Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

COUNTRY PROFILE: GERMANY 

December 2005 

COUNTRY 

Formal Name: Federal Republic of Germany (Bundesrepublik Deutschland). 

Short Form: Germany. 

Term for Citizen(s): German(s).

Capital: Berlin, with a population of about 3.4 million. 

Major Cities: After Berlin, the most populous cities are Hamburg (1.7 million), Munich (1.2 

million), Cologne (964,000), Frankfurt (644,000), Essen (603,000), Dortmund (592,000), 

Stuttgart (582,000), Düsseldorf (568,000), Bremen (543,000), and Hanover (516,000). 

Independence: The Day of German Unity commemorates the official reunification of the 

democratic Federal Republic of Germany (West Germany) and the communist German 

Democratic Republic (East Germany) on October 3, 1990. The holiday is the equivalent of an 

independence celebration because it marks the end of the country’s Cold War-driven division 

into two separate states.

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Public Holidays: Official holidays are New Year’s (January 1), Good Friday/Easter Monday 

(variable dates in March or April), May Day (May 1), Ascension Day (variable date in April or 

May), Pentecost (variable date in April or May), Day of German Unity (October 3), and 

Christmas/Boxing Day (December 25–26). 

Flag: The German flag is a horizontal tricolor consisting of black (top), 

red (middle), and yellow (bottom) stripes. 

HISTORICAL BACKGROUND

Current Challenges: In 2005 Germany was still grappling with the effects of unification of the 

democratic Federal Republic of Germany (West Germany) and the communist German 

Democratic Republic (East Germany) on October 3, 1990. Unification brought together a people 

separated for more than four decades by the division of Europe into two hostile blocs in the 

aftermath of World War II. Economically, a division remains between East and West, 

exacerbated by the decision following unification to substitute the German mark (subsequently 

replaced by the euro in January 1999) for the East German currency, generally at a 1:1 rate, and 

the adoption of similar wages and benefits in both parts of the country in spite of unequal 

productivity. Despite massive investment from the western part of Germany into the new 

German states of the East—a transfer of wealth that totaled about US$1.6 trillion from 1991 to 

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2004—the latter still suffer from extremely high unemployment. Germany’s government, run by 

a “Grand Coalition” of the Christian Democratic Party/Christian Social Union and the Social 

Democratic Party, is continuing to pursue an economic reform effort aimed at reversing rising 

unemployment, currently about 11 percent nationwide but much higher in the East, by reducing 

taxes and generous unemployment and other social benefits. The expansion of the European 

Union (EU) in 2004 into low-wage Eastern Europe, including neighboring Poland and the Czech 

Republic, poses a fresh challenge to Germany’s social-market economy. 

Coping with Division: In its long history, Germany has rarely been united. For most of the two 

millennia that central Europe has been inhabited by German-speaking peoples, such as the 

Eastern Franks, the area now called Germany was divided into hundreds of states, many quite 

small, including duchies, principalities, free cities, and ecclesiastical states. Not even the Romans 

united what is now known as Germany under one government; they managed to occupy only its 

southern and western portions. In A.D. 800 Charlemagne, who had been crowned Holy Roman 

emperor by Pope Leo III, ruled over a territory that encompassed much of present-day Belgium,

France, Germany, the Netherlands, and Switzerland, but within a generation its existence was 

more symbolic than real.

Medieval Germany was marked by division. As France and England began their centuries-long 

evolution into united nation-states, Germany was racked by a ceaseless series of wars among 

local rulers. The Habsburg Dynasty's long monopoly of the crown of the Holy Roman Empire 

provided only the semblance of German unity. Within the empire, German princes warred 

against one another as before. The Protestant Reformation deprived Germany of even its 

religious unity, leaving its population Roman Catholic, Lutheran, and Calvinist. These religious 

divisions gave military strife an added ferocity in the Thirty Years' War (1618–48), during which 

Germany was ravaged to a degree not seen again until World War II. 

The Peace of Westphalia of 1648 left German-speaking Europe divided into hundreds of states. 

During the next two centuries, the two largest of these states—Prussia and Austria—jockeyed for 

dominance. The smaller states sought to retain their independence by allying themselves with 

one, then the other, depending on local conditions. From the mid-1790s until Prussia, Austria, 

and Russia defeated Napoleon at the Battle of Leipzig in 1813 and drove him out of German 

territory, much of the area was occupied by French troops. Napoleon's officials abolished 

numerous small states; as a result, in 1815, after the Congress of Vienna, German territory 

consisted of only about 40 states. 

During the next half-century, pressures for German unification grew. Scholars, bureaucrats, 

students, journalists, and businessmen agitated for a united Germany that would bring with it 

uniform laws and a single currency and that would replace the benighted absolutism of petty 

German states with democracy. The revolutions of 1848 seemed at first likely to realize this 

dream of unity and freedom, but the monarch who was offered the crown of a united Germany, 

King Friedrich Wilhelm IV of Prussia, rejected it. The king, like the other rulers of Germany's 

kingdoms, opposed German unity because he saw it as a threat to his power. 

Despite the opposition of conservative forces, German unification came just over two decades 

later, in 1871, following the Franco-Prussian War, when Germany was unified and transformed 

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into an empire under Emperor Wilhelm I, king of Prussia. Unification was brought about not by 

revolutionary or liberal forces but rather by a conservative Prussian aristocrat, Otto von 

Bismarck. Sensing the power of nationalism, Bismarck sought to use it for his own aims, the 

preservation of a feudal social order and the triumph of his country, Prussia, in the long contest 

with Austria for preeminence in Germany. By a series of masterful diplomatic maneuvers and 

three brief and dazzlingly successful military campaigns, Bismarck achieved a united Germany 

without Austria. He brought together the so-called "small Germany," consisting of Prussia and 

the remaining German states, some of which had been subdued by Prussian armies before they 

became part of a Germany ruled by a Prussian emperor. 

Although united Germany had a parliament, the Reichstag, elected through universal male 

suffrage, supreme power rested with the emperor and his ministers, who were not responsible to 

the Reichstag. The Reichstag could contest the government's decisions, but in the end the 

emperor could largely govern as he saw fit. Supporting the emperor were the nobility, large rural 

landowners, business and financial elites, the civil service, the Protestant clergy, and the military. 

The military, which had made unification possible, enjoyed tremendous prestige. These groups 

were pitted against the Roman Catholic Center Party, the Socialist Party, and a variety of liberal 

and regional political groups opposed to Prussia's hegemony over Germany. In the long term, 

Bismarck and his successors were not able to subjugate this opposition. By 1912 the Socialists 

had come to have the largest number of representatives in the Reichstag. They and the Center 

Party made governing increasingly difficult for the empire's conservative leadership. 

The World Wars: In World War I (1914–18), Germany’s aims were annexationist in nature and 

foresaw an enlarged Germany, with Belgium and Poland as vassal states and with colonies in 

Africa. However, Germany’s military strategy, involving a two-front war in France and Belgium

in the west and Russia in the east, ultimately failed. Germany’s defeat in 1918 meant the end of 

the German Empire. The Treaty of Versailles, the peace settlement negotiated by the victors 

(Britain, France, and the United States) in 1919, imposed punitive conditions on Germany, 

including the loss of territory, financial reparations, and a diminished military. These conditions 

set the stage for World War II. 

A republic, the Weimar Republic (1919–33), was established with a constitution that provided 

for a parliamentary democracy in which the government was ultimately responsible to the 

people. The new republic's first president and prime minister were convinced democrats, and 

Germany seemed ready at last to join the community of democratic nations. But the Weimar 

Republic ultimately disappointed those who had hoped it would introduce democracy to 

Germany. By mid-1933 it had been destroyed by Adolf Hitler, its declared enemy since his first 

days in the public arena. Hitler was a psychopath who sensed and exploited the worries and 

resentments of many Germans, knew when to act, and possessed a sure instinct for power. His 

greatest weapon in his quest for political power, however, was the disdain many Germans felt for 

the new republic. 

Many Germans held the Weimar Republic responsible for Germany's defeat in World War I. At 

the war's end, no foreign troops stood on German soil, and military victory still seemed likely. 

Instead of victory, however, in the view of many, the republic's Socialist politicians arranged a 

humiliating peace. Many Germans also were affronted by the spectacle of parliamentary politics. 

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The republic's numerous small parties made forming stable and coherent coalition governments 

very difficult. Frequent elections failed to yield effective governments. Government policies also 

often failed to solve pressing social and economic problems. 

A modest economic recovery from 1924 to 1929 gave the Weimar Republic a brief respite. The 

severe social stress engendered by the Great Depression, however, swelled the vote received by 

extreme antidemocratic parties in the election of 1930 and the two elections of 1932. The 

government ruled by emergency decree. In January 1933, leading conservative politicians 

formed a new government with Hitler as chancellor. They intended to harness him and his party 

(the National Socialist German Workers’ Party, or Nazis), now the country's largest, to realize 

their own aim of replacing the republic with an authoritarian government. Within a few months, 

however, Hitler had outmaneuvered them and established a totalitarian regime. Only in 1945 did 

a military alliance of dozens of nations succeed in deposing him, and only after his regime and 

the nation it ruled had committed crimes of unparalleled enormity known as the Holocaust. 

