Losses force Germany to privatise railways

THE GERMAN Transport Minister, Gunther Krause, yesterday talked of bringing 'financial reality' back to the German railway system with the privatisation and restructuring of the network. The changes would begin to take effect next year, and would continue into the next century.

The plans were approved by the cabinet yesterday, and are intended to bring the system's debts under control. On current estimates, the debt would reach 500bn German marks ( pounds 208bn) shortly after the year 2000; the government hopes to reduce this figure steadily, saving a possible DM100bn by 2002.

The idea is that the financial slate should be wiped clean. The new Deutsche Bahn AG is due to come into being next year, debt free, if the new legislation is approved by parliament in time - leaving the state to deal with the debts that have been incurred until now. According to Mr Krause, things will be better from now on: 'More rail traffic, together with less burden on the taxpayer, is no longer a utopia.'

Mr Krause said the privatisation plans are the 'first, but decisive step'. He argued that 'by transforming the railways into a quoted company, we want to ensure that they remain flexible and sensitive to the market, and can thus improve their competitiveness'. The restructuring of the railways will include the full merger of the west and east German railways. An ambitious programme of investment is planned, in order to bring the east German railways up to western standards.

Even now, the Bonn government is much less gung-ho about privatisation than Britain; Germany is keen to emphasise that it is not a question of profit-takes- all. Although privatisation is a crucial element of the proposed Sanierung (stabilisation plan), continued state investment is regarded as a crucial element of the package. Some parts of the railways will remain in public hands.

The managing board of German railways, based in Frankfurt, welcomed yesterday's announcement: 'With trained and motivated staff, we will do everything to make sure that the railway reforms are a success.' One note of caution came from the Prime Minister of the region of Hesse, Hans Eichel. He emphasised that the regions, or Lander, must receive sufficient additional funds for their increased responsibilities in the new decentralised system.

But, if the announcement of the rail reforms caused only muted expressions of discontent, Mr Krause is under severe pressure on another front. His recent proposal that use of the German autobahn network should be paid for - with one-off toll fees, and by the sale of windscreen-display discs - has caused howls of outrage. An opinion poll this week suggested that more than three- quarters of all Germans think Mr Krause should resign immediately because of his plans to make autobahn drivers pay.

France, Switzerland and Italy all have a system of motorway payments. But Germany, like Britain, has never had to pay, and motorists here are inclined to treat the prospect as a gross infringement of their liberties.

THE former Soviet president Mikhail Gorbachev says in a new book that Chancellor Helmut Kohl admitted as early as July 1990 that east Germany's economy was a mess, a weekly newspaper said yesterday, Reuter reports.

Chancellor Kohl, who at the time was telling eastern Germans their region would soon be a 'blossoming landscape', discussed the problems with Mr Gorbachev during a meeting on German unification, Die Woche said.