By Madeline Chambers

BERLIN (Reuters) - In his decade as a neo-Nazi skinhead in eastern Germany, Manuel Bauer says he beat up foreigners and disabled people, stabbed a cigarette in the eye of a 12-year old boy and assaulted a Muslim man and his pregnant German wife.

Bauer, who led two racist gangs, the "League of Aryan Fighters" and "Revenge Act", says groups like his carried out violence on behalf of the far-right National Democratic Party (NPD), which has a seat in the European Parliament and five seats in one of Germany's 16 state assemblies.

Bauer was jailed on a 22 month sentence for extortion, causing bodily harm and arson, before he quit the right-wing scene with the help of a support group. Today he works with refugees from Afghanistan and Syria. He says the NPD should be banned.

"There is too much democracy if you allow anti-democratic forces like (the NPD) to exist," said Bauer.

The NPD denies that it is behind violence, and says it is being unfairly targeted as a group over the behavior of some individuals. Reuters was not able to verify independently any relationship between the party and Bauer's former groups.

The upper house of parliament is trying to impose just such a ban. It has lodged a court case which alleges the NPD is inspired by the Third Reich, believes in ethnic German supremacy and incites people to torch refugee hostels. The Constitutional Court is expected to rule in coming months.

Germany recorded 1,408 violent acts carried out by right wing supporters last year, a more than 42 percent rise from the previous year, and 75 arson attacks on refugee shelters, up from five a year earlier, according to an annual report by the BfV domestic intelligence agency published in June.

But at a time when far right parties are winning votes across Europe, and Germany itself is struggling to integrate an unprecedented influx of more than 1 million foreigners last year, some experts in right-wing extremism say a ban could be counterproductive. Germany's federal government, while officially supporting the case, has declined to sign on as a party to it.

A ban would deprive the NPD of around 1 million euros it receives in public funds as a lawful political party, and prevent it from contesting future elections, although it is not clear what would happen to its existing seats.

The party would be barred from holding rallies in public, and the authorities could punish people who persisted as members. But in practice, followers could avert punishment by forming new organizations, or take their activities under ground, making them harder to detect.

That would “make it even more difficult to recognize right-wing extremist players and to develop appropriate ways of countering them,” said Matthias Quent, director of the Institute for Democracy and Civil Society in Jena, in eastern Germany.

“Bans can easily lead to people and small groups being criminalized and being driven underground and then they radicalize. Then the danger, which is already large, from right-wing terrorism would increase.”

FEDERAL GOVERNMENT STAYS OUT OF CASE

The NPD publicly disavows violence and rejects accusations by the authorities that it is connected to skinhead gangs like the ones Bauer used to lead, or to the neo-Nazi National Socialist Underground (NSU) blamed for the murders of nine immigrants and a policewoman between 2000 and 2007.

NPD lawyer Peter Richter said it was wrong to judge the party based on the actions of individuals.

"No one can predict whether an acquaintance who seems completely normal today will tomorrow commit a terrible crime," argues Richter in his defense to the court, which he sent to Reuters in response to a request for comment.

Individual NPD figures have fallen afoul of German laws that ban Holocaust denial and punish praise of the Nazis.

The NPD's European lawmaker Udo Voigt has described Hitler as a "great German statesman". Before being elected to the European parliament, he was found guilty of incitement, including honoring Hitler's SS. He was given a 10-month suspended sentence which was upheld on appeal.

The case to ban the NPD is being brought on behalf of the Bundesrat, parliament's upper house, which represents Germany's 16 regional state governments.

The federal government's decision not to sign on as a party to the case is seen by some as a sign that Berlin is uncertain of the wisdom of pursuing a ban. The government denies it is half-hearted.

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