Towards a new federalism?

Die Zeit’s Bernd Ulrich calls it “his fourth act of patriotism”: Gerhard Schröder’s decision to seek new elections for Germany’s lower chamber of parliament (the other three being: German participation in NATO’s Kosovo war, Schröder’s refusal to take part in the Iraq war, and the belated, but much needed, reform of the German economy known as Agenda 2010). There is, says Ulrich, a simple logic behind it: The government has to go, in order to allow the Agenda to continue. And whatever the outcome of the election, two things are clear: the Greens will not be in the next government, and neither will Schröder. Ulrich is probably right on all these accounts.

What is interesting, is that there are many parallels between Schröder’s political problems in Germany and those of the EU as a whole: In both cases, economic and social reform is badly needed. In both cases, the reform process has stalled. And in both cases, the main cause is a constitutional arrangement that is very similar.

So here is part one: Can German federalism teach us something for the debate on the EU’s constitutional future? The topic of part two will be: Does Swiss economist Bruno Frey have the solution?

Infobox: Early elections in Germany?
Gerhard Schröder wants new elections for the Bundestag, the lower house of the German parliament, in September. This would be one year before the actual end of his term. It is not certain that he will get his way: holding early elections is constitutionally complicated in Germany. At this stage, Federal President Horst Köhler could still refuse his permission, as could the constitutional court in Karlsruhe. In most other European countries, Scandinavia excepted, it is much easier for either Parliament or the government to call an early election.

As is often the case with constitutional oddities in Germany, this one too goes back to the aftermath of World War II. Adenauer and the other makers of the new federal constitution were anxious to avoid what were seen as constitutional failures of the Weimar Republic contributing to the Nazi takeover of power. The result is probably the world’s most scrupulous implementation of the checks and balances principle put forward by the Federalist Papers.

Therefore, the German parliament cannot vote out the Chancellor without proposing a successor at the same time – the so-called “constructive vote of no-confidence”. The authors of Germany’s postwar Constitution feared that otherwise, the extreme right and the extreme left would be able to shipwreck its young democracy by jointly voting out centrist governments.

The Chancellor, then, can ask Parliament for a vote of confidence, but if that vote is negative, it is the German President, not the Chancellor, who decides what happens next. The President may dissolve Parliament in order to allow for new elections, but he may also tell the Chancellor and Parliament to stop whining and carry on governing. The intention of the Constitution makers was to make sure that Germany would have stable governments. Therefore, the possibility of having new elections was created only as a last resort, to get out of a persistent political deadlock.

Although Schröder is expected to win the argument, some German MPs have in fact announced they would challenge a decision to hold new elections on the grounds that no such deadlock exists. There are precedents, however, of early elections held on much shakier grounds than is the case now. Most notably in 1982, when Helmut Kohl, who had just become Chancellor following a constructive vote of no-confidence, managed to get early elections approved only because he wanted a longer-lasting mandate. Two years later, the newly appointed vice-president of the Federal Constitutional Court defended Kohl’s move in an influential commentary. His name: Horst Köhler, current President of Germany – the same man who now has to approve Schröder’s bid for new elections.

Föderalismusreform, a review of Germany’s federal system, has been a theme in German politics for some time now. A commission led by Bavarian Prime Minister and CSU (conservative christian) leader Edmund Stoiber and SPD (social democratic) party chairman Franz Müntefering has been working for two years now on proposals to modernise Germany’s federal system. So far without result.

Yet there is wide agreement that the problem is situated in the distribution of powers between the Bundestag, the lower house of the federal parliament, and the Bundesrat, the chamber representing the states of the federation. One of the main reasons why Schröder has not been able to reform Germany’s economy, is, apart from leftwing opposition within his own SPD party, that nearly all reform laws required the support of the Bundesrat, where the rightwing opposition parties have a majority. Any proposal therefore had to please both the left and the right extremes of German politics. In such a sensitive area as socio-economic reform, this was a juggling act Schröder was unable to perform.

