History and Evolution of Federalism

Introduction & Historical Background

“Continue, continue, there is no future for the people of Europe other than in union,” Jean Monnet repeated. To the day he died, Monnet had one objective: “Make men work together. Show them that beyond their differences and geographical boundaries there lies a common interest.”

        Considered to be one of the ‘founding fathers’ of the European Union, Jean Monnet served as a French political economist and diplomat. He inspired the creation of the famous ‘Schuman Declaration’ in May 1950, which led to the creation of the European Coal and Steel Community and, as such, is considered to be the birth of the European Union. He served as the president of the executive body of the ECSC between 1952 and 1955.  Monnet was a force behind the integration of Western Europe and committed himself to this new, unifying project.

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        Today, the European Union still prides itself on those foundational promises of unity across borders even as it faces increasing Euroscepticism, political divisions between Eastern and Western Europe, criticism over funding, and a broad range of cultural differences. In the midst of the crises in the first decade of the new millennium, a new term was attributed to this ever-expanding body of institutions and members states. In a seminal speech at Humboldt University in May of 2000, Joschka Fischer, then the German Minister of Foreign Affairs, suggested an answer to the EU’s recent difficulties: ‘the transition from a union of states to full parliamentarisation as a European Federation’, meaning ‘nothing less than a European Parliament and a European government which really do exercise legislative and executive power within the Federation.’  A heated political debate has been ongoing ever since as the question of how to go about organizing the division and sharing of sovereignty rights among the different levels of government within the EU would be conducted.

        As for my place in the debate, I venture to suggest that limited elements of federalism are useful concepts to apply to the European Union when describing its political function in terms of its executive function, political inputs, intentional democratic practices, legislative and judicial powers, and in the integration of member states. The EU may be described as a system of multi-level governance, where sovereignty rights are shared and divided between supranational, national, and subnational institutions. Traditional theories of international relations and European integration have difficulty classifying the multi-level nature of the emerging European polity attributing it to such concepts as an international organization, regional economic organization, a federal state, a confederation of states, and even as an entirely new system with the term ‘sui generis’.  The European Union is a modern political phenomenon that has risen out of the social, historical and economic context of the 20th century. In this context, the EU exists as a political system which is unique in comparison to all others. Although it has traits that bear resemblance to the political systems of federal states as well as intergovernmental organizations, we cannot properly compare it in all its dimensions to anything else, as there is no other entity that has existed or exists now. We can only attribute certain elements of existing mechanisms of governance to the EU in hopes of providing some sort of characterization. I intend to explore the federal nature of the EU through theoretical examination and historical examples.

Executive Function and Practices

The founders of the European Community, including Jean Monnet, did not provide for a traditionally federal structure. Originally, the European Community was set up and conceptualized primarily as a functional organization of economic integration based on neither fixed territorial boundaries nor a direct link between its citizens and its institutions. Nevertheless, European institutions have always entailed federal elements.  The High Authority of the Coal and Steel Community was not an intergovernmental executive body, but it held autonomous powers and was accountable to the ECSC’s Common Assembly. When it developed into the European Commission with the Treaties of Rome in 1957 it continued to enjoy broad powers within the European Economic Community (EEC). The Council of Ministers retained control of supranational powers, however the Single European Act in 1986 made qualified majority voting a standard decision-making practice in the Council and increased the powers of the European Parliament.  Whether intentional or an indirect result of progression, the institutions of the EU have functioned with some federal elements.

