Scholz considering call to Moscow, Zeit says ++ Covestro-Adnoc deal fuels further pessimism about German competitiveness
Wednesday 2nd October
Good morning.
Besides coverage of Israel’s invasion of Lebanon and the US Vice-Presidential debate overnight, two stories warrant attention.
Berlin calling?
Signs of shifting positions in Berlin ahead of the US election, and a general weariness with the war in Ukraine. Die Zeit reports that the Chancellor, Olaf Scholz, has been weighing up the merits of a call to the Kremlin, with a date “in the run-up to the G20 in Brazil in November” being considered.
In a separate long-form article speculating about the end of the war, Zeit’s reporters write that a direct conversation between Scholz and Putin would be “a small sensation. Scholz last spoke to Putin on the phone in December 2022. Other Western heads of government have also had no direct contact recently. It would be a test after a long, icy silence: Whether anyone in Moscow will even answer the phone. Whether they can at least talk about talking.”
Tomorrow, which is a federal holiday in Germany to mark reunification in 1990, the pro-Russian ‘left-conservative’ Sahra Wagenknecht Alliance (BSW) is holding a ‘peace demonstration’ in Berlin which will demand an end to weapons transfers to Ukraine and immediate peace talks. After last month’s elections, the BSW now holds outsized influence in coalition talks in three states in east Germany. Scholz is clearly feeling the pressure which the party, whose current conditions for participation even in state governments include the war in Ukraine, are placing on his declared ‘Zeitenwende’ in German defence and security policy.
UAE’s Adnoc acquires Leverkusen chemical firm Covestro
The UAE oil company Adnoc has bought out German chemicals manufacturer Covestro for €16bn. The firm currently employs 17,000 workers, some 7,250 of them in Germany, and ranks among the most valuable companies on Germany’s DAX index.
The press’ reaction to the deal has been quite unimpressed. The SZ’s Caspar Busse wonders whether this latest deal, coming shortly off the back of frenzied reporting of UniCredit’s moves to acquire Commerzbank, and lesser-known international deals —Thyssen-Krupp’s partial sale a to Czech investor, logistics firm Schenker going to the Danes, or the Port of Hamburg’s 50% sale to the Italian shipping firm MSC — shows that Germany has entered an era of mass selloffs.
Handelsblatt’s Theresa Rauffmann assesses that, although the €62-per-share price that was eventually agreed seems generous given the company’s recent valuation at much lower than this, Adnoc has managed to get a ‘bargain price’ for Covestro. Plus, the new owner’s commitments to the phrase ‘Made in Germany’ are far from set in stone:
“Adnoc is not allowed to sell or close anything at Covestro, and the collective labour agreements and works agreements remain in place. However, the investment agreement only runs until 2028, so it is uncertain what will happen after that. With Covestro's expertise, Adnoc could certainly build plants in the Middle East. Whether the German plants will still have a chance in a competition over costs remains to be seen.”