Germany’s Reunification - The Political Geography of Inequality - page 142

and policies to the challenges of socioeconomic change have led to new tensions
between governments. 6 The federal government tends to react more selectively
to political demands and to favor activities that promise to foster the national
economy; the l ander and local governments have become the representatives of
the losers in the process of structural change” (Benz 1989 : 205). Under these
conditions, the design of interterritorial redistribution could not remain unchal-
lenged. As a result of the structural economic transformations, the l ander split
into two groups, with clearly divergent institutional agendas, “those who have
sufficiently strong economic resources to pursue autonomous policy answers
and those who do not” (Degg 1996 : 31-33). The former demand more fiscal
autonomy; the latter, an increase in the levels of solidarity.
A careful consideration of three specific episodes which occurred between
1983 and 1989 helps illustrate the nature of these conflicts. The first one
regards the inclusion/exclusion of oil extraction duties (F orderaufgabe) in the
FA formula. By 1983, Lower Saxony was the major recipient of FA (1.5 DM
billions, 32% of total volume) at the same time that “it was raising an income
of 2 DM billions per financial year from a licensing fee for the granting of
oil extraction rights” (Exler 1991 : 83-105). At the time, the fee was not tech-
nically considered a tax. Meanwhile Baden-Wurttemberg was the main con-
tributor to the system (2 DM billion, 55% of the total volume) and North
Rhine Westphalia, fully affected by deindustrialization and its socio-economic
effects and for decades a net contributor, did not receive any net transfer from
FA. A major conflict within German cooperative arrangements started when
North Rhine Westphalia (and five other l ander including Baden Wurttenberg) 7
denounced the system before the Constitutional Court, demanding, among
other things, the inclusion of oil duties in the FA system. The FA was amended
in 1987 along these lines, following a June 1986 ruling of the Constitutional
Court.
A second major issue concerned the city-states problem. The problem here
stemmed from the negative impact that high levels of urban concentration
have on the ratio, as defined by the FA legislation, between fiscal capacities and
expenditure needs. On the understanding that large cities have greater expendi-
ture needs per capita, Bremen and Hamburg receive a population weight in their
expenditure needs of 135% as opposed to the 100% applied elsewhere (Exler
1991 : 85). While both cities considered this weighting insufficient, the rest of
the l ander saw it as excessive, including a case against it in their denouncement
6 The consequences of European integration for the distribution of powers within the federation
overlapped with this process, contributing to a rising tension between the Bund and the l ander.
Indeed, it was remarkable how the l ander could combine fierce arguments among them regarding
FA with a united position in favor of their presence at the EU level in all the arenas where their
interests were at stake (Borkenhagen 1990 : 36-44; Jeffery 1995 : 253-266; Jeffery and Yates
1993 : 58-82; Sturm and Jeffery 1993 : 164-177).
7 As Bulmer ( 1991 : 118) puts it, “the court case was brought by a mixture of contributing and
recipient Lander sharing the conviction that the system was unfair.”