German politicians are continuing to put obstacles in the way of an early privatisation of Deutsche Bahn, according to news sources. At a meeting in Germany of the country's various regional Transport Ministers, the strategy to sell Deutsche Bahn as a single entity, controlling transport infrastructure as well as operating trains, was roundly criticised. The state politicians believe that this will lead to unprofitable local lines being shut down.

Although largely a passenger issue, the impasse has implications for the company's freight and logistics operations. Deutsche Bahn's Schenker and Railion divisions have major plans for development which will be frustrated by any delay in the company's IPO.

Angela Merkel, the country's premier and a supporter of the sale, will need the support of the regional states in the Parliament's upper house as well as politicians in the lower house, if she is to push through legislation. It had been hoped that the IPO would be as early as autumn 2008. However calls for a complete re-think of the structure of the privatisation would inevitably lead to delays.

There is a great fear amongst politicians and unions that by turning Deutsche Bahn into a fully commercial entity through an IPO, key interest groups will suffer. This highlights the tensions which exist between those who want the full privatisation of German railways and who welcome the influx of foreign capital, and those who see such a move as leading to the destruction of an important public service.

The hostility towards private equity companies in Germany has been well-documented, and this trend may well have implications for the future not only of Deutsche Bahn, but also rival Deutsche Post. If these companies are not allowed the access to the capital markets which their global rivals enjoy, they will find themselves at a significant competitive disadvantage.