With the global financial crisis showing no sign of abating, German crisis managers find themselves both adjusting future budgetary expectations and reconsidering earlier economic decisions. Among the objects of second-guessing are plans to privatize Deutsche Bahn, Germany's national railway company. The initial public offering process had been scheduled to begin on Monday and the company, expecting to take in upwards of €4 billion, had already been courting international investors for months.
Thursday, government officials announced that the privatization would be delayed until further notice. "We are not going to put the assets on the capital markets at the wrong time," Finance Minister Peer Steinbrück said.
The postponement is a bitter pill to swallow for Germany's ruling "Grand Coalition" between Christian Democrats and Social Democrats. The privatization plans -- which called for the company's passenger, freight and logistic divisions to be spun off into a holding company, 24.9 percent of which was to be privatized -- were the product of months of arduous negotiations between the coalition partners. It was also among the government's few headlining achievements during its three years in power.
Politicians insist that they reckon only with a delay, not a cancellation of Deutsche Bahn's privatization. As Angela Merkel told reporters Thursday, "I assume that there will eventually be a business environment in which the privatization can take place." But, with politicians openly discussing greater intervention in the economy and murmuring of further bank takeovers, Germany's newspaper commentators are skeptical that the Deutsche Bahn plan will ever get back on track.
The center-left Süddeutsche Zeitung writes:
"The worst case scenario for Deutsche Bahn is that nothing changes. Rail remains a state-owned company and it remains a giant with monoplistic control over trains and track networks. How likely the worst case is, though, is about as easy to predict as the health of the stock market at the end of November. The fact is that the privitization of German rail has lost all momentum...."
"Meanwhile, difficulties are mounting. German rail may be able to credibly promise that rail doesn't need to be overly concerned about the economic problems. After all, travellers will continue to travel and goods will still have to be transported through the country. But one business segment, carefully built up by the head of Deutsche Bahn Hartmut Mehdorn, is in trouble: global freight. If the global economy slows down, there won't be as much to transport. When the numbers will be as auspicious for a German rail IPO as they were this year is a question nobody can answer."
The business daily Handelsblatt writes:
The fact is, the already botched, partial privatization of the Deutsche Bahn received on Thursday ... it's death blow. And that's a good thing."
"The calculation behind the political pressure for partial privatization is clear: the IPO is a prestige project for Germany's governing coalition. But that coalition reaches the end of its road in the elections next fall. The coalition can see that there will likely be a larger opposition from the left, which is hardly supports rail privatization. The IPO, then, would have to take place before next autumn's elections."
"That, though, isn't likely and, seen politically, the chances that the light will ever again be green are sinking. At the moment, one bank after another across the globe is being partially nationalized. A partial privatization of German rail hardly fits."
"Finally, there are the economic forecasts, that predict anything but rosy economic times in the coming months. It is hard to imagine stock markets making a quick recovery. The value of the company on the stock market will continue to sink. Every day that the stock market drops is another argument for not selling the German rail system cheaply -- and with that, the light will remain red."
The business daily Financial Times Deutschland writes:
"Among the people, the entry to the market has few friends, and skepticism of the market will only increase. It won't be long until the representatives of the governing parties succumb to the temptation to question the privatization plans. Then we'll be facing a bizarre alliance of panicking markets and moralizing admonishers. That would be a big mistake."
"If the government initiates another fundamental debate about the privatization of Deutsche Bahn, many of the interested investors would be permanently turned off. It would be too clear a signal that the company is a plaything of political interests."
"If Berlin doesn't manage [to realize the privatization plans] years of preparation will have gone to waste. And that won't have helped anyone -- neither the head of Deutsch Bahn, nor the passengers of the railway."
The left-of-center Beliner Zeitung writes:
"It's understandable if the latest rejection causes stomach problems for the head of Deutsche Bahn. Because nobody knows whether the markets will have calmed down enough in the next few weeks to make another go at privatization. There's much to suggest that that won't be the case."
"A large majority of the population has always rejected the idea of going public. Many of Deutsche Bahn's employees have also always preferred to remain under control of the state. Their desire is understandable. They fear that unserious investors will have a say at the company. And in the past few days, these fears have likely deepened and spread even further. The recent turbulence has caused enormous damage to the public's trust of the free market. Certainly it calls into question the point of railway privatization. It is indeed a paradox that, at a time when banks around the world are getting nationalized, Deutsche Bahn wants to enter the stock market."
-- Cameron Abadi; 3:15 p.m. CET