A FIERCE row over the privatisation of the Autobahnen, one of Germany’s finest assets, yesterday overshadowed the formation of Angela Merkel’s new Government in Berlin.

Frau Merkel, who yesterday presented her Cabinet of Christian Democrats and Social Democrats, has been billed as the German equivalent of Margaret Thatcher and so political observers have been watching carefully how she deals with privatisation of the country’s national treasures.

First under the hammer could be the 12,000km (7,500 miles) of motorway, begun by Hitler as part of his preparations for war. “We have to test this proposition carefully,” Peer Steinbrück, the designated Finance Minister, said. Two investment houses, Goldman Sachs and Barclays, were reported yesterday to be interested in a possible sale, which could bring €127 billion (£87 billion) into the state coffers.

German motorists are furious, fearing that privatisation would mean motorway tolls on car drivers. “This is just a short-sighted way of stuffing the holes in the Budget,” said Erhard Oehm, vice president of ADAC, the main German motoring organisation.

The Christian Democrat half of the grand coalition has taken up the motorists’ cause.

The Finance Minister, a Social Democrat, will have to struggle to save the €14.5 billion he needs to meet eurozone public debt targets by 2007. Germany is already in breach of the rules. Disagreement over where savings should be made, and which assets can be sold, is likely to make the next four weeks of horse trading very complex.

Other proposals this week include a cut in retraining budgets for the unemployed and slashing tax breaks for commuters and house builders. The most emotional battle, however, will be fought over a cut in coal subsidies. The Cabinet line-up unveiled yesterday revealed a government made up largely of technocrats but also including several declared critics of Frau Merkel. On the conservative side, the Interior Minister will be Wolfgang Schäuble, an old adversary of Frau Merkel, and the Agriculture and Consumer Affairs Minister will be Horst Seehofer, a Bavarian who has been a vocal critic of the designated Chancellor.

Franz Josef Jung, the Defence Minister, is very close to Roland Koch, the Prime Minister of Hesse, a strong potential rival of Frau Merkel within the Christian Democrat party.

The Social Democrats have supplied the Foreign Minister, Frank-Walter Steinmeier, who used to be Herr Schröder’s chief of staff. As such he helped to cement the personal relationship with Vladimir Putin, the Russian President, and was responsible for lecturing the US Ambassador about the deficiencies of White House policies.

By contrast Frau Merkel has vowed to be warmer towards Washington and less enthusiastic about the Russian leadership. Her chancellery staff, as announced yesterday, is focused on the domestic reform agenda. All the signs are that the new German Government is not intending to make a big impact on international or European debates.

PROPOSED GERMAN CABINET

Ministers are drawn from the Christian Democratic Union, its ally the Christian Social Union, and the Social Democratic Party

Chancellor Angela Merkel, 51, CDU

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