Germany’s Reunification - The Political Geography of Inequality - page 172

political climate and the adjustments introduced during the second half of the
period, the FA system remains a major source of redistribution between ter-
ritories in Germany, and the levels to redistribution towards Eastern l ander
have not declined. Indeed, they are unlikely to do so as the reform of the fiscal
equalization system remains stalled by insurmountable distributive conflicts in
the context of long lasting efforts towards federalism reform. 25
The Aftermath of Reunification: Quantitative Evidence
Table 6.9 replicates earlier analyses of the developments of interregional trans-
fers per capita for the period 1995-2002. The contrast between these results
and those for the earlier period reveals interesting differences.
In this section I have highlighted two major differences between the post-
1995 period and the earlier years. First, political and economic elites realized
over time that the initial strategy to jumpstart capitalism in the East and stop the
population flow is not working. As a result, federal elites should no longer target
their transfers towards those areas that are more likely to expel population.
In Table 6.9 , the lack of association between mobility and transfers in the
post-1995 period is consistent with this development. Mobility is no longer a
predictor of the magnitude of interregional transfers per capita. After the initial
phase, in which a conscious effort to stop undesired migration patterns from
East to West took place, interregional transfers are no longer responsive to
mobility patterns.
Second, the failure to relaunch capitalism in a short period of time had
its political correlate in the ultimate failure to prevent the emergence of an
East-West divide in the patterns of party competition. Given the new partisan
geography, one should observe a weaker correlation between the size of trans-
fers received and a particular party (or coalition) controlling both the federal
government and the l ander.
The results reported in Table 6.9 are consistent with this expectation. While,
according to the estimates reported, Eastern l ander continue to be privileged
beneficiaries of interregional redistribution, they no longer receive an additional
premium associated with the copartisanship between their regional incumbents
and the federal ones. Transfers forge coalitions to deliver votes, as successfully
experienced by the CDU during the early period postunification (see Table
6.6 ). Consistent with the qualitative evidence provided in this section, changes
in the partisan composition of regional and federal legislatures altered the
federal government's incentives when targeting recipients.
25 These recent efforts, initiated first by the Red-Green Coalition in 2003, and resumed, after
their initial failure, by the Grand Coalition after 2005, are still ongoing. For details of these
negotiations, and the unlikely prospects of a consensus-based reform of fiscal federalism
in Germany, see Gunlicks ( 2005 , 2007 ); Moore, Jacoby and Gunlicks ( 2008 ); and Scharpf
( 2007 ).