German Federal Elections 2013

 

Title of report

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

German Federal Elections 2013

 

 

 

 

 

 

 

 

 

International Business

 

Strategic Management Accounting and ERP

Dawn Aarnio

 

Konstantin Bylkov

Dmitri Ratnikov

 

 

 

 

 

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CONTENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. German political system overview

Germany is a federal parliamentary republic, comprised of sixteen states.. Germany has multi-party system, which is dominated by the Christian Democratic Union (CDU) and the Social Democratic Party of Germany (SPD) already for 50 years.

 

The entire political system is laid out in 1949 constitution (Basic Law), which was slightly corrected after 1990’s German reunification. The constitution emphasizes the protection of individual liberty and human/civil rights.

 

At federal level, German constitution divides power between the legislative and executive branches and independent judiciary.

1. Legislative power

The federal legislative power is vested in the bicameral parliament made up of Bundestag and Bundesrat. The Bundestag is directly elected by the German people, while the Bundesrat represents the regional states.

1. Bundestag

Bundestag is the primary legislative body of Parliament.  It consist of at least 598 deputies which are directly elected by the public every four years (half elected personally and another half via votes for their party). A party must receive either five percent of the national vote or win at least three directly elected seats to be eligible for non-constituency seats in the Bundestag. This standard is also known as “five percent hurdle” and is important in order to prevent political fragmentation and strong minor parties.

 

There are 2 main duties, performed by Bundestag:

1. Legislative process and the parliamentary scrutiny of the government and its work
2. Election of the German Federal Chancellor1

2. Bundesrat

The Bundesrat is a secondary legislative body, which represents the sixteen federal states of Germany at the national level. Altogether, there are 69 members who are delegated by their respective state governments.

 

The federal government required submitting all legislation to the Bundesrat before the Bundestag and Bundesrat approval is compulsory when the state has concurrent powers or when it must administer federal regulations2. Moreover the following institution cannot be dissolved.

2. Executive power

The executive is the part of government that has sole authority and responsibility for the daily administration of the country. The executive branch executes or enforces the law.  In Germany, the executive branch is represented by 3 institutions/individuals.

1. Federal Chancellor

The Federal Chancellor of Germany represents the head of government. The term is directly equivalent to the Prime Minister in many other countries.

 

The Federal Chancellor is the only member of the Federal Government who is elected (after being proposed by the President). In order to be elected, the candidate must secure the votes of an absolute majority of the Bundestag. If the candidate fails to reach an absolute majority in the first round of voting, a second round is held. Before the second round the Bundestag has 14 days to elect another candidate to be Chancellor. There is no limit to the number of possible ballots, although an absolute majority is always required.

 

The constitution empowers the Federal Chancellor to personally choose ministers, who head the most important political authorities. In addition, the Federal Chancellor has substantial authority as a head of Executive and leader of the party that has majority in the Bundestag. (I.e. controls both legislative and executive branches).

 

Current Federal Chancellor – Angela Merkel – takes position since 2005 year.

2. Cabinet

The Cabinet of Germany is the main executive body of the Federal republic of German. It consists of the minister cabinet, guided by Chancellor.  Chancellor also determines the number and identity of ministers. Every Minister supervises its’ own department and policies of planning, legislative initiatives and administrative procedures in accordance with the Chancellor’s broad guidelines.

 

The cabinet regularly convenes Wednesday mornings in the Chancellery.

3. Federal President

As Germany has a parliamentary system of government with the Chancellor running the government, the President has mainly ceremonial and supervisory duties. He is not elected by the people but by a federal convention, which is made up of members from both federal and state governments. The German President serves for a period of 5 years with a maximum of two terms.

 

Current Federal President – Joachim Gauck – was selected on the 23th of March 2012.

3. Juridical power

The constitutional authority vested in courts and judges to hear and decide justiciable cases, and to interpret, and enforce or void, statutes when disputes arise over their scope or constitutionality.3

 

The Juridical system involves 3 types of courts:

 

1. Ordinary courts, dealing with criminal and most civil cases.
2. Specialized courts hear cases related to administrative, labor, social, fiscal, and patent law
3. Constitutional courts focus on judicial review and constitutional interpretation

1. Constitutional courts

The constitutional court is divided into two different senates. Every senate has his own responsibilities as well as administrative staff, panel of eight juries and its’ own Chief of Justice.  Members of the court are selected in equal numbers by Bundestag and Bundesrat.  However Justices can be removed from the position for the abuse of authority.