The Post-War Era and Unification: In the aftermath of World War II (1939–45) and following 

occupation by the victorious powers (the United States, the Soviet Union, Britain, and France), 

Germany came to consist of two states. One, East Germany, never attained real legitimacy in the 

eyes of its citizens, fell farther and farther behind economically, and had to use force to prevent 

its population from fleeing to the West. The other, West Germany, was resoundingly successful. 

Within two decades of defeat, it had become one of the world's richest nations, with a prosperity 

that extended to all segments of the population. The economy performed so successfully that 

eventually several million foreigners came to West Germany to work as well. West German and 

foreign workers alike were protected from need arising from sickness, accidents, and old age by 

an extensive, mostly nongovernment welfare system. In 1990 German unification overcame the 

geographic separation of the two German states, including an infamous wall between West 

Berlin and East Berlin, but economic integration still has not been achieved satisfactorily. In the 

first decade of the twenty-first century, the forces of globalization are posing a renewed 

challenge to the social-market economy in place throughout the nation. 

GEOGRAPHY 

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Location: Germany is located in the heart of Europe, at the 

crossroads between west and east, north and south. The northern 

border is formed by the North Sea and the Baltic Sea, separated by 

a brief border with Denmark. In the west, Germany borders on the 

Netherlands, Belgium, Luxembourg, and France. In the south, 

Germany borders on Switzerland and Austria. In the east, Germany 

borders on Poland and the Czech Republic. 

Size: Germany has an area of 357,022 square kilometers. The longest 

distance from north to south is 876 kilometers; from east to west, the 

longest distance is 640 kilometers. One-third of the country’s territory 

belonged to the former East Germany. 

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Land Boundaries: Germany shares land boundaries with Austria (784 kilometers), Belgium

(167 kilometers), the Czech Republic (646 kilometers), Denmark (68 kilometers), France (451 

kilometers), Luxembourg (138 kilometers), the Netherlands (577 kilometers), Poland (456 

kilometers), and Switzerland (334 kilometers). 

Disputed Territory: In November 1990, Germany and Poland settled a protracted historical 

dispute by signing a treaty confirming the Oder-Neisse line as a permanent border. 

Length of Coastline: Germany’s coastline along the North Sea and Baltic Sea measures 2,389 

kilometers. 

Maritime Claims: Germany claims a territorial sea of 12 nautical miles and an exclusive 

economic zone of 200 nautical miles. 

Topography: Germany is divided into four distinct topographic regions. From north to south, 

they are the Northern Lowlands, the Central Uplands, the Alpine Foreland, and the Alps. From

the north, a plain dotted with lakes, moors, marshes, and heaths retreats from the sea and reaches 

inland, where it becomes a landscape of hills crisscrossed by streams, rivers, and valleys. These 

hills lead upward, gradually forming high plateaus and woodlands and eventually climaxing in 

spectacular mountain ranges. As of the turn of the century, about 34 percent of the country's area 

was arable, and about 30 percent was covered by forests. 

Principal Rivers: Germany’s principal rivers, ordered by length, are the Rhine, Elbe, Danube, 

Main, Weser, Saale, Ems, Neckar, and Havel. The Rhine River, which stretches 1,320 kilometers 

from Switzerland through Germany and the Netherlands to the North Sea, is a major north-south 

transportation route. The next most commercially significant river is the Elbe, which flows 1,165 

kilometers from the Czech Republic through Germany to the North Sea. The Danube flows 2,848 

kilometers east from the Black Forest region of Germany to the Black Sea. 

Climate: The northwestern and coastal areas of Germany have a maritime climate caused by 

warm westerly winds from the North Sea; the climate is characterized by warm summers and 

mild, cloudy winters. Farther inland, the climate is continental, marked by greater diurnal and 

seasonal variations in temperature, with warmer summers and colder winters. The alpine regions 

in the extreme south and, to a lesser degree, some areas of the Central Uplands have a so-called 

mountain climate. This climate is characterized by lower temperatures because of higher 

elevations and greater precipitation caused by air becoming moisture-laden as it rises over higher 

terrain. 

Overall, Germany's climate is moderate and is generally without sustained periods of cold or 

heat. The yearly mean temperature for the country is about 9° C. During January, the coldest 

month, the average temperature is approximately 1.6° C in the north and –2° C in the south. In 

July, the warmest month, the situation reverses, and it is cooler in the north than in the south. The 

northern coastal region has July temperatures averaging between 16° C and 18° C; at some

locations in the south, the average is 19.4° C or slightly higher. 

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Natural Resources: Germany does not possess extensive natural resources, so it depends on 

imports to acquire them. However, coal is an exception. In fact, Germany has the largest coal 

reserves in the European Union: an estimated 72.8 billion short tons as of October 2001. 

Land Use: As of January 2003, Germany’s land use was as follows: settlement and 

transportation infrastructure, 12.3 percent; agriculture, 53.5 percent; forests, 29.5 percent; water, 

2.3 percent; and miscellaneous, 2.4 percent. 

Environmental Factors: The Federal Ministry of the Environment, Nature Conservation, and 

Nuclear Safety is responsible for environmental protection. The ministry has taken a very strict 

approach toward environmental protection. For example, in 2000 the government and the nuclear 

power industry agreed to phase out all nuclear power plants by 2021. As a result of changing the 

mix of energy sources and other measures, from 1991 until 2002 Germany was able to reduce 

greenhouse gas emissions by 19 percent. The closure of many coal-burning power plants in the 

eastern states contributed to Germany’s success. However, Germany is facing a new threat from

airborne particulates, known as Feinstaub. Water pollution also remains a challenge, reflecting 

diverse causes ranging from dams to the use of fertilizers for farming. At the end of 2004, only 

14 percent of surface water “probably” met the government’s environmental goals, while 

uncertainty existed about the status of an additional 26 percent. About 47 percent of groundwater 

met the standards. Germany ratified the Kyoto Protocol on climate change on May 31, 2002. 

Time Zone: Germany is in the Central European Time (CET) zone, which is normally one hour 

ahead of Greenwich Mean Time (GMT). In the summer, CET is two hours ahead of GMT. 

SOCIETY 

Population: At the end of 2004, Germany’s population was 82.5 million, essentially unchanged 

from the prior year. However, the World Bank projects that Germany’s population will decline to 

about 80.3 million by 2015. Average population density is about 230 people per square 

kilometer, but population distribution is very uneven. In the former West Germany, population 

density is 267 people per square kilometer, compared with 140 people per square kilometer in 

the former East Germany. Berlin and the industrialized Ruhr Valley are densely populated, while 

much of the Brandenburg and Mecklenburg-Western Pomerania regions in the East are thinly 

populated. These disparities have been exacerbated by migration from East to West, as former 

Easterners have sought better employment opportunities. About 61 percent of the population 

lives in towns with 2,000 to 100,000 inhabitants; 30 percent, in cities with more than 100,000 

inhabitants; and the remainder, in villages with fewer than 2,000 inhabitants. 

Germany’s population includes 7.3 million foreigners, including 2 million Turks and many 

refugees from the developing world. Many Turks came to Germany as guest workers during the 

economic boom from the mid-1950s to the end of 1973. Since 1970, about 3.2 million foreigners 

have become German citizens. With the introduction of a new citizenship law in 2000, many 

children of foreign parents became eligible for German citizenship for the first time. Between 

1988 and 1993, more than 1.4 million refugees, many from the former Soviet Union, sought 

asylum in Germany, but only 57,000 were granted their wish. Although the right to asylum

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

remains intact for legitimate victims of political persecution, restrictions on the countries of 

origin and entry introduced in 1993 have steadily reduced the number of those seeking asylum to 

a 20-year low of 50,500 in 2003. A new immigration law that took effect on January 1, 2005, 

promotes a more open immigration policy, particularly for highly skilled workers. The law also 

extends the right to asylum to the victims of genital mutilation and sexual abuse and political

persecution by non-European Union groups. In 2005 Germany’s net migration rate was 

estimated to be 2.18 migrants per 1,000 people, placing Germany forty-second in the world in 

inbound migration, the same level experienced by the United Kingdom.

Demography: In 2004 population distribution by age was as follows: 0–14 years: 14.7 percent; 

15–64 years: 67 percent; and 65 years and older: 18.3 percent. The elderly are growing as a 

percentage of the population; by 2030, those more than 60 years old are expected to reach 30 

percent of the general population, up from 23 percent currently. In 2004 the birthrate was 8.5 per 

1,000 people, and the fertility rate was 1.4 children born per woman, some of the lowest rates in 

the world. However, the population has remained stable, as rising life expectancy and 

immigration have offset low birth and fertility rates. In 2004 the infant mortality rate was low at 

4.7 per 1,000 live births. Meanwhile, the death rate was relatively high at 10.4 per 1,000 people, 

but life expectancy was well above average globally. Life expectancy was 78.5 years for the total 

population, including 75.6 years for men and 81.7 years for women. 

