Even as President Obama attempts to emulate the French by building high- speed rail lines, the French are stepping back and may cur- tail service as unaffordable. Under European Union rules, EU nations are not allowed to subsidize transportation or other services that would give businesses in those nations undue advantage over businesses in other EU countries.
The EU has given France until July 2010 to more-or- less privatize its rail lines and take them off the government dole. The French national railway, SNCF, says that 80% of its high-speed trains cover their operating costs, but it racked up a $38 billion debt building those lines. In 1997, the French government gave the tracks and the debt to a second company, RFF, which charges SNCF to operate trains on its tracks.
To repay the debt, RFF plans to increase its fees to the point where almost no trains will cover their costs. This means that SNCF will be forced to raise fares or eliminate trains or both. Anyway, the number of people riding French high-speed trains is likely to be far lower next year than it was last year, when the average resident of France rode them a mere 400 miles.
Meanwhile, the United States recently announced $8 billion worth of high-speed rail grants to 31 states. Most of these grants represent only a tiny down payment on the cost of providing high-speed rail in those states. One exception is a $773 million grant for 79-mph rail service between Milwaukee and Madison. Based on state of Wisconsin estimates, this train will require subsidies of $130 or more for every rider. Maybe the way for us to put a stop to such ridiculous projects is for the United States to join the EU.