The German government, spearheaded by Economy Minister Katarina Reiche (CDU), is facing increasing scrutiny over the planned investment by Abu Dhabi’s sovereign wealth fund, ADQ, into German chemical giant Covestro. Reiche, in a recent defense of the deal from Abu Dhabi, emphasized its purported benefits for job security and the strength of the company, framing it as a vital response to the pressures facing German industry.
The proposed investment, marking the first acquisition of a DAX-listed company by a state-owned entity from the United Arab Emirates, has triggered concerns within Germany about a potential erosion of national control over strategic industrial assets. Critics have voiced anxieties over a broader “sell-off” of German industrial capabilities, particularly given the sector’s ongoing struggles with soaring energy costs, burdensome bureaucracy and protracted permitting processes.
Reiche dismissed these critiques, asserting that an international partner represents a “significant success” for Germany, yet her explanation sidesteps the core issues of long-term dependency and the implications of ceding influence to a foreign government. While acknowledging the anxieties surrounding the deal, the minister offered assurances that the United Arab Emirates display a substantial interest in maintaining a robust industrial landscape in Germany and hold “considerable respect” for the company.
The temporary location guarantees, stipulated for a seven-year period, have also drawn criticism, with questions raised regarding their enforceability and the potential for abrupt shifts in investment strategy. Reiche’s statement that no government can realistically predict conditions eight or ten years into the future, while technically accurate, appears to offer a tacit acceptance that these guarantees are ultimately fragile.
The government’s willingness to facilitate this level of foreign investment raises broader questions about the attractiveness of Germany as an investment destination and the perceived need to incentivize foreign capital. While Reiche predicted that Covestro will not be the only company to benefit from such arrangements, this declaration underscores a potential shift in policy that prioritizes immediate economic gains over long-term strategic autonomy and risks further politicizing German industry’s vulnerabilities. The situation now places significant pressure on the government to demonstrate that this investment and others to follow, genuinely serve Germany’s national interests and do not compromise its economic sovereignty.