Ethnic Groups: Ethnic Germans constitute 91.5 percent of the population. Turks, many of them

guest workers and their children, constitute 2.4 percent of the population, and various others 

account for the remainder. Germany officially recognizes four ethnic minorities: the Danes, the 

Friesians, the Sinti and Roma, and the Sorbs. The Danish minority, which numbers about 50,000, 

lives primarily in the northern state of Schleswig-Holstein. The Friesians live along the North 

Sea coast. The approximately 70,000 Sinti and Roma live throughout Germany. Some 20,000 

Lower Sorbs live in the state of Brandenburg, while some 40,000 Upper Sorbs live in the state of 

Saxony. The Framework Convention for the Protection of National Minorities has protected 

these four groups since Germany ratified the Council of Europe convention in 1997. 

Languages: German is the predominant language, but some Turkish immigrants speak their 

native language. In addition, the four officially recognized national minorities have their own 

languages: Danish, North and Sater Friesian, Romany, and Lower and Upper Sorbian. The 

European Charter for Regional or Minority Languages promotes the languages of the four 

national minorities. 

Religion: Religious affiliation is as follows: Roman Catholics, 33 percent; Protestants, 33 

percent; Muslims, 3 percent; and Jews, 0.1 percent. Roman Catholics are more numerous in 

southern Germany. 

Education and Literacy: The literacy rate in Germany is officially pegged at 99 percent, where 

literacy is defined as the ability of those 15 years old or older to read and write. However, an 

interest group specializing in literacy estimates that 4 million Germans are functionally illiterate, 

meaning that they cannot read or write well enough to hold a job or support themselves. Many of 

them are immigrants. The Organisation for Economic Co-operation and Development (OECD)’s 

Program for International Student Assessment (PISA) tests schoolchildren from all 30 OECD 

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countries and 11 other nations every three years. According to the most recent results from 2003, 

German students scored about average in mathematics and reading and slightly above average in 

problem solving. 

The federal government shares control over education with the states. However, the federal 

government has primary responsibility for the vocational training system. Kindergarten is 

available to every child between the ages of three and six. Everyone is required to attend school 

beginning at the end of their sixth year and must remain in some form of school or training for 

12 years. Anyone who leaves school after nine years is required to complete a three-year 

vocational training program. 

Primary school begins at age six and generally lasts for four years (six in Brandenburg and 

Berlin). Following primary school, the first stage of secondary general education begins. In the 

fifth and sixth grades, teachers evaluate pupils and recommend a path for their continuing 

education, but the parents’ wishes are taken into account. 

There are four options for secondary school. One option is secondary general school. On 

completion, pupils receive a certificate that entitles them to attend a vocational training program. 

A second option is intermediate school, which provides more complete education during grades 

5–10 and prepares pupils for a wider range of secondary education opportunities. A third option 

is college-preparatory high school, which lasts for nine years, including the upper stage, which 

normally extends from grade 11 through grade 13 and provides the most demanding and in-depth 

education available. In order to be admitted to a university, high-school students must take a 

rigorous exam called das Abitur that tests them on four to five subjects. However, holders of 

diplomas from vocational upper secondary schools and technical high schools also are eligible to 

attend a university. A fourth option is the comprehensive school, which combines several of the 

paths described above. Finally, special schools accommodate disabled or special-education 

students. About 70 percent of secondary-school graduates receive three years of vocational 

training, consisting of a combination of theoretical knowledge gained in the classroom and 

practical experience gained in the workplace as apprentices. This combination is known as the 

dual system. Others may attend academic vocational schools full-time for three years.

The alternative to some form of vocational training is university study. Most German universities 

are public and do not charge tuition to students pursuing a first degree on a timely basis. 

However, the introduction of limited fees is being discussed. A few relatively new private 

universities charge tuition, but they lag behind the public universities in research, the range of 

academic disciplines, and, arguably, public acceptance. Germany has more than 90 universities 

that award doctoral degrees and 190 technical colleges that specialize in such disciplines as 

engineering, information technology, and business administration but are not eligible to award 

doctorates. In 1998 a reform to the higher education system introduced a distinction between 

bachelor’s and master’s degrees. Many German universities suffer from overcrowding, and 

students sometimes have difficulty making steady progress toward their degrees. Some subjects, 

particularly medicine, are subject to limited enrollment. The percentage of Germans with 

university degrees (19.3 percent) is much lower than in the United States (33.2 percent), Britain 

(37.5 percent), Australia (36.3 percent), and Finland (36.3 percent). 

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Health: Germany does well in international health care comparisons. In 2004 Germany ranked 

thirtieth in the world in life expectancy (78 years), it had a very low infant mortality rate (4.7 per 

1,000 live births), and it was tied for eighth place in the number of practicing physicians per 

1,000 people (3.3). In 2001 total spending on health amounted to 10.8 percent of gross domestic 

product. 

Germany has three mandatory health benefits, which are co-financed by employer and employee: 

health insurance, accident insurance, and long-term care insurance. The health care reform law 

that took effect on January 1, 2004, aimed at reducing health insurance costs and required payroll 

deductions. Costs were to be reduced by introducing more competition into the health care 

system and requiring higher co-payments by the insured. Related savings were estimated at 

US$12 billion in 2004 and US$26 billion in 2005. In conjunction with the cost reductions, 

payroll contributions were expected to decline below 14 percent in 2004 and below 13 percent in 

2005. 

In 2002 the top diagnosis for male patients released from the hospital was chronic heart disease, 

followed by alcohol-related disorders and hernias. For women, the top diagnoses related to 

pregnancies, breast cancer, and heart weakness. At the end of 2004, some 44,000 Germans, or 

less than 0.1 percent of the population, were infected with human immunodeficiency 

virus/acquired immune deficiency syndrome (HIV/AIDS). In the first half of 2005, German 

health authorities registered 1,164 new infections; about 60 percent of the cases involved 

homosexual men. Since the beginning of the HIV/AIDS epidemic, about 24,000 Germans have 

died from the disease. Widespread smoking also has a deleterious impact on health. According to 

a 2003 survey, 37 percent of adult males and 28 percent of adult females in Germany are 

smokers. 

Welfare: Three non-health-related social benefits are pension insurance, unemployment 

insurance, and social assistance. Each of these long-entrenched and very generous benefits has 

been pared back modestly under the Agenda 2010 reform program, which takes into account 

Germany’s aging population and stubbornly high unemployment. New policies introduced in 

2005 under a related initiative known as Hartz IV limit unemployment payments to 12 months in 

most cases. Those more than 55 years of age may receive support for 18 months. The 

unemployed face pressure to accept job opportunities presented to them. In 2003 the average 

pension in western Germany was US$1,188 for men and US$780 per month for women. In 

eastern Germany, the average pension was US$1,248 for men and US$1,005 for women. The 

current payroll deduction for pensions is 19.5 percent. This deduction is expected to rise, but it is 

capped at 20 percent until 2020 and 22 percent until 2030. The standard retirement age is 65, and 

early retirements are discouraged. Monetary and material social assistance is available for those 

who cannot support themselves. At the end of 2001, 2.7 million Germans received such 

assistance. 

ECONOMY 

Overview: Germany has a social-market economy that combines free enterprise and competition 

with a high level of social services. The economy is the world’s third largest, when measured at 

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market exchange rates, and the fifth largest, when using purchasing power parity. Reflecting a 

social compact between employers and employees, workers’ representatives share power with 

executives in corporate boardrooms in a system known as co-determination, or Mitbestimmung. 

The performance of the German economy is a study in contradictions, with indisputable 

strengths in exports and manufacturing, but also troubling weaknesses in the labor market and 

federal budget. Exports are responsible for one-third of total economic output, and at the 

prevailing dollar-euro exchange rate, no country exports more merchandise. In 2003 Germany 

edged out the United States in merchandise exports (US$748 billion for Germany vs. US$724 

billion for the United States, according to the World Bank) and accounted for 10 percent of total 

world trade. In the same year, illustrating the competitiveness of its export sector, Germany 

posted a trade surplus. German manufacturing excels in the production of automobiles, machine 

tools, and chemical products. 

By contrast, weak domestic demand has suppressed overall economic output, which rose by 1.7 

percent in 2004 after two years of zero growth but was slowing again in 2005. In the summer of 

2005, the International Monetary Fund (IMF) forecast growth of 0.8 percent during the year and 

1.2 percent in 2006, 0.7 percentage points lower than the prior forecast. These projections 

placed Germany in last place among industrialized nations in the IMF survey. Most ominously, 

in March 2005 Germany’s seasonally adjusted unemployment rate increased to 12 percent, a 

post-war record. The unemployed totaled nearly 5.2 million people, an amount not seen since the 

Weimar Republic. After peaking in March, however, unemployment moderated to 11.2 percent, 

or 4.65 million people, in September 2005. Only one-third of the German population is 

employed full-time. Unemployment is linked to lagging economic development in the former 

East Germany, strict regulations, rigid labor market conditions, and the impact of globalization. 

