German Federalism: Government Structure and Development

Historical Origins of German Federalism

Federalism is a key feature of the political system and governance of Germany. Its roots date back to the period after World War II, though its origins extend much further — to an era when Germany was under Prussian leadership and consisted of a patchwork of states. These states formed the "Old Empire" (Altes Reich) with a common institution, the so-called Immerwährender Reichstag in Regensburg (1663–1806), composed of representatives of the respective territories. Its key features were power-sharing, bargaining, and compromise-seeking (Kitschelt and Wolfgang 16).

Following the dissolution of that Empire in 1806, 39 territories formed, under Napoleon's protectorate, the Rheinbund (Rhine Confederation), which proved unwieldy and inefficient. The Vienna Congress in 1815 established the confederal Deutscher Bund as successor to the Old Empire, with the Bundesrat in Frankfurt as its supreme but weak institution (Kitschelt and Wolfgang 18).

After a revolution in 1848, a constituent assembly (the Frankfurter Paulskirche) established an alternative structure — a democratic federation similar to the American model, but again with much weight given to the executives of the participating entities. Owing to the resistance of Austria and Prussia, however, this model could not be realized. Political unification was ultimately achieved under Prussia's leadership in two subsequent steps: in 1867, Otto von Bismarck formed the Norddeutscher Bund, which then developed into the German Empire, with the larger states of southern Germany joining as additional members (Kitschelt and Wolfgang 22).

The Empire was a confederation of 25 states in which Prussia stood out as the dominant entity. The states retained sizeable internal autonomy, forming the sovereign institution of the Bundesrat to represent their governments. Federalism was exemplified by executive dominance, public administration, the absence of a single national center, and the preservation of distinctive features within the participating states.

The feudal elements of German governance were weakened following World War I, under the constitution of the Weimar Republic. This was achieved by strengthening the Reichstag as Parliament and restructuring the states — later known as Länder — under elected presidents. The Länder were represented at the Reich level by the Reichsrat, the second chamber, composed of members of Länder governments formed by political parties, in line with the executive-bias tradition of German federalism. Although the Reichsrat was weak, bargaining between the administrations of the Reich government and the Länder governments continued to be the prevailing feature of decision-making. The Nazi totalitarian regime abolished all remaining federal elements, establishing a centralized governance system during the period 1933–1945 (Streeck, Wolfgang and Kathleen 112).

The end of World War II came as a result of Germany's unconditional surrender, at which point there was no German authority even at the local level. Responsibility and power were taken over by the Soviet Union, the United Kingdom, the United States, and France. An agreement was reached to dissolve Prussia and divide the territory into four zones of occupation. This decision had a lasting impact on the development of governance in the region (Streeck, Wolfgang and Kathleen 119).

Since 1949, the federal system of the Federal Republic of Germany has evolved toward a pattern of interlocking relationships between the federal and Länder governments, driven by the following factors:

None of the reform proposals of this era, however, were incorporated into the Basic Law. Attempts in the 1980s to strengthen the Länder by reducing the scope of Joint Tasks relied on federal self-restraint in legislative action and on improving the financial foundation of the Länder. These efforts were ultimately unsuccessful (Thelen and Kathleen 89).

The continued challenges of reunification and the overall economic situation negatively affected the room for maneuver of federal entities. From 1992 to 1994, a joint commission of the Bundestag and Bundesrat discussed constitutional reforms that might be necessary as a consequence of reunification. With the exception of a few minor modifications, the federal system remained unchanged. Decisions on constitutional provisions are difficult, as they require a two-thirds majority in both the Bundestag and the Bundesrat — which effectively requires agreement between the two major parties (Thelen and Kathleen 45).

Developing Political Aspects in Germany

Three issues carry substantial implications for German federalism: the consequences of reunification, the challenge of European integration, and initiatives toward a comprehensive reform of the federal system. Reunification increased economic and financial disparities among the Länder. As a result, weaker Länder became more dependent on the federation, potentially allowing the federation to gain additional weight — with consequences for the overall federal balance. Furthermore, the system of horizontal financial equalization (horizontaler Finanzausgleich) has been strained by this widening gap (The Economist 17).

All five new Länder — Brandenburg, Mecklenburg-Vorpommern, Sachsen, Sachsen-Anhalt, and Thüringen — belong to the group of net-receivers, with consequences for previous net-receivers (who may become net-payers or at least suffer losses) and for the traditional net-payers (whose burden in transfer payments may grow) (The Economist 17–18).

The party system in the five new Länder also differs from the pattern in the "old" Länder, with the Partei des Demokratischen Sozialismus (PDS) — the successor of the Communist Party in the former GDR — emerging as a third force alongside the Christian Democratic Union (CDU) and the Social Democratic Party (SPD). Notably, the Liberals (Free Democratic Party/FDP) and the Greens were not represented in the respective Land parliaments (Scarrow 622).

This has had consequences for coalition patterns — SPD–PDS coalitions or grand coalitions in cases where no single party can form a majority — which may influence political developments in German politics as a whole. The deepening process of European integration has also posed a challenge to the legal status of the Länder and, consequently, to the federal structure of the Federal Republic of Germany.

The first challenge arises from the fact that the European Union has considerably extended its functional scope, meaning that EU activities now fall into areas previously reserved to the Länder in the internal allocation of competencies. The second challenge stems from the modalities of EU decision-making. In the EU, the Council of Ministers is the most important decision-making and legislative body, and Germany is represented in the Council by the federal government. This means the federal government participates in decisions in fields belonging to the exclusive competence of the Länder. The third challenge lies in the implementation of European legislation in Germany, which is primarily the responsibility of the Länder — entities that, until recently, had no opportunity to influence that legislation and found themselves subject to a high degree of federal government oversight (Scarrow 625).

The Länder responded to these challenges successfully. First, in 1992–93, they secured rights of participation in EU matters at the domestic level through the new Article 23, supplemented by the "Law on the Cooperation of Federation and Länder in Affairs of the EU." The federal government must now take Länder concerns, as formulated by the Bundesrat, into account — including on matters falling under the exclusive competence of the Länder.

A further transfer of sovereign powers that would alter the content of the Basic Law requires a two-thirds majority in the Bundesrat. Second, the Länder have established autonomous EU activities, such as setting up representative offices in Brussels and lobbying directly. They have also acquired the right to participate formally and directly in EU-level decision-making. The Länder are represented in the Committee of the Regions (established in 1993, in an advisory capacity), and they may represent Germany in the Council when matters falling under their jurisdiction are on the agenda. In addition, the new Article 24.1(a) allows the Länder, subject to federal government consent, to transfer sovereign powers to cross-border institutions in policy fields where they hold competence. On the whole, the position of the Länder has been strengthened (Kitschelt and Wolfgang 21).

This is illustrated by the fact that two Länder representatives participated in the intergovernmental conferences at Amsterdam (1996) and Nice (2000) on reforms of EU treaties, and that the Bundesrat and Bundestag were each represented by one member in the Convention on the EU Constitution in 2002–2003.