Reform Strife

Federal-State Family Feud

Seeing things eye to eye, Wolfgang Schäuble (l) and Olaf Scholz.
  • Why it matters

    Why it matters

    Chancellor Angela Merkel has created a group to advise on reform of the workings between federal and state governments. But two senior politicians from rival parties in the ruling coalition have bypassed it and announced their own reform plans.

  • Facts


    • Christian Democratic Union and Social Democratic Party rule Germany in grand coalition.
    • Relationship between coalition and state governments strained.
    • Reform of state powers would affect taxes, welfare and national debt.
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If Wolfgang Schäuble and Olaf Scholz had planned to surprise everyone, they certainly succeeded. At a news conference back in May, these political rivals were expected to announce an agreement on a multi-billion euro spending plan for education and research. Instead they proposed a major federal shake-up, challenging the relationship between states and the federal government by pushing for a constitutional amendment that would relax a ban on education cooperation.

Mr. Schäuble, Germany’s finance minister, and Mr. Scholz, Hamburg’s mayor, are now working on their next idea for reforming the long-standing state-federal relationship in Germany.  The unlikely bedfellows, whose parties form Germany’s current coalition government, want to use ongoing negotiations on the country’s fiscal equalization scheme (a redistribution of money between its 16 states) and its solidarity surcharge (paid by Germans in the west to subsidize those in the former East Germany) to agree a major reform of the relationship between federal and state governments.

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