AUGUST 2007

Berlin looks to vet foreign fund deals

By Bertrand Benoit in Berlin and Mark Schieritz in Frankfurt

Published: June 25 2007 18:54 | Last updated: June 26 2007 08:25

The German government is looking at setting up an agency to vet acquisitions by state-controlled foreign funds amid rising concern about the financial might of China, Russia and oil-producing countries.

Government officials told the Financial Times the finance ministry, economics ministry and chancellery were investigating whether foreign state-owned funds posed a national security risk. Officials are particularly anxious about any threat to take over German banks.

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Should this be the case, Berlin could create a German equivalent of the US Committee on Foreign Investment, known as Cfius, the inter-agency panel that can recommend the US president block foreign direct investments it deems a threat to national security.

The move represents a rising concern in some western capitals at the growing economic might of state-controlled funds.

“We are seeing record currency reserves in highly centralised countries,” a finance ministry official said. “This is not necessarily a problem but given the leverage possibilities available to foreign state-controlled funds, it is something that needs looking into.

“This is at a very early stage, but depending on the result of our investigations, we may consider setting up an inter-ministerial committee on the US model.”

The recent $3bn Chinese investment in Blackstone, the US private equity group, is among the transactions that have drawn the attention of German authorities. Blackstone owns 4.5 per cent of Deutsche Telekom, the former telecommunication monopoly.

Russian investors have approached the German government about its remaining stake in Deutsche Telekom, while Dubai’s investment fund bought 2.2 per cent of Deutsche Bank.

Morgan Stanley puts the total assets of Chinese, Russian and Middle Eastern state-controlled funds at $2,500bn. Berlin is more concerned about investments by funds than by public-sector companies because of the funds’ ability to leverage their cash.

Among the risks Berlin is investigating is an indirect takeover of one of the country’s largest banks by a foreign government. These have capitalisations that are lower than average and have long been considered potential targets.

Another scenario is whereby Chinese state-controlled investors would buy small engineering companies to siphon off patents and intellectual property.

Copyright The Financial Times Limited 2007

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Monday 16 July 2007
The  Irish Army Press Office  has stated that 6 Irish armed forces personnel took part in last Saturday's Bastille Day parade in Paris, representing the Irish army,  naval service  and air corps.
One man carried  the Irish  flag at the front of the parade, alongside those carrying the other 26 EU Member State  flags. The other 5 marched together as one of the 26 non-French EU Member State contingents.
All this is seen by French  President Sarkozy  as prefiguring the European military  force which  he referred to in his speech as quoted by Lara Marlowe in today's Irish Times.
Marlowe states that the heads of the EU Commission, Parliament and the rotating Portuguese presidency  "were on hand to watch the V-shaped formation advance down the Champs-Elysees.. . .
"A child from the Petits Chanteurs a la Croix de Bois boys choir recited from Robert Schuman's declaration  of May 9th 1950: ' Europe will not happen all at ocne, or as an overall project. It will be made through concrete realisations that create solidarity on the ground". The words resounded across the Place de la Concorde. . .
"Mr Sarkozy is the first leader to have brought troops from all 27 EU member states together. "I'd been thinking about it for years", he told France 2 television. "I wanted to show that Europe is back in France and that France is back in Europe. I want a Europe that protects, a Europe that is led differently."
Defence against whom or what, one may ask?  Who is militarily threatening the EU that it needs defending? Military offence rather than defence, in the former Arican colonial territories, is much more likely to be what Sarkozy has in mind.
Marlowe writes also: "Mr Sarkozy has said that European defence will be a lever to relaunch 'political Europe."
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  Below is an astonishing admission. Former Italian Prime Minister Giuliano Amato, who helped draft the EU Constitution proposals, admits quite openly that the whole thing is a total deceit.

EUOBSERVER Monday 16.7.07
Treaty made unreadable to avoid referendums, says Amato                 By Lisbeth Kirk
BRUSSELS - The new EU reform treaty text was deliberately made unreadable for citizens to avoid calls for referendum, one of the central figures in the treaty drafting process has said.
Speaking at a meeting of the Centre for European Reform in London on Thursday (12 July) former Italian prime minister Giuliano Amato said: "They [EU leaders] decided that the document should be unreadable. If it is unreadable, it is not constitutional, that was the sort of perception".
"Where they got this perception from is a mystery to me. In order to make our citizens happy, to produce a document that they will never understand!"
"But, there is some truth [in it]. Because if this is the kind of document that the IGC [intergovernmental conference] will produce, any Prime Minister - imagine the UK Prime Minister - can go to the Commons and say 'look, you see, it's absolutely unreadable, it's the typical Brussels treaty, nothing new, no need for a referendum."
"Should you succeed in understanding it at first sight there might be some reason for a referendum, because it would mean that there is something new," he added.
Mr Amato, who is now minister of the interior in Italy, has been a central figure in all stages of the year-long process of writing a new constitution for Europe.He was vice-president and leader of the socialists in the Convention, the body that wrote the first constitution-draft in 2002-2003 under the leadership of former French president Giscard d'Estaing.
But the draft was rejected in referendums in France and the Netherlands in 2005.
Following two years of 'reflection' Mr Amato headed the 16-strong group of politicians which prepared a simplified version of the document. Unofficially known as the "Amato Group" the group stripped the rejected constitution of its constitutional elements - including the article on the EU's symbols. But the main elements of the original constitution were kept in.
EU leaders in June agreed on a "reform treaty" blueprint which follows the outlines of the Amato Group's proposal but which has also come under criticism for complicating rather than simplifying the text. A so-called Intergovernmental Conference (IGC) - a round of technical negotiations on the treaty - will kick off on 23 July and should be finalised by October. The job to produce a so-called consolidated text, updating the existing treaty with the new paragraphs, will be left with 'the Secretariat', Mr Amato said referring to the secretariat of the EU council, member states' decision-making body.
"Nothing [will be] directly produced by the prime ministers because they feel safer with the unreadable thing. They can present it better in order to avoid dangerous referendums".
The speech was recorded by UK based think tank Open Europe. It is also available on YouTube.
"This is an extraordinary admission from someone who has been close to the negotiations on the EU treaty", said Open Europe director Neil O'Brien.
"The idea of just changing the name of the Constitution and pretending that it is just another complex treaty shows a total contempt for voters."
Neutral Ireland joins other EU army representatives at Sarkozy's Bastille Day parade - Former Italian Prime Minister Amato e