Regarding globalization, competition from cheap labor in countries like China and India is only 

part of the story. The private sector needs to look no farther than Eastern Europe, particularly the 

neighboring countries of Poland and the Czech Republic, for an attractive investment climate and 

extremely low labor costs. The fall of the Iron Curtain, which accompanied German 

reunification, and the expansion of the European Union (EU) into Eastern Europe on May 1, 

2004, have placed the livelihoods of many German workers in jeopardy. 

Germany is seeking to ease labor market rigidities through a reform program known as Agenda 

2010. This program is designed to reduce the overly generous and costly benefits associated with 

jobs (and therefore impeding the creation of new ones). These benefits include short working 

hours and long vacations, unemployment insurance, pension rights, paid sick leave, and 

comprehensive health insurance. Agenda 2010 also reduces the marginal tax rate to a maximum 

of 42 percent in the highest tax bracket and 15 percent in the lowest tax bracket. 

Unemployment is about 18 percent in the new states in the East, where 14 years of massive 

investment from the West have failed to produce prosperity. This enormous inter-German 

transfer of wealth, which totaled US$1.6 trillion cumulatively from 1991 to 2004, or about 

US$130 billion per year, has exceeded the growth rate of the states in the West and thus has 

eaten away at the substance of the West’s economy. Furthermore, the combined impact of slow 

economic growth, tax cuts, and the internal wealth transfer has had a negative impact on 

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Germany’s budget deficit, which has exceeded the 3 percent of gross domestic product limit 

established by the EU’s Stability and Growth Pact each year since 2002. 

Gross Domestic Product (GDP): In 2004 Germany’s GDP was nearly US$2.2 trillion. Per 

capita GDP was US$31,992, at current exchange rates. Using purchasing power parity, per capita 

gross national income was US$26,220 in 2002, putting Germany in twentieth place in the world. 

In 2003 services constituted 70 percent of GDP; industry and construction, 29 percent; and 

agriculture, the remaining 1 percent. 

Government Budget: Since 2002, Germany has run a budget deficit in excess of 3 percent of 

gross domestic product (GDP), in violation of the European Union’s Stability and Growth Pact. 

In 2004 the budget deficit was about 3.7 percent of GDP. However, some forecasters expect the 

deficit to decline below 3 percent of GDP in 2006. 

Inflation: Inflation is under control. In 2003 consumer price inflation was only 1.1 percent. 

Agriculture, Forestry, and Fishing: In 2003 agriculture, forestry, and fishing accounted for 

only 1.1 percent of Germany’s gross domestic product (GDP) and employed only 2.2 percent of 

the population, down from 4 percent in 1991. Much of the reduction in employment occurred in 

the eastern states, where the number of agricultural workers declined by as much as 75 percent 

following reunification. However, agriculture is extremely productive, and Germany is able to 

cover 90 percent of its nutritional needs with domestic production. In fact, Germany is the third 

largest agricultural producer in the European Union (EU) after France and Italy. Germany’s 

principal agricultural products are potatoes, wheat, barley, sugar beets, fruit, and cabbages. From

1999 to 2003, the number of agricultural holdings declined by 11 percent to 421,400, reflecting a 

general trend toward consolidation. As of May 2004, Germany had a total of 448,000 cattle and 

726,000 pigs, both figures down about 3 percent from the previous year. 

Despite Germany’s high level of industrialization, roughly one-third of its territory is covered by 

forest. The forestry industry provides for about two-thirds of domestic consumption of wood and 

wood products, so Germany is a net importer of these items. In 2003 the forestry industry’s 

production equaled 51.2 million cubic meters of roundwood and 17.6 million cubic meters of 

sawnwood. As of 2004, an estimated 31 percent of trees in Germany showed signs of 

environmental damage, according to an annual report by the federal government. 

Germany’s ocean fishing fleet is active in the North Sea, the Baltic Sea, and the Atlantic Ocean 

between Britain and Greenland. The fleet, which has diminished in size in recent decades, 

contends with overfishing, extended exclusive fishing zones claimed by neighboring countries, 

and quotas imposed by the European Community Common Fisheries Policy. In 2003 the fishing 

industry’s total catch was 335.1 million tons. 

Mining and Minerals: Coal is Germany’s most important energy resource, although 

government policy is to reduce subsidies for coal extraction. Coal production has declined since 

1989 as a result of environmental policy and the closing of inefficient mines in the former East 

Germany. As of October 2001, recoverable coal reserves were estimated at 72.8 billion short 

tons, the largest amount of any country in the then 15-member European Union (EU). The two 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

main grades of coal in Germany are “hard coal” and lignite, which is also called “brown coal.” 

Unfavorable geological conditions make the mining of hard coal economically uncompetitive, 

but a slight increase has occurred in lignite production since 1999. Despite its considerable 

reserves, environmental restrictions have led Germany to become a net importer of coal. Nonenergy-related mining recovers potash for fertilizer and rock salt for edible salt and the chemical 

industry. 

As of January 2004, proven oil reserves were 442 million barrels, a modest amount by 

international standards but still the fourth largest reserves in the EU. More than half of 

Germany’s domestic oil production is attributable to the offshore Mittelplate field along the 

western coast of the German state Schleswig-Holstein. 

Also as of January 2004, proven natural gas reserves were 10.8 trillion cubic feet, the third 

largest in the EU. Nearly 90 percent of Germany’s natural gas production takes place in the state 

of Lower Saxony. In 2002 Germany imported 2.4 trillion cubic feet of natural gas, or 75 percent 

of its requirements. The most important source of natural gas imports is Russia, with a 40.8 

percent share, followed by Norway at 31.5 percent, and the Netherlands at 22.3 percent. 

Industry and Manufacturing: Industry and construction accounted for 29 percent of gross 

domestic product (GDP) in 2003, a comparatively large share even without taking into account 

related services. The sector employed 26.4 percent of the workforce. Germany excels in the 

production of automobiles, machine tools, and chemicals. With the manufacture of 5.5 million 

vehicles in 2003, Germany was the world’s third largest producer of automobiles after the United 

States and Japan, although China was threatening to displace Germany in the world rankings as 

early as 2005. In 2004 Germany enjoyed the largest world market share in machine tools (19.3 

percent). German-based multinationals such as Daimler-Chrysler, BMW, BASF, Bayer, and 

Siemens are marquee names throughout the world. What is less well known is the vital role of 

small- to medium-sized manufacturing firms, which specialize in niche products and often are 

owned by management. These firms employ two-thirds of the German workforce. 

Energy: In 2002 Germany was the world’s fifth largest consumer of energy, and two-thirds of its 

primary energy was imported. In the same year, Germany was Europe’s largest consumer of 

electricity; electricity consumption that year totaled 512.9 billion kilowatt-hours. 

Government policy emphasizes conservation and the development of renewable sources of 

energy, such as solar, wind, biomass, hydro, and geothermal. As a result of energy-saving 

measures, energy efficiency (the amount of energy required to produce a unit of gross domestic 

product) has been improving since the beginning of the 1970s. The government has set the goal 

of meeting half the country’s energy demands from renewable sources by 2050. In 2000 the 

government and the nuclear power industry agreed to phase out all nuclear power plants by 2021. 

However, renewables currently play a more modest role in energy consumption. In 2002 energy 

consumption was met by the following sources: oil (40 percent), coal (23 percent), natural gas 

(22 percent), nuclear (11 percent), hydro (2 percent), and other renewables (2 percent). 

Services: In 2003 services constituted 70 percent of gross domestic product (GDP), and the 

sector employed 71.3 percent of the workforce. The subcomponents of services are financial, 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

renting, and business activities (30.5 percent); trade, hotels and restaurants, and transport (18 

percent); and other service activities (21.7 percent). 

Banking and Finance: By tradition, Germany’s financial system is bank-oriented rather than 

stock market-oriented. The process of disintermediation, whereby businesses and individuals 

arrange financing by directly accessing the financial markets versus seeking loans from banks 

acting as intermediaries, has not fully taken hold in Germany. One of the reasons that banks are 

so important in German finance is that they have never been subject to a legal separation of 

commercial and investment banking. Instead, under a system known as universal banking, banks 

have offered a wide range of services from lending to securities trading to insurance. Another 

reason for the strong influence of banks is that there is no prohibition of interlocking ownership 

between banks and their client companies. However, in January 2002 the government moved to 

discourage this practice and promote more rational capital allocation by eliminating the capital 

gains tax on the sale of corporate holdings from one company to another. 

At the end of 2000, 2,713 out of 2,931 German financial institutions (92.6 percent) were 

universal banks, including 354 commercial banks, 1,798 credit cooperatives, and 561 savings 

banks. The non-universal banks specialized in such activities as mortgage banking and 

investments. The list of the six largest German banks illustrates the diversity of bank structure 

and ownership. Of the top six banks, ranked by total assets as of year-end 2002, four are private, 

but the fifth largest is public, and the sixth largest is a cooperative. 

