Berlin to sue Schroder as it runs out of money

 

GERMANY: The German Chancellor, Mr Gerhard Schröder, is no stranger to alimony. The German leader shells out thousands of euros in alimony to his three former wives each month. But now he could be forced to hand over €40 billion in alimony, not to a former spouse but to an estranged, spoiled child: the city of Berlin.

The German capital is on the verge of bankruptcy and the city is going to court to prove that Mr Schröder's government is to blame. The financial crisis goes back to the fall of the Berlin Wall, 13 years ago this weekend. For nearly three decades the government of West Berlin grew fat on subsidies from Bonn that made up half of its annual budget.

The West Berlin government spread the wealth around, transforming the walled city into a capitalist showpiece with subsidised opera, orchestras and an exclusive shopping thoroughfare with subsidised rents.

The federal government cut off the subsidies a decade ago when Berlin became a federal state, but no one in the city's government seemed to notice until the city government collapsed last year, throwing light on the city's murky finances. Berliners were horrified to discover that the city was €46 billion in debt.

The new government imposed austerity measures as soon as it took office last year: cultural budgets were slashed, swimming pools emptied and kindergartens were closed.

Berlin was supposed to be the gleaming capital of a confident, united Germany. Instead it has become a city of overflowing bins, untended parks and chronic unemployment.

It couldn't even pay for the renovation of the Brandenburg Gate. Instead a telephone company provided the cash in exchange for the right to use Germany's most famous monument as an advertising billboard for two years.

Last week, city officials met Mr Hans Eichel, the federal finance minister, to make their own trick-or-treat demand: pay up a €40 billion treat or risk a trick. The cash-strapped Mr Eichel sent the officials away empty-handed and this week came the trick.

Mr Thilo Sarrazin, the city's finance senator, delivered an announcement that went down with a bang like a firework in a letterbox. He announced that Berlin was broke, opening the way to a case at the constitutional court to force the federal government to cough up.

"After unification, billions of euros in subsidies were simply slashed. That should never have been allowed to happen," said Mr Sarrazin.

He said that Berlin was in such a mess that even Argentina had a healthier economy despite months of economic chaos there.

"A mark, a yen, a buck or a pound, is all that makes the world go around," sang the MC of Berlin's Kit Kat Klub in the film Cabaret. It's a lesson the German capital has learned the hard way. Now Berlin is determined to go to Germany's highest court to teach the same lesson to what it sees as its rightful Sugar Daddy, Chancellor Schröder.