Germany’s top Jewish leader has slammed the government’s decision not to join efforts to ban the country’s most powerful neo-Nazi party.

“The decision of the Federal Government is disappointing and politically completely wrong,” Dieter Graumann, head of the Central Council of Jews in Germany, said in a statement Wednesday. “They chose hesitation and procrastination over courage and determination.”

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The decision by Chancellor Angela Merkel’s government not to submit a supportive brief to the Supreme Court is seen as a setback but not a final blow to attempts to ban the National Democratic Party of Germany, or NPD. Those attempts picked up steam in December, when the Bundesrat – the legislative council representing Germany’s 16 states – voted to submit a petition to the top court.

Critics had hoped for a united front of the executive, Bundesrat and Bundestag, the lower house of the German parliament. Now, legislators are scrambling to build support within the Bundestag, so that at least two of the three governmental bodies will stand firm for an investigation against the NPD.

Germany’s main neo-Nazi party, which according to the latest government figures has 5,800 members, is known for its anti-democratic, anti-foreigner and anti-Semitic stances. It blames foreigners for Germany’s problems and belittles the Holocaust, while publicly trying to avoid outright Holocaust denial, which is illegal. The party has representatives in two state legislatures, where it barely passed the 5 percent vote threshold. It thus receives federal funding – about $1.7 million in 2011, according to a report in the Bild newspaper.

German law protects even the most abhorrent of speech, as long as it is not illegal. A 2003 attempt to ban the NPD failed after the Supreme Court found that government informants may have incited the very illegal acts that were then under scrutiny. The failure was seen as a great embarrassment for the government.

In the years since, the NPD has been “spreading its Nazi poison and offering many right-wing extremist groups ideological and logistical support – with German taxpayer monies, no less,” Graumann said in his statement Wednesday.

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