Source AP ©

German governing parties debate over partial privatization of national railway operator

The issue of partial privatization of Germany's national railway operator met some contradictions Monday after one of the country's governing parties voted to limit the influence of new investors in the company.

Amid fears that investors could focus too much on profits and prompt cutbacks in services, members of the center-left Social Democrats called at a weekend conference for 25.1 percent of Deutsche Bahn AG to be sold via nonvoting preferred shares - preventing big investors from gaining influence.

Ronald Pofalla, the general secretary of Chancellor Angela Merkel's conservative Christian Democrats, said that would be "the least favorable offer to shareholders for them to invest in the railway."

"If the Social Democrats do not take back this decision or deviate from it, then they will be responsible if the reform of (Deutsche) Bahn fails," added Pofalla, whose party governs alongside the Social Democrats in an uneasy coalition.

The Social Democrats' rank and file secured an agreement from their leaders over the weekend that any compromise they reach with Merkel's party would be put to another party conference - which could further complicate matters.

In July, the Cabinet approved a draft bill that initially would see a first stake of up to 25 percent sold, but leaves open how exactly the shares would be sold. Under that plan, the government aims eventually to sell a maximum of 49 percent of Deutsche Bahn.

Transport Minister Wolfgang Tiefensee, a Social Democrat, hopes to get the privatization under way by the beginning of 2009. Merkel's spokesman, Ulrich Wilhelm, said he now expects a "difficult discussion" over the party's proposal.

Deutsche Bahn chief executive Hartmut Mehdorn, accompanying Merkel on a trip to India, said Monday that "the government, as the owner, must say how we now proceed."

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