The government must find a balanced approach to state aid.
(Photo: IMAGO/Christian Spicker)
The federal government’s protective shield for the German energy industry has not yet been finalized in all details. But the procedure evokes memories of the financial crisis more than ten years ago: it’s about saving vital infrastructure in a serious crisis. And again there are difficult questions to be answered: How much should the state interfere in companies? Why should he take risks for them? To what extent can shareholders be held liable? How can we prevent the taxpayer from having to foot the bill in the end?
The government must now find a balanced concept. But above all – as the comparison with the financial crisis shows – it must not shy away from assuming corporate responsibility. She owes that to the taxpayer, who ultimately assumes the entrepreneurial risk.
It is true that the process by which the crisis developed is very different today than it was then. The financial crisis arose out of the system. The banks themselves and other players in the capital market – including insurance companies, but also financial supervisors worldwide – were the easily identified culprits. At the time, this made tough interventions easier, sometimes at the expense of the shareholders. The bottom line is that the impression that the banks and their owners have fared too well was still partly retained.
Today it is more the politics of the last decades that are in the pillory. Former governments very carelessly trusted in the good relations with Russia – according to the motto: We are President Vladimir Putin’s best customers, so he won’t do anything to us. The possibility that Germany could be indirectly caught up in a conflict or even war in Eastern Europe was overlooked or ignored, although there were numerous warnings.
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On the other hand, don’t companies also have an obligation to diversify their supply sources? Can they block out geopolitical tensions? Or rely on the German government just as comfortably as it has relied on the protection of the Americans, who have repeatedly warned against too close ties to Russia? There is no convincing reason to let the companies and their shareholders completely off the hook. Because it is already apparent that not all suppliers are equally affected by the extreme increase in gas prices, which is now causing the problems.
Three options for the state
There are basically three different options for how the state can help a crisis industry beyond individual guarantees or subsidies. Once he can simply take the majority of the shares. The Swedes, for example, handled it this way during a regional financial crisis that took place before the big financial crisis of 2008. The motto back then was to ask a bank in need: “Did you bring the shares with you?” Similarly, in 2008 the Americans caught up with the insurer AIG, which had gambled away with speculation on the capital market. There, the US Federal Reserve (Fed) took over almost 80 percent of the share capital.
The second version was also demonstrated by the Americans during the financial crisis: they bought their endangered assets from the banks. But that doesn’t fit the current situation. The third model is silent participation, which is apparently now being discussed again. Germany had used this form at the Commerzbank at the time. This later became a minority stake in the share capital.
In cheap, out with profit
So the question remains: When in doubt, does the state step in and assume corporate responsibility, but also get the appropriate opportunities? The Scandinavians had relatively good experiences with their bank takeover at the time, Germany experienced the opposite with the silent participation at Commerzbank. The reason is obvious: if the state buys in a crisis, it gets in cheap. If he sells after the crisis, he can make a profit. It’s more difficult with a silent participation. In addition, the restructuring of Commerzbank did not succeed as desired.
Disadvantage of an indirect entry: Here the state has less influence on the restructuring. In this context, there is often the objection that the state is not a good entrepreneur per se. That may be so. But he always takes on the entrepreneurial risk – and responsibility is part of it. No state secretary has to sit on the supervisory board, at least not alone: Experienced managers can receive honorable orders from the government.
The question remains whether the shareholders can be expected to accept a takeover on poor terms, given that politicians are largely to blame for the crisis. The question is legitimate. On the other hand, the taxpayer is already burdened enough by the crisis, isn’t it?
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