Siemens CEO Cites ‘Unusual Forces’ at Play for Iraqi Mega Order

(Bloomberg) -- After an early charm offensive toward President Donald Trump, Siemens AG Chief Executive Officer Joe Kaeser is now taking a swipe.

The head of Europe’s biggest engineering company on Thursday turned critical of the administration’s “America First” policy, saying apparent political pressure on Iraq to choose General Electric Co. for a $15 billion power plant order is skewing competition. Siemens is also vying for the contract, and had signaled optimism to clinch the deal.

“We have noticed that there have been unusual forces” at play, he said in an interview with Bloomberg TV. The practices are “obviously affecting the level playing field.”

Kaeser’s criticism contrasts with his effort to curry favor with Trump in the earlier days of his administration. In January, the CEO sat next to the president at a meeting with executives at the Davos World Economic Forum, laying out Siemens’s many contributions to the U.S. economy and infrastructure and exchanging pleasantries. The more critical tone on Thursday highlights the pressure for both GE and Siemens to secure a crucial deal that would go a long way to prop up either company’s ailing power-generation businesses.

Industry Slump

The operations at both GE and Siemens face a protracted industry slump. The German company on Thursday reported its power and gas unit swung to a loss after it set aside severance payments for thousands of job cuts.

To read more about Siemens fourth-quarter earnings, click here

Siemens and the U.S. administration have each claimed to have a leg up in the fight, with Kaeser having met with Iraqi Prime Minister Haider Al-Abadi in Baghdad in September. Two U.S. officials then said intervention by the Trump administration successfully quashed a Siemens deal and persuaded Baghdad to choose GE, Bloomberg reported.

Iraq signed a memorandum of understanding with GE on Oct. 15 after U.S. officials warned the prime minister U.S.-Iraqi relations would be at risk if his government accepted the deal with Siemens, Bloomberg reported. Adel Jeryan, Iraq’s deputy electricity minister for production and projects, said the country also inked an accord with Siemens and that both memorandums were non-binding.

Corroding Decisions

Germany’s main industry federation has backed Siemens, saying last month that the U.S. pressure in favor of GE is corroding business decisions.

“To implement the America First doctrine in this way in the global competition of multinational companies is not acceptable,” Joachim Lang, managing director of the Federation of German Industries, or BDI, told Welt am Sonntag newspaper. Governments and companies should make deals based on business interests, he said.

“We are an American company, too,” Kaeser said Thursday, noting that the company has almost 60,000 people working in the U.S. and “is creating a lot of jobs.”

“At the end of the day we just want the best team to win,” he said in Munich, where Siemens presented its fiscal full-year earnings. “It’s not like we’re sending combat helicopters. We’re not sending troops there or weapons of mass destruction.”

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