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Unrest in Egypt

February 1, 2011

The massive protests in Egypt against President Hosni Mubarak's government are impacting an increasing number of German firms with subsidiaries in the country.

Egyptian women in Alexandria protest aginst the government
Protest leaders want President Mubarak to step down by FridayImage: AP

Production at the factories of many German companies in Egypt has stopped as management orders expatriate employees and their families back home. Egyptian nationals and international staff remaining in the country have been advised by their employers to stay at home.

Chemicals giant BASF has temporarily stopped production at its facility in Egypt, as have carmakers BMW and Daimler. Meanwhile Volkswagen has stopped delivering vehicles to Egypt, citing concerns over the security situation.

Energy company RWE has flown around 90 employees of its oil and gas subsidiary Dea back to Germany, although key personnel are remaining in the country. The company's CEO, Jürgen Grossmann, said that production has so far not been affected, and stressed the company's long-term commitment to the region.

German citizens at their embassy in Cairo
German citizens gather at their embassy in Cairo for assistance in flying homeImage: picture alliance/dpa

Steelmaker ThyssenKrupp has told its 1,900 employees in Egypt to stay at home. Ten of the company's roughly 70 German staff were flown home over the weekend. The rest are based in Port Said, where the situation is still reported to be calm.

German retailer Metro Group has likewise told its 700 employees to stay at home. Over the weekend, two of its markets were plundered, with one person sustaining injuries in the commotion.

Protestors want Mubarak's resignation

Egypt is witnessing an eighth day of demonstrations against corruption and the authoritarian style of President Hosni Mubarak, who has ruled the country for 30 years.

On Tuesday, protest organizers called for a massive rally in Cairo aimed at forcing Mubarak from power. They said they expected a million Egyptians to take to the streets of the capital. The protests, sparked by an Internet campaign, have been inspired by the recent uprising in Tunisia and the ousting of President Zine al-Abidine Ben Ali.

According to German economists, young Egyptians participating in the protests want a greater share in Egypt's growing wealth as much as they want democracy and freedom. Despite six years of economic liberalization, young Egyptians suffer from high unemployment, said Volker Trier, chief economist with the German Chamber of Industry and Commerce (DIHK).

Women walk past a damaged shopping center in Cairo, Egypt
Some areas of Egypt have been hit by lootingImage: dapd

He added that it's mainly the country's economic elite who are benefiting from the economic growth, while the government has done too little to improve education and job training for the broader population.

Investors advised to wait and see

While some experts are predicting that foreign direct investment in Egypt's economy will suffer due to the current unrest, Trier advises a “wait and see” approach. He is unperturbed by the fact that German companies have temporarily shut down production at their Egyptian locations.

“These companies are well established in Egypt, and they see it as both a good location and a strategically important one,” Trier said.

If the current crisis results in greater democracy and improved economic conditions for Egypt, the country could eventually be of even greater interest for foreign investors, according to Martin Kalhöfer, Middle East expert at Germany Trade and Invest.

“One can only hope that the democratic process will get a jump start,” he said. “Then, investors will be sure to come.”

Author: Deanne Cobett (dpa, Reuters)

Editor: Sam Edmonds