Germany to break postwar era taboo
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Reuters
Oluşturulma Tarihi: Şubat 18, 2009 00:00
BERLIN/FRANKFURT - The meltdown forces Germany to break a postwar taboo on nationalization with a new law which will give Berlin the right to seize private property. For Merkel, this step is extremely difficult to swallow, says a leading historian
Chancellor Angela Merkel's government appeared ready to end weeks of intense debate and back a new law this week, which would give Berlin the right to seize private property for the first time in the postwar era.
The law, an extension of bank rescue legislation agreed last year, is due to go before Merkel's cabinet today and would set the stage for a nationalization of Hypo Real Estate, a high-profile casualty of the financial crisis.
Her government decided last month it needed to take control of Hypo, a Munich-based lender, after giving the bank 87 billion euros ($110 billion) in state guarantees over the past year and seeing no improvement in its financial condition. But negotiations on the legal details of taking it over have dragged on for weeks amid disagreements over how to handle U.S. private equity firm JC Flowers, whose Hypo stake of about 25 percent must be bought to give Berlin the full control it wants. The government has so far failed to secure a compromise with Flowers and now looks ready to push through a law allowing it to seize possession of Hypo shares.
Other countries, including Britain and Ireland, have already taken control of stricken banks, justifying an expropriation of shareholders by pointing to the extraordinary nature of the crisis and the need to protect taxpayers.
"The idea of expropriation runs counter to the entire philosophy of the social market economy that postwar Germany was based on," said Hans-Ulrich Wehler, a leading German historian. "Particularly for Merkel's Christian Democrat a party founded on the ideas of Ludwig Erhard, this step is extremely difficult to swallow."
As economy minister under Germany's first postwar Chancellor Konrad Adenauer, Erhard is credited with introducing the reforms and "social market economy" philosophy that set a beaten and battered West Germany on the road to recovery. After the war, the desire to prevent Nazi-style interference in the economy was so high, that the authors of Germany's new Constitution, included a special section on the issue of expropriation.
Public good
Article 14 of the "Basic Law" states that government seizure of private property is only permissible when it is done for the public good. It specifies that a new law is required for such moves and gives citizens the right to challenge them in court.
Conscious of these constitutional limits, Merkel's coalition has debated the legislation for weeks, reiterating on an almost daily basis that any expropriation step would be a last resort. Economy Minister Karl-Theodor zu Guttenberg told daily Bild that Erhard would "turn in his grave" were Berlin to go down this road. In the end, Merkel's government is likely to tread carefully with the new law. "If the (expropriation) option were indeed used in a particular case and as a last resort, then the company in question would be privatized again as soon as it was stabilized," a draft of the law reads.
The law, an extension of bank rescue legislation agreed last year, is due to go before Merkel's cabinet today and would set the stage for a nationalization of Hypo Real Estate, a high-profile casualty of the financial crisis.
Her government decided last month it needed to take control of Hypo, a Munich-based lender, after giving the bank 87 billion euros ($110 billion) in state guarantees over the past year and seeing no improvement in its financial condition. But negotiations on the legal details of taking it over have dragged on for weeks amid disagreements over how to handle U.S. private equity firm JC Flowers, whose Hypo stake of about 25 percent must be bought to give Berlin the full control it wants. The government has so far failed to secure a compromise with Flowers and now looks ready to push through a law allowing it to seize possession of Hypo shares.
Other countries, including Britain and Ireland, have already taken control of stricken banks, justifying an expropriation of shareholders by pointing to the extraordinary nature of the crisis and the need to protect taxpayers.
"The idea of expropriation runs counter to the entire philosophy of the social market economy that postwar Germany was based on," said Hans-Ulrich Wehler, a leading German historian. "Particularly for Merkel's Christian Democrat a party founded on the ideas of Ludwig Erhard, this step is extremely difficult to swallow."
As economy minister under Germany's first postwar Chancellor Konrad Adenauer, Erhard is credited with introducing the reforms and "social market economy" philosophy that set a beaten and battered West Germany on the road to recovery. After the war, the desire to prevent Nazi-style interference in the economy was so high, that the authors of Germany's new Constitution, included a special section on the issue of expropriation.
Public good
Article 14 of the "Basic Law" states that government seizure of private property is only permissible when it is done for the public good. It specifies that a new law is required for such moves and gives citizens the right to challenge them in court.
Conscious of these constitutional limits, Merkel's coalition has debated the legislation for weeks, reiterating on an almost daily basis that any expropriation step would be a last resort. Economy Minister Karl-Theodor zu Guttenberg told daily Bild that Erhard would "turn in his grave" were Berlin to go down this road. In the end, Merkel's government is likely to tread carefully with the new law. "If the (expropriation) option were indeed used in a particular case and as a last resort, then the company in question would be privatized again as soon as it was stabilized," a draft of the law reads.