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Federalism as a Model for Explaining the European Union

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The European Union (EU) is a remarkable and world widely unique case of regional integration (Hix, 2017, p. 580). After the two world wars in the first half of the 20th century, some of the European countries decided to voluntarily yield part of their sovereignty to supranational institutions to ensure a long-lasting peace through regional integration and to enjoy the greater advantages of collective cooperation. The EU, at that time called European Community, was first formed at the beginning of the 1950s as a common market for coal and steel, but it later evolved in an economic and also a political union. It is not based on a constitution, meaning on a specific document setting the fundamental norms of the organization, but on a set of Treaties, which are introducing the institutions of the European Union and their rights and duties in the ensuring of the functioning of the EU. The European Union institutions have their own competences in the areas such as the single market or in monetary policies of the countries that have the euro as their currency. They also share some competences with the member states, based on the principle of subsidiarity, however, the important areas of taxation or the public spending, such as health care or welfare benefits still belong to the competences of the EU member states (Hix and Hoyland, 2011, p. 4).

As the nature of the European Union is unique and no such a form of regional cooperation exists elsewhere in the world, it is widely discussed how exactly can be the EU characterized and studied. There is a little agreement on what the European Union actually is since it is not a state nor it is a typical international organization (McCormick, 2011, p. 13). The aim of this essay is to analyze how useful a model of federalism is in explaining the European Union. Federalist theory significantly influenced the founders of European integration (Benson and Jordan, 2011, p. 2). However, its position in the debate about the European Union, especially its future, has shifted, since federation was proclaimed mainly by Eurosceptics as a final state which the EU should not reach (McCormick, 2011, p. 16). According to Kelemen (2003, p. 185) federalism can be defined by using three simple characteristic features. Firstly, there exist different levels of governments which all have a direct effect on the citizens, secondly, these governments have some separated competences in areas where they make decisions independently of each other, and the last characteristic is an existence of a supreme federal court. McCormick (2011, p. 16) adds other aspects important for a system to be regarded as federal, such as a constitution, which sets the competences of central and local governments, use of a single currency or an exclusive right to the use of coercion. This essay is going to argue that federalism is to a high degree useful in explaining the EU, as it, unlike other theories, can provide an explanation for many features of the European Union, especially its multi-level governance. However, the EU is still missing some of the characteristics of the federation and cannot be regarded as a truly federal state and as such cannot be wholly explained by using federalism. The first part of the essay is going to introduce the features of the European Union which can be explained by the federalism theory. On the other hand, the second part is presenting aspects of the EU that are not typical for the federal systems.

Even though the European Union cannot be formally considered a federal system, federalism can be used to explain many of its features. The first one is the multi-level governance of the European Union. For federal systems, it is typical that powers are separated between different levels of governance (Abromeit, 2002, p. 4). Each level has its own exclusive competences, however, there are some areas in which they share powers to attain better efficiency, as various problems can be more effectively addressed at different levels of decision-making (McCormick, 2011, p. 16). Furthermore, all level of decision-making in the federal systems have a direct effect on the citizens. Looking at the issue of the multi-level governance, federalism is more useful than any other theory of international relations for explaining the case of the European Union, because the decisions in the EU are made not only at the national level, meaning the level of the member states of the Union, but also at the supranational European level (Benson and Jordan, 2008, p. 81). Additionally, decisions made by the European Union institutions have a significant impact on all member states, as they directly affect the EU member states and their citizens (Abromeit, 2002, p. 4).

Moreover, as in the case of the federal states, the different levels of decision-making in the European Union have their own autonomous competences. From the establishment of the EU to the present time, the European Union member states shifted part of their sovereignty in a number of different policy fields to the institutions of the EU. The first supranational policy project of at that time the European Community was the Common Agricultural Policy, which was adopted in the late 1960s (Hix and Hoyland, 2011, p. 2). Over the years the number of areas where the EU institutions can make autonomous decisions significantly increased, especially with the creation of the European single market, which was connected with an adoption of a wide range of common policies (Hix, 2017, p. 574). In the current state, the European Union has exclusive powers in areas of a customs union, monetary policies for those member states, which have euro as their currency, or commercial policy. From the adoption of the Lisbon Treaty, the European Union can also act on behalf of its members and independently sign international treaties with third parties as a single unit (McCormick, 2011, p. 17). Apart from the exclusive competences of the European Union, a large number of other important policy areas is shared by the member states and the European Union institutions, examples being the internal market, transport, environment or social policy. For all European Union policy areas applies the principle of subsidiarity, which sets that in cases where it is more efficient the policies should be dealt with at lower levels of decision-making (Church and Dardanelli, 2005, p. 179).

Besides from explaining the division of sovereignty powers between different levels of governance within the European Union, federalism can be also useful for an explanation of some specific features of the particular EU institutions. The European Union was firstly created with the goal to achieve economic integration between its members (Borzel, 2005, p. 246), however, it soon evolved in more complex political union with its autonomous supranational institutions, such as the European Commission, the European Parliament and the European Court of Justice. On the European level, there also exist institutions based on the intergovernmental principle, which means that they are composed of the members of the national governments. As financially and legislatively independent units, the member states hold significant powers in these European institutions (Borzel and Hosli, 2003, p. 190) and the representatives of their national governments directly participate in the EU decision-making process (Benson and Jordan, 2011, p. 4). Examples of these institutions are the Council of the European Union and the European Council.

