Federalism In East Germany

As a term federalism is used to describe a government system in which sovereignty is constitutionally divided between a central authority and political units, for instance states. It is based upon democratic rules. Furthermore, “federalism, in reconciling a regional and a national sense of belonging in a non-hierarchical order, is predicated on the assumption of plurality of identities, and thus defies any attempt to equate it with a single political concept or ideology’’ (Umbach, 2002: 5). German Federalism is not an abstract concept, because it does not have universal definition. The meaning of federalism has altered progressively over many centuries. ‘Federalism did, however play an important role in reconstructing democracy after

What actually caused the harsh economic deterioration after 1990? In contrast to the West Germany economic , in the former GDR the situation was described as a ‘veiled economic collapse and government bankruptcy”. While the economy of the FRG experienced boom, the situation in the East Germany differed totally. Much more people moved to West Germany after the fall of the Berlin Wall. 8 years after the events of the 1990 the number of people that leaved former GDR was more than 800,000. This caused decrease in a workforce, in a working age and increase in the unemployment. In July 1990 the chancellor Helmut Kohl introduced the monetary union and the currency in East Germany was converted at a rate of 1:1 to Deutschmark that caused new crises in this part of the country. Although the former GDR adopted institutional infrastructure long established in the West Germany and the community benefited from the creditworthiness of the West Germany, the former GDR needed longer time and much more investments in order to gain on the West. The reasons for the structural deficit of the East German economy were : “the command economy, capital stock was obsolete, low division of labour and that the banks, insurance companies and retail sectors were underdeveloped.” (Gromling,2008: 7). The economic deficit of the East Germany was a sign that immediate changes needed to be implemented if Germany wanted to remain an economic leader in Europe. As a part of monetary union most financial liabilities and assets were converted at a rate of 2 Eastmarks to 1 Deutschmarks. Moreover, recurrent payment( e.g. rents and wages) were converted