Germany to Sell Last 'Family Silver'
June 24, 2004
German Finance Minister Hans Eichel has to fill a €22 billion ($26.7 billion) budget hole next year and he's eyeing Deutsche Telekom and Deutsche Post to help him out. By selling the country's share-holdings in both companies, Eichel hopes to bring around €15.45 billion into government coffers.
If all goes according to plan, the privatization of state-owned companies will be concluded by 2006 -- 55 years after the country began selling off its "family silver."
Some, such as Walter Schöler, a Social Democratic parliamentarian and budget expert, have come out in support of the move, saying that Eichel had no other way to balance the budget. Schöler added that the opposition Christian Democrats (CDU) had opposed a more radical reduction of subsidies, which would have helped the government to save money.
CDU leader Angela Merkel on the other hand called the proposed privatizations "scandalous." She said the shares were meant to cover state pensions that have to be paid to employees of the telecommunication giants.
The opposite of sustainability?
By selling the government's shares, these pensions would have to be paid with money taken from the regular budget. "That's the exact opposite of sustainability," Merkel said. "The federal government won't be able to live up to its obligations to these companies 10 years down the line."
Even members of the ruling coalition of Social Democrats and Greens expressed their concern over Eichel's plan. "The sale solves problems for a year and not in the long term," said Christine Scheel, a Greens member who chairs the parliament's finance committee. But she added that she also didn't see any other way to balance the budget.
Officials from the Association of German Taxpayers (BdSt), a watchdog group, meanwhile, expressed doubts that the budget hole would not get bigger than expected. "I'm sure that €22 billion won't be enough," Karl Heinz Dräke, BdSt's president, told German public broadcaster ZDF on Wednesday.
The current budget already includes new government debt of €29 billion, a number that could grow by as much as €10 billion in the fall, once the new tax revenue estimates come out.