Germany Approves Partial Rail Privatization

Will sell a 24.9% stake in Deutsche Bahn's passenger and freight operations

After years of wrangling, the lower house of the German parliament on May 30 gave the green light to a partial privatization of the country's railways.

Germany aims to sell a 24.9% stake in Deutsche Bahn's passenger and freight operations, while infrastructure such as tracks and railway stations would remain state-owned.

The privatization of Deutsche Bahn has been on the cards since 1994, when the rail operators of the former West and East Germany merged. But the plans were delayed by the company's disastrous financial situation following the unification of the country. The government was sharply divided between Christian Democrats backing the privatization and Social Democrats raising concerns about potential job cuts at Deutsche Bahn. They struck a compromise to avoid handing a foreign investor a blocking minority, which German law has set as a 25% stake in a company.

Deutsche Bahn and trade unions have also agreed on a plan that would prevent any layoffs at the company until 2023.

Deutsche Bahn chief Hartmut Mehdorn called it "a good day for passengers, taxpayers and staff. Today's decision secures the future of the company and its 237,000 employees," he said. "Now we must make the partial privatization a success together in the coming months and strengthen Germany's position as a place to do business."

Copyright Agence France-Presse, 2008

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