Germany, Eu Harden Stand On Volkswagen Aid
Germany and the EU each threatened to file fresh complaints in the case with the European Court of Justice in Luxembourg, after Saxony did so on Friday.
The tussle began in June when the European Commission approved only DM540 million ($365.5 million) of a proposed DM780 million in subsidies for VW to build two plants in the formerly communist east German state.
Saxony premier Kurt Biedenkopf decided to hand over all the money anyway, because he said 23,000 jobs depended on it.
German economics minister Guenter Rexrodt said Bonn backed Volkswagen's claim to all the cash, despite Brussels' contention this could start a spiralling war of subsidies.
I believe VW has a right to this money, and that the two plants must be built in Mosel and Chemnitz, Rexrodt told German television.
Initially, Rexrodt was less than pleased at Biedenkopf's action and had urged him to reach a compromise with Brussels, but he now appears to be digging in for a standoff.
Compromise will be difficult, but nothing should be left untried. We need Brussels, Brussels needs us, he said.
Rexrodt said he would recommend to the cabinet on Tuesday that Germany file a complaint in Luxembourg to clarify what role Brussels should play in monitoring Bonn's support for the rebuilding of the east, which still depends on massive help six years after unification.
In Brussels, a spokesman told reporters the Commission planned no immediate action but would discuss the VW row at its September 4 meeting, and would prepare to launch its own action in Luxembourg if the matter was not fixed to its liking.
If legality is not re-established we are preparing everything so that if necessary the complaint on our side will be launched, he said.
Rexrodt and EU competition commissioner Karel Van Miert failed to resolve differences in a meeting last Friday, the day Saxony filed its complaint.
Biedenkopf yesterday defended the decision to go to court.
Putting a European Commission decision to the test in court is not the same as putting Europe in question, Biedenkopf told a gathering of VW managers.
He said the Commission was not a government but a bureaucratic body. The relationship between Saxony and VW was one of cooperation, not blackmail as Van Miert suggested last week, he said, adding that Saxony was convinced the subsidies for VW were legal. Saxony was one of the most industrialised regions in Germany before World WarII, and suffered greatly under the communist east German government. Unemployment there is now over 15 per cent.