Deutsche Bahn broadens its horizons | Business| Economy and finance news from a German perspective | DW | 01.04.2010
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Deutsche Bahn broadens its horizons

Deutsche Bahn's agreement to help the United Arab Emirates build a rail system involves investments worth billions of euros. Four months ago, the German company signed an even bigger deal with Qatar.

Trains at a depot

Deutsche Bahn's plans to operate in markets beyond Europe are on track

Germany's national rail operator Deutsche Bahn seems to be feeling boxed-in by the European market. The company announced on Wednesday that it had signed an agreement to help the United Arab Emirates (UAE) build a high-capacity railway system.

The deal comes just four months after its announcement of a partnership with Qatar to build a rail system there valued at 17 billion euros ($22 billion). While the exact investment value of the UAE agreement was not available, a Deutsche Bahn spokesperson said it could reach the level of "double-digit billions."

Rail investments in the Gulf will develop regional transport networks including a metro system, tram services and a long-distance line linking the UAE capital Abu Dhabi with the southern emirates.

Analysts say the agreement is part of a pattern that's seen Deutsche Bahn become more aggressive in its pursuit of foreign business. Amongst other ventures, it is currently competing with French public railway enterprise SNCF for ownership of the British transport service Arriva.

Maria Leenen of SCI Verkehr, a Hamburg-based transportation sector consultancy, said she sees a great deal of promise in the recent agreements.

"Deutsche Bahn is the largest transportation provider in Europe and doesn't have any chances to expand in Germany," she told Deutsche Welle. "We are in a liberalized railway environment where it's necessary to position oneself against the competition to be able to defend that leading position and expand in the future."

An ICE speeding along a track

Exporting Deutsche Bahn's technological know-how could be lucrative

Privatization controversy

But Deutsche Bahn is also stuck in a controversial privatization process that began in 1993 and has left Germans dismayed by its lack of a resolution. And upper management has been under public scrutiny after the company was fined in 2009 over a scandal involving spying on employee email accounts, hard drives and health records.

Matthias Warneke of the Federation of German Taxpayers in Berlin said the company has made progress in transforming itself from an archaic government service into a modern enterprise. But his organization still wants to see Deutsche Bahn become a privatized company in equal competition with other firms using Germany's federally-owned rail network.

"We have no problem with Deutsche Bahn continuing to deal as a global player and use synergy, but it should do so as a private company and not as a public enterprise," Warneke said.

"We simply believe that enlivened competition for use of the (German) railway network needs to begin taking place. So long as the Deutsche Bahn is still the 'ruler' of the network it will have advantages in using it."

Locked out of France

A Deutsche Bahn spokesman told Deutsche Welle the company needs to expand its business beyond Germany's borders because it faces as many as 300 passenger and freight competitors at home. Although many of thee firms are significantly smaller, others are backed by public money from other European nations.

French President Sarkozy on board a TGV

Sarkozy on board a French TGV: France hasn't welcomed the Deutsche Bahn

"We already face competition from… (French) Keolis, and the absurd thing about this situation is we have to fight against French competitors, but we're not allowed access to the French market for passenger rail. That's a very clear distortion of competition," he said.

So while Deutsche Bahn can't currently offer competitive passenger train services in France, it hopes to compensate one day by doing so in the United Arab Emirates or Qatar.

"Competition is good. It's good for the market, it's good for us and it's good for the taxpayer. But if we're subject to competition at home, then it's only legitimate if we can also seek our chances internationally," the spokesman said.

Gernot Mueller, an analyst with the Scientific Institute for Infrastructure and Communication Services in Bad Honnef, expects that with time only a few consolidated rail companies will survive in Europe.

"An oligarchic structure is developing and fewer companies will be left on the market," Mueller said. "The catch phrase is 'mobility logistics.' I see the strategy of Deutsche Bahn as trying to become one of the most important providers, and not only in the area of rail transport, but generally everything which has to do with freight and passenger transportation including local transit, freight trucking and long-distance bus services."

Author: Gerhard Schneibel
Editor: Sam Edmonds

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