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Tuesday, 17 July 2012 - Bavaria seeks to trump Merkel with anti-bailout card |
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Get me to the court on time Related Topics World » Germany » By Christian Kraemer MUNICH, Germany | Tue Jul 17, 2012 12:28pm EDT MUNICH, Germany (Reuters) - Solidarity seems in short supply in Germany these days. Just as Chancellor Angela Merkel insists Berlin cannot keep bailing out Europe's weaker economies, wealthy Bavaria now wants to stop bankrolling poorer German states under a federal system of financial transfers it says is unfair and wasteful. Bavaria's state government in Munich, run by center-right parties that are part of Merkel's federal coalition in Berlin, said on Tuesday it would ask Germany's highest court to back its call for an overhaul of the system. The decision to file a lawsuit in the constitutional court - which already has a ruling pending on whether Germany can legally ratify Europe's permanent rescue fund for struggling euro zone countries - drew swift criticism from the opposition Social Democrats (SDP). They accused the Munich administration of lacking a spirit of solidarity and of bidding for votes ahead of a 2013 regional election in Bavaria. "This system of transfers has nothing to do any more with a just sharing of the burden," said Martin Zeil, Bavaria's economy minister and a member of the pro-business, low-tax Free Democrats (FDP) who at the national level have been very critical of Greece's failure to clean up its public finances. Only four of Germany's 16 regions or 'Laender' are net contributors to the federal transfer fund - the southern states of Bavaria, Baden-Wuerttemberg and Hesse and the northern city state of Hamburg. Mirroring federal Germany's role as paymaster on the European stage, Bavaria contributed 3.66 billion euros last year, more than half of the total fund. For the two-year financial period 2013-14 Bavaria will have to set aside 8.2 billion euros, almost 10 percent of all spending, to help out poorer regions of Germany, officials said. The system of transfers has long fostered a sense of resentment in western Germany, which has forked out an estimated 2 trillion euros over the past two decades to rebuild the former East Germany after the collapse of communism. Tellingly, the capital Berlin - located in the old east, though the western half of the city used to be part of capitalist West Germany - is the biggest current beneficiary of the federal transfer system. Eastern Germany's painful, patchy recovery - which has still to take hold in parts of the region - has also contributed to Germans' reluctance to keep pouring their hard-earned cash into heavily indebted euro zone countries like Greece or Portugal. TOUGH STANCE Merkel's tough stance in the euro zone crisis, including her opposition to transnational sovereign 'euro bonds' - which would amount to transfers from the wealthy north of Europe to the poorer south - enjoys strong support in Germany and could help her win a third term of office in next year's federal election. Echoing Merkel's comments on the euro zone crisis, Bavaria's Finance Minister Markus Soeder said his taxpayers were running out of patience too. "Enough is enough. This issue has to be tackled now... The system is fundamentally wrong," said Soeder, who hails from the Christian Social Union, the regional sister party of Merkel's Christian Democrats. Opposition politicians were unimpressed. "The attacks against the transfer system are a transparent maneuver in the Bavarian pre-election battle," said Frank-Walter Steinmeier, SDP parliamentary leader in the Bundestag, the lower house of Germany's federal parliament in Berlin. Baden-Wuerttemberg, another donor state which is run by the Greens and the SPD, said it would not back Bavaria's lawsuit and instead urged reform via negotiations between all the states. "I believe a negotiated solution is the right way," said state premier Winfried Kretschmann, a Green, adding that further talks would in any case be required if the Constitutional Court eventually ruled in Bavaria's favor. Bavarian politicians said a court verdict was unlikely until at least 2014, after both the state and federal elections. Under the transfer system, Bavaria was itself a recipient state until 1988, receiving around 3.5 billion euros from 1950 until 1988. But Soeder said Bavaria had repaid those monies many times over since then by contributing some 38 billion euros to federal coffers in transfer payments. (Writing by Gareth Jones; Editing by John Stonestreet) World Germany Tweet this Link this Share this Digg this Email Reprints   We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.   Edition: U.S. Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom Back to top Reuters.com Business Markets World Politics Technology Opinion Money Pictures Videos Site Index Legal Bankruptcy Law California Legal New York Legal Securities Law Support & Contact Support Corrections Connect with Reuters Twitter   Facebook   LinkedIn   RSS   Podcast   Newsletters   Mobile About Privacy Policy Terms of Use AdChoices Copyright Our Flagship financial information platform incorporating Reuters Insider An ultra-low latency infrastructure for electronic trading and data distribution A connected approach to governance, risk and compliance Our next generation legal research platform Our global tax workstation Thomsonreuters.com About Thomson Reuters Investor Relations Careers Contact Us   Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. 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