Reform in Germany: Prospects for the New Government

Foreign commentators and the international press have been skeptical about Germany’s new “grand coalition” government, seeing the September election result as a “vote against reforms” and the expression of an apparently innate German desire to stick to the status quo. According to The Economist, “this hung vote looks like being a setback for the reform process in Germany.”1Le Figaro fears that “after the vote, Germany may become ungovernable.”2 On the other side of the Atlantic, the Los Angeles Times opined that the “[r]esults boost alternative factions and weaken the push for reform.”3 While it is true that the elections did not bring about a clear winner and made forming a traditional coalition government difficult, the new government will by no means be a weak one. Indeed, for the time being at least, the reforms in Germany are likely to benefit from the current power configuration in the Bundestag

Despite press reports to the contrary, the results were not a clear signal against reforms. The only party in favor of the status quo, the leftist Linkspartei, won just 8.7% of the vote nationwide, although it did fare better in Eastern Germany. Polling in the spring and summer of 2005 that predicted a clear victory for a Christian Democrat-Liberal coalition led by Angela Merkel took place at a time when her policy proposals were already well-known. If German voters were opposed to a reformist platform, this would have been visible in the polls. Analysts of the German political scene have, in recent months, failed to point out that all of the main political parties—apart from the Linkspartei, —supported reform. While they may differ in the scope and the intensity of the reforms they advocate, these parties all understand the necessity of such measures. Moreover, although the results of the elections were confusing in many ways, public opinion polls showed large majorities were in favor of reforms. For example, the 2004 online poll Perspektive Deutschland showed that 85% of the 450,000 participants were in favor of reforms.4

Reforms in Germany in recent years have stalled on two specific and interrelated questions that are quite distinct from public opinion. Institutionally, German politics in the past few decades have seen a redistribution of power within the federalist system. The German states (Länder) have given up their fiscal prerogatives in return for more veto power at the federal level. As a result, the German Upper House (the Bundesrat), whose members are appointed by the Länder governments, now weighs in on 60% of all federal legislation. German voters have tended, via state elections, to give the national opposition party control of the Bundesrat, which has led to numerous political deadlocks. Thus, for example, the Social Democrats blocked the tax reform plans of Chancellor Helmut Kohl’s government, whereas the Christian Democrats blocked the federalism reform of Chancellor Gerhard Schröder’s government.

Similarly, with regional elections scheduled throughout federal legislative periods, both the Kohl and the Schröder governments routinely came under fire from their respective opposition parties for “unsocial” measures, even if that party had agreed to these measures in the Bundesrat. The 2004 controversy in state elections about the “Hartz IV” welfare reforms, for example, saw the Christian Democrats doing precisely that. These types of actions often convinced the central governments to refrain from proposing reforms and in some cases led them to drop reform proposals entirely for fear of loosing voters. Schröder scaled down his reform ardor in the middle of his first term when his party lost several regional elections. Helmut Kohl reached a reasonable pace in reform only late in his final mandate and was then unable to implement them.

Merkel’s grand coalition breaks the institutional deadlock in that for the first time in years, a single coalition will control both the Lower and the Upper House—the Kohl government did not have a majority in the Upper House from April 1991 to fall 1998 and Schröder lost his majority in the Upper House in April 1999 after just a few months in power.

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