January 10, 2006

Germany begins to ask how many states it needs

By Nick Antonovics

BERLIN (Reuters) - The debate has long simmered below the
surface, infusing popular culture even if it has yet to take
political center stage: how should Germany look in the future?

In her novel "Aus Drei mach Eins" (Making One out of
Three), restaurateur Conny Kirschgarten sets a love story
against plans to merge three of Germany's 16 states. In the
book, regional politicians cannot even join forces to oppose
the plans without getting into fist fights.

Germany's political class will be hoping fact does not
mirror fiction as it prepares to tackle what is being billed as
the biggest shake-up of the federal structure for decades.

The federal government is hoping to streamline the way laws
are passed -- a move many see as the first step to addressing
bigger questions about the viability of some if not all states.

"It (the debate) will come," said Gerd Landsberg, director
of an association representing 12,500 towns and authorities.

"If we want to simplify the financial relations, we first
have to have roughly equally strong states ... I doubt we can
achieve this at all with the current structure," he said.

Germany's 16 states vary greatly in size, history and
financial strength and are bound together by a intricate system
of taxes and transfers. The new "grand coalition" government
wants to begin untangling this web later this year.

The debate has been invigorated by the financial woes of
Berlin -- the country's capital and a city-state with a 60
billion euro ($72.6 billion) debt mountain. Other states do not
want to end up footing Berlin's bill.


Critics argue that with more decisions being taken at
European Union rather than national level, there are too many
states with too little to do to justify costly administrations.

The five "new" eastern states created after German
unification in 1990 are home to 15 million people, 3 million
less than live in the biggest state, North Rhine-Westphalia.
They survive largely thanks to financial aid from richer

Some western politicians now say the decision to resurrect
the eastern states was a mistake.

Michael Burda from Berlin's Humboldt University said the
system discouraged states from trying to boost their economies.

"The really small states can't compete (economically). If
you are going to go for competition you have to start from a
level playing field (by merging states). That would be a sine
qua non for the whole thing to work," he said.

Nearly all state leaders defend their right to exist.

"Federalism does not live from similar sized entities,"
Peter Mueller, premier of Saarland, said in October. "The
independence of this state is not in question and won't be in

There is a cross-party consensus that the federal system
slows the political process: 60 percent of Germany's laws must
be approved by the Bundesrat, or upper house, where the states
are represented, and by the lower house or Bundestag.

This has often led to legislative gridlock when the lower
and upper houses have been in the hands of opposing parties.

Reforms drawn up by the country's first "grand coalition"
government since 1969 aim to halve the number of laws requiring
joint say by more clearly defining responsibility for policies
like education and the environment. For example, the states
would be given more responsibility for education.

With the two largest parties -- both members of the
coalition -- in control of the lower and upper houses and
support from the opposition Free Democrats the measures are
likely to get the two thirds majority needed in both houses by

That will pave the way for the "real battlefield," said
Thomas Fischer of the Bertelsmann Foundation think tank,
referring to the debate on wider financial reforms that could
call some states' existence into question.

"You can't separate the issues because if you say the
states have to take more decisions, then you have to talk about
how they have the revenues to pay for them," he said.

Poorer states are fearful of losing out in any reform of
the tax system, he said. "There are huge conflicts of interest
between them."


Fischer, Burda and Landsberg said the question of how many
states there should be was unlikely to be settled until the
future of Berlin became clear.

Berliners approved a merger with neighboring Brandenburg in
1996, but it was rejected by Brandenburg voters, who feared
they would be left servicing the city's huge debts.

Berlin, which has since applied for a 35 billion euro
($42.3 billion) federal bailout, now wants a fresh referendum
in 2009, but Brandenburg's leader Matthias Platzeck is cool on
the idea.

Views on how many states there should be vary. Nine is an
oft-cited figure, derived from scrapping the three city states
and Saarland and merging the eastern states with their
neighbors or each other.

Others advocate six states, assuming the creation of one
big northern territory and a three-way merger of Hessen,
Saarland and Rhineland-Palatinate, as proposed in
Kirschgarten's novel.

"If the people say in 10, 15 or however many years that we
cooperate so closely that we should merge, then that would be
OK," Peter Harry Carstensen, premier of the northern state of
Schleswig-Holstein, told Berliner Zeitung newspaper last month.

"But if we talk about a merger now, it will fail just like
Berlin and Brandenburg."