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GERMANY TO LIMIT FOREIGN PURCHASES OF ARMS MAKERS

07 Aug 03. Reuters reports that the German government wants to pass legislation giving it the right to veto foreign investors’ purchases of German armaments firms, a junior economy minister told a German newspaper on Thursday.

“We expect to set out a proposal to change the foreign trade law in the second half of August, which we can bring to parliament,” Ditmar Staffelt told the Financial Times Deutschland.

“We must have a degree of certainty that German high technology or armaments companies not be sold abroad,” Staffelt said, adding that Germany’s many small and medium-sized firms could be very attractive to foreign investors.

An economy ministry spokeswoman said details of the proposed law change had not been finally settled. She declined to comment on a report that any proposed purchase of a stake of 25 percent or more would lead to a government review.

A plan to limit the sales of military hardware manufacturers could match similar restrictions in Britain, France or the United States.The proposal could cause problems for German industry, which could find it difficult to sell operations or to enter joint ventures with foreign partners.

German engineering giant Siemens AG (XETRA:SIEGn.DE – News) is looking to sell its 49 percent stake in tank manufacturer Krauss-Maffei, while carmaker DaimlerChrysler (XETRA:DCXGn.DE – News) is assessing a number of foreign bids for its MTU aero-engine business.

Last year, U.S. investor One Equity Partners completed a controversial purchase of Germany’s leading submarine and naval shipyard Howaldtswerke-Deutsche Werft (HDW).

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