 

The first senate is responsible for the protection of civil liberties and judicial review of legislation. The second senate deals with constitutional disputes.

2. Main Parties

There are two major parties, which are struggling for power:  the CDU and the SPD, but neither of them can achieve a parliamentary majority in an election being alone. In addition, there are several minor parties – the CSU, the FDP, Alliance ‘90/Green Party and the Left Party. Since 1966, all federal governments have been formed by coalition of at least two parties.

1. Center-right orientation

CDU – The Christian Democratic Union was founded after World War II and it is the main conservative party in Germany.  Angela Merkel is currently takes the position of leader in the CDU and was chosen as a candidate to the position of Federal Chancellor from the CDU party..  The party believes in conservative social values, social market economy, and European integration and in membership of NATO.  Against tax increase and aims complete nuclear power shut-down by 2022.

 

CSU – The Christian Social Union was founded in 1945 and is considered as a “sister party? To Angela Merkel’s CDU. CSU is the only national political party that is actually a state party ; it stands only in Bavaria.  The leader of the party is Horst Seehofer. Key components of their ideology are Christian democracy, Conservatism (historically more conservative than CDU) and Regionalism.

 

In 2009, both parties won 38.4% of votes and 239 of 622 seats in the Bundestag.

2. Center-left orientation

SPD – the Social Democratic party is Germany’s oldest political party, founded in 1875.  Traditionally it has been representing the working classes, but in recent years, it has made efforts to attract middle classes as well. The party platform is social democracy, believing in a strengthened social market economy, a welfare state, civil rights and European integration. A support tax increase and sees no room for material tax cuts. SPD also stands against nuclear power usage. Leader of the party is Sigmar Gabriel, but candidate for the post of Federal Chancellor from the party was Peer Steinbruck.

 

In 2009 won 23.5% of votes and 146 out of 622 seats in the Bundestag.

3. Left orientation

Alliance '90/The Greens is a green political party in Germany, formed from the merger of the German Green Party (founded in West Germany in 1980) and Alliance 90 (founded during the Revolution of 1989–1990 in East Germany) in 1993. Its leaders are Simone Peter and Cem Özdemir. The main ideology of the party was environmental activism and pacifism but when the Green Party joined the Federal government in coalition with the SDP in 1998, it dropped the latter, supporting the 1999 NATO bombing of Kosovo, and the US-led attack on Afghanistan two years later. Alternative energy, sustainable development and a green transport policy are ranked high on the party's To-do list. Jürgen Trittin and Katrin Goring-Eckardt were introduced as candidates for the post of Federal Chancellor. The leaders of the party are Simone Peter and Cem Özdemir.

 

In 2009 won 10.9% of votes and 68 of 622 seats in Bundestag.

4. Liberals

FDP - The Free Democratic Party is a pro-business party that promotes the free market economy and individual liberty. It supports civil liberties, human right and internationalism. It was founded in 1948 but slightly shifted from the center to the Centre-right. FDP has actually been in power the longest time than any other due to the fact, that it was invited to join coalitions with the main winning party. The leader of the party is Philipp Rosier. Party is against tax increase and Eurobonds.  The candidate being introduced for the position of the Federal Chancellor was Rainer Bruderle.

 

In 2009 won 15% of votes and 93 out of 622 seats in Bundestag.

5. Far-left orientation

Lefts party is the most left oriented party in the Bundestag. The Party was founded in 2007 as a merger of the Party of Democratic Socialism and the Electoral Alternative for Labor and Social Justice.  The left Party is headed up by co=chairs Katja Kipping and Bernd Riexinger. It works towards the usual left-wing ideals to overcome capitalism, including increased government public spending and more taxes for corporations and high earners. Leaders of the part were introduced to the post of Federal Chancellor from the Lefts.

 

In 2009 won 12.2% of votes and 76 out of 622 seats in the Bundestag.

