This chapter demonstrates how, over a period of more than 40 years, the Länder have pulled together in pursuing a compensation-through-participation strategy in responding to the challenges of Europeanization. Their cooperative strategy facilitated a sharing of adaptational costs, which allowed for a flexible redressing of the territorial balance of power and resulted in a reinforcement and certain revival (rinascimento) of German cooperative federalism.

The double loss of competencies and the uneven distribution of “say and pay”

Europeanization is, alongside German unification, the most important challenge that cooperative federalism has been faced with so far. After the constitutional amendments in the 1960s and 1970s, the transfer of domestic competencies to the European caused the second major push toward territorial centralization. Unlike joint tasks and mixed financing, however, Europeanization entails a gradual erosion of regional autonomy, which increases as European integration proceeds. Moreover, Europeanization entails a twofold logic of centralization: the Länder lose competencies both at the regional and the federal level, which fundamentally alters the territorial balance of power in favor of the central state.

Like all institutionally well-entrenched regions, the Länder lose policy competencies in the area of their exclusive responsibilities as a consequence of Europeanization. Unlike in domestic policy-making, the Länder do not receive any compensation for such losses. Once their competencies are transferred to the European level, the Länder do not have any direct input on decisions taken in these areas. The number of exclusive Länder competencies is, however, rather small (culture, media, education, justice and home affairs).