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Thursday, 20 January, 2000, 21:31 GMT
Political scandal threatens German business

Daimler-Benz HQ Famous names like Daimler-Benz could suffer from the political scandal


By Europe business correspondent Patrick Barlett in Frankfurt

German industry fears the country's deepening party funding scandal is damaging its image abroad.

The head of Germany's exporters' association, Bundesverbandes des Deutschen Gross- und Aussenhandels (BGA), Michael Fuchs, has said that the scandal, which has ravaged the opposition Christian Democratic Union, is harming the country's business interests.

German industry is also worried that important tax and welfare reforms, currently under discussion, are suffering from the lack of an effective political oposition.

The words "Made in Germany," like a trusted brand name, have become a hallmark of quality, but businessmen like Mr Fuchs fear that that brand is being tarnished by the political scandal.

Mr Fuchs urged the Christian Democrats to put an end to the party funding scandal as soon as possible.

But with a criminal investigation, a parliamentary inquiry and an internal financial audit all underway, the party's embarrassment could continue for many months.

Businessmen fear that Germany's economic recovery could itself be put at risk if exports, which have led that revival, are harmed by the political scandal.

Overhaul

Mr Fuchs's fears may be overstated, but his comments highlight concerns about the self-destruction of a party traditionally sympathetic to business interests.

And the scandal comes just as the Social Democratic government is discussing important reforms to make the German economy more competitive - among them a complex package of tax cuts and a long-postponed overhaul of Germany's pension and welfare systems.

But there is an alternative view: that the lack of political opposition will strengthen Chancellor Gerhard Schroeder's hand in pushing through reforms which are unpopular with trade unions and left-wingers in his own party.

The Christian Democrats' disarray, the theory goes, could provide the first real opportunity for Mr Schroeder to live up to his claim to be a business-friendly chancellor.

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See also:
20 Jan 00 |  Europe
Kohl defies resignation pressure
19 Jan 00 |  Europe
Analysis: Tough road ahead for CDU
19 Jan 00 |  Europe
Q&A: Germany's party funding scandal
04 Jan 00 |  Europe
Kohl's mark on history
18 Jan 00 |  Europe
Kohl resigns party post
18 Jan 00 |  Europe
Schaeuble: Committed to his party
04 Jan 00 |  Europe
Kohl scandal: The story so far
15 Jan 00 |  Europe
German SPD demands election re-run

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