6. Right orientation

AFG – Alternative for Germany is a conservative, euro-currency-skeptic German political party founded in 2013. The party states that it is anti-euro as they consider that Euro is the falling currency but not anti-EU.  AFD propose a review of Germany’s membership in the EMU or an exit of peripheral countries. The federal board was established on 14 April 2013 and chose three principal speakers: Konrad Adam, Bernd Lucke and Frauke Petry. The principal speakers are comparable to the leaders of other parties.

3. Election procedure

German Federal elections of the Bundestag and elections for the position of Federal Chancellor occur every four-year and guided by the constitution and the Federal Election Law. Constitution states that elections should be held between 46 and 48 months after the beginning of the legislative period. However the exact date can be shifted to the earlier or later time under exceptional constitutional circumstances.

 

Bundestag is elected using a mixed member proportional system. Voters have two votes: the first vote is used to elect a Bundestag member directly, which is represented in their district or area and second vote is used to support the party. The seats in the Bundestag are distributed according the second vote. A party that wins more direct seats (in the first vote) than it is entitled to according to the number of party votes it received keeps these “overhang” seats. Thus, the Bundestag has at least 598 members: 299 members are directly elected in their district areas and the other 299 members enter parliament via party lists through proportional representation, but could be larger if overhang seats are won. Thereby, the size of the seats of the parliament could vary, but cannot be less than 598. However, the rule of “5 percentage hurdle” applies certain barriers to the entire procedure. A party that wins at least 5% of the vote gets seats in Bundestag automatically and vice versa, if party fails to reach the Rubicon of 5%, it is automatically excluded from the government.

 

The Germany electoral system makes it difficult to any party to end up with an absolute majority. Thereby, after elections, party leaders ( who went through) meet together and discuss the possibilities for coalitions.  It generally takes from four to eight weeks to negotiate the coalition possibilities Once the coalition agreement has been signed, parliament meets for its first session to elect the Federal Chancellor.

 

The Bundestag members do not directly elect the Federal Chancellor, but instead, they elect members, who in turn elect the Chancellor. The strongest party in the new ruling coalition is accorded the right to propose the candidate. The candidate is typically chosen before the general elections and is critical in the federal election campaign.

 

The vote is done by secret ballot with no prior debate. The winning candidate is officially appointed by the Federal President and sworn in in front of the Bundestag.

 

 

4. Results

 

The results of the German Federal Elections 2013 are represented below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The results of the Elections were truly surprising and exciting. The 2013 Federal Elections were the most unpredictable elections in the Germany’s recent political history. Mrs. Merkel’s CDU Party took about 41.5% of the vote. That was a “super result” as she looked set for a historic third term.  Surprisingly, the main political partner of CDU, liberal Free Democrats won only 4.8 percent and failed to pass into the Parliament, as the minimum percentage of votes needed to have seats in Bundestag is 5%. From BBC News Europe: “The results showed that the liberal Free Democrats (FDP) won only 4.8%, which correspondents say is a disaster for the junior coalition partner, leaving it with no national representation in parliament for the first time in Germany's post-war history.”

 

The FDP was beaten by the Green Party (8.4%) and the former communist Left Party (8.6%). The far left party, Die Linke, unexpectedly became the third largest party in the Bundestag. The Alternative for Germany (AfD) unpredictably won 4.7% of votes with their program of anti-euro stance.

 

Although the Merkel’s Party CDU won the majority of the votes, it obtained 311 seats in the Parliament where 316 seats are needed to form a government. Their main partner FDP lost the chance to gain seats in Bundestag and now CDU needs to form a coalition with another party in the Bundestag. The second biggest party in Bundestag is Social Democratic Party (SPD) with a little more than a quarter of the votes (25.7%). CDU and SPD agreed on October 17 to negotiate about forming a coalition like they did in 2005. Back that time it took 65 days for Parties to formulate a coalition contract appropriate for both sides. On November 27th Angela Merkel finally signed the agreement with Social Democrats to form the Grand Coalition together with CDU’s sister Party – Christian Social Union from Bavaria. It took about 2 months to form this 185-page agreement and 17 hours of negotiations to finally come to a compromise. 