Despite the central role of banks in finance, stock markets are competing for influence. The 

Deutsche Börse (German stock exchange), a private corporation, is responsible for managing 

Germany’s eight stock markets, by far the largest of which is the Frankfurt Stock Exchange, 

which handles 90 percent of all securities trading in Germany. The leading stock index on the 

Frankfurt exchange is the DAX, which, like the New York Stock Exchange’s Dow Jones 

Industrial Average, is composed of 30 blue-chip companies. The other German stock exchanges 

are located in Berlin, Bremen, Düsseldorf, Hamburg, Hanover, Munich, and Stuttgart. Xetra is 

Germany’s electronic trading platform. As of the end of 2004, the total market capitalization of 

the German stock markets was nearly US$1.1 trillion, representing about 45 percent of gross 

domestic product (GDP). The shares of some 684 companies trade on the exchanges. 

Recent stock market volatility has discouraged the development of an equity or shareholder 

culture, where individuals view stocks and mutual funds as promising alternatives to bank 

savings accounts or bonds as investments. In fact, by mid-2004 only 16.4 percent of the German 

population owned stock, down from 21 percent in early 2001. One failed experiment in the 

evolution of an equity culture was the Neuer Markt (New Market) exchange, which was intended 

to serve as the German equivalent to the United States’ technology-laden NASDAQ market. The 

Neuer Markt, which opened in 1997 during a euphoric period for technology investors, was 

designed to handle the initial public offerings of nascent German technology companies. By the 

fall of 2002, it had all but collapsed, having lost 96 percent of its value since the market peak. In 

September 2002, Deutsche Börse announced that it would shut down the niche exchange by the 

end of 2003. Although the Neuer Markt experience does not tell the whole story about German 

capital markets, the continued reliance on bank financing has negative implications for the 

creation of new companies and, in turn, jobs. So too, in the view of some observers, does 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

resistance to restructuring of failing small-to-medium sized companies by foreign-run private 

equity and hedge funds. 

Tourism: Domestic and international tourism generates about 8 percent of gross domestic 

product (GDP) and 2.8 million jobs. Following commerce, tourism is the second largest 

component of the services sector. In 2004 Germany registered 45 million overnight stays by 

international tourists, 9 percent higher than in the previous year and an all-time record. In 2003 

Germany ranked ninth in the world in international arrivals, with 18.4 million international 

tourists, versus 75 million in top-ranked France. In the same year, Germany registered a net 

outflow in the balance of payments related to tourism, as visitors spent US$24.6 million, while 

German tourists outside the country spent US$68.3 million. Tourism is a factor in Germany’s net 

deficit in the trade of services. Two-thirds of all major trade fairs are held in Germany, and each 

year they attract 9 to 10 million business travelers, about 20 percent of whom are foreigners. The 

four most important trade fairs take place in Hanover, Frankfurt, Cologne, and Düsseldorf. 

Germany’s sponsorship of the soccer World Cup in 2006 presents an opportunity for the tourism

sector. 

Labor: The distribution of Germany’s workforce by sector is very similar to the relative output 

of each sector. In 2004 the workforce was distributed as follows: agriculture, 2.2 percent; 

industry, 26.4 percent; and services, 71.3 percent. Participants in the workforce totaled 38.87 

million. In March 2005, Germany’s seasonally adjusted unemployment rate increased to 12 

percent, or nearly 5.2 million people. Both statistics represented post-war records. 

Unemployment approached 20 percent in some states in the East, where high wages are not 

matched by productivity. However, by September 2005 overall unemployment had declined to 

11.2 percent, or 4.65 million people. Germany has no legal minimum wage, except in 

construction, but the government is considering introducing one. 

Foreign Economic Relations: Germany’s foreign economic relations are consistent with the 

policy of the European Union (EU) to expand trade among the 25 member states and also with 

the goal of global trade liberalization through the latest Doha Round of the World Trade 

Organization (WTO). Germany uses its position as the world’s leading merchandise exporter—a 

fact that partially reflects the strength of the euro—to compensate for subdued domestic demand. 

German companies derive one-third of their revenues from foreign trade. Therefore, Germany is

committed to reducing trade restrictions, whether involving tariffs or non-tariff barriers, and 

improving the transparency of foreign markets, including access to public works projects. The 

fact that Germany has exceeded the EU’s Stability and Growth Pact’s 3 percent limit on the 

budget deficit as a percentage of gross domestic product every year since 2002 has been an 

irritant in relations with the rest of the EU. 

In 2003 Germany conducted slightly more than half of its trade within the then 15-member EU, 

followed by, in order of volume, developing countries, Eastern Europe (including countries like 

Poland that subsequently joined the EU), the United States and Canada, non-EU Europe 

(Switzerland, Norway, Liechtenstein, and Iceland), and Japan. Increasing emphasis is being 

placed on trade with Russia and China. The 2005 Hanover trade fair devoted much of its 

attention to Germany’s growing economic and trade ties to Russia, particularly in the area of 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

energy. Germany is Russia’s top trade partner. In 2002 China overtook Japan as Germany’s top 

trade partner in Asia, and Germany is investing heavily in that rapidly rising economic power. 

Imports: In 2003 Germany imported US$601.4 billion of merchandise, while imports of goods 

and services totaled US$773.4 billion. Principal merchandise imports were motor vehicles 

(US$64.4 billion), chemical products (US$63.2 billion), machinery (US$41.8 billion), oil and 

gas (US$39.9 billion), and computers (US$30.5 billion). Germany’s main import partners were 

France (9.0 percent), the Netherlands (7.8 percent), the United States (7.3 percent), Italy (6.1 

percent), the United Kingdom (6.1 percent), Belgium (4.9 percent), China (3.8 percent), and 

Austria (3.8 percent). 

Exports: In 2003 Germany exported US$748.4 billion of merchandise, while exports of goods 

and services totaled US$873.3 billion. Principal merchandise exports were motor vehicles 

(US$145.5 billion), machinery (US$103.0 billion), chemical products (US$92.9 billion), 

electrical devices (US$36.2 billion), and telecommunications technology (US$35.1 billion). 

Germany’s main export partners were France (10.6 percent), the United States (9.3 percent), the 

United Kingdom (8.4 percent), Italy (7.4 percent), the Netherlands (6.2 percent), Austria (5.3 

percent), Belgium (5.0 percent), and Spain (4.9 percent). 

Trade Balance: In 2003 Germany posted a merchandise trade surplus of US$147 billion. 

Balance of Payments: In 2003 the current account balance was a positive US$54.9 billion, or 

2.2 percent of gross domestic product. 

External Debt: In 2002 total public debt was about US$1.5 trillion, or 60.8 percent of gross 

domestic product. 

Foreign Investment: In 2003 net foreign direct investment was inbound US$11 billion. 

Foreign Aid: In 2004 Germany provided US$7.5 billion of foreign aid, corresponding to about 

0.3 percent of gross domestic product. Germany provides foreign aid to roughly 70 nations. The 

majority of the aid is bilateral, as opposed to multilateral. 

Currency and Exchange Rate: Germany’s currency is the euro. As of December 20, 2005, one 

US dollar was equivalent to 0.8406 euros. Because Germany has adopted the euro, the 

Bundesbank, which had been responsible for conducting monetary policy and maintaining a 

stable German mark, has ceded much of its previous influence to the European Central Bank. 

Fiscal Year: Calendar year. 

TRANSPORTATION AND TELECOMMUNICATIONS

Overview: Germany has a very modern transportation and telecommunications network. The 

country is known for its high-speed autobahns, efficient railroads, and busy ports. 

Telecommunications reform has introduced competition into the formerly monopolistic system. 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

Roads: Germany’s road network has a total length of 230,800 kilometers, including limitedaccess, high-speed autobahns (11,800 kilometers), federal highways (41,200 kilometers), 

ordinary roads (86,800 kilometers), and district roads (91,000 kilometers). In general, the 

network is modern, reflecting improvements to the antiquated roads in the East under the 

reconstruction program called Aufbau Ost (reconstruction of the East), which led to the 

construction or upgrade of 13,200 kilometers of federal highways or trunk roads by the end of 

2001. 

Railroads: Germany’s railroads, which total 44,400 kilometers in length, are well known for 

their efficiency. In 1994, four years after German reunification, the private Deutsche Bahn AG 

assumed control of the former Deutsche Bundesbahn in the West and the former Reichsbahn in 

the East. By the end of 2001, Germany had built or upgraded 5,800 kilometers of rail lines in the 

new states in the East under the Aufbau Ost program. German trains carry passengers, freight, 

cars, and even trucks on special flatcars. In 1991 the railroads in the West began to introduce 

high-speed inter-city service. High-speed trains can travel as fast as 250 kilometers/hour. In 

addition, in 2005 Deutsche Bahn plans to build a magnetic levitation train service between Berlin 

and Hamburg using German-made technology known as “Maglev.” 

Ports: Germany’s busiest port is Hamburg, which ranks ninth in the world in container traffic. 