You could argue that it is normal for a federal system, especially one with so many built-in checks and balances, to have two chambers of parliament which both have to agree with legislative proposals. But Germany’s federal system is a bit special:

When Germany’s postwar federal constitution was designed, in the late 1940s, the choice was to represent the individual states through a senate, with elected senators, or a federal council (Bundesrat), with state government representatives. The latter option was chosen because it was more in line with Germany’s history as a confederation of states. This means, however, that all Bundesrat members from a specific state always vote as a block, because they represent the views of their state’s government, not its voters or parliament. Decisions of the Bundesrat are prepared in working groups until they are ready for formal decision-taking by a staff of civil servants from the states. Public interest in its proceedings is low, and state parliaments have little influence on how it votes. In 1984, Sontheimer [1] wrote that as a consequence of the way the Bundesrat functions:

… fungiert die Ländervertretung im Prozeß der staatlichen Willensbildung vornehmlich als ein Instrument der Exekutive und der Bürokratie, nicht jedoch als ein zusätzliches Organ der demokratischen Willensbildung.

(…in the process of federal decision-making, the representation of the states functions as an instrument of the executive and the bureaucracy – not, however, as an additional body of democratic will formation.)

Conflicts between the federal and the state level on the distribution of competences led to compromises which, according to Sontheimer, seem to give the states a lot of power as the federal level is only allowed to legislate in areas explicitely attributed to it by the constitution, but in fact concentrates legislative power at the federal level, leaving the states mainly the implementation and execution of federal laws:

Faktisch ist die im Grundgesetz zwischen Bund und Ländern geteilte Gesetzgebungskompetenz heute weitgehend beim Bund konzentriert, die Länderparlamente sind als Legislativen ziemlich bedeutungslos geworden. Hingegen liegt die Ausführung der Gesetze, d.h. die Verwaltung, und auch die Organisation der Rechtsprechung weitgehend in der Hand der Länder.

Similarly to the EU’s proposed Constitution, Germany’s Constitution distinguishes between exclusive federal competences on the one hand and competences the federal level shares with the state level. There are also areas where the federal level lays down only framework principles, leaving it to individual states to fill in the details.

The predominance of the federal level in the legislative process was caused mainly by the fact that it claimed most areas of shared competence for itself, saying this was necessary for a uniform arrangement of living conditions:

Entscheidend für das große übergewicht des Bundes im heutigen Gesetzgebungsprozeß wurde die Inanspruchnahme der meisten Bereiche der konkurrierender Gesetzgebung durch den Bund unter Hinweis auf die Notwendigkeit einer einheitlichen Regelung der Lebensverhältnisse.

This “uniform arrangement of living conditions” is in fact one of the holy cows of German politics: current president Köhler created a political row shortly after he took office, simply by suggesting it might be easier to solve former East Germany’s persistent economic problems if wages and social security benefits were allowed to be lower in the eastern states than than they are in the west.

Over the years, the individual states in Germany kept little more than cultural matters, police and municipal law to legislate on. But even in these areas, the competences of state legislators have been further eroded by state governments, who started to coordinate policies through ministerial conferences and treaties between the individual states of the federation.

Note, at this stage, the similarities between the German and the EU (con-)federal construction:

  • both have “senates” representing the administrations of the individual states rather than their parliaments or peoples, with most of the actual decision-making done by civil servants of the individual states and behind closed doors;
  • both have constitutional arrangements spelling out which competences belong to the (con-)federal level, which to the state level, and which to both;
  • both have shown a tendency to concentrate power at the highest level, which is defended by referring to the need for “uniform living conditions” (Germany) or “a level playing field in the internal market” (EU);
  • in both, states use intergovernmental coordination and agreements to create common policies where no formal (con-)federal competence exists;
  • there is a consensus in both that constitutional and economic reform is needed, but tangible results have yet to be produced;
  • in both, there is discussion, but no consensus, on whether (and which) competences should be returned to the state level.

