German banks sign pipeline cash deal

Press, 15 July 1982, Page 8

German banks sign pipeline cash deal

NZPA Frankfurt A consortium of West German banks signed an agreement yesterday with the Soviet Union to provide up to four billion marks (SN22 billion) to help finance the controversial Siberian gas pipeline.

The Deutsche Bank chief executive (Mr Friedrich Christians), in an interview at the signing in Leningrad broadcast in West Germany, strongly defended the deal against American opposition. The United States believes that the 513.4 billion pipeline will make Western Europe too dependent on the Soviet Union for energy and provide Moscow with much-needed foreign exchange. • "We made a commitment a year ago,” Mr Christians said. “We are doing no more and no less than what the Government, and the American Government as well, have said — that commitments already made must be fulfilled."

He denied a suggestion that the Soviet Union was receiving credit terms of a generosity normally only accorded to Third World nations.

“The Soviets are paying in the final analysis under the definitive conditions which we also demand of German creditors, not less,” he said. In Frankfurt Deutsche Bank, the consortium’s leader, said that under the accord the Soviet Union could draw on 2.8 billion marks (SNZI.37 billion) to pay for equipment it had already ordered from West German firms.

The' credit line could be extended to four billion marks if the Soviet Union ordered more equipment and services for the pipeline from West German firms before the end of the year.

Bankers said that the agreement signed in Leningrad at a meeting of the Soviet-West German Banking Commission was more evi-

dence that West German firms were determined to go ahead with the pipeline project despite the obstacles placed in their way by American sanctions. In December, President Ronald Reagan suspended American exports of equipment for. the pipeline because of what he called the Soviet Union’s role in the military crack-down in Poland.

The embargo was extended last month to West European firms making pipeline equipment under licence from American companies because of continued martial law in Poland.

Despite the extension. Mr Christians was hopeful about the chances of German firms doing business related to the project.

"There is a whole row of German firms appearing ■ with deliveries behind the big ones, and not only for this contract, but for, all the other contracts," he said.