Germany's Reform by Committee

German politicians like to proudly tell their European counterparts about the advantages that Germany’s federal political system has over other more centralized forms of government. Alongside the lower house of parliament, the Bundestag, 16 federal states, or Länder, are represented by an upper house known as the Bundesrat.

While such a federal structure has served the country well over the past half century, it can also lead to political gridlock if both houses aren’t controlled by the same parties. That’s currently the case and, much to the chagrin of Chancellor Gerhard Schröder, it means the conservative opposition could torpedo his so-called “Agenda 2010”, a package of sweeping reforms designed to spark growth and trim the country’s bloated welfare state.

That’s because over the years, the Bundesrat has gained more scope to veto legislation. When West Germany’s constitution was written 54 years ago, the upper chamber had to be consulted on only around 10 percent of federal legislation. Now, however, that figure has soared to almost 60 percent, increasing the importance of a mediation committee made up of 32 representatives from both houses of parliament.

Reforms at stake

Schröder’s center-left coalition of Social Democrats and Greens passed labor market reforms and tax cuts last month in the lower house, but the Bundesrat – controlled by the conservatives and free-market liberals – rejected them two weeks ago. That set the stage for a high-stakes legislative poker match that will determine the fate of the biggest reform process in Germany in recent history.

In order to have the legislation become law by January 1 next year, the mediators will have to make the most of four meetings scheduled to take place through early December. “What hasn’t happened by December 10, won’t make it this year,” Christian Democrat Joachim Hörster, the mediation committee chairman, told German ZDF television.

The opposition chalked up a first victory on Friday after getting the government to agree to bring reform legislation that doesn’t require Bundesrat approval to the bargaining table. As hard as it likely is for the government to let the conservatives doctor their reforms, the latest compromise doesn’t mean the whole process will be any easier for the opposition.

Risks for the opposition

At some point they will have to either decide to play ball and possibly help the government pass its agenda, which could aid in its reelection, or they can block the reforms and risk taking the heat for toying with the country’s well-being for political gain.

Aware of the tightrope the conservatives and liberals are walking, Schröder’s spokesman Bela Anda last week called on them to take a constructive attitude toward the mediation talks.

“The government urges the opposition to stop the tactical power games,” Anda said. “They are harmful to our nation and the economy. The government is open for compromise and talks. But the condition for that is an end to the tactical games.”