According to the proposal, Germany would spend 1.9 billion euros ($2.45 billion) over the next six years to improve the country's academic institutions. Universities could apply to a central commission for funding for so-called interdisciplinary clusters of excellence that include graduate schools. Up to 10 German universities could benefit from the program. The federal government would contribute 75 percent of the money.

The plan represents a compromise between federal and state governments after the latter had opposed a federal push for 10 elite universities throughout the country.

Germany's states could now approve the new program as early as April 14. But the opposition of the central German state of Hesse could prevent this from happening as it has to be a unanimous decision.

State doesn't want to give up rights

Hesse, governed by Christian Democrats who are in opposition on the federal level, reject the plan for two reasons. They're saying that it would challenge the states' rights to determine education matters on their own. Hesse officials also argue that the federal government will cut funds for construction projects at universities at the same time, meaning that universities will effectively not get more money.

But Roland Koch (photo), the state's premier, has even faced criticism from his own party for rejecting the plan. Other Christian Democratic politicians have said that this program is a sound compromise and should be supported. And the Social Democratic education minister of Germany's most populous state, North Rhine-Westphalia, has even called on her colleagues to override Hesse's opposition.

"It would be a case of collective self-defense," Hannelore Kraft said.

Peter Gaehtgens, who heads the association of German university presidents, also urged Hesse to stop blocking the program in order to make the country's academic institutions more competitive.

"Germany has long become Europe's taillight," he told newsmagazine Der Spiegel.