Western German shipbuilders next year will receive nearly double the amount of competition subsidies they receive now. The decision can be seen as a political defeat for Economics Minister Juergen Moellemann, who had pledged earlier to eliminate the payments.
The increases come at a time when Bonn is scrambling for ways to fund the ever-increasing burdens of unification, and follow pledges from Mr. Moellemann to crack down on taxpayers handouts to shipbuilders. A ministry spokesman said the subsidies were "unavoidable because other countries heavily subsidize shipbuilding."An Economics Ministry spokesman defended a decision made in the Bundestag's Budget Committee to increase shipbuilding subsidies to 126.4 million deutsche marks ($81.6 million) from DM67 million ($43.2 million). He said of the DM59.4 million ($37.1 million) in increases, only DM33 million ($20.6 million) would go to new projects. The remaining funds come from shifting previously promised subsidy funds to the 1993 budget.
As expected, the Hamburg-based Association for Shipbuilding and Marine Technology said the subsidies weren't enough. In a statement released Thursday, the group said that even with the expected additional subsidies from the coastal state governments, which would bring payments to DM166 million ($103 million), this wouldn't be enough.
''This volume remains significantly below the expectations and demands that the shipyards, the coastal states and the IG Metall (union) have on the federal government," the association said.
The group noted that German shipbuilding subsidies amount to 7.5 percent of project cost, compared with the nearly 10 percent allowed by the European Community.
Konrad Lammers, an economist with the Institute for World Economics in Kiel, said the government is caught in a bind. On the one hand, competition has intensified, not only from Asian producers, but also from the eastern German yards, some of which already have been privatized. On the other hand, the increased subsidy level shows "that the government doesn't have the political power" to reduce subsidies.
The institute is a longtime advocate of reduced shipbuilding subsidies. Mr. Lammers said the payments cost taxpayers too much money, are not good for long-term employment and prevent restructuring.