- - Monday, October 31, 2016

BERLIN — Waves of xenophobia and clashes over immigration policy are not only politically explosive in some of Germany’s poorest regions, but they are also bad for business.

A quarter-century after reunification, a large part of the once-communist East Germany still struggles to catch up to the more prosperous west. But now, anti-immigrant sentiment and the success of far-right parties in the face of a flood of Middle Eastern, North African and South Asian refugees pose new threats to the business climate and fears for investors in a region still recovering from Marxist control.

“Xenophobia, right-wing extremism and intolerance pose a great danger to not only the society, but also the economy of the nine newer states,” concluded a report from the Amadeu Antonio Foundation. “Eastern Germany will have good development prospects only when it becomes a cosmopolitan region in which all people living there feel at home and participate in the social life.”

Timo Reinfrank, director of the Berlin-based foundation dedicated to combating right-wing extremism, said he regularly receives complaints from people of color who feel unsafe traveling and working in certain parts of Germany.

“There is always a debate over whether or not black artists and actors should go to eastern Germany,” Mr. Reinfrank said. “This is a large problem for these people, who are oftentimes greeted at the train stations by neo-Nazis.”

The government’s hopes to bolster the domestic film industry, which includes tax breaks for free-spending movie production sets, took a hit at a recent shoot in the Baltic town of Rostock, after locals assembled and harassed a black model working at the scene.

“This is a huge problem for companies because the actors don’t want to come back,” Mr. Reinfrank said. “There is increasing state funding and promotion for shooting movies and commercials in eastern Germany, but it won’t help.”

Despite a heavy inflow of investment from Berlin and former West German states and companies, gross domestic product per capita in the states that made up East Germany remain just 67 percent of those in the rest of the country, while the unemployment rate is markedly higher.

Although immigration policy has always been a sensitive issue in German politics, the situation became particularly inflamed when German Chancellor Angela Merkel last year announced a virtual open-door policy for refugees fleeing Syria and other world crisis spots while many other European countries were trying to shut their borders. The result: Germany took in more than 1 million migrants last year, five times the number from 2014, straining social services and sparking a political backlash. The resistance is particularly fierce in the poorer eastern parts of the country.

Even the taciturn and low-key chancellor has acknowledged that her welcoming policy was a mistake, leaving local and federal authorities unprepared for the crush that followed.

“If I were able to, I would turn back time by many, many years, so that I could have prepared the whole government and the authorities for the situation, which hit us out of the blue in the late summer of 2015,” Ms. Merkel said in an extraordinary mea culpa to the nation in September.

The backlash has fueled the rise of the anti-immigrant Alternative for Germany political party in local elections. The party is now the third most popular in the country, according to polls, and even beat Ms. Merkel’s Christian Democrats in local elections in September in the chancellor’s home state of Mecklenburg-Western Pomerania, once part of East Germany.

The successor to the Nazi Party, the National Democratic Party has had a resurgence in popularity, too. In the western state of Hessen, the party’s share of votes in municipal elections jumped from low single digits to 14.2 percent this year, according to election officials.

Even in the liberal, freewheeling German capital of Berlin, Timo Ehleringer, 22, said he can the rightward movement.

“There is a shift in public opinion,” said Mr. Ehleringer, a graduate student at the Hertie School of Governance in Berlin. “Especially in conversations with older relatives, you get more Islamophobia and homophobia, but you also see more posts on Facebook against Muslims. Germany is polarized.”

Dresden’s image

The eastern German city of Dresden has long been renowned as a center of culture, art and architecture. But since last year, the city garnered headlines across Europe for giving birth to the anti-immigrant movement PEGIDA, the German acronym for the Patriotic Europeans Against the Islamization of the West. The group organizes weekly marches through the city center to protest immigration and promote traditional German culture.

PEGIDA has become a major obstacle for global German firms looking to attract foreign investment and employ the best and the brightest from around the world.

“It’s a problem when these pictures of xenophobia reach the public,” said Clemens Fuest, director of the Center for Economic Studies, a think tank in Munich. “It is bad for all people who have businesses in Germany that are looking for foreign investors. The whole thing leads to uncertainty.”

Employers such as Dresden’s Max Planck Institute, an independent scientific research organization, say they have been forced to provide extra safety measures for foreign employees.

“We provide taxi vouchers for our researchers who have to work late at night and feel unsafe,” said institute spokeswoman Ingrid Rothe. “A lot of our employees schedule their work to avoid the demonstrations.”

Other companies sidestep Dresden altogether.

Microsoft received major coverage in the German press last year when it canceled a 1,600-member conference in the city because of PEGIDA demonstrations.

Mr. Fuest and other analysts fear that while groups like the Alternative for Germany and PEGIDA say they are fighting immigration in the name of saving Germany, the Continent’s economic engine is becoming ever more dependent on immigrants. Even unskilled migrants, who take jobs Germans are reluctant to do, help keep the economic engine going.

“Germans are not having enough children, so we need qualified immigration,” Mr. Fuest said. “But we aren’t getting this type of mass qualified migration, so we have to see how we can make the best of the migration we do have.”

He said anti-foreign sentiment is also affecting one of Germany’s best sources of educated immigrants: its universities.

“Students are also getting scared off,” Mr. Fuest said. “These are people who used to come to study and most likely stay in the German workforce.”

For the majority of Germans who accept increased immigration, the negative effects of contentious debate over refugee policy and immigration are starting to sink in. Some, like Stephan Becker, the marketing director for Dresden’s Taschenbergpalais Kempinski Hotel, say more ordinary Germans must speak out to protect the country’s image and its business climate.

“We need to show the rest of the world what Dresden is standing for,” Mr. Becker said. “There is so much art, culture and international people that no one is focusing on right now. I’ve lived here for six years, but the people who were born here should be even more upset.”

Still, even moderate Germans would be reluctant to move to eastern Germany or the small western German towns where support for the Alternative for Germany and National Democratic Party can run as high as 70 percent.

“Small villages where the majority supports the Alternative for Germany have a very strong feel to them ,” said Mr. Ehleringer, the Berlin student. “It would definitely be an argument against moving there for a job.”

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