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Campus inSaint Petersburg

Distributing Power and Money: Federalism and Decentralisation in Germany and Russia

On 7th April, the International Seminar on Distributing Power and Money: Federalism and Decentralisation in Germany and Russia took place at the Higher School of Economics, St Petersburg. The event was organized by the HSE Department of Political Science and Bachelor's Programme 'Political Science and World Politics' as part of the 14th annual Germany Week in St Petersburg – a project aimed at supporting and developing friendly relations and multilateral ties between Russia and Germany. The seminar brought together political analysts and economists – experts in the field of territorial management from the Higher School of Economics, the Leontief Center, MGIMO, the Freie Universität Berlin, Technische Universität Dresden as well as the non-governmental organization Forum of Federations. Our guests discussed the two models of federalism in Germany and Russia focusing on the reforms in the field of decentralization of public administration.

Felix Knuepling from Forum of Federations kick-started the session by introducing the particularities of German federalism and recent federal reform. He explained the German system as a unique and very different type of federalism as it involves higher level of power sharing and shared responsibilities between center and states compared to other countries. This, in a way, contrasts with German society where the concept of unity is emphasised. Most importantly, Knuepling highlighted the interdependency between the two levels of government which makes dialogue a key driver of reform.

Irina Busygina from MGIMO University (Moscow) gave the Russian response. Referring to federalism as an “incomplete contract”, Busygina highlighted that permanent political bargaining is at the centre of this type of system. In practice, this means that any federation is dynamic, and thus significantly prone to change. Yet, Prof. Busygina underlined that even though likely, such change would require agreement of a number of veto players which might prove difficult to obtain. As such, we are more likely talking about an incremental reform based on compromise rather than a drastic change. From this point of view, federal reform can be seen as “the art of finding a compromise” that would satisfy many different interests and actors. Finally, examining federal changes in Russia, Prof. Busygina pointed out that unlike Germany, where results come later but bargaining results last longer, in Russia, the strong center means that there is little incentive to bargain with other actors, which in turn often leads to unilateral decisions.

Sabine Kropp from the Freie Universität in Berlin built upon Prof Busygina’s ideas, focusing on the reasons why even though strongly decentralized, German federalism has such consensus-generating character. The explanation, according to Kropp, lies in the links between the numerous administrative bodies and bureaucrats connecting on different levels of the system. Thus, federalism in the German sense can be seen as “a spider-web” with a variety of coordinative bodies and techniques such as meetings between minister conferences and minister presidents, as well as party coordination even before those meetings.

Stanislav Klimovich from HSE Moscow dealt with the same question from the Russian perspective. Yet, he related centralization and decentralization to democracy and non-democracy explaining that while decentralization in democracy tends to improve the quality of government, in non-democracies such process is seen as an option only if the regime wants to survive. Thus, Klimovich concluded that we can understand decentralization in the logic of regime survival. However, he ended on a positive note pointing out that as the situation continously deteriorates, this may become an incentive to come up with a strategy of how to decentralize in a way that would produce positive results.

Final remarks were added by Professors Georg Milbradt from Technische Universität Dresden and Andrey Yushkov from the Leontief Centre in St Petersburg. Тhe two guests attempted to compare and contrast the different aspects of fiscal federalism, concluding that Germany and Russia differ significantly in this respect. A long-standing member of the German Federal Council, Prof. Milbradt explained the German principle of expenditure being “in state by their own right” with every government paying for its own administration or services no matter if governed by state law or federal law. By contrast, having missed its major chance to implement political decentralization and give extensive fiscal resources to regions in the 1990s, Yushkov placed the Russian federal case on the opposite side. Following 2003-5 turning point, the centralizing trend seems to have continued, with a lot of critics referring to Russia’s “lethargic” pace of reform in this dimension.

Finally, all guests agreed that the two cases at hand are extremely interesting but nearly impossible to compare. Therefore, with no clear-cut modern solution, the miracle of establishing consensus in federal systems has to be dealt with in local context, taking the different mindsets, political goals and economic situations into account.


By Teodora Delcheva, an exchange student, University College London, UK