Industrial policy: Habeck defends himself against criticism of subsidies

Federal Minister of Economics Robert Habeck defends himself against criticism of government subsidies for companies such as the ailing battery manufacturer Northvolt. “The reason for this is essentially the resilience of the European and German economy,” said the Green politician before a questioning in the Bundestag’s budget committee. “Our semiconductors, i.e. microchips, are largely produced in Taiwan and South Korea.” Taiwan has conflicts with China, South Korea is North Korea’s neighbor.

“Our entire economy in the high-tech sector depends on this. It’s a bold bet to say that these are secure supplier conditions, they will definitely be like this for the next 20 years,” said Habeck.

That is why it is important to invest in the resilience of the economy. “This is an economic security program, but of course security has a price. Otherwise companies won’t produce in Europe.” The programs also came largely from the previous government. They made the right decision.

The financially troubled Swedish battery manufacturer Northvolt has filed for bankruptcy protection in the USA. The company filed for restructuring under Chapter 11 of the US Bankruptcy Code. According to the company, its battery plant, which is being built in Heide, Schleswig-Holstein, is not affected. The crisis could be expensive for the federal government and the state of Schleswig-Holstein. The ailing company received around 600 million euros from the state development bank KfW, for which the federal and state governments each guaranteed half.

Habeck said that many other companies had already restructured and then successfully returned to the market. There is definitely a chance that Northvolt will reposition itself, restructure itself and keep the funds.

FDP parliamentary group leader Christian Dürr said that the Northvolt insolvency was an example of a “failed planned economy subsidy policy” that would ultimately have to be paid for by taxpayers. The CDU economic politician Julia Klöckner accused Habeck of having “sloppily done” Northvolt. “For them, beautiful pictures were more important at the groundbreaking than checking tax money.”

Billions in government funding were also planned for a chip factory owned by the US company Intel in Magdeburg. The construction of the plant has now been postponed by Intel due to cost-cutting measures.