Swastika ban left out of EU's racism law
Germany had said it wanted to harmonise rules throughout the 27-member bloc for dealing with Holocaust deniers and for punishing displays of the Nazi symbol, banned in Germany and several other states.
But, setting out plans for an EU-wide anti-racism law, it said it would not seek to prohibit "specific symbols such as swastikas".
It would also not try to push all EU states to say it is a crime to deny that six million Jews were exterminated during the Second World War.
Member states could decide not to make the denial of the Holocaust a crime "where the conduct is of a kind unlikely to incite to violence or hatred," the draft showed.
The EU's executive Commission proposed an EU-wide anti-racism law in 2001, but EU states failed to agree, struggling over the balance between freedom of expression and sanction of racism.
Germany's new draft suggests that incitement to racism and xenophobia would be punishable by at least one to three years of jail in all 27 EU states, while leaving to each state to decide on the specifics.