The German government has reportedly limited the export and investment guarantees for German companies doing business with Turkey.
A report by German news agency dpa claimed that the government has capped the amount of the Hermes export guarantees it provides for trade with Turkey at 1.5 billion euros ($1.8 billion).
The Hermes guarantees provide the German government protection for German companies when foreign debtors fail to pay.
"The government has agreed to limit the so-called Hermes debt guarantees for business with Turkey to a total amount of 1.5 billion euros for 2017," a spokesman for the German Foreign Ministry said during a news conference in Berlin. According to dpa, German companies operating in Turkey allocated some 680 million euros in the first half of the year as part of the Hermes cover.
Approximately 6,900 German companies operate in Turkey, while the bilateral trade volume hovers at around 37 billion euros.
According to the German Ministry of Economy, the foreign direct investment (FDI) from Germany to Turkey between 2002 and May 2017 exceeded $9 billion, placing it sixth among the top 20 countries investing in Turkey. The FDI from Germany, which generally invests in energy, insurance and manufacturing sectors, composes at least 6.3 percent of the total FDI in Turkey.
Moreover, the ministry data showed that the number of German investors in Turkey during the January-April period this year increased more than 100 percent as the German FDI was recorded at $123 million, compared to $58 million during the same period last year.
In late June, German Foreign Minister Sigmar Gabriel said the federal government would review its export guarantees to Turkey following allegations that the Turkish government launched an investigation into German firms operating in Turkey on the grounds of aiding and abetting terrorism. The accusations were rebuffed by the Turkish authorities, who ensured the safety and security of the operations of German companies on several occasions. German Chancellor Angela Merkel, who is seeking a re-election Sunday, has however vowed to restrict trade with Turkey to pressure it into releasing around a dozen German or Turkish-German citizens arrested in recent months for their alleged terror affiliations.
Meanwhile, German political weekly Spiegel claimed in a report Wednesday that the German government has failed to deliver its pledge to increase economic pressure on Ankara with the limitations of Hermes guarantees as promised by Foreign Minister Gabriel.
The report claimed that the Federal Government was still reviewing its Hermes guarantees with regards to exports to Turkey and cited Greens party politician of Turkish origin Özcan Mutlu who criticized the government for not taking any concrete measures regarding the matter and not being fair to its own citizens.
Thomas Bauer, Vice President of the Federation of German Industry (BDI), told Spiegel that the cooperation with the sales partners was still fair and correct, saying: "At the moment, business with Turkey is as usual. In my daily life, nothing has changed for me as a businessman."