More trouble hits German nuclear phase-out plan

Future uncertain after collapse of government-power industry talks, Lafontaine resignation

Germany's plan to phase out nuclear power suffered further setbacks this week, including being dragged into the red/green government's most serious political crisis since it took power last autumn.

Green environment minister Jürgen Trittin insisted on Wednesday that the process was still on track, despite the collapse of the latest industry-government talks the previous day. Particularly since yesterday's shock resignation of finance minister Oskar Lafontaine, many observers are suggesting that the week's events have done more damage than Mr Trittin admits.

The government and power firms met on Tuesday for a second round of so-called "consensus talks" on the practicalities of ending the use of nuclear power. About 35,000 nuclear sector workers travelled to Bonn to protest. Meanwhile, inside the talks, the power companies refused to discuss the agenda in protest at separate government plans to levy new taxes on them. It is this dispute which later became entangled in Mr Lafontaine's resignation.

As part of a broad-ranging tax reform package including cuts in personal income taxes, the government is proposing to end the tax-free status of financial reserves held by power firms as well as the insurance and coal sectors. Until this week it maintained that the new tax would cost the power industry some DM10bn (euros 5.1bn), while the electricity firms angrily maintained that the real cost would be DM25bn. On Monday, the finance ministry backtracked, suggesting that the taxes might cost the power industry DM21bn.

One day after the "consensus" talks came the cabinet meeting that appears to have sealed Mr Lafontaine's fate. According to unconfirmed but widespread reports, chancellor Gerhard Schröder clashed with the finance minister, criticising him specifically over the tax row with electricity firms. Mr Schröder is reported to have attacked both Mr Lafontaine and his Green environment minister Jürgen Trittin for launching policies that would hurt industry.

The political atmosphere surrounding Mr Trittin's nuclear phase-out plan was further soured during the week when Bavaria's economics minister Otto Wiesheu compared the project with Hitler's "final solution," sparking a tidal wave of criticism. Although Mr Wiesheu was forced to apologise for his remarks yesterday, the conservative Bavarian government continued its defence of nuclear power by saying that it would import French nuclear electricity after a German phase-out.

Follow Up:
German government, tel: +49 228 2080.

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