rffrydr
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Joined: 30 Oct 2005
Posts: 16909
Location: Sunny California
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 Posted: Sat Mar 31, 2007 7:15 am Post subject: 1st World Nationalization... |
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...from an old socialist, Austria. Advertising itself as "the better Germany" this chip off the European Block shows echoes of South America.
Question: the success that globalized trade and liberalization has induced a sense of pride equal and opposite to an impending dread at the loss of cultural identity. Has the cycle of globalization turned? Or is this just the contemporary expression of "Ludditism" on a national level?
Austria is toying with a curious new form of protectionism
"TO CALL it a catastrophe was a catastrophe," says Martin Bartenstein, Austria's economics minister. Last week Alfred Gusenbauer, Austria's chancellor, called the bid by CVC, a British private-equity group, for Bohler-Uddeholm, an Austrian steelmaker, a catastrophe because the firm is a jewel of Austrian industry. But that is just Mr Gusenbauer's personal opinion, says Mr Bartenstein. It is not the government's official position. (The bid was rejected on March 28th.)
Tensions within Austria's grand coalition of Socialists and the centre-right People's Party are running high as the political and industrial elite, led by Hannes Androsch, a former finance minister, discusses the establishment of a private-equity fund to protect Austrian companies from foreign takeovers. The so-called Austro-fund would buy controlling stakes in firms such as Bohler (the potential sale of which triggered the debate), Wienerberger, the world's largest maker of clay bricks, OMV, an oil and gas company, Voest, a steelmaker, and Lenzing, a maker of cellulose fibre. The fund's start-up capital would be euro1 billion ($1.3 billion), which would grow to at least euro5 billion.
Leading bankers and industrialists are at loggerheads over the idea. Andreas Treichel, the boss of Erste Bank, Austria's second-biggest bank, says he will not play ball. Nor will the head of Wiener Stadtische, an insurance company, or the boss of Wienerberger. Ludwig Scharinger, the boss of Raiffeisenbank, another bank, and Christoph Leitl, the head of the Economic Chamber, a lobby group, are in favour of the plan. Veit Sorger, head of the Federation of Austrian Industry, says Austrian capital in Austrian companies is a good thing, but the Austro-fund must not get preferential treatment over other private-equity firms. Politicians are mooting a state guarantee for the fund and tax exemptions for its dividend payments. Some have even talked about a re-nationalisation of Bohler through a takeover by the OIAG, Austria's state holding agency. (Bohler was fully privatised in 2003.)
Austria has a history of protectionism and strong state intervention in business. In 2004, it rebuffed Siemens of Germany for taking an interest in VA Technologie, a smaller Austrian firm, and authorised OIAG to take up Siemens' intended share of a planned VA Tech capital increase instead. In the same year the government turned down a deal to sell the state's 42% stake in Telekom Austria to Switzerland's Swisscom, and shelved plans to sell a quarter of the state-owned postal service to Germany's Deutsche Post.
Yet even while keeping foreigners at arm's length, Austrian banks and companies are big investors in eastern Europe, where cultural and economic ties dating from the Habsburg empire give the Austrians a competitive edge over bigger rivals from farther afield. Some 6% of foreign direct investment in central and eastern Europe is Austrian. Telekom Austria is one of the top telecoms companies in the region. Vienna's stock exchange bought the bourse in Budapest and is showing an interest in the stock exchanges in Bulgaria and Slovenia. Erste Bank makes almost two-thirds of its profits in eastern Europe.
"We used to say 'Come to Austria--we are the better Germany'," says Mr Bartenstein, who was in China this week to tout the advantages of doing business with and in Austria. Even if the Austro-fund never sees the light of day, he worries that the debate about it is damaging his country's business-friendly reputation in London and Frankfurt--and, even more important, in Sofia, Bucharest and Belgrade.
Source Citation: "Not so welcome in Vienna; Business in Austria." The Economist (US) 382.8522 (March 31, 2007)
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