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Business

Schröder Wants to Make Up

Relations between Berlin and Brussels have been strained in recent weeks, to say the least. Chancellor Gerhard Schröder's visit to the EU capital on Monday was meant to ease some of that tension.

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Gerhard Schröder's loyalty to VW has upset many in Brussels.

After a few weeks of unusually fiery rhetoric against Brussels, Gerhard Schröder met with the European Commission’s president Monday night and told him it was nothing big.

He went, according to his spokesman, "to begin a discussion" with Commission President Roman Prodi on the way the European Union will integrate the various industry politics of its member countries in the coming years.

Not up for discussion - at least as far as his press handlers revealed - was Schröder’s spats with Brussels in recent weeks over the sorry state of the German economy, the liberalization of the European auto industry and the introduction of a unified corporate takeover law.

Monday evening’s dinner with Commission President Roman Prodi was advertised by aides in advance as a civil and result-free affair. One told the Sueddeutsche Zeitung that Berlin better not await "any practical results".

Let's be friends

The talk was more of an indication that after weeks to the contrary, Schröder wants to be on good terms again with Brussels. European harmony is important in these times, Schröder said before leaving, especially as right wingers like France’s Jean-Marie Le Pen pledge to turn their backs on the European Union should they come into power.

But unifying the industrial policies of the various European Union economies has proved difficult. Germany, which is fiercely protective of its tradition-rich and state-supported industrial branch, fears its major corporations will suffer under the strict de-regulation and standardization the European Commission wants to implement.

Car companies put up a fight

One example called up again and again by Commissioners is the so-called Volkswagen Law. The law is the practical application of German government’s symbolic support in its flagship companies – in this case Volkswagen.

The state law gives the state of Lower Saxony a so-called "golden share" of Volkswagen, based in the state, that gives it voting rights disproportionate to its stake. As a result, the state has a majority share in the company.

Schröder, the former premier of Lower Saxony and a former member of Volkswagen’s board, has been a staunch defender of the law. His stance has angered European integrationists, who see the law as a hindrance to the sort of economic harmony the Union is supposed to be working towards.

"The VW law, in my opinion, is not compatible with an integrated European financial market," Frits Bolkestein, the European Commissioner for the Internal Market, said in an interview with the Frankfurter Allgemeine Zeitung.

Neither is Schröder’s objection to a recent European Union move to liberalize the auto market so that prices remain the same across Europe. Volkswagen and Germany’s powerful automobile industry would suffer from such liberalization.

Chemicals industry also at loggerheads

A further fight with Brussels is looming over chemicals. As Europe's largest chemicals producer - German chemical companies like Bayer employ one fifth of all chemical workers in Europe - Germany is not happy with EU plans seeking to regulate chemicals that go into products sold in Europe's stores.

For the EU, the plans make environmental sense. For German companies, the plans mean more expenses that could harm the Union's competitiveness.

There is much to sort out in the months ahead. The negotiations complicated by Schröder's very fierce election battle at home.

But with Monday's meeting Schröder seemed send a signal to Brussels: domestic struggles won't affect his commitment to the European Union.

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