The German Constitution (Grundgesetz) stipulates that comparable living standards must be assured in all federal states. To achieve that, the differences in economic power of the individual states must be equalized. The respective law defines the methodology which is supposed to be used. The present arrangements expire in 2019.
All transfers together amount to 7,3 BEUR. Of that amount, the State of Bavaria (one out of 16 states) has the distinction of having to cough up slightly more than half of it (3,7 BEUR). Elections are coming up in Bavaria next year, so this is as good a time as any to start threatening a veto to the next transfer regulation.
What is so fascinating in the discussion is that the argumentation of the Bavarian Economy Minister is the same as that of Germany would be in a European transfer union. Just one soundbite: Berlin, the largest recipients of transfers, has instituted a “welcome grant” for new students. Bavaria, as one of the measures which it had instituted years ago to beef up its finances, had introduced a “tuition fee” at universities. So the Bavarian Economy Minister asks: “Why should we charge our students a tuition fee if that money is used by Berlin to give away a “welcome grant” for new students?” Right away, the moderator innocently asks whether this isn’t the time to think of national German interests instead of egotistic state interests…
The Bavarian Finance Minister goes even further: “If we impose austerity measures on countries like Greece, we have even more reason to impose austerity measures on our fellow states!” Not a bad argument! He wants to tell his fellow states what they can spend money on and what not!
There are a couple of big differences between the domestic German transfer union and what a European transfer union would be. First of all, all the negotiators speak the same language; German. Secondly, they are all Germans and share the same national heritage. Call it “of the same blood”, if you will.
Now, if you picture a future day where ministers from all EU-countries sit around a table to hash out the formula for calculating payments in the transfer union, my prediction would be that that discussion will be even more interesting than the one shown on Bavarian TV the other day!