Bankrupt Berlin goes to court for bailout

25th April 2006, Comments 0 comments

April 25, 2006, BERLIN - The German capital, which is in effect bankrupt, with a staggering EUR 60 billion of debt, plans to open a lawsuit Wednesday aimed at winning a state bailout.

April 25, 2006

BERLIN - The German capital, which is in effect bankrupt, with a staggering EUR 60 billion of debt, plans to open a lawsuit Wednesday aimed at winning a state bailout.

Mayor Klaus Wowereit wants the federal government and more wealthy German states such as Bavaria and Hesse to pay Berlin's bills under the country's complex fiscal redistribution laws aimed at creating similar social conditions nationwide.

Berlin, which saw subsidies cut after the 1990 German unification, has failed to get spending under control and debt swiftly grew from just EUR 8 billion after unity to its current level of 60 billion euros.

The city of 3.4 million people still affords the luxury of two zoos, numerous state opera houses and a large number of civil servants.

Mayor Wowereit, who heads a leftist government of his Social Democrats and the former East German communists, insists he has now cut spending "until the pips squeak."

But the leaders of other states whose finances have been kept in order are not convinced.

"Berlin's problem is home-made and has been created by excessive spending. It must therefore be resolved by Berlin itself," said Saxony state's premier, Georg Milbradt.

Germany's Federal Constitutional Court in Karlsruhe is expected to rule swiftly on Berlin's lawsuit, possibly in May or June. Legal experts predict the court will demand a complete revamping of the country's financial redistribution system.

DPA

Subject: German news

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