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German bank reclaims 50 trains from Bulgaria over payment row

Germany's state development bank KfW has claimed back 50 Siemens trains leased to Bulgaria's state railways company BDZ over delayed payments and an insurance row, a press report said on Friday.

Published: 7 October 2011 11:41 CEST

German bank reclaims 50 trains from Bulgaria over payment row

Joy on delivery - but no payment. The trains arrive in Bulgaria. Photo: DPA

The heavily-indebted BDZ, which is facing a nationwide strike by its 14,000 workers, stopped paying instalments in 2010 and has now broken a clause in the contract by changing its insurer, the mass circulation Trud daily said.

The 50 diesel and electric trains, which were leased in 2003, form the only modern component of Bulgaria’s creaking fleet of trains, with the bulk of locomotives and rolling stock dating back to the communist era.

BDZ was not immediately available to comment on the report as the company’s management was holding a new round of talks with the trade unions on Friday in a bid to prevent the strike.

A failure to resolve the problem with KfW would “blow to pieces” the whole schedule of the railways since the new trains are vital for commuters around the European Union country’s main cities, Trud reported.

The government of Prime Minister Boyko Borisov aims to split BDZ and privatise the cargo operations, which is the only profitable area.

The firm currently has debts of 771 million leva (€394 million, $529.6 million), according to the finance ministry.

AFP/emh

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Court turns down AfD-led challenge to Germany's spending in pandemic

Germany last year ratified the €750-billion ($790-billion) fund, which offers loans and grants to EU countries hit hardest by the pandemic.

The court in Karlsruhe ruled on two challenges, one submitted by a former founder of the far-right AfD party, and the other by a businessman.

They argued the fund could ultimately lead to Germany, Europe’s biggest economy, having to take on the debts of other EU member states on a permanent basis.

But the Constitutional Court judges ruled the EU measure does not violate Germany’s Basic Law, which forbids the government from sharing other countries’ debts.

READ ALSO: Germany plans return to debt-limit rules in 2023

The judgement noted the government had stressed that the plan was “intended to be a one-time instrument in reaction to an unprecedented crisis”.

It also noted that the German parliament retains “sufficient influence in the decision-making process as to how the funds provided will be used”.

The judges, who ruled six to one against the challenges, did however express some reservations.

They questioned whether paying out such a large amount over the planned period – until 2026 – could really be considered “an exceptional measure” to fight the pandemic.

At least 37 percent of the funds are aimed at achieving climate targets, the judges said, noting it was hard to see a link between combating global warming and the pandemic.

READ ALSO: Germany to fast-track disputed €200 billion energy fund

They also warned against any permanent mechanism that could lead to EU members taking on joint liability over the long term.

Berenberg Bank economist Holger Schmieding said the ruling had “raised serious doubts whether the joint issuance to finance the fund is in line with” EU treaties.

“The German court — once again — emphasised German limits for EU fiscal integration,” he said.

The court had already thrown out a legal challenge, in April 2021, that had initially stopped Berlin from ratifying the financial package.

Along with French President Emmanuel Macron, then chancellor Angela Merkel sketched out the fund in 2020, which eventually was agreed by the EU’s 27 members in December.

The first funds were disbursed in summer 2021, with the most given to Italy and Spain, both hit hard by the pandemic.

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