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Germany

Germany's Partial Railway Privatization Derailed for Now

Germany's trains tend to arrive relatively punctually, but plans to partially privatize the rail service have been postponed for the second time. The government blames global economic instability for the delay.

The logo of the German national railway company Deutsche Bahn is accompanied by a red signal light

The trains may still be running, but privatization plans have ground to a halt

The partial sale of the state-owned German rail system will eventually go ahead, but for now government officials have delayed the process for an undisclosed period of time. Some senior officials have said the stock flotation could be put off until after general elections in September.

The sale of just under 25 percent of Deutsche Bahn Mobility Logistics, a unit operating passenger and freight trains, had initially been set for last week, but it was called off because of the global financial crisis.

Complicated timetable

The Chief Executive of Deutsche Bahn smiles (or perhaps grimaces?) during wage talks with trade unions earlier this year. Der Vorstandsvorsitzende der Deutschen Bahn AG Hartmut Mehdorn laechelt am Montag, 31. Maerz 2008, waehrend der Bilanz-Pressekonferenz in Berlin. Laut Mehdorn stiegen der Umsatz, der Gewinn und die Verkehrsleistung der Deutschen Bahn im dritten Jahr in Folge. (AP Photo/Franka Bruns) ---Hartmut Mehdorn, Chairman of the German Railway Company Deutsche Bahn AG, smiles during the annual balance press conference in Berlin, Monday, March 31, 2008. (AP Photo/Franka Bruns)

Railway boss Mehdorn could profit most from a deal

Thomas de Maiziere, Chancellor Anglea Merkel's chief of staff, insisted that a sale before the next German general election on Sept. 27, 2009 remained possible if stock markets recovered. He said it was postponed, not abandoned.

But the finance ministry isn't expecting any privatization receipts next year, according to ministry spokesman Torsten Albig, who implicitly suggested the flotation is on ice for the time being.

"The government definitely does not intend to sell assets below their worth," Merkel's spokesman Ulrich Wilhelm said, adding that the government would wait until "a reasonable return can be expected."

Despite struggling with industrial actions and cancellations due to train maintenance this year, Deutsche Bahn's profits are on the rise. The firm has been helped by rising fuel prices, as ever more German commuters turn to public transportation for their daily journeys.

Contentious bonuses

A member of the German train drivers' union holds up a strike placard

Deutsche Bahn's profits are on the up despite strikes earlier this year

Public criticism of large bonuses promised to Bahn head Hartmut Mehdorn and other executives has turned the proposed stock launch into even more of a contentious issue than it was just months ago.

The German government now seems to be distancing itself from this bonus payment plan.

"If there is a flotation, there won't be any bonus provision," Finance Minister Peer Steinbrueck said.

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