a fourth month, in figures out on Monday, reflecting dismal economic performance in the eurozone. The IFO institute’s business climate index, based on a survey of 7,000 executives, fell to 106.3 in August from 108 in July. Tensions with Russia contributed to a 0.2 per cent decline in economic output last quarter, the first contraction since the end of 2012. The contraction was also due to a warm winter that meant construction activity shifted to the first quarter, rather than rebounding in spring. German industry accepted the need for tougher action against Russia following the shooting down of Malaysia Airlines flight MH17. But as the impact of sanctions is felt, business leaders are again urging restraint.

Eckhard Cordes, chairman of the Eastern Committee and a former chief executive of retailer Metro, said: “The discussion about sanctions in the spring was already poisonous for the weak economies in the EU and Russia. Everything must be done to ensure that we are not drawn further into the spiral of sanctions.” The lobby group said sanctions were causing difficulties for companies that supplied parts for agricultural machinery, excavators, pumps and railways, because of concern over a possible military use. “While the delivery of whole machine is often harmless, their spare parts are suddenly a problem,” Mr Cordes said. “This uncertainty, and delays to deliveries, mean that Russian customers are, one after the other, looking for suppliers in other countries. The fear is that large parts of the Russian trade will move towards Asia or Latin America.”


Germany debates weapons exports amid Iraq 'exception'

Chancellor Angela Merkel defended the planned deliveries of German weapons to Kurdish peshmerga forces fighting the self-proclaimed "Islamic State" ("IS") fighters in northern Iraq. Speaking to public broadcaster ARD, in an interview broadcast on Sunday evening as Merkel headed for Spain, the chancellor said her government had made a difficult decision. "I don't want to pretend that this risk does not exist whatsoever," Merkel said on ARD, when asked about the possibility of German weapons falling into the wrong hands. In the Chemnitzer Freie Presse newspaper, the chancellor said that there was not a "100-percent 'yes' or 'no' answer to the question of whether we're making the right decision." Germany usually refuses to export weapons to conflict zones as a point of principle, but Merkel said that the "IS" advance in Iraq and the spectre of genocide convinced her government to act rather than observe the Sunni militants' progress. Merkel also insisted that "under no circumstances" would Germany "send combat troops to Iraq."

Although approved by the majority of German politicians, the decision to arms Kurds in Iraq has still prompted considerable debate in Berlin - not least on the broader implications of the move. The state premier of Baden-Württemberg, Green party politician Winfried Kretschmann, called for a vote on the deliveries in the lower house, the Bundestag. Kretschmann did not get his wish; the German government will make the decision, as is the case with more standard arms sales abroad. Still, parliament will debate the likely move on September 1, and Merkel will formally explain her government's choice in the Bundestag. Social Democrat (SPD) Labour Minister Andrea Nahles told Monday's edition of the Rheinische Post paper that the decision was "a break with Germany's grand tradition" of not arming conflict zones. "This is owing to the special situation and the great suffering of the people in northern Iraq, but it cannot be allowed to become the rule," Nahles told the paper. "In view of the really dramatic developments, there is understanding in our party for Germany, along with European partners, having to support the resistance of the Kurds against the advance of the IS terror militia." However, Nahles also called for the process to be transparent, saying Germany should be open about what it delivers, and what becomes of the weaponry.

Senior Social Democrat Ralf Stegner, an opponent to arming the Kurds within Merkel's junior coalition partners, told Monday's Saarbrücker Zeitung that he was not the only party member with reservations about the move. "According to all the information I have available, there are many within the SPD who share my concerns. It's surely no small minority," Stegner said. Defence politicians of every stripe issued a more traditionally cautious tone on the reported Egyptian interest in tanks made by German companies Rheinmetall and Krauss-Maffei Wegmann on Monday. Henning Otte, defense policy spokesman for Merkel's Christian Democrats, told the newspaper "Die Welt" that the Iraq decision would be "an exception." Egypt - site of two changes in government since 2011, most recently in a coup last year - is reportedly interested in using the German vehicles in its troubled northern province of Sinai. The Greens' Omid Nouripour warned that road-going tanks would be "suitable for use against one's own population," while the Social Democrats' Rainer Arnold said the ground vehicles posed more of a problem than "a ship to protect the coastline." Longstanding German foreign minister of the late 20th century Hans-Dietrich Genscher once famously said "whatever floats is fine, whatever rolls is not" to sum up military export policy for restless countries - based on a navy's unsuitability for use against a country's own people.


Amazon at odds with Germany over strong union tradition

There’s a labour battle festering on the outskirts of this quaint city, dotted with old stone churches and houses that date back to the 15th century. Every few months for the past year, 400 or more workers have walked off their jobs at two massive Amazon.com warehouses that sit near the geographic centre of Germany. On a sunny June day, as the protesting workers grill bratwurst and listen to a guitarist playing union songs, the rants aren’t the hot-button issues that often fuel strikes in the United States. Sure, the workers here want better pay and job security for zipping off boxes of books, shirts, razors and more to customers. But often, the first complaint these Amazon strikers raise is simply that the company doesn’t respect their rights as Germans to form a union and engage in collective bargaining.  They want Amazon to come to the table because, they say, that’s what companies in Germany do.

“It is the culture in Europe,” said Martin Schierl, who works in customer returns behind the secure turnstiles at the warehouse on the other side of the parking lot. “My father was in the union, too.” Even though they don’t have a contract, roughly 2,000 of the 9,000 full-time Amazon warehouse workers in Germany have joined Ver.di, the country’s second-largest union. Since early 2013, they have walked off the job in occasional strikes in four cities — Bad Hersfeld, Leipzig, Graben and Rheinberg. Amazon says the strikes haven’t affected shipping times. And they haven’t had any discernible impact on the Seattle Company’s staunchly anti-union views. Amazon steadfastly opposes negotiating with Ver.di, and the company has opened new warehouses in neighbouring Eastern European countries, where jobs are more scarce and unions are less of a threat. But where the strikes have had impact is on the impression Amazon leaves with Germans. This isn’t merely a battle about wringing a few more dollars from Amazon’s pocket. It’s a cultural battle in which a union-averse American tech giant is trying to grow rapidly in a market where labour-management cooperation has long been a business hallmark.

And, as it pushes German workers to adapt to its management style, Amazon has been tarnished by the strikes, negative news coverage and concerns from some that it is riding roughshod over the country’s customs. The disquiet peaked in February 2013 after a scathing documentary alleged that immigrant employees Amazon hired temporarily to handle the holiday crush were mistreated. The program, aired by the public ARD network, also alleged that security guards wearing neo-Nazi garb intimidated the workers.  Saying it had “zero tolerance for discrimination and intimidation,” Amazon swiftly ended its contract with the security firm, Hensel European Security Services, whose initials, HESS, recalled Adolf Hitler’s deputy, Rudolf Hess, according to the documentary. But the damage was done. “It seems that Amazon is giving them an easy target,” said Bernd Fitzenberger, a professor whose research at the University of Freiburg in southwest Germany focuses on trade unions.


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