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Germany's Plan to Partially Privatize the Autobahn

Foreign drivers could foot the bill.

jo.sau/Flickr

It’s not just the U.S. raising the idea of private highway investment. Germany’s Autobahn network may be famous for its extent, quality, and lack of universal speed limits, but it’s now suffering from underinvestment and poor management. That, at least, is the contention of Germany’s government, which put forward a plan this weekend that it hopes will pump fresh cash into the country’s highway system. The idea is to partially privatize the network, handing over 49.9 percent of its maintenance and revenue to a newly created private company, whose investors are expected to mainly be major German insurance firms.

This could free up new funds to improve the network, but the plan’s long-term consequences are heavily disputed. Following through would require not only a major cultural shift, but also a change to Germany’s constitution.

Battle lines are already being drawn. For advocates, the plan is a brilliant opportunity to streamline road funding and get highway projects delivered more quickly. For skeptics, the proposal risks prioritizing shareholder profit over network quality, leading to possible inefficiency and neglect. Significantly, the debate is one in which international onlookers are playing more than a walk-on role. That’s because, when it comes to providing profits for Autobahn investors, it is foreign drivers who may end up footing a substantial part of the bill.

The reason for this is Germany’s current toll system. At present, cars do not pay to use the Autobahn, which is funded by taxes, but large vehicles heavier than 7.5 metric tons must pay a toll. At present, Germany’s government says a share of this revenue would be enough to entice private investors. There’s still an elephant in the room — a golden elephant. For years, Germany has been planning to charge non-domestic drivers to use the Autobahn. The reasons for the proposal are fair enough. Germany’s location means that lots of international traffic crisscrosses the country, profiting from a network that only Germans pay for.

The plan to charge non-Germans nonetheless inspired a court challenge from the European Commission, which said it contradicted the E.U.’s ban on discriminating according to nationality. The Commission had a fair point here, as while other E.U. states including France charge tolls, they do so equally to all cars. This year, Germany and the E.U. reached a compromise that will finally see the new toll introduced, likely in 2017. To fit in with E.U. law, all drivers will have to pay it. The difference is that German drivers will have the amount deducted from their current road taxes to compensate.

This extra money should make part ownership of the roads a more tempting proposition for private investors. But what would the move do for the German public? The German Institute for Economic Research makes a pretty abrupt case for privatized highways. They’ve said that sufficient public funds aren’t available to keep the network up to the standards that German drivers require. By and large, Germany’s media disagrees. Several commentators have pointed out that public-private partnerships often end up being more expensive than state-funded projects.

There’s also a fear that giving a profit-making body responsibility for highways will mean investors try to wheedle their way out of maintaining less used, lower profile parts of the network. The German state would still have the holding majority, of course, but it might be pressured into picking up the tab for improvements that private investors deem unprofitable. More broadly, the prospect of what has always been considered a public resource being squeezed for revenue sits ill with many people.

To get a snapshot of German Autobahn’s possible future, it’s worth looking at the country’s western neighbor, France. On the other side of the Rhine, highways have always charged tolls at point of use, while France’s overseeing body was privatized in 2006. Since then, investment in highways has shot up — for a highly specific reason. The highways group is only allowed to raise tolls above inflation when it makes investments in the network. It has thus used improvements as a means to raise tolls by 20 percent. Critics say that the level of improvements falls far short of this significant toll increase. In 2014, a report from the French competition ombudsman noted that the costs and risks associated with running the highway in no way sufficiently justified the toll rise.

This shows the potential double-edged sword of privatization: On the one hand, the system can offer profit-based incentives for improvement. On the other, it can create a motor where profit, rather than accessibility, becomes the prime motive, squeezing drivers and converting highways from essential arteries to luxury services.

Before Germany, which is not planning to introduce point-of-use tolls, gets remotely close to such a situation, there’s still the small matter of the German Constitution. Currently, German law states that Autobahn maintenance is the duty of the country’s 16 federal states. A private company taking a 49.9 percent stake in the network would need to be a single national body, or become a bureaucratic nightmare, so the law would need to be changed to make that possible.

If that sounds like a major change, bear in mind that Germany’s constitution is a flexible, oft-amended document. Its German name — Grundgesetz or “basic law” — has a different ring to it, suggesting a living document rather than immutable marble tablets, and the document was changed 50 times between 1949 and 2003. It would still need a push through parliament, where Chancellor Angela Merkel’s Christian Democratic Union is just a few percentage points short of a majority and, in time-honored German style, is ruling in grand coalition which their chief opponents, the Social Democrats.

In other words, Germany’s highway to privatization still has quite a few barriers strung across it. They’re barriers that the plan’s proposers may struggle to break through, partly because the network is in itself a symbol of the nation that created it, even during these days when cars have lost much of their prestige. If this network ends up partly in private hands, a major border for Germany will have been crossed.

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