A joint committee of the two houses of the German parliament failed Monday to reach a compromise on legislation to combat the illegal sale of arms and weapons technology abroad.
The government initiated the move after a scandal erupted over the role of German companies in providing chemical warfare capabilities to Libya and Iraq.
The conservative Christian Democratic Union, which heads the governing coalition in the Bundestag, the lower house, proposed a bill that would allow the government to tap the telephones and intercept the mail of suspected violators.
But the opposition Social Democratic Party, which holds a majority in the Bundesrat, the upper house, opposed such measures.
The draft law has been sent back to the government for revisions.
Germany came in for some sharp criticism from its Western allies after it was learned that German technology enabled Iraq to produce poison gas and to improve its outmoded Scud missiles, with which it attacked Saudi Arabia and Israel during the Persian Gulf War.
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