Is obstruction by Germany and France forcing a 5th Railway Package on Europe to bring its railways rather belatedly into the 21st Century?

Lord Berkeley

 2015 New Year message from Tony Berkeley

The latest draft of the 4th Railway Package from the Latvian Presidency (see link below) makes depressing reading. It is a pale version of what the Commission started with, a blueprint to revitalise Europe’s railways, to introduce competition and efficiencies, better customer choice and private investment.

Since then, Angela Merkel summoned the then Commission President Barroso to Berlin and told him to alter the 4th RP to allow the German structure, full of allegations of unfair subsidies and competition issue, to continue.  He capitulated and introduced a second best solution of a ‘Chinese wall’ to prevent such abuses. Now France, loosing passenger and freight traffic at an alarming rate because of poor service quality and higher charges, is reintegrating track and train to further obstruct the Commission, and is joining Germany in opposing any attempt to introduce competition and bring some efficiencies into Europe’s creaking railway system.  According to a recent article in les Echos, there will soon be little of a rail network left in France apart from regional services around major cities and the still loss making TGV lines.

Both DB and SNCF are also suffering from competition from new long distance coach services, whose staff do not get the benefits of SNCF drivers who retire at the age of 50 on a pension of their final salary.  France’s solution to Europe’s rail problems is to try to get all rail workers across Europe to have the same benefits as its own featherbedded ‘cheminots’; this is indeed an odd way of beating the road or air competition. Germany does not want competition for passenger services, and refused to allow competitors to sell tickets in DB booking offices or machines, and neither operator will consider selling or leasing unused passenger trains to competitors.

Italy, in urgent need to finance its inefficient rail system, may float part of it on the stock exchange but will this inefficient monopoly provide the low risk dividends that investors will expect without falling foul of state aid or competition law?

Does all this matter?  Is it important for Europe to have a thriving rail network capable of delivering faster, more reliable and cheaper services to customers?

The Commission thought it did; that is why it developed the 4th Railway Package to try to break the monopolies of the incumbents as well as introducing common standards and interoperability. Germany and France are killing it, by requiring the dilution of legislation on fair competition, so that their monopolies can be preserved in perpetuity.  No sensible investor will risk putting money into services in competition with these and other incumbents who obstruct, obfuscate, deny fair access to the network, and try to hide the unfair and secret subsidies that they arrange with their paymasters or owners.

Why don’t other member states object?   One might expect the UK to lead this, but the UK Government’s uncertain approach to Europe does not add to its credibility.  How many other member states are free from German pressure on their budgets, or French pressure on social issue?

So I fear that the Latvian Presidency will be browbeaten into accepting whatever Germany and France dictate, and the next Presidency, Luxembourg, sandwiched geographically between Germany and France, is rather unlikely to lead the campaign for liberalisation.

Will the European Parliament save the 4th RP?   It is new, and there are some strong supporters of liberalisation there.  However, it can be much easier to accept the story that all is fine with the railway – and one can always go by road or air.  MEPs should remember that monopolies are self-perpetuating, provide bad service and high costs to their governments, and lose more and more money, but have unlimited resources for fighting off or buying up any competition whilst at the same time having their begging bowl out for more and more state subsidy.

Nobody gains from this, neither the passenger or freight customer, not in the end the featherbedded workers who, in the end, will lose their jobs, as the more efficient road or air transport takes the business.  It does not have to be like this but, at the present rate of progress, it will be, to the serious detriment of Europe’s’ business and quality of life.

If you don’t want such monopolies, then you need fair and open competition, separation of infrastructure from train operation, strong and comprehensive regulation, and the will to make it all work fairly; that is the only way to encourage investment that Europe’s railway so desperately needs.

With increasing number of press articles predicting the slow death of many railways, is the 4th Railway Package the last train to a competitive market, now departing almost empty of passengers, freight – and hope for the future!

Roll on the 5th Railway Package, supported by a strong political will to bring the single market, competition and investment to this rail sector which, with few exceptions, instead of looking forward, clings to a starry eyed version of history!

Tony Berkeley

Lord Berkeley is chairman of the Rail Freight Group and a Board Member of the European Rail Freight Association.  The opinions expressed here are his own.

Tony Berkeley

tony@rfg.org.uk. Lordsoftheblog/Berkeley

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@tonyberkeley1