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Germany

Court freezes loans for Germany's biggest state

A court in the German state of North Rhine-Westphalia has blocked the regional government from accruing further debt, bringing to a head a dispute between the country's major political parties.

Money in a wrench

Germany's biggest state can't get at new cash

The government in Germany's most populous state, North Rhine-Westphalia (NRW) has had its budget frozen after a court ruled on Tuesday that it could potentially rack up unconstitutional record debts. The unprecedented ruling brought to a head a dispute between the country's major parties.

The court decision came after action was requested by Chancellor Angela Merkel's Christian Democrats (CDU) and its Free Democrat (FDP) coalition partner.

The move was seen as a serious blow to the minority coalition of Social Democrats (SPD) and Greens in NRW, where a CDU-FDP coalition was eventually ousted in drawn-out elections last year.

North Rhine-Westphalia's constitutional court imposed an injunction against a supplementary budget for 2010, after the state parliament approved an additional 1.8 billion euros ($2.4 billion) in debt to be taken on at the end of the year.

State Premier Hannelore Kraft being sworn in

State Premier Hannelore Kraft was only elected last year

The majority of these funds were earmarked for the ailing state-owned WestLB bank.

The supplementary budget would have pushed North Rhine-Westphalia's debt to a record high of roughly 8.4 billion euros, a move that the CDU and FDP considered unconstitutional.

The injunction prevents any borrowing under the supplementary budget until the court has ruled on the case brought by the opposition parties.

Blow for fragile government

The court order could have big consequences for the western German state, which includes major cities such as Cologne, Bonn and Düsseldorf. There are even suggestions it could lead to new elections.

The head of the regional CDU, federal Environment Minister Norbert Röttgen, said State Premier Hannelore Kraft of the SPD must now strike a different course - or face the consequences.

"The government must act in line with the constitution or say it has failed," Röttgen demanded. The CDU was ready for new elections, he added.

The court said the decree would not affect the capabilities of the regional government. If the court had not intervened, billions of euros worth of loans could have been taken out.

"Of course the regional government will comply with the decision of the constitutional court, and not take out any further loans on the basis of the budget proposals until a final decision has been made," state Finance Minister Norbert Walter-Borjans said after the decree had been issued.

"The judges in Münster have only agreed with the Christian Democrats and Free Democrats in so far as they have asked us not to close our books for the year 2010," he added.

Karl-Josef Laumann of the Christian Democrats said he was "very satisfied" with the outcome. He said it was a "good judgement for North Rhine-Westphalia."

New elections would add to the political drama already due to be played out in 2011, when voters go to the polls in seven of Germany's 16 federal states.

Author: Joanna Impey (AFP, dpa)
Editor: Rob Turner

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