Over the years with the reform of the European Union and the adoption of new treaties, also the EU institutions underwent some noteworthy changes. These changes added more federal features to the character of the EU. The institution than went through the most significant transformation is the European Parliament. From its establishment, it was elected by the national parliaments. This procedure was, however, not transparent enough, and so in the year 1979 the first direct elections of the European Parliament were held and the European Parliament became the first and also the only European Union institution directly elected by the citizens of the member states. This change was supposed to link the citizens with the European Union through their direct participation in influencing the composition of the EU institutions and to make this process more democratic. At that time the European Parliament did not have any real impact on the decision-making process but this has changed with the reform of the treaties and in the last forty years the European Parliament gained significant powers. After the adoption of the Lisbon Treaty, the European Parliament gained major competences in approving the European legislation, budget and in the appointment of the European Commission. The direct participation of the EU citizens and increase in the powers of the European Parliament can be considered as a federalist shift in the transformation of the European Union (Kelemen, 2003, p. 197), as the linkage of the institutions and decision-making process with the individual citizens is an important aspect of federal systems to be democratic and legitimate.

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Even though the federal shift can be most significantly recognized in the case of the transformation of the European Parliament, it is not the only European Union institution with features typical for federalism. Another example is the Council of the European Union, which compose of the ministers of the EU member states, who according to the ordinary legislative procedure approve the European legislation together with the European Parliament. Typical federalist feature in the decision-making of the Council is the increasing number of areas where decisions are approved by qualified majority voting instead of by unanimous vote (Kelemen, 2003, p. 197). However, another aspect of the voting in the Council goes against the federalism principles, and that is the weighting of the votes (Abromeit, 2002, p. 9), as through this procedure the votes of the member states are not equal and are influenced by the number of states’ citizens.

Another institution which makes the European Union more federal is the European Court of Justice (ECJ). Kelemen (2003, p. 185) argues, that one of the three fundamental characteristics of federalism is the existence of a supreme federal court. This is the case also of the European Union. The European Union law is supreme over the national law and has a direct effect on the EU citizens (Church and Dardanelli, 2005, p. 179). The ECJ serves a supreme court and is dealing with the disputes not only between the European Union and its member states but also between citizens and their member state, as the citizen can sue the member state for a breach of the European law (Borzel and Hosli, 2003, p. 187). There also exists a direct connection between the national courts and the ECJ. Through the preliminary ruling procedure, the national courts can ask the ECJ for an interpretation of the EU law (Kelemen, 2003, p. 193)

Apart from institutional features, another typical characteristic of federal systems is the existence of a constitution, a document which sets the fundamental rules for the functioning of the state, such as the competences and rights of the particular institutions. The European Union on its own does not have a constitution like that. The member states aspired to create such a document with the Constitutional Treaty, which was signed by the leaders of the European countries in the year 2004. Yet, this treaty was rejected in the referenda in the Netherlands and France in the year 2005, which led to its abandonment (Hix and Hoyland, 2011, p. 2). Even though that the EU does not have a constitution in its typical meaning, its function is in context of the European Union fulfilled by the Treaties, which set the fundamental rules for the functioning of the EU. The norms set in the complex of the EU Treaties are binding to all member states and are enforced by the European Court of Justice (McCormick, 2011, p. 17).

As was illustrated above, the European Union has many characteristics typical for federal systems, however, the EU cannot be regarded as a truly federal state, as it also has features, which cannot be explained by using the federalism theory. Firstly, the European Union member states still hold competences in the most important areas, such as taxation or public spending (McCormick, 2011, p. 17). The European Union does not have the competence to impose direct taxes on the citizens of the member states or corporate taxes (Borzel and Hosli, 2003, p. 188). It also has only a minimum of its own financial sources such as customs duties, taxes on imports from third countries, a percentage of the value-added taxes by the member states and mainly the financial contributions of the member states (Borzel and Hosli, 2003, p. 188). This makes the EU to a great extent financially dependent on the member states. The issue of the low number of independent financial sources is connected with another aspect which makes the European Union not suitable for being a federation, namely its budget. Compared to the budgets of the member states the EU budget is quite small, as its value is only one per cent of the gross national income of the whole European Union (Hix and Hoyland, 2011, p. 13). The fact that the European Union is not financially independent cannot be explained using federalism.

For federal systems, it is also characteristic to have a single federal currency. A European currency exists, namely the euro, however, the member states are not all compelled to adopt it as their state currency in the future (McCormick, 2011, p. 17). So even though that the EU can independently set monetary policies of its member states, it can do so only for those that already adopted euro. Another non-federalist feature of the EU is the fact that unlike in the federal systems all around the world the European Union does not have an exclusive right to legitimately use coercion, as only the member states have their own independent military forces (Hix and Hoyland, 2011, p. 14). Apart from military the member states also remained their sovereