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Essay/Term paper: Germany

Essay, term paper, research paper:  Economics

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On October 3, 1990, the states of the German Democratic Republic (East
Germany) shed their last ties to their Soviet created structure and joined the
Federal Republic of Germany (West Germany). The 23rd article of West Germany's
1949 constitution, the Basic Law, had been drafted specifically to allow for
such an arrival from the East. But as the 1980s drew to a close, few Germans on
either side of the border expected it to be used in their lifetime. Yet, in less
than a year the beginning of an upsurge of popular protest came together against
the communist regime in East Germany and the formal unification of Germany on
West German terms.
At a simple level, the constitution may be seen as a representation of
the traditional German desire for clarity and order, applied to the rights and
duties of the individual. It can also be described as a way of ensuring that the
events of the 1930s, particularly the rise of facism and dictatorship, will
never recur.
As a result of historical roots in West Germany and past abuses by
central government, Germany is a federation. The powers of the states cannot be
reduced. Each of the federal states and Berlin has its own constitution, a
democratically elected Parliament, a government, administrative agencies and
independant courts. However, states are binding to the federal constitution, the
federal constitution is binding upon the states and the federal parliament is
responsible for major legislation and policy. The state parliaments main
responsibility is in two major policy areas: education, and law and order.
Administration of federal legislation is mainly the responsibility of the states,
allowing for greater consideration of local needs and issues. This system of
government ia also intended to bring government closer to the people. In many
cases, state powers are delegated further to local authorities.
A further area of responsibility for the states arives from the
parliamentary structure. The legislative body is the Bundestag, but the
Bundesrat (anupper house representing )the states must approve most legislation.
Each state has between three and five votes in the Bundesrat, depending
on the size of its population. Members of the Bundesrat are appointed by the
state governments for their duration within the state government. Since state
elections are held continually during the term of federal parliament, the
members of the upper house may alter during the life of a federal government.
The approval of the Bundesrat is required for certain types of legislation,
Particularly the budget and those affecting the states. Differences are usually
overcome by a joint committee from the two houses.
The lower house, or the Bundestag, consists of a minimum of 656 deputies.
The Bundestag has a speaker, or president, usually elected from among the
largest parliamentary group. It has three main tasks: to act as the legislative
body, to elect the federal chancellor, and to control government activity. Any
changes to the Basic Law requires a two-thirds majority in both houses of
parliament. Thus the opposition parties can prevent amendments to the
constitution through their representation in either the Bundestag or Bundesrat.
The electoral system, finalized in 1956, is designed to both provide a
government representing the wishes of the people and proportional
representation. Candidates are elected by a majority vote in 328 constituencies
of roughly equal size. Each state is allocated a quota of MPs for each party,
derived from the second, or party vote. The difference between these numbers and
the numbers of directly elected representatives is then made up from party lists.
A party can win more seats on the directly elected segment of the vote than the
number given by the party list results, in which event the size of the lower
house is enlarged. This provision was used in 1990, with the addition of six
To prevent fragmentation, a party must secure either three direct
mandates or 5% of the total vote to be represented in parliament. This results
in a barrier to the development of new parties, which must fullfill the 5%
criteria without the help of representation in parliament. Also, when the
practice of vacancies exist in parliament the positions are filled from the
party list of the previous election rather than by a by-election, hampering new
or small party formation. In the 1990 elections the small, and largely new, East
German parties were allowed, for on time only, to form umbrella groups, side-
stepping this constraint.
However, state elections occur almost always once a year allowing
parties to try and gain representation in a state parliament, often by
concentrating their efforts.
The lower house is elected for a fixed term of four years and early
elections may only be called in specific circumstances. The chancellor (head of
government) is elected by the Bundestag on the proposal of the federal president.
In practice each of the main parties announces its chancellor candidate before
the election, making the task of the president somewhat of a formality. Once
elected, the chancellor nominates his or her cabinet for presidential approval,
but is still personally responsible to parliament. Individual ministers cannot
initiate a vote of no-confidence. A government can only be voted out if the
opposition can establish a majority for what is known as a constructive vote of
no confidence. In other words, the opposition must be able to provide a working
majority in favour of a new government. This occurred in late 1982, when the
small Free Democrat Party changed itsfollowing from the ruling Social Democrats
to the Christian Democrats, enabling the Christian Democrats to form a coalition.

The ability of a government to resign in order to call early elections
is also restricted to cirtain circumstances. When the new government of the
Christian Democrats and Free Democrats formed after the events of 1982 they
decided early elections would be appropriate. However, this decision was forced
to be brought up before the constitutional court, and only because it was the
parties only tactic was it allowed.
Although the federal president performs some of the usual formal
functions of a head of state, including signing treaties and following the
procedures for appointing the chancellor, the role is basically ceremonial. All
presidential orders require the counter-signature of the chancellor or relevant
minister. This obligation is concerned with the alleviating a number of the
problems which arose under Germany's constitution of 1919 which gave the
president too much power and not enough to the parliament. The president is
elected for a five-year term by the full Bundestag and an equal number of
delegates from state parliaments. In the past the election has usually been a
formality. Richard von Weizsacker, formerly Christian Democrat mayor of West
Berlin, was elected president in 1984 and re-elected in 1989. His second, and
final, term comes to an end in May 1994. Although usually a former politician,
the president is expected to stand above party politics.
In the summer of 1989 the German Bundestag passed the so-called Stage
one Postal Reform which came into effect on January 1, 1990. The reforms
included a division between jurisdictional and regulatory functions and
entrepreneurial functions. The reform also resulted in associated business
sectors making up telecommunications, postal services and postal banking. The
aim of these reforms was to allow for more competition, hoping this would lead
to more innovation and development in the telecommunication sector. The reforms
represented to many in Europe a tremendous liberalization of the German
telecommunications market. Under the new structure, the Telekom branch of
Deutsche Bundespost (DBT) was granted a network monopoly. All other sectors of
the telecommunications market, including mobile and satelite communications,
which both legally belong to the monopoly were liberalized. Gradually, licences
were sold to private enterprises in these small and limiting areas of the
monopoly. Within the framework of its economic capabilities, Telekom is legally
bound to provide both the infrastructure and the infrastructure services.
As the new Telecommunication structure was being omplemented the
unification of Germany began, delaying the objectives of the postal reform. Many
Ministers used the successfull expansion of Telekom as a means of recognition,
while postponing a rapid seperation of the political and entrepreneurial
functions. At the beginning of 1990 Telekom had only just started changing from
a public administration to an undertaking based on entrepreneurial based
organization. Telekoms actions during and immediately following unification were
still largely focused on the objectives and procedures of the old Germany.
Therefore, there has been no real debate between Telekom and the Federal
Minister of Posts and Telecommunications (BMPT) on what gudelines Telekom should
follow when investing in the new federal states of the East. Telekomfrom must
decide whether it should follow its original political standpoint or its new
entrepreneurial approach, or whether the two even differ. Such a judgement is
not only desirable, but necessary to determine where the responsibilities of
Telekom lie.
In principle, the regulatory political and organizational structure set
upvalid in the Western German telecommunications sector was also binding in the
new federal states of the East on October3, 1990. This was decided even though
the conditions were very different in the former GDR due to the poor state of
development of telecommunications.The rapid installation of a basic
infrastructure was the priority in the East, while the emphasis in the West was
promoting network and service innovations. Nevertheless the BMPT did little
after unification to change the regulatory political framework in this
sectorregarding the circumstances existing in Eastern Germany. The monopoly on
terminal equipment which had been abandoned in the middle of 1990 in Western
Germany was maintained in Eastern Germany until the end of 1991. The ban on
private agencies offering satelite communication services was eased in mid-1990.
At first, certain conditions were attached to issuing these special permits, but
they were lifted in March 1991. These exceptions to the voice telephone service
monopoly are limited until 1997, and have not had any major influence on
accelerating the expansion of the telecommunication service offered. Only a few
private satellite service firms have offered appropriate services as a result.
In connection with the rapid improvements in the possibilities for East-West
communication, considerations of cost and quality control have created the
major obstacle to a larger range of services offered by private investors.
In June 1991 the BMPT also extended the licence of Mannesmann Mobilfunk,
the second cellular mobile radio operator chosen for Western Germany in December
1989, to cover the whole of Germany. At the same time it ordered that Mannesmann
was to provide access to the D2 network for 90% of the population and 75% of the
area in the new states in the East by the end of 1994. The two mobile telephone
networks in the 900 MHz band, D2 and D1, which were in the process of being
developed just after the political turning point, were in well suited to
providing a considerable expansion in the services offered in Eastern Germany.
With respect to the problems encountered by the federal government in
financing German unification, a special contribution to the federal treasury of
approximately DM 3 billion was imposed on Telekom. The BMPT was able to save
Telekom and its customers from a greater financial burden that had originally
been planned. In reality, however, this special contribution imposes an
additional financial burden on Telekom and makes the telecommunication services
it offers in Germany more expensive.
After the fall of the Berlin Wall and of the Communist regime at the
turn of 1989-90, it was not to clear if the developments would end in a rapid
unification of the two Germanies. Only months before the summer of 1990, when
Germany was to be officially united, a many decisions were taken in East and
West Germany that greatly affected the German telecommunication sector.
Immediately following the political turning point, as early as the beginning of
1990, joint committees were set up between the BMPT and the GDR ministry
responsible, and between DBT Telekom in the West and Deutsche Post Telekom in
the East. The main purpose of the committees was to ensure the rapid development
of the telecommunications infrastructure in the GDR and guide a compatible
merger of the two organizations' regulatory bodies. By March of 1990 (long
before German unification had been decided) the two business enterprises had
completed the Telekom 2000 program to develop infrastructure in the GDR,
allowing Deutsche Post Telekom to start on the expansion of infrastructure in
the GDR with the financial support from DBT Telekom.
During the period of the political turning point the forces supporting
German unification gained the upper hand at an early stage within the post and
telecommunication sector of the GDR. They stematically reorganized structures
inside the GDR telecommunication sector with this in mind. They anticipated
Western German restructuring by seperating the GDR Post Ministry from Deutsche
Post and by splitting up the business underytaking into three divisions. These
same forces also prevented different regulatory political structures from
developing during these hectic months. It is a fact that foreign network
operators are known to have made offers to the GDR Minister of Posts during this
time, and for a short period the minister actually did consider licensing a
further (third) digital cellular mobile radio network operator in the GDR.
However, it was decided that ensuring optimum conditions for the smooth union of
telecommunications branches in East and West was their priority. Their strategy
was to achieve this by creating regulatory political by creating regulatory
political and organizational structures which were as uniform as possible. For
this reason the sectoral structures of the Western German telecommunication
sector were adopted in the new states of the East with practically no
modification. In this respect, developments in the telecommunication sector
following the political turning point do not differ from developments in other
branches of society, such as the sciences, the health service and others.
It is debated whether the structures introduced by the postal reform
were really suited to the rapid developments in telecommunications in Eastern
Germany, or whether it might not have been better to choose a regulatory
political structure that better matched the situation they faced. With a few
exceptions, no such discussions were ever undertaken. Because of the unexpected
speed with which of German unification took place, and the enormous public
pressure for immediate noticeable improvements in the industry, it was common to
spend hours of unsuccessful attempts to dial numbers in East-West communication.
Frequencies would have been available in the 1800 MHz band. However, this idea
was not pursued any further. Presumably the lack of any standardization of DCS
1800 at this time and respect for the financial stability of DBT Telekom, which
had just launched a DM 60 billion expansion program for the new federal states
in the East, played a major role in this respect. The new federal states
continued to play a role with the later licensing of a private E1 network
operator on the basis of DCS1800 in the spring of 1993, insofar as E-Plus has
undertaken to start developing its network in the East.
Also in the autumn and winter of 1990, the Monopolkommission (Monopolies
Commission) entered the debate, issuing a statement backed by a report
advocating a competitive market, or at least strengthening the competitive
elements, in the process of developing infrastructure in the East. None of these
ideas were followed up, all mainly because of the belief that no real dramatic
change in developments could be expected from such a major change in regulatory
Development of private investment in the new federal states of Eastern
Germany could best be described as hesitant. Companies were largely skeptical of
the industry structure.Because of Telekoms merger with Deutsche Post and its
ownership of existing buildings and land it was only minimally affected by the
problems of ownership to private companies and administrative procedures.
The primary objective of all development was to improve the
telecommunications infrastructure as soon as possible. Telecommunications was
seen as playing a leading role in the process of economic recovery and its
significance for the growing together of East and West. There was not enough
time for additional basic experimentation, either on the political or on the
technological level.
Another important political objective behind the process of unification,
was the intention of creating a uniform standard of living in the East and West.
The importance of this objective and of its implications within the political
process has an enormous influence on overall economic developments in Eastern
Germany and the telecommunication sector. In view of the huge excess demand for
telephone connections and telecommunication services, there were economic
arguments in favor of a sharp increase in tariffs above those in the West.
However, such a policy could never have been implemented at the political level.
Telephone tariffs in the East were brought in line with those in the West as
soon as was technically possible, regardless of the different conditions in
Eastern and Western Germany. Uniform charges were considered politically to be
more important than an economically efficient distribution of the short supply
of telephone connections. Like in many other economic sectors, goals of economic
efficiency have lost out to of just distribution when fixing telephone tarriffs
in the new states in the East.
As a public service, the West German telecommunications system is run by
the federal counties. The legal basis of this state monopoly is found in Article
87 of West German basic law, which states that the West German PTT has to be
conducted by a direct federal administration with its lower level of
administrative offices. The right of legislation on postal and telecommunication
matters falls exclusively on the federal county, according to Article 73 of the
basic law.
The federal minister for postal and telecommunication services is the
head of the West German PTT. According to Article 65 of West German basic law
the federal minister for postal and telecommunication services, shall conduct
the affairs of the West German PTT autonomously and on his own responsibility.
Telecommunication policy formation as well as the management of administration
is the responsability of the federal minister for postal and telecommunication
services,. However, his power is is restricted and controlled by the Postal
Administration Council (Para 1, Art 1 of the postal administration law). The
members include the West German Bundestag, the West German Bundesrat and
representatives of the different areas of the economy as well as seven members
of the West German PTT trade union, the Deutsche Postgewerkschaft (DPG), and
experts from the fields of broadcasting and finance (Para 5, Art 2). All 24
members of the Postal Administration Council are appointed by their national
councils or by the minister for postal and telecommunication services (expert
from the field of broadcasting) and the minister for finance (expert from the
field of finance). According to Para 12 of the postal administration law, the
council decides on the budget of the West German PTT. Further executive rights
extend to conditions on the use of postal and telecomunication systems,
including pricing (ara 12, Art 4), decisions on the field of activities (Para 12,
Art 5), as well as changes in the technical telecommunication infrastructure
(Para 12, Art 6). As an important control body, the Postal Administration
Council has to approve all regulations proposed by the federal minister for
postal and telecommunication services.However, the minister for postal and
telecommunication services has the power to annul decisions of the postal
administration council (Para 13, Art 1,2).
Despite this kind of veto right, the federal government as well as the
Bundestag have no direct control over the West German policies of
telecommunication. Yet the West German PTT is obliged to respect the principles
of the politics of West Germany, according to Para 2, Art 1 of the postal
administration law. However, the principles defined by the federal government
are so vague that they cannot properly act as a stern basis for engaging in
telecommunication policies. The influence of the Bundestag is even weaker since
the budget of the West German PTT forms a special fund (Para 3, Art 1 of the
postal administration law), over which the West German PTT exercises its own
budgetary rights. The influence of parliament is only by the participation of
members of parliament in the postal administration council as well as in
political positions in the federal postal and telecommunication administration.
The result is that West German telecommunication policy is designed and
implemented around the postal administration council and the postal
administration. In spite of occasional accusations of opportunism aimed at the
postal administration council, it's believable that the post administration has
adjusted itself to the potential compromises in the council. This can be backed
up by the strong clashes in the council, and by that overruling the postal
administration council too often would likely lead to harmful campaigns against
the council.
The development of the telecommunication infrastructure within this
political and institutional framework became more and more criticized in the
1970s. Finally it caused the demand for reform within the institutional and
political framework. The origins of the criticism came from the rapid
technological developments of the 1960s and 1970s. Spectacular developments in
the realms of microelectronics and transmission technology as well as the
continuing digitalization made merging telecommunication and data-processing
possible. This resulted in new quantitative and qualitative demands on the
telecommunication infrastructure.
According to critics, the West German PTT, by not allowing competition,
had not been in a position to complete these demands. This criticism, mainly
forwarded by the Liberal Democratic Party, was mostly concerned with the
international competitiveness of West Germany. Further demands for the opening
of markets were created by those countries which have already deregulated their
telecommunication systems, for example the UK, USA, and Japan.

Germany has eight main political paries: Christian Democratic Union
(CDU), Christian Social Union (CSU), Free Democrat Party (FDP), Social Democrat
Party (SDP), The Greens, The Party of Democratic Socialism (PDS), The
Republicans, and the Deutsche Volksunion.

Christian Democratic Union

The CDU, combining Catholics abd Protestants, has been the most
important single party in the development of post-war Germany. Its foreign
policy was forged by Konrad Adenauer and is based on the Atlantic alliance.
Although it also accepted the opening to the east initiated in the late 1960s
and early 1970s by Willy Brandt and it is currently concerned with stability in
post-communist Eastern Europe. Its leader, Helmut Kohl, has been chancellor
since 1982 and still exercises a powerful personal control over the party. The
CDU's domestic policy is based on the concept of the social market as developed
by Ludwig Erhard in the 1950s.

Christian Social Union

The CSU is a sister party of the CDU. It is Catholic and operates only
in Bavaria where it is not challenged by the CDU. Under the leadership of the
late Franz Josef Strauss, it was more openly assertive in the pursuance of
German interests than the CDU. Its present leader is the finance minister, Theo
Waigel. Howevere, Edmund Stoiber, the prime minister of Bavaria, as a more
aggressive politician in the tradition of Franz Josef Strauss, is equally

Free Democrat Party

The free democrats are basically a liberal party in the European rather
than the American sense; they believe in limiting government interference in all
walks of life, including both questions like divorce and abortion, and the
economy. On the latter they are generally to the right of the CDU. However, the
FDP's most dominant personality in the second half of the 1970s, and until his
resignation in 1992, was Hans-Dietrich Genscher, who made his name as foreign
minister. The present leader, Klaus Kinkel, is also foreign minister.

Social Democrat Party

Once Marxist (though always democratic), the Social Democrats
established a programme of pragmatic reform known as the Bad Godesberg program
at the end of the 1950s. This paved the way for Helmut Schmidt, two of Germany's
most influential post-war politicians. The difference between their economic
philosophy and the Christian Democrats' social market is not fundamental. At
present, however, the SPD believes the CDU has failed to face up to the need to
pay for unification, and advocates higher taxes, especially on the better off.
The SPD's foreign policy has always emphasized openings to the east, but not at
the expense of the Atlantic alliance or the EU. There is a strong pacifist
element which currently opposes any German military activity outside Germany,
including participation in UN peacekeeping operations; however, it should be
said that there are pacifists in all major parties.

The Greens

The Greens had a major influence on German policies of all major parties
during the 1980s, having surmounted the 5% threshold needed to be represented in
parliament in the 1983 elections. However, in December 1990 they just failed to
meet this threshold in western Germany, partly because of an internal division
between realists and purists. They are represented in the Bundestag because in
eastern Germany, where a seperate threshold was provided, they won more than 5%
in alliance with Bundnis 90, a group of protest parties from the former East
Germany. They also participate in governing coalitions in some state parliaments.

The Party of Democratic Socialism

This is the former SED or ruling party of East Germany. Under a moderate
leader, Gregor Gysi, who was never closely associated with the Honecker regime,
it has attracted the support of some of those who have lost their jobs or homes
as a result of unification.

The Republicans and Deutsche Volksunion

The Republicans and Deutsche Volksunion represent nationalist forces on
the far right of German politics. They have played on the immigration issue.


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