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A row has erupted over the future of university funding in Germany after negotiations between the states and the Government failed to make any progress on the €1.9 billion (?1.3 billion) "excellence initiative competition" proposed by Edelgard Bulmahn, the Education Minister.

The competition, scheduled to run from 2006-11, would provide funding for 40 outstanding graduate programmes and 30 internationally recognised centres of excellence and reward up to ten outstanding universities as "beacons of science" with an additional €21 million each year.

Although, in Germany, education and research are the responsibility of the regional state governments ( L?nder ), the federal Government offered to provide 75 per cent of the costs. But continuing opposition from conservative-run L?nder , such as Hesse, means it is unclear whether the competition to promote German elite universities will ever go ahead.

Ms Bulmahn called the blockade a "slap in the face for universities and research centres".

The cultural and educational independence of the L?nder has become a pre-election battleground for conservative states and the Social Democratic federal Government, and many academics see the universities as victims of the stalemate over federal reform.

Peter Gaehtgens, chair of the German Rectors' Conference, complained that universities were being "held hostage" by the politicians.

Earlier this month, the constitutional court rejected a petition by Roland Koch, governor of Hesse, to outlaw a federal advisory centre aimed at helping universities to implement the changes required by the Bologna process.

Although science ministers at federal and L?nd level had already reached a compromise on the excellence initiative in March, Mr Koch managed to block the agreement at this month's conference of state governors in Berlin.

A decision on fees, which are the responsibility of the individual states, has also been postponed.

It is unlikely that progress will be made before the state election in Northrhine-Westphalia on May 22.