THE WORLD FROM BERLIN

Merkel 'Didn't Let Herself be Blackmailed by Arcandor'

The verdict is in. Most in Germany welcome Berlin's decision not to throw money at ailing retail group Arcandor. Commentators say the refusal may be the product of simple political calculation.

The German government has won across-the-board praise from media commentators for its decision on Wednesday to refuse retail and travel group Arcandor's request for government aid.

DPA

Arcandor, owner of the Karstadt department store chain, filed for bankruptcy on Tuesday.

Newspapers on the left and right say the company's main shareholders -- the Schickedanz family and private bank sal. Oppenheim, as well as the banks who own Arcandor's valuable city center real estate -- weren't prepared to contribute enough to rescue the group.

The Arcandor case has allayed fears that the government is willing to rescue jobs at any price to win votes in the Sept. 27 general election, commentators said.

It also marks a U-turn from two weeks ago when Chancellor Angela Merkel's coalition of conservatives and Social Democrats agreed to help automaker Opel. The change of heart may stem in part from the outcome of the European election on Sunday which bolstered the conservatives, who have been more skeptical of state bailouts, and weakened the center-left Social Democrats, who had argued in favor of government aid for Arcandor, commentators said.

But one paper points out another possible reason for the government's tough line on Arcandor, which owns the Karstadt department store chain, the Quelle mail order business and travel operator Thomas Cook. At Opel, well-paid, industrial, unionized and male jobs were at stake. At Arcandor, it was predominantly low-paid, female shop assistants with little union clout.

Conservative Frankfurter Allgemeine Zeitung writes:

"This time the German government has shown strong nerves. It didn't allow itself to be blackmailed by the management which mobilized the street by pointing to the fate of thousands of employees. Former managers and shareholders are to blame for the demise of Karstadt and Quelle. They didn't move with the times. A state loan would have only given the outdated department store business model a little more time and wouldn't have been able to stop the trend towards shopping malls and online retailing. The government deserves praise for its responsible use of taxpayers' money by deciding to reject state guarantees or loans, and for explaining itself well."

Conservative Die Welt writes:

"The government got it right in the end. Chancellor Angela Merkel and her ministers didn't go soft on Arcandor the way it did with Opel recently. Not enough capital, not enough credit, excessive rents. At last the government was guided by economic factors instead of pointlessly trying to save jobs that can no longer be saved. The government's change of course doesn't stem from any change of principle -- it's mainly due to opportunism. After saving Opel, politicians realized that two long nights of negotiation don't guarantee political dividends. The reaction was too disastrous. And the European election provided the final certainty."

Left-wing Die Tageszeitung writes:

"Evidently, there are two kinds of jobs: well paid ones for men backed by strong trade unions, and abysmally paid ones for women, often employed on a part time basis. The latter aren't especially interesting for unions or politicians. The Karstadt employees can be sure that most people feel sorry for them, but that doesn't help. One can hardly blame politicians in this situation. They're only responding to what the population thinks. After all, there's an election campaign going on, and underpaid female sales assistants don't play a role in that."

Center-left Süddeutsche Zeitung writes:

"Arcandor didn't fail because of the financial crisis, or because of the tough line taken by the government, and even the general demise of department stores that has been going on for years is only partly to blame. It was the owners who failed. They begged the government for help but they barely offered any help themselves. They wanted taxpayers to take the risk while risking as little as possible themselves. In a crisis in which the demands on the state are greater than ever before, they wanted to overstretch the public finances. The state resisted that. And it was right to. Because it has a responsibility towards its citizens.

"One can't put a lot of blame on the government. It didn't refuse to talk. The chancellor and her deputy, the economy minister and the finance minister all negotiated with Arcandor representatives. They were all ready to help Arcandor. But not at any price. One can argue that the government should have shown the same kind of skepticism with Opel. Like Arcandor, Opel didn't get into trouble as a result of the financial crisis, and the automaker doesn't meet the criteria the government has set for possible state aid. The fact that the government took a different decision this time around shows that it's capable of learning."

Business daily Financial Times Deutschland writes:

"This news is as unexpected as it is pleasing. By refusing government aid for Arcandor, the government isn't just sparing taxpayers the burden of footing the bill for years of mismanagement without having any guarantee that the rescue efforts would keep the company afloat in the long term. The main point is that the government is sending a signal to all companies: neither the Opel precedent nor the upcoming general election automatically means that every ailing company will get staid aid just because employees demonstrate in front of the Economy Ministry. The government has retrieved the room for maneuver it lost when it guaranteed Opel's rescue."

-- David Crossland, 12:30 p.m CET