The second largest port is Bremen/Bremerhaven, which ranks twenty-first in the world in 

container traffic. Hamburg, Bremen/Bremerhaven, and Wilhelmshaven are North Sea ports, 

while Luebeck and Rostock are Baltic Sea ports. The inland port along the Rhine and Ruhr 

Rivers in Duisburg is the world’s leading inland port. 

Inland Waterways: Germany’s inland waterways are about 7,450 kilometers in length. Natural 

rivers account for about 39 percent of the network, dams control 38 percent, and canals 

constitute 23 percent. The Rhine River carries about two-thirds of inland waterways traffic. 

Civil Aviation and Airports: Germany has 18 international airports. The largest airport is 

Frankfurt am Main. The German government is in the process of upgrading Berlin’s airport 

system, which reflects the city’s former Cold War division. The centerpiece of the plan is the 

construction of a new international airport, to be called Berlin-Brandenburg, by 2012. Berlin’s 

Tegel and Tempelhof airports will be closed between 2008 and 2010. Other major airports are 

located in Cologne, Dresden, Hamburg, Munich, and Stuttgart. Germany’s largest air carrier is 

Lufthansa, which is owned by a publicly traded corporation. 

Pipelines: Germany uses an extensive pipeline network, consisting of eight major pipelines 

connected to local distribution grids, to import natural gas. Several of these pipelines serve other 

European countries as well. In 2002 Germany imported 75 percent of its natural gas 

requirements. Germany obtains most of its imported natural gas from Russia, Norway, and the 

Netherlands. Russia’s influence as a natural gas supplier is bound to increase since the Russian 

oil giant Gazprom began construction of an 1,197-kilometer-long underwater pipeline from

Russia directly to Germany in September 2005. Construction of the pipeline, which has a 

capacity of 55 million cubic meters per year, should be completed in 2010. 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

Telecommunications: Regulatory reform culminating in the Telecommunications Act of 1998 

eliminated the monopoly status of Deutsche Telekom AG and Deutsche Post AG and introduced 

competition into the telecommunications industry. Oversight responsibility lies with the Federal 

Ministry for Economics, which monitors the activities of the two previous monopolies and new 

market entrants. 

In 2003 Germany had 54.4 million telephone lines, or 659.4 per 1,000 people, and 64.8 million 

cellular phones, or 786.2 per 1,000 people. The cell phone penetration rate of 78.3 percent far 

exceeds that of the United States, where penetration is only 47.7 percent. Each customer has a 

single number under which he/she can be reached at home or on the move. As of February 2005, 

Germany had 47.3 million Internet users, representing 56 percent penetration. In 2004 Internet 

hosts totaled 2.7 million. As of the end of 2001, individuals or businesses owned 27 million 

personal computers, corresponding to about one for every three Germans. 

In 2003 Germans had 51.4 million televisions, or 623.6 per 1,000 people. The Association of 

Public Broadcasting Corporations, known as ARD, is responsible for the “first” German 

television channel, and ZDF (Second German Television) provides an alternative. ARD also 

sponsors a third regional channel, including, for example, Westdeutscher Rundfunk (West 

German Broadcasting) and Norddeutscher Rundfunk (North German Broadcasting). Also in 

2003, the number of VHF radio receivers was estimated at 225 million, which corresponds to 45 

million households with an average of five receivers. ARD manages Deutsche Welle, the only 

federal public radio station in Germany. ARD and ZDF charge fees: access to public radio and 

television costs US$19.57 per month, while access to public radio alone costs US$6.45 per 

month. In 1984 public television began to compete with the private sector for the first time when 

two privately funded television stations, Mainz-based SAT.1 and Cologne-based RTL, went on 

the air. Various media companies have established other television channels available via cable, 

satellite, and even terrestrial (over-the-air) frequencies. The private networks do not charge fees 

but rather depend on advertising for their revenues. In 2003 Germany had 276 private radio 

stations with a total of more than a half-million listeners. 

GOVERNMENT AND POLITICS 

Overview: Germany is a federal democracy, with rights guaranteed by the Basic Law, or 

constitution. The federal government shares power with 16 states. 

Branches of Government: The dual executive consists of a chancellor, who is head of 

government, and a president, who is head of state. The chancellor is the leader of the party or 

coalition of parties holding a majority of seats in the lower house of parliament. The president is 

usually one of the senior leaders of the largest party in the lower house of parliament but is 

nonetheless expected to be non-partisan after assuming office. A cabinet officer, often from a 

smaller coalition party, serves as vice chancellor. The Basic Law grants most executive authority 

to the federal chancellor; the presidency is primarily a ceremonial post, and its occupant 

represents the Federal Republic in international relations. The president is selected every five 

years by secret ballot at a Federal Convention composed of members of the lower house of 

parliament and delegates chosen by state legislatures. A president may serve no more than two 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

five-year terms. Chancellor Angela Merkel, who took office in November 2005, and President 

Horst Köhler, who took office in July 2004, both belong to the Christian Democratic Union. 

Two federal legislative bodies form the national parliament: the Bundesrat (Federal Council, or 

upper house), consisting of 69 members appointed by state governments in proportion to the 

population; and the Bundestag (Federal Diet, or lower house), the main legislative body, 

consisting of 601 popularly elected members. The Bundestag is responsible for passing federal 

laws, which are then implemented by the government. The chancellor, who is elected by the 

Bundestag, functions as prime minister in the cabinet. The chancellor’s authority emanates from

the provisions of the Basic Law, which invests the chancellor with central executive authority, 

and from his or her status as leader of the majority party or coalition in the Bundestag. The Basic 

Law limits parliament’s control over the chancellor and the cabinet. Unlike most parliamentary 

legislatures, the Bundestag cannot remove the chancellor simply with a vote of no-confidence. 

The Basic Law allows only for a “constructive vote of no-confidence.” That is, the Bundestag 

can remove a chancellor only when it simultaneously agrees on a successor. This stipulation was 

recently a source of controversy when ex-Chancellor Gerhard Schröder called for a vote of noconfidence to trigger an early national election in September 2005. President Köhler and the 

Federal Constitutional Court decided that this step was consistent with the Basic Law. 

Germany has an independent judiciary, with most judges appointed for life. The Federal 

Constitutional Court resolves issues relating to the Basic Law and conflicts between the branches

of government. Germany has five types of courts: ordinary courts for criminal and civil matters, 

labor courts for employment disputes, administrative courts to provide protection against 

administrative acts, social courts for social security cases, and fiscal courts for tax-related 

disputes. Ordinary courts are organized hierarchically in four tiers—local courts, regional courts, 

state courts, and the Federal Supreme Court. 

Constitution: Germany’s constitution, known as the Basic Law (Grundgesetz), was enacted on 

May 23, 1949. The Basic Law recognizes fundamental human rights, such as the freedoms of 

speech and the press, the right of equality before the law, and the right of asylum. These basic 

rights are legally binding and apply equally to the three branches of government: executive, 

legislative, and judicial. Any individual who believes that his or her rights have been violated 

may file a complaint with the Federal Constitutional Court. 

In addition to codifying human rights, the Basic Law stipulates the structure of the German 

government, including the Bundestag (lower house of parliament), the Bundesrat (upper house of 

parliament), the president (chief of state), the executive branch and administration, the 

independent judiciary, the financial system, and the relationship of the states to the federal 

government. The Basic Law requires that Germany work toward a unified Europe under the 

aegis of the European Union (EU). It also specifies the requirements for a declaration of war. 

In May 2005, Germany’s Bundestag and Bundesrat ratified the EU constitution. 

Administrative Divisions: Administratively, Germany is divided into 16 states (Länder; sing.,

Land), including five that belonged to the former East Germany until reunification in 1990. The 

states are as follows, with new states labeled as such: Baden Württemberg, Bavaria, Berlin, 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

Brandenburg (new), Bremen, Hamburg, Hesse, Mecklenburg-Western Pomerania (new), Lower 

Saxony, North Rhine-Westphalia, Rhineland-Palatinate, Saarland, Saxony (new), Saxony-Anhalt 

(new), Schleswig-Holstein, and Thuringia (new). The unification of West Berlin and East Berlin 

did not add a new state. 

Provincial and Local Government: Germany’s 16 states enjoy limited autonomy, particularly 

in the areas of law, education, the environment, media, police, social assistance, and other local 

issues, within a federal system. Each state has its own elected parliament (Landtag or 

Bürgerschaft). Depending on size, states are subdivided into up to three levels of local 

government—districts; Landkreise (sing., Landkreis), or counties; and Gemeinden (sing., 

Gemeinde), or municipal government authorities. 

Judicial and Legal System: The legal system is based on principles of Roman law, and courts 

rely on a comprehensive system of legal codes rather than on precedents from prior cases as in 

the Anglo-Saxon tradition. The Basic Law (constitution) is the primary basis of the legal system, 

but the laws of the European Union and the international community also are taken into 

consideration. Defendants enjoy the presumption of innocence, the right to an attorney, and the 

right to appeal. Trial by jury is the norm, but judges hear some cases. Germany is less litigious 

than the United States. In fact, Germany has only about 100,000 attorneys. 