Simon Hix and Bern Heyland (2005) attribute the executive function of EU institutions to that of a ‘political system without a state’.  Even without a traditional constitution, the EU Treaty and the practices and norms that have evolved over the past sixty-plus years are alike to the basic architecture of a constitution in that there is a clear division of policy competences and institutional powers. There are a multitude of features that exist in the EU that liken it to a federal structure.  The EU is a system of governance based on at least two orders of government, each existing under its own right and acting directly on its citizens. The European Treaties allocate jurisdiction and resources to these two main orders of government. There are provisions for ‘shared government’ in areas such as security, labor market regulation, regional spending, and immigration, where the jurisdictions of the EU and the member states overlap. Community Law enjoys supremacy over the national law of member states. European legislation is increasingly made on the basis of majority decisions, obliging individual states to accept decisions against the priorities outlined in their own agendas. The composition and procedures of EU institutions are based not solely on principles of majoritarian representation but allow for the representation of ‘minority’ views, as smaller EU states tend to be over-represented in both the European Parliament and the Council of the EU. European Treaties are not unilaterally amendable by one level government alone and require the endorsement by the second level, national governments, and either the national parliaments or the citizens by referenda. Hix and Hyland offer a tangible amount of evidence to support the federalist features of the EU’s executive institutions.

However, a member of the Royal Institute for International Affairs, notes that the EU presently lacks significant features of a federal system.  Firstly, EU member states retain the exclusive power to amend or change the constitutive treaties of the EU on the basis of unanimity rule, a mandatory procedure. Secondly, the EU has no real ‘tax and spending’ capacity. All major areas of taxation and public spending, such a health care, housing, welfare provision, and pensions remain the exclusive preserve of the member states with very little EU interference.  Lastly, the EU lacks an essential element of democratic control: the will of the people. The composition of the European Commission as the ‘EU executive’ is not determined by the European citizens, either directly, through the election of a president, or indirectly by the European Parliament. There has been an attempt to incorporate some level of indirect democracy to the election of the Commission President through the Spizenkandidat process. The Spitzenkandidat process awards the Commission presidency to the party winning the most seats in Parliament. A majority of the European Council, including French President Emmanuel Macron as well as the leaders of the Czech Republic, Hungary, Lithuania, the Netherlands, Poland, Portugal and Slovakia have voiced opposition to the process.  Czech Prime Minister Andrej Babi?? has said, “Who should decide about the chief of the Commission? All member states, not somebody saying ‘ah, this is our Spitzenkandidat.”  In this regard, it is difficult to characterize the whole of the EU as a federal system if the link between the populous and the function of the executive institutions is missing.

Cooperative Federalism in the EU

According to Montesquieu, distribution des pouvoirs or cooperative federalism is based on a functional division of powers among different levels of government: while the central level makes the laws, the federal units are responsible for implementing them. In this system, the vast majority of competences are ‘concurrent’ or ‘shared’. This division of labor, in order to function, demands a strong representation of the interests of the federal units at the central level, not only in order to ensure that federally policies are actually implemented but also in order to prevent federal units from being reduced to mere ‘administrative agents’ of the federal government. The capacity of federal units to ‘self-determine’ is compensated, however, by strong participatory rights in the process of federal decision.

The EU does not have an autonomous sphere of competences in the sense of holding both legislative and executive responsibilities in selected policy sectors. The EU has ‘exclusive competences’ under Article III of the TFEU which states that ‘The Union shall have exclusive competence in the following areas: customs union; the establishing of the competition rules necessary for the functioning of the internal market; monetary policy for the Member States whose currency is the euro; the conservation of marine biological resources under the common fisheries policy; and common commercial policy.’  Even so, the EU cannot legislate without the consent of the member states (as represented in the Council of Ministers). With the exception of policies concerning money, there is no area in which the member states have completely ceded sovereignty to the EU, to the extent of excluding their direct participation in decision-making. For policy concerning agriculture, member states still hold significant leverage through the institution of the Council of Agricultural Ministers.

While the vast majority of legislative powers in the EU are de facto, responsibilities for policy execution mostly rest with the member states. The EU has established an administrative network that is too small to enforce policy once it is handed off to member states. Member state governments have a strong role in European institutions which does not align with the federal model’s sharing of power and authority between both levels.

