UPDATE 1-German CEOs form front against Merkel nuclear tax

Fri Aug 20, 2010 4:35pm IST

Stocks

   

* Merkel under pressure to resolve contentious issue

* Industry also criticises solar energy in open letter

* Banking boss and soccer chief back initiative

(Adds comment, details, government response)

By Dave Graham

BERLIN, Aug 20 (Reuters) - German industry launched a concerted attack on Chancellor Angela Merkel on Friday over her proposal for a tax on nuclear power providers, urging her in an open letter to drop the plan or put Germany's future at risk.

Led by the heads of the country's biggest utilities, industry bosses and members of her own Christian Democrats (CDU) ramped up the pressure on Merkel to yield as her centre-right government prepares to unveil its long-term energy plans.

The letter, which was also signed by academics and a top media executive, follows weeks of protest by the utilities about the tax, which Merkel hopes will raise 2.3 billion euros ($3 billion) a year as part of an 80 billion euro budget consolidation drive.

"This is about securing the basis on which we live for tomorrow and Germany's ability to thrive as a place for business in future. It concerns all of us," the letter said.

"Policies that aim to consolidate the budget with new energy taxes block necessary investment in the future. For example: the planned nuclear fuel tax or new increases in energy tax must not lead to future investments being prevented," it added.

Merkel, a former environment minister under Helmut Kohl, said this week she was open to alternatives to the tax, which foresees levying a charge on nuclear fuel, but that the government still wanted to raise the 2.3 billion euros.

Her spokesman, Steffen Seibert, said the government was committed to providing a sustainable energy supply and would decide in due course how to resolve the matter.

"The chancellor sees the (letter) as a completely legitimate contribution to the discussion; there's nothing more to say," he told a regular news briefing, rejecting the suggestion that the initiative was a warning shot against the government.

Surveys have long shown that a majority of Germans oppose nuclear energy, making it a sensitive area for Merkel's government, which has pledged to extend the lifespan of nuclear power stations, even though it has yet to agree on how much.

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Support for the government has plunged in recent weeks, and a poll published this week showed Merkel's CDU had been overtaken by the centre-left Social Democrats (SPD) for the first time since she won re-election last autumn.

"If big business tells the government what to do, then its legitimacy will be called into question," said Gero Neugebauer, a political scientist at Berlin's Free University.

The government has said it will postpone a decision on the nuclear tax to give it time to talk to utilities, which want to have the lifespan of nuclear plants extended. [ID:nLDE67H0WB]

Merkel's predecessor as chancellor, Gerhard Schroeder, agreed a plan to phase out nuclear power in Germany by 2021.

The protest letter, which comes as the government prepares to lay out its long-term energy strategy at the end of September, also took aim at other sources of power generation.

"Renewable energies -- particularly solar energy -- lead to much higher added costs in the long term, which will be 8 billion euros this year," said the letter, also signed by the manager of Germany's national football team, Oliver Bierhoff.

Among the signatories were Deutsche Bank (DBKGn.DE) Chief Executive Josef Ackermann as well as CEOs of state-owned rail operator Deutsche Bahn [DBN.UL], chemicals firm BASF (BASFn.DE), steelmaker ThyssenKrupp (TKAG.DE), retailer Metro (MEOG.DE) and utilities E.ON (EONGn.DE), RWE (RWEG.DE), EnBW (EBKG.DE) and Vattenfall [VATN.UL], which provide some 80 percent of Germany's power.

The heads of leading German industry associations also lent their support, including the head of the main carmakers' lobby.

A number of pro-business figures from Merkel's conservative CDU also signed, including Michael Fuchs, a deputy head of the party in the Bundestag lower house of parliament.

Otto Schily, a minister in the Schroeder cabinet that agreed the nuclear phase-out, and who had previously helped found the anti-nuclear Greens party, was another prominent signatory.

(Additional reporting by Tom Kaeckenhoff; editing by Keiron Henderson and Jane Baird))

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