In May 2013, Angela Merkel topped the Forbes World’s 100 Most Powerful Women list for the third year running as the woman “who is the backbone of the 27-member European Union and carries the fate of the Euro on her shoulders.”

 

“Merkel laid down strict rules for the aid including domestic tax increases, spending cuts, as well as politically difficult market reforms. She also included the IMF in the so-called troika of creditors, along with the European Commission and the European Central Bank. In fact, Merkel’s tough stance over the handling of the Euro crisis garnered support from her conservative constituency and opponents.”4

 

1. For Germany

According to theguardian.com, CDU and SPD came to the agreement with several changes in the country:

 

• Dual citizenship. Currently, people born and educated in Germany who also hold a passport from a non-EU country still have to choose one citizenship by the age of 23.

 

• A lowering of the pension age from 68 to 63 for those who have contributed to the system for more than 45 years.
• A minimum wage of €8.50 an hour will be introduced in 2015, but won't come into full effect until 2017, thus potentially giving employers time to negotiate exceptions.

 

• The coalition agreement also includes plans for a road charge on foreign drivers – a key demand by the Bavarian Christian Social Union that Merkel had initially rejected before the elections.

 

• Another key CDU/CSU demand that made it into the final document is that German should be made one of the official working languages of the EU alongside English and French.

 

«The challenge for the next German government will be to try to realize these policy proposals without raising taxes: €23bn are set aside to spend on the new policies, with no further borrowings after 2015.» - written in theguardian.com article.

 

All these new changes are criticized from different parties representatives, including Merkel’s own party members. Taking a closer and deeper look at this issue, several aspects can be highlighted. This mini-analysis was made out from the outcomes on the expert.ru website article5:

 

• Critics name the Merkel’s program “the supermarket” as it contains everything any politician need. It is considered to be populist as the program includes extremely big number of promises.

 

• The total costs of the program realization can be estimated as it is mentioned above – around €23bn and even more.  This will be worth of massive amount of money for taxpayers to pay. One big issue here is Merkel’s intention not to raise the taxes. It seems almost impossible for the number of critics.

 

• Another point is Berlin’s invocation of all EU members to follow the regime of austerity and at the same time their enormous spending of money on some objects, which actually can be considered not so important – for example, construction of new roads. As German roads are truly known as the best ones in the world, many people do not see the point of this part of the program.

 

• Several aspects of the Merkel’s program are indeed enormously expensive. For example, tax deductions for families will cost the government around €8bn to realize.

 

In general, the program of CDU is full of promises, where some parts cannot be achieved logically as in this case Germany would fail financially. Mrs. Merkel at some point tries to fulfill the needs of everyone, but this is, of course, impossible. On the other hand, the first powerful woman will definitely bring new changes to the country and its citizens. Germany is a stable country. Nothing extraordinary is going to happen, at least in the nearest future.

2. For Europe

 

Germany is considered as the main “donor” to all European funds and truly has the strongest economy in Europe. It can be thought that everything will remain the same for German-European relations, but many politicians think the opposite.

 

During the euro crisis, Germany donated extremely large amount of money to other governments, but Merkel always insisted on the strictest conditions of returning the finances back to Germany. Although nowadays this country positions itself as the most Europe-oriented, it always defends its national interests. One can say that Germany saves the economies of other countries, but others think that leads to new crises. Still it is enormously difficult for number of countries to raise the level of their economy with such conditions. If Germany wants to save the Eurozone, it will have to soften the conditions of economic programs.

 

Mr. Yan Merkulov, the RBK News main redactor states that the whole Europe will suffer in future if Merkel does not forgive the debts of several countries, e.g. Portugal and Greece, nothing will work6.

 

Another big and serious issue is Merkel’s insistence on creating the Fiscal Union and European United Bank, which help balancing governments’ budgets and improve and increase the financial control widely.

 

According to Mr. Merkulov, Germany has to choose between 2 options in general:

 

1. Germany turns EU into “The Unite States of Europe” and receives main control and responsibility into its “hands”.
2. At some moment, electors decide that they do not need such kind of Europe and they want to quit the EU.