INTRODUCTION
Following the federal elections in Germany in September 2005, a Grand Coalition of the Christian Democratic Union (CDU) and its sister party, the Christian Social Union (CSU), together with the Social Democratic Party of Germany (SPD) was formed under the leadership of Chancellor Angela Merkel (CDU).
Given the results of the election, this was the only feasible combination. The expected coalition of the CDU/CSU and the Free Democratic Party (FDP) did not materialize, because of the failure of the two parties to achieve a predicted combined majority of seats in the federal assembly (Bundestag), and the previous coalition of the SPD and Greens also failed to regain their previous majority of seats. The new Left party (die Linken) was too close to former communists and radical socialists to be a viable partner even for the center-left SPD and Greens, and these parties also had too many differences with the center-right FDP to form a coalition. There was some brief talk about a “Jamaica coalition” with the “black” CDU/CSU, the “yellow” FDP, and Greens, but there were too many disagreements on several issues between the first two parties and the Greens.1On 11 November 2005 a coalition agreement was signed that contained a section on the reform of federalism and an appendix of 226 pages, including 56 pages that presented the results of coalition discussions in the form of numerous proposals for constitutional changes in the federal system. The proposed changes represented a revival of the core elements of a package of proposals put together by a Federalism Commission that had been formed in the fall of 2003 and had met until December 2004, when the co-chairs announced that the commission was unable to reach agreement on several issues.2
The purpose of this chapter is to review the major features of the German federal system and to describe and analyze the reform proposals and amendments culminating in what are now being designated in Germany as Federalism Reform I and Federalism Reform II. The first reform package was passed in 2006 and concerns the division of legislative competences of the federal and Land (or “state”) levels of government, the reduction of the veto powers of the Bundesrat (chamber of state governments) through consent legislation (Zustimmungsgesetzgebung), and the new rights of the Länder to deviate from federal regulations in a number of areas. Other aspects of the reform, including some limited measures regarding joint federal-Land financing and federal-Land policies relating to the EU, will receive only limited attention. Federalism Reform II was passed in March 2009 and focuses on budgetary issues at the federal, Land, and local levels, but with particular emphasis on the Länder.