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As a Berlin resident I can tell you that foreign diplomats fishing in the Havel river is the least of our worries. Trafic rule violations such as blocking emergency exits and excessive speeding are not uncommon for vehicles with diplomatic licence plates. There are roundabout 8000 - 12000 cases each year with Russia, China, Saudi-Arabia and Egypt leading the board. Most cases are petty fines, but we have around 50 accidents a year. In 2004 the bulgarian Ambassador ran over a Policeman who tried to stop him for driving under influence.

Basically all that happens is that if things get too excessive a protest note will be sent to the country in question. However, other cities share the same fate. AFAIK New York collects the tickets and deducts them from foreign aid paid to the country (not that this would have any influence on Saudi-Arabia or China I'd assume)

What is the purpose of diplomatic immunity? I suppose there is some overriding principle over the laws of the land, but I've never been shown what it is. Why do countries allow this?
The basic idea is a simple one: The diplomat should not be at the mercy of the host state nor should there be the possibility to arrest the diplomat or his family on trumped up charges. Diplomatic immunity allows the diplomat to live and do as he could and would in his home country. It also allows for the diplomat to be in the host country even during times of strained relationships or even war. It allows western diplomats to commit crimes such as serving and drinking alcohol in states where alcohol is considered a forbidden drug. It also allows diplomats to misbehave badly and go fishing without permit :)
Unclear how this is HN material.