No Money for Berlin

Berlin has long been hoping that Chancellor Angela Merkel's coalition government might see its way to helping the city out with its financial problems.

It was up to the court in Karlsruhe to decide if Berlin met the constitutional rules that would qualify it for aid.

Few will be surprised that the court ruled that Merkel's government would not be expected to top up the capital's coffers.

"It is highly probable that Berlin can sort out its budget difficulties itself," said Winfried Hassemer, vice-president of the Court.

Government duty

Legally, the government is obliged to bail out a cash-strapped state so long as it has made the requisite budget savings and undertaken sufficient austerity measures. States that have been on the receiving end of government aid include Bremen and the Saarland in 1992.

But in the 1990s, it was that the capital which bore the brunt of reunification's cost.

Public spending was scaled back as unemployment soared, with some 100,000 industrial jobs lost over the last 16 years. Cultural spending has seen massive cuts and civil servant salaries have been reduced. But major business investments have have been few.

According to the city authorities, Berlin is not to blame for its spiraling debt. They argue that the government slashed its post-reunification aid too soon -- before the city had time to stabilize.

Resentment in the south

But the government as well as a number of other states argued that Berlin did not meet the criteria for aid, and that with seven of Germany's 16 states are currently in debt, it is not the only one in financial dire straits.

Other states, including Bavaria and Baden-Württemberg, point out that Berlin has consistently overspent and failed to privatize state holdings.

"Berlin could have done far more to tighten its belt," said Baden-Württemberg's Finance Minister Gerhard Stratthaus (CDU) in an interview with weekly magazine Der Spiegel.

Bavarian State premier Edmund Stoiber, meanwhile, has insisted that "solidarity has its limits."

Major cuts ahead

The ruling will raise pressure on the capital to sell assets and cut spending in a city which has three opera companies, two zoos and what other regional states claim is a cultural scene way beyond its financial means. Judges said the city could sell some of its housing stock, valued at five billion euros.

Wowereit said he would now be forced to bring in measures to cut costs.