EUROPE: Siemens Caught In European Spat Over Libya

European harmony is all well and good, but when a lucrative energy deal is at stake, the knives of nationalism are quick to come out. German politicians on Monday attacked the Franco-Libyan accord signed last week that promised a nuclear power plant for Tripoli, most likely to be provided by French energy conglomerate Areva. All eyes are now on scandal-racked German group Siemens, with its 34% stake in Areva's nuclear power division, to see what happens next.

The parliamentary state secretary to Germany's environment ministry, Michael Muller, told the newspaper Handelsblatt on Monday that Siemens had a responsibility to act against French President Nicolas Sarkozy's preliminary accord with his Libyan counterpart Moammar Gadhaffi. "We must know what Siemens will say about this immoral deal," he said.

Libya is a signatory to the Nuclear Non-proliferation Treaty, and in 2004 publicly renounced its pursuit of nuclear weapons. It wants nuclear energy to power a new desalination plant. But given the North African country's past involvement with Arab nationalism, so-called "Islamic socialism" and terrorist attacks such as the bombing of a Pan Am flight over Lockerbie, Scotland, any mention of the word "nuclear" is a sensitive subject.

"Siemens would be wise in terms of its image and its responsibilities not to play with fire with this," said Margareta Wolf, foreign affairs spokeswoman for the Green Party, in an interview with Handelsblatt.

And if the political pressure is designed to get Siemens to sell its stake in France's Areva, it isn't working just yet. "We want to keep our stake in Areva," Siemens spokesman Wolfram Trost told Forbes.com. "There is no reason to sell it at the moment."

Shares in Siemens closed up slightly, gaining 33 euro cents (45 cents), or 0.4%, to 95.12 euros ($130.19) in Frankfurt. Areva shares also registered a similar pick-up, gaining 7.12 euros ($9.74), or 0.9%, to 777.41 euros ($1,064.01).

There are more obvious reasons than the nuclear issue that could be the cause of German resentment. Politicians close to the matronly German Chancellor are furious that years of Europe-wide diplomatic coaxing, which resulted in the release of five Bulgarian nurses and a doctor from Libyan prison last Tuesday, have been hijacked by a new French president on the lookout for a national advantage.

Merkel's fellow Social Democrats, such as Muller, are lining up to take pot shots at the deal. Deputy Foreign Minister Gernot Erler said last week that it was "politically problematic" and threatened Germany's interests directly. With leading French group Areva likely to be the first choice for the nuclear-powered desalination plant promised to Gadhaffi, the obvious weapon to wield is Siemens' minority stake.

Via: Forbes

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