The Model of the United States

To best understand the federal efficiencies and inefficiencies of the EU, it is imperative to compare the EU to a non-European example of a classically-federalist state which shares quite a few features. The United States has existed as a federal republic since 1789 by the ratification of the Constitution but did not assume the form of federalism as it is practiced today until the 1970s.  ‘Marble cake federalism’, the present model of federalism in the US, is a blend of cooperative and New Federalism, developed under Regan’s administration. In contrast to dual federalism, it erodes the jurisdictional boundaries between the states and national government, leading to a blending of layers as in a marble cake. The US has experienced a gradual incursion of national authority into the jurisdictional domain of the states, as well as the expansion of the national government’s power in concurrent policy areas. The European Union has too witnessed a greater centralization of powers to which John McCormick (2008) attributes increased supranationalism.  The EU’s cooperation with its member states has shifted towards the creation of a new ‘state’ of institutions with accumulated authority.

More specifically, the EU functions in some regards that are alike to the cooperative federalism the US practices today. In the United States, state and local governments have varying fiscal capacities and the national government’s involvement in state activities such as education, health, and social welfare is necessary to ensure some degree of uniformity in the provision of public services to citizens in richer and poorer states.  The EU enforces Community Law in areas from human rights, to transport, to trade which is expected to be enforced by national governments. Under Article VI of the United States’ Constitution, the supremacy clause establishes that the Constitution, federal laws made pursuant to it, and treaties made under its authority, constitute the supreme law of the land.  The 1972 European Communities Act provides for EU law supremacy over national law. For example, all primary legislation enacted by the UK Parliament after the 1972 Act came into force on 1 January 1973 has effect subject to the requirements of EU law. This means that the courts are obliged to strike down legislation which is inconsistent with EU law.

Although we may draw comparisons between features of federalism shared between the United States and the EU, we cannot dismiss the stark contrasts between the two. McCormick reminds us that EU member states retain much greater sovereignty and authority than states do in the US model. Member states are permitted under the TFEU and conditions assumed when applying to integrate into the EU to establish treaties, maintain a near monopoly over tax policy, maintain independent militaries, and in some cases assume their own national currency.  Likewise, EU institutions (including the Council, Commission, and Parliament), do not hold some of the significant powers entrusted to the US federal government including: the power to levy taxes, sole power to negotiate all agreements on behalf of member states with third countries, act beyond the scope of constitutions and treaties, boast a large and flexible budget, and the loyalty and patriotism of fifty unique states. 

The EU emanates the blended relationship between the US federal government and her states but grants a much higher level of authority and autonomy to its member states than the US Constitution permits.  The experiences of these political systems largely differ but we cannot deny the existence of shared federalist characteristics.

Closing Thoughts

Federalism is not an absolute concept and has the capacity to assume different forms relative to the intensity of social, political, economic, and cultural pressures in addition to the state’s historical legacy. The United States witnessed a transformation from dual federalism where in the states and national government exercise exclusive authority in distinctly delineated spheres of jurisdiction to a blend of cooperative and dual federalism. The EU, though not a state by Hix and Hyland’s definition, functions with some features of federalism. Competencies are shared among different levels of government and enforcement falls to the responsibility of national governments.  However, due to the disparateness of member states and its citizens and the absence of an effective system to directly represent popular interests with large participation, the EU is an institution that lacks the legitimacy of traditional federal systems.

The EU is likely to experience a move towards cooperative federalism as the institutions and the member states work towards coordinating their efforts to solve such European issues as immigration and job market stability. Policies concerning market integration and the welfare state are likely to be increasingly centralized at the level of EU institutions. EU member states will likely retain strong co-decision powers in European policy-making, as exercised by their governments. The EU still lacks a vertically integrated party system and a functioning system of interest intermediation, which are critical solutions to structural deficiencies of cooperative federalism.  Mechanisms of functional interest representation remain weak and require serious reconsideration and the rallied support of the heads of government of member states.

Even so, federalism is reflected in the relationship of the institutions and member states of the EU as sovereignty is being shared and divided between different levels of government rather than being located exclusively at one level.  Federalism provides a better way of understanding these political, economic, social, and cultural relationships that are neither purely domestic nor purely international and allow us to imagine the future shape of the EU. As Jean Monnet set out to accomplish six decades ago, “Continue, continue, there is no future for the people of Europe other than in union.” Whether the union retains its federal features is in future years is up for question.

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