Telegraph

By Tony Paterson in Berlin and Charles Laurence in New York (Filed: 29/09/2002)

German exports to America are being affected by consumer anger over Chancellor Gerhard Schröder's vehement opposition to US policy on Iraq, business leaders admitted last week.

Ludolf von Wartenberg, the director of the German Federation of Industry, said that German firms in America already faced the first signs of a boycott following weeks of anti-war rhetoric during the run-up to last weekend's election.

Mr von Wartenburg said that public contracts for German firms in America had already been affected.

Projects involving German building companies and deals over the supply of German medical equipment to the US had been hit. "There have been the first signals and the first cancellations," he said.

"If the political establishment in the United States views Germany as an unreliable partner, then this will affect the attitude of American business towards its German counterpart," he added.

Mr von Wartenberg refused to name specific firms which were being hit. A spokesman said that would merely exacerbate an already difficult situation.

In America people have been calling the German consulate in New York, threatening to start their own economic boycott.

"We have had some calls from individual Americans threatening to sell their BMWs or tear out their German-made fitted kitchens. We had one wine importer who called us to say that he would no longer stock German Riesling wine," Werner Schmidt, a spokesman for the consulate said.

Officials in the New York offices of Germany's corporate giants - Siemens, Hoescht and Deutsche Bank - were officially maintaining a wall of silence over the international spat.

Privately, however, they admitted to fearing that bad blood between Washington and Berlin could prove the catalyst to triggering a collapse of exports and economic deflation.

A Deutsche Bank executive said: "We do take the danger seriously. We depend on high-value exports, and political difficulties can only deepen the dangers presented by the recession both here and in Europe."

At Siemens, the electronics giant, there were reports of contracts to supply medical equipment being jeopardised by political pressure from Washington.

Behind the scenes, the company's New York staff were pointing out that it is one thing to sell telephone systems to small, independently-minded entrepreneurs, but quite another to sign multi-million dollar contracts with hospital groups for the organisation's medical screening equipment.

"It is very easy for Washington to put pressure on the health industry, which is highly dependent on the political climate in America. We have good reason to be worried," said one executive.

Germany is heavily reliant on exports to the United States. Last year Germany exported goods worth £44 billion to America, which accounted for 10.6 per cent of the country's total foreign exports.

Fears of a boycott of German goods were echoed by Hans-Jurgen Muller, the spokesman for Germany's Foreign Trade Association.

"We are worried about the deteriorating political relationship with Washington. We had warned about the consequences of the Schröder government's anti-Iraq policy before the election," he said.

"German firms now face the prospect of being simply cut out of deals in America. The government may be making efforts to repair the damage but these are not nearly intensive enough," he added.

Ludwig Braun, president of Germany's chamber of commerce association appealed to the Schröder government to repair the damage as quickly as possible.

"Otherwise we will have to reckon with a creeping deterioration of our commercial relationship. Fewer cars of certain makes will be bought," he added, in a reference to the German car giants Mercedes, BMW and Volkswagen.

In Atlanta, Georgia, a centre for German businesses - Mercedes and BMW included - which have taken advantage of loose labour laws in the American South to set up factories and import centres, the consul general, Heinrich-Peter Rothmann, said that both countries would soon get over the bruises of "election rhetoric".

If differences over Iraq hurt German trade, there was some speculation in New York on whether British marques might become new symbols of loyalty and see rising sales.

At a Manhattan showroom for Jaguars, the sales manager Mr John Kaufman said that he wanted to avoid "either side of the argument", when asked if there would be any economic fall-out. But added: "I hope so."

-- Anonymous, September 28, 2002