A difference between the EU and German discussions on reform, is that what is usually seen as the EU’s main problem is the distribution of competences between the EU and the member state level, as well as the EU level’s lack of democratic legitimacy. In the German discussion on the other hand, the main issue for politicians seems to be that state governments have too much power to block federal legislation through the Bundesrat: Back in 1948, only 10% of German laws required Bundesrat assent – today, this is as much as 60%. In a lecture she gave in 2003, Angela Merkel made clear that she wanted to see the percentage reduced to 30, because the involvement of state governments in so many federal decisions make it more difficult to carry out economic reforms.

So Germany’s problem is a seeming paradox, with the individual states having both too much and too little power. President Köhler was probably right to suggest that certain decisions should be returned to the individual states, allowing them more room to conduct their own socio-economic policies. But his fellow party member, and likely future chancellor, Angela Merkel was also right saying that it is too easy for the governments of individual states to block federal laws. Therefore, German reform would have to consist of moving some competences from the federal level back to the state level, while at the same time reducing the possibilities for state governments to block legislation that remains federal. The net effects of this operation would be that power is taken away from the state governments and returned to the (state and federal) parliaments, that Germany is liberated from its current state of governmental paralysis and that the country’s economic problems finally, hopefully, get solved.

But with so many constitutional similarities between them, the thought that perhaps the EU’s problems should be solved in a similar way as Germany’s becomes rather tempting. It is in fact true that the EU has been used by national governments as a means to accrue power, by moving a great deal of decision-making behind closed doors, away from the eyes of parliaments and the public. It is also true that the EU is often accused of having too many competences – although I would argue that it has, largely as a result of the closed door decision-making, acquired the wrong set of competences.

To me, for instance, it seems utterly wrong that in 2005 agricultural policy still is entirely an EU thing. I also find it strange that the EU does have a common currency (with a few odd exceptions), but no common economic policy. That there is no common foreign and defence policy to back up the EU’s common trade policy seems, for an economic world power, also wrong and counterproductive.

Those are of course my own views, and other people’s opinions on which competences belong at the national or the EU level will be different. Much less questionable, however, is the general lesson the EU could draw from Germany, which is that either you make something an EU competence or you don’t – but once you do, you should also give the EU enough clout to actually do something with it. If state governments cannot part with the powers they have shared, as happened in the EU and in Germany, the result is stalled decision-making, expectations not lived up to, problems remaining unsolved and public loss of confidence for all levels of government.

The next question to solve then, is how you decide which decisions should be taken at a common or federal level, and which at a national or regional level. Swiss economist Bruno Frey has some ideas about this. My thoughts in a future posting.
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[1] Kurt Sontheimer – Grundzüge des politischen Systems der Bundesrepublik Deutschland, Piper, München, 1984, p. 248.

2 Responses to “Towards a new federalism?”

  1. Jon Worth Says:

    Excellent article, and very thought provoking. At the theoretical level I agree – both Germany and the EU are caught in some trap where the needs of the component parts and the needs of the whole are not in line with each other. However that is where the similarity ends in my opinion. There is at least some sort of consensus in Germany about what needs to be done but progress is blocked by party political concerns.

    In the EU, there is no consensus on what the best way forward is. Tony Blair (partially backed by Barroso and the Commission) thinks he has an answer, but is far from being able to gather a consensus behind that.

    Further, while the Bundesrat is undoubtedly a problem in Germany, the Bundestag remains notionally the prime legislative chamber. In the EU, the Council (i.e. the intergovernmental body / Senate) has the prime role, and Member States maintain vetoes in key areas.

    Last but not least, the debate is at least in terms of political parties and some semblance of left-right ideology in Germany, but it remains a battle of national interests at the EU level.

    I suppose the European Convention should have been some kind of EU level parallel of the Fderalismusreform, but that looks very dead and buried for the moment…

  2. Nosemonkey / Europhobia » Migraine ctd. Says:

    […] Finally, further afield, and more big words – this time German ones – courtesy of European Democracy’s look at the lessons the EU can learn from Germany’s experiences of federalism. […]

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