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German politicians will investigate whether Nokia took unfair advantage of state and EU subsidies after it announced the closure of its handset assembly plant in Bochum in North Rhine-Westphalia. Nokia employed more than 2,300 people there in exchange for EU subsidies.

Nokia said production of mobile devices in Germany was no longer feasible due to market changes and requirements for cost-effectiveness and that most of the work will shift to a new plant in Romania.

German politicians now believe Nokia already knew it was going to close the doors on its plant in Bochum and relocate when the required period of retention ran out late in 2006. The decision to build a new plant in Romania was made only several months later.

German Economy Minister Hartmut Schauerte wants to know whether that decision was somehow supported financially by European structural funds. For its Bochum plant Nokia received €60m in subsidies from the EU and another €28m from the federal government.

European Commission president Jose Manuel Barroso denied any arrangements, and defended Nokia's decision. "If you can move production from Finland to Germany, you can also relocate from Germany to Romania."

Employees at the Bochum factory say they feel betrayed by Nokia's decision. Leaders of trade union IG Metall believed the factory still made profits and that Germany's high labour costs made up only five per cent of production expenses.

Reacting yesterday, State Social Democratic Party chairman Kurt Beck questioned the validity of Nokia's famous "Connecting People" slogan. "The company is breaking societies," Beck said in a letter. ®

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