German Federalism: A reform that misses its mark

Early in the present decade, political actors at the national and regional levels finally seemed to agree: if government at both levels was to remain effective, Germany‘s system of federalism needed to be reformed. Their objective was to reduce the number of federal laws requiring approval by the upper house of the federal parliament, and to increase the range of issues to be decided autonomously by state parliaments. But by the end of the first reform stage, not much had been achieved. And according to the viewpoint of Fritz W. Scharpf, Emeritus Director at the Max Planck Institute for the Study of Societies, nor will the second stage, which involves restructuring the financial affairs of the Bund (the federation) and the Länder (the states), deliver the desired “disentanglement.” Here, he analyzes the faulty approach that defeated the objectives of the first stage of reforms.

 

The Commission therefore did not even bother to discuss the veto in the field of public finances. In phase two of the reform now commencing, this is unlikely to change since no one has any plans to abolish the tax-sharing regime, which divides the revenues from major taxes between the Bund and Länder. The discussion in phase one instead concentrated on Article 84, para. 1 of the Constitution, to which the bulk of the cases requiring Bundesrat approval may be attributed. This reads: “Where the Länder execute federal laws in their own right, they shall regulate the establishment of the authorities and their administrative procedures unless federal laws enacted with the consent of the Bundesrat provide otherwise.”

The Bundesrat veto

Thus, if the Bund intends to intervene in the administrative authority of the Länder, the Bundesrat must be asked to agree. This reasonable rule, however, became a serious structural problem for the German Constitution after the Constitutional Court had announced the so-called “unitary theory” in 1958. It postulated that the need for agreement of the Bundesrat was not restricted to the organizational or procedural provisions of a law, but pertained to the statute as a unit of legislation.

The harmful consequences of this judgment became apparent in the 1970s when, for the first time, a social-liberal majority in government found itself facing an opposition majority in the Bundesrat. The need for Bundesrat agreement, intended to protect the administrative authority of the Länder, could now be used as a party political weapon to veto unwelcome legislation.

Under these institutional conditions, first analyzed by Gerhard Lehmbruch in 1976, German federal politics developed a characteristic dynamic: in difficult times, when governments are forced to push through unpopular measures, and when elections to the Länder parliaments can be stage-managed as plebiscites on federal policies, the opposition can quickly gain a majority in the Bundesrat. Prime ministers on the opposition side then have three choices: they can limit themselves to representing the institutional self-interests of their Land; they can try to assert the policy interests of the opposition; or they can promote the positional interests of the opposition parties by obstructing the government.

The probable outcome in the first case is a pragmatic agreement among professionals. In the second, one may expect compromises that, as a combination of incompatible policy preferences, are defended by neither side. In the third case, however, one may expect blockades intended primarily to make the incumbent government appear incompetent and helpless in the eyes of the electorate. In the 1970s, Franz-Josef Strauß played these cards with brilliant cynicism, as did Oskar Lafontaine in the 1990s, followed by prime ministers on the Union side after the turn of the century. The malaise afflicting German politics in which no side is able to realize and take responsibility for a reform concept of its own is essentially rooted in the facility to mount party political blockades in the Bundesrat.

The Commission received proposals by legal experts that would have once again restricted the Bundesrat veto to organizational and procedural matters. But having once gained the opportunity to engage in party political blockading, prime ministers of the Länder were unwilling to give it up again. Their veto over the process of constitutional reform ensured that the unitary theory could not be challenged.

Instead, discussion switched to solutions under which, in principle, the Bund would avoid regulations of administrative procedures or organization – in which case, of course, agreement of the Bundesrat would not be required. But since that would still not rule out financially burdensome legislation, the Länder demanded – and ultimately obtained – a new veto over federal laws that imposed costs on them. The solutions finally adopted are complex and in part contradictory, and, as Philip Manow and Simone Burkhardt of the Max Planck Institute for the Study of Societies have shown in a working paper, they will ultimately increase, rather than reduce, the number of cases requiring Bundesrat consent.

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