Electoral System: Germany’s electoral system combines indirect election of the chancellor 

(head of government) and president (head of state) with direct elections for the Bundestag (lower 

house of parliament). Bundestag representatives are selected by a combination of majority vote 

and proportional representation. Each voter casts two ballots: the first for a candidate in his or 

her jurisdiction and the second for a national party list of candidates. Each method determines 

approximately half the seats. The chancellor is elected indirectly because his or her name appears 

first on a party list. Any German 18 years or older, including those living overseas, is eligible to 

vote. Popular elections are held every four years, but federal, state, and local elections are 

staggered throughout the year, not held simultaneously as in the United States. Parliamentary 

elections were last held in September 2005. 

Politics and Political Parties: Political parties are explicitly recognized in the Basic Law, and 

they receive government subsidies. The current German administration is a coalition of the 

moderate-to-conservative Christian Democratic Union/Christian Social Union (CDU/CSU), 

headed by Chancellor Angela Merkel, and the center-left Social Democratic Party (SPD), headed 

by Matthias Platzeck. Following the latest elections in September 2005, these two major parties, 

which are normally bitter rivals, joined forces in an unusual “Grand Coalition” when neither was 

able to form a majority with its preferred coalition partner. The CDU’s territory covers all of 

Germany outside Bavaria, while the CSU is the CDU’s Bavarian sister party. The CDU/CSU has 

226 representatives, slightly more than the 222 SPD representatives. The CDU/CSU controls the 

following ministerial posts: Chancellor, Chief of the Chancellor’s Office, Interior, Economics, 

Defense, Family, Education, Consumer Protection/Agriculture, Culture, and Bundestag 

President. The SPD controls the following: Vice Chancellor, Foreign Affairs, Justice, Finance, 

Health, Environment, International Development, Labor, and Transportation. 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

The opposition parties represented in the Bundestag are the business-oriented Free Democratic 

Party (FDP), led by Guido Westerwelle; the Left Party, led by Lothar Bisky; and the ecologically 

oriented Green Party, led by Renate Künast and Fritz Kuhn. The FDP has 61 seats, the Left Party 

has 54 seats, and the Green Party has 51 seats. Four seats are assigned to others. The Left Party is 

the successor to the former East Germany’s communist Socialist Unity Party (SED). Far-right 

parties have no representation. 

In order to win representation in the Bundestag or a state parliament, a party is required to obtain 

at least 5 percent of the vote. This minimum threshold is designed to prevent extremist parties on 

the left and right from exercising power. On the federal level, the “5 percent rule” has been 

successful in marginalizing extreme right-wing parties, but it has failed to prevent parties on the 

far left and right from gaining representation in certain state parliaments in the new eastern 

states. For example, in the Brandenburg Landtag (Brandenburg state parliament), representation 

is as follows, reflecting the results of the latest election on September 19, 2004: SPD (33 seats), 

CDU (20 seats), the far-left Party of Democratic Socialism, or PDS (29 seats), and the far-right 

German People’s Union, or DVU (6 seats). Following the election, the SPD and CDU took the 

unusual step of forming a ruling coalition, much like the one that subsequently took power on the 

federal level, to limit the influence of the PDS and DVU. 

Mass Media: The mass media in Germany take advantage of the guarantee of freedom of the 

press under Article 5 of the Basic Law (constitution). They do not face any censorship. The 

federal government’s involvement with the mass media is restricted to the Press and Information 

Office, which serves as a liaison between government, particularly the chancellor, and almost 

1,200 accredited journalists. Some of these journalists are affiliated with Germany’s largest press 

agency, Deutsche Presse-Agentur. 

On average, Germans listen to radio for 3.5 hours, watch television for three hours, and read a 

newspaper for 36 minutes each day. In 2002 daily newspaper circulation was 23.2 million 

copies. The newspaper with the largest circulation is Bild, a tabloid. The most influential 

broadsheets are the Frankfurter Allgemeine Zeitung, Die Welt, Süddeutsche Zeitung, Frankfurter 

Rundschau, Handelsblatt, and the weekly Die Zeit. Two popular news magazines are Der 

Spiegel and Focus. Glossy magazines include Stern and Bunte. The two main television stations 

are ARD and ZDF. Public television and radio are financed by fees, while their private 

counterparts depend on advertising for revenue. 

Foreign Relations: Germany’s role has been changing in the post-Cold War era. Previously 

bound to a close trans-Atlantic relationship with the United States, in 2003 Germany resisted 

pressure from the United States to participate in Operation Iraqi Freedom. Germany also 

distanced itself from the United States by supporting the Kyoto Protocol on climate change and 

the International Criminal Court. These steps reflected, in part, Germany’s belief in the primacy 

of the United Nations (UN) in settling international disputes. Germany also is seeking a 

permanent seat on the UN Security Council as a means of asserting a more independent 

international role. Many observers expect an improvement in U.S.-German relations following 

the emergence of Angela Merkel as chancellor in the fall of 2005. Germany is a member of the 

North Atlantic Treaty Organization (NATO). In general, Germany advocates the solidification 

and expansion of the European Union, although it has not committed to admitting Turkey into 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

the organization. Germany often joins forces with France on foreign policy issues. Germany 

gives priority to economics over human rights in its relationship with China. The country also is 

pursuing deeper economic and political ties to Russia. Germany helped spearhead the Group of 8 

(G–8) decision in June 2005 to cancel US$55 billion of debt owed by the countries of subSaharan Africa. 

Membership in International Organizations: Germany is a member of the African 

Development Bank, Asian Development Bank, Australia Group, Bank for International 

Settlements, Council of the Baltic Sea States, Caribbean Development Bank, Council of Europe, 

Euro-Atlantic Partnership Council, European Bank for Reconstruction and Development, 

European Investment Bank, European Monetary Union, European Organization for Nuclear 

Research, European Space Agency, European Union, Food and Agriculture Organization, Group 

of 5, Group of 7, Group of 8, Group of 10, Inter-American Development Bank, International 

Atomic Energy Agency, International Bank for Reconstruction and Development, International 

Chamber of Commerce, International Civil Aviation Organization, International Confederation 

of Free Trade Unions, International Criminal Court, International Criminal Police Organization, 

International Development Association, International Energy Agency, International Finance 

Corporation, International Fund for International Development, International Hydrographic 

Organization, International Labour Organization, International Maritime Organization, 

International Monetary Fund, International Olympic Committee, International Organization for 

Migration, International Organization for Standardization, International Red Cross and Red 

Crescent Movement, International Telecommunication Union, Multilateral Investment 

Geographic Agency, Nonaligned Movement (guest), North Atlantic Treaty Organization, 

Nuclear Energy Agency, Nuclear Suppliers Group, Organisation for Economic Co-operation and 

Development, Organisation for the Prohibition of Chemical Weapons, Organization for Security 

and Co-operation in Europe, Paris Club, Permanent Court of Arbitration, United Nations (UN), 

UN Conference on Trade and Development, UN Educational, Scientific and Cultural 

Organization, UN High Commissioner for Refugees, UN Industrial Development Organization, 

UN Monitoring, Verification, and Inspection Commission, Universal Postal Union, West African 

Development Bank (nonregional), Western European Union, World Customs Organization, 

World Health Organization, World Intellectual Property Organization, World Meteorological 

Organization, World Tourism Organization, World Trade Organization, and Zangger Committee. 

Major International Treaties: In the area of arms control, Germany is a party to the Biological 

Weapons Convention, Chemical Weapons Convention, Fissile Material Cut-off Treaty, Limited 

Test Ban Treaty, Nuclear Non-Proliferation Treaty, Ottawa Convention on Land Mines, and 

Treaty on Conventional Armed Forces in Europe. Regarding the environment, Germany is a 

party to the conventions on Air Pollution, Air Pollution-Nitrogen Oxides, Air Pollution-Sulphur 

85, Air Pollution-Sulphur 94, Air Pollution-Volatile Organic Compounds, AntarcticEnvironmental Protocol, Antarctic Treaty, Biodiversity, Climate Change-Kyoto Protocol, 

Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of 

the Sea, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical 

Timber 83, Tropical Timber 94, Wetlands, and Whaling. Germany has signed, but not ratified, 

the convention on Air Pollution-Persistent Organic Pollutants. In the area of human rights, 

Germany is a party to the Convention against Torture and other Cruel, Inhumane, and Degrading 

Treatment or Punishment, Convention on the Elimination of all Forms of Discrimination against 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

Women, Convention on the Elimination of all Forms of Racial Discrimination, Convention on 

the Rights of the Child, International Convention on the Protection of the Rights of all Migrant 

Workers, International Covenant on Civil and Political Rights, and International Covenant on 

Economic, Social, and Cultural Rights. Germany also has ratified the Rome Statute of the 

International Criminal Court. 

NATIONAL SECURITY 

Armed Forces Overview: Germany is a member of the North Atlantic Treaty Organization 

(NATO). In 1999 Germany participated in an armed conflict for the first time since World War 

II during NATO’s intervention in Kosovo. Previously, Germany made a token military 

contribution to Operation Desert Storm in 1991 (by deploying an air squadron to Turkey) but 

later refused to participate in Operation Iraqi Freedom in 2003. However, Germany’s military 

has participated in many United Nations (UN)-sanctioned peacekeeping operations, including 

those in Afghanistan, Djibouti, and the former Yugoslavia. 

Germany’s military consists of 284,500 active-duty personnel and 358,650 reserves. The activeduty troops, who normally serve for nine months, are assigned to the various services as follows: 

army (191,350), navy (25,650), and air force (67,500). The reserves, who are enlisted personnel 

up to age 45 and commissioned and non-commissioned officers up to age 60, are assigned as 

follows: army (297,300), navy (11,500), and air force (49,850). 

Reflecting the realities of the post-Cold War era, Germany’s military is moving away from

territorial defense toward readiness to participate in multilateral operations under the aegis of the 

UN, NATO, European Union, and Organization for Security and Co-operation in Europe. This 

new vision for the military is articulated in an official document issued in May 2003 called 

Defense Policy Guidelines. As part of this transformation, troop strength will be reduced by 

about 35,000 to about 250,000. 

Foreign Military Relations: Under the doctrine introduced by the 2003 Defense Policy 

Guidelines, Germany continues to give priority to the transatlantic partnership with the United 

States through the North Atlantic Treaty Organization. However, Germany is giving increasing 

attention to coordinating its policies with the European Union through the Common European 

Security and Defense Policy. 

External Threat: According to former German Defense Minister Peter Struck, Germany does 

not face a conventional threat to its territory.In his own words, “At present, and in the 

foreseeable future, a conventional threat to the German territory is not recognizable.” 

Defense Budget: In 2003 Germany’s defense budget totaled US$35 billion, or 1.5 percent of 

gross domestic product. Germany’s defense minister advocates a US$30 billion cut in defense 

expenditures over a five to seven-year period, in keeping with the military’s transformation into 

an international peacekeeping and intervention force. 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

Major Military Units: Germany’s army command consists of a Germany/Netherlands 

headquarters corps, a Germany/United States headquarters corps, five divisions (including two 

armored infantry), one air-mobile division, one special operations division, one support 

command (forming), one SIGINT/ELINT brigade, and two logistics brigades. The navy is 

organized into submarine, frigate, patrol boat, mine countermeasures, and naval aviation 

commands. The air force command consists of four air divisions, eight fighter wings, one 

reconnaissance wing, six surface-to-air missile wings, and two tactical air control regiments. The 

air force also has a transport command and training forces. 

Major Military Equipment: Germany’s army is equipped with 2,398 main battle tanks, 523 

reconnaissance vehicles, 2,122 armored infantry fighting vehicles, and 909 armored personnel 

carriers. In addition, the army has 1,682 artillery pieces, 1,915 antitank guided weapons, 1,509 

air defense guns, 143 surface-to-air missiles, 18 surveillance vehicles, 525 attack and support 

helicopters, and various unmanned aerial vehicles. The navy is equipped with 12 submarines, 13 

principal surface combatants, 20 patrol and coastal combatants, 23 mine warfare vessels, 38 

support vessels, 20 special purpose vessels, and 4 research and survey vessels. Naval aviation 

has 65 combat aircraft and 22 armed helicopters. The air force is equipped with 384 combat 

aircraft but no combat helicopters. 

Military Service: Germany has nine months of compulsory military service for men at age 18. 

Paramilitary Forces: In May 2005, the paramilitary German Federal Border Guard was 

renamed the “Federal Police” to reflect new responsibilities for domestic security that combine 

law enforcement and intelligence. The organization not only is responsible for protecting the 

country’s borders but also participates in United Nations peacekeeping missions and supports 

intelligence-gathering activities. Border Security Troop 9 is a special unit that was created for 

preventing hostage incidents, assassinations, and organized crime. Former German Foreign 

Minister Hans-Dietrich Genscher established the unit after the terrorist attack on Israeli athletes

at the Olympic Games in Munich in 1972. 

Foreign Military Forces: Several foreign militaries are stationed in Germany under the North 

Atlantic Treaty Organization (NATO) umbrella. They include 69,790 U.S. troops, 22,000 British 

troops, 3,200 French troops, and 2,600 Dutch troops. 

Military Forces Abroad: In recent years, Germany has deployed troops to several multinational 

peacekeeping operations, including those in Afghanistan, Bosnia, Djibouti, Montenegro, Sierra 

Leone, and Uzbekistan. The largest contingents were in Montenegro and Afghanistan. 

Police: The states are responsible for managing Germany’s police, which are divided into the 

following units: the general police (for crime prevention and response), the emergency police 

(for natural disasters and major accidents), and the water police (for waterways). The public 

prosecutor’s office is responsible for handling criminal prosecutions, and the general police are 

subordinate to it. The Federal Border Guard is a national police force that has jurisdiction over 

security on the borders, on the railroads, and at airports. Despite isolated reports of abuses of 

police detainees, Germany’s police generally respect individual human rights. 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

Internal Threat: At the end of 2004, Germany’s Federal Office for the Protection of the 

Constitution identified 24 Islamic organizations operating in Germany that pose a security risk or

promote extremism. Members and followers of these organizations total approximately 31,800, 

about 1 percent of Muslims living in Germany. The Turkish organization Islamic Society Milli 

Görüs has the largest following, numbering 26,500. However, only a small hard core of fanatics 

is considered to be capable of terrorism. The primary targets are believed to be American, 

British, Israeli, and Jewish facilities, although the facilities of other nations also are endangered. 

Potential targets include embassies, consulates, nuclear power plants, dams, airports, sewage 

plants, subways, skyscrapers, sports stadiums, and churches, according to the former interior 

minister. The fact that Germany refused to participate in Operation Iraqi Freedom may mitigate 

the risk of terrorism by extremist Islamic groups somewhat. However, German authorities are 

not complacent. 

Germany also faces an internal threat from right-wing and left-wing extremists. At the end of 

2004, there were 168 right-wing extremist organizations with 40,700 members, according to the 

Federal Office for the Protection of the Constitution. Neo-Nazis totaled about 3,800. A hard core 

of right-wing extremists capable of violence is estimated at about 10,000. Three political parties 

are associated with right-wing extremism: the Republicans, the German People’s Union, and the 

National Democratic Party of Germany. The far-right German People’s Union holds six seats in 

the Brandenburg state parliament and one seat in the Bremen state parliament. At the end of 

2004, the far left, which has revolutionary Marxist and anarchist factions, had about 30,800 

adherents. Only about 1,000 out of 65,800 members of the Party of Democratic Socialism

support a communist platform. Approximately 5,500 far-left extremists are deemed to be capable 

of violence. 

Terrorism: Following al Qaeda’s September 11, 2001, terrorist attack against the United States, 

Germans were surprised to learn that the mastermind of the strike and several accomplices 

previously had been living in Hamburg. Since then, Germany has been a reliable partner in the 

United States-led war on terrorism, according to the U.S. Department of State. German courts 

have a very high standard of proof, which has made it difficult for authorities to convict or deport 

terrorist suspects. In February 2003, a Hamburg court convicted Mounir el Motassadeq of aiding 

and abetting the conspiracy and sentenced him to the maximum available term of 15 years. 

However, in March 2004, the German supreme court overturned this conviction, which was the 

first in the world related to the 9/11 incident, for lack of evidence and remanded the case for 

retrial. Finally, in August 2005, a Hamburg court re-convicted el Motassadeq and sentenced him

to a seven-year prison term. In another case, years of procedural maneuvers were required before 

the German judicial system finally succeeded in October 2004 in deporting an Islamic extremist, 

the so-called “caliph of Cologne,” to Turkey. In yet another case, in July 2005 a Syrian-German 

terrorist suspect was released from custody after the German supreme court ruled that he could 

not be extradited to Spain under a European Union arrest warrant because this step would violate 

Germany’s Basic Law. 

Human Rights: Fundamental human rights are enshrined in Germany’s Basic Law, or 

constitution. These rights encompass the freedoms of speech and the press, the right of equality 

before the law, and the right of asylum. Freedom of speech is not universal. Statements 

promoting racial hatred or Nazism are prohibited, as are statements denying the Holocaust. 

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Library of Congress – Federal Research Division Country Profile: Germany, December 2005 

Efforts to enforce these bans extend to all modes of communication, including CDs and the 

Internet. 

Although Germany endorses religious freedom and the separation of church and state, majority 

religions, such as Protestantism and Catholicism, enjoy a privileged status. In fact, the 

government recognizes them as legal corporations and collects taxes for them. Some minority 

religions fare less well. For example, the government views the Church of Scientology as a cult 

and a threat to democracy rather than as a legitimate religion and openly discriminates against its 

members. For similar reasons, Reverend Sun Myung Moon of the Unification Church has been 

denied entry to the country. Several states have banned the wearing of Islamic headscarves in the 

public schools, and a federal court has upheld the ban on appeal. 

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