The Admiral Graf Spee, the German "pocket battleship" scuttled here in 1939, is caught in the middle of a struggle between the businessman salvaging it and the German government, which wants to prevent its commercialisation.

"We always proposed a serious historical and cultural destiny" for the remains of the Graf Spee while "contemplating fair compensation" for the work and investment made to recover its remains, said Alfredo Etchegaray, the businessman.

During a visit to Montevideo this week, German Foreign Minister Guido Westerwelle said his desire was "to prevent the remains of the symbols of the Nazi regime from becoming commercialized."

"What we want really is to reach a constructive deal," he said, adding that Germany was prepared to support the presentation of the remains "in a historical context, like a museum."

In 2006, divers hired by Mr Etchegaray recovered an imposing Nazi bronze eagle measuring 2.8 meters wide by two meters high and weighing 350 kilos from the stern of the Graf Spee.

Two years earlier, they had come up with a 27-ton rangefinder used to direct the ship's cannons. And in 1998, a 155 millimetre gun from the ship's secondary armament was salvaged.

The underwater salvage group planned to bring up more cannons and other pieces of the Graf Spee, but were barred from doing so by an Uruguayan government decree.

After the recovery of the Nazi eagle, with its outspread wings and swastika, Germany sent a note to the Uruguayan foreign ministry claiming ownership of the Graf Spee and opposing continuation of the salvage work. Mr Etchegaray, who had received permission from the Uruguay government to undertake the salvage work, has spent $2.5 million over the past 25 years scouring the Rio de la Plata estuary for sunken ships.

The Graf Spee was scuttled by its captain just outside Montevideo harbour where it had gone for repairs after the first major naval battle of World War II.

The Nazi warship was used to raid commercial shipping in the Atlantic until it was intercepted by two British cruisers and one from the New Zealand navy off Montevideo.

Mr Etchegaray claims the wreck was sold in 1940 by the then German ambassador Otto Langmann to Uruguayan Julio Vega Helguera, who concluded the deal as an undercover agent for the British government for the sum of £14,000.