Investment Summit | Playing with government infrastructure

Small toy, great joy, which the Mercedes-Benz CEO is handing over to Federal Chancellor Friedrich Merz. A bigger toy: German public services and infrastructure Photo: dpa/Fabian Sommer Is the management of the world's largest asset manager Blackrock aware of where their ex-employee has promoted them? This Monday and Tuesday, Chancellor Friedrich Merz (Union) hosted an “investment summit” at the European School of Management and Technology in Berlin. The business school is located in the old GDR State Council building. Next to the balcony from which Karl Liebknecht once proclaimed the socialist republic, the federal cabinet and 200 international and German CEOs, including those of the investor Goldman Sachs and the financial services provider GP Morgan, gathered. For two days, the government members met the board members in 15-minute private discussions.

The capital only experiences such a density of international big names in the financial and technology scene during the “Superreturn”. Since 1997, managers of over $50 trillion have been meeting at the trade fair with the aim of concluding further investment deals. Die Linke asked that the current summit and the associated development of a new, global marketing campaign for Germany as a business location cost the black-red federal government around five million euros.

This is worth it for the federal government to mobilize significantly more private capital for investments. Since Black-Red has only lifted the debt brake for the defense budget and the special funds are being used in many parts to plug budget holes, there is not enough public funding to expand the infrastructure.

The summit is about spending on machinery and equipment, research and development, modern production facilities or software that increase productivity and thus economic growth, government circles told the dpa news agency.

"There remains an enormous need for investment, especially for sustainable industry and basic services," said the Left Party's energy policy spokesman, Jörg Cezanne. For example, municipal utilities have little equity and belong to municipalities that are financially poorly positioned. The federal government is currently planning a “private investment platform” that will facilitate investments and investments in municipal utilities and energy suppliers.

“Private participants like Blackrock should be won over for these investments,” Cezanne feared on Monday. In the afternoon, at the invitation of the Left, experts debated alternatives to the participation of major investors in public services and critical infrastructure.

»We are concerned that there is a risk that strategic, sustainable industrial policy will be subordinated to short-term profit interests and extractive business models of financial investors. This can have fatal consequences for basic public services,” said Cezanne.

"Even with government bonds, the financial and administrative effort would be significantly lower and political control would be higher."

For example, where BlackRock invests in the USA, electricity costs for households rise. This is due to the high return expectations of private investors. In addition, as economist Daniel Mertens from the University of Osnabrück explained: Capital is not always invested accurately, and state structures often have less control than originally hoped.

A “financing model as an elite consensus” is emerging, as Mertens described it. This in turn means that values ​​such as workers' rights or climate protection are less important. "Even with government bonds, the financial and administrative effort would be significantly lower and political control would be higher."

The fact that politicians are still interested in such investment models is due, among other things, to the image of statehood after 40 years of neoliberalism. In this way, rulers would signal their ability to act without having to make decisions.

In order to change that, one would have to start with the volumes and objectives of the investments. This means: strengthening public equity and direct financing, taking into account aspects such as employee conditions, adherence to collective bargaining agreements or decarbonization when making investments, and evaluating processes externally.

“Private investors have no place in the most important infrastructure such as the drinking water supply or the electricity distribution networks,” said Rainer Kleedörfer from the Nuremberg Municipal Works. A concrete example of a different type of investment in the energy sector can be seen in Lower Saxony. There, a municipality takes out a loan at a low interest rate and passes it on to the municipal utility at a market interest rate. This means that the difference between the municipal utility's payment to the municipality remains in the municipal budget and the municipal utilities can continue to accept borrowed capital at market prices.

At around the same time as the alternative left summit in the Bundestag ended, Merz received the star guest of his event, the head of the US chip manufacturer Nvidia, Jensen Huang. The federal government plans to cooperate with Nvidia to advance the industrial use of artificial intelligence in Germany.

The Federal Republic has a lot of data thanks to its small and medium-sized industrial companies. These are essential if, in the next steps, machines and factory systems are equipped with self-learning algorithms. It is also about automating processes and work steps. According to the Handelsblatt, the federal government plans to invest a three-digit million amount in Nvidia in order to advance the use of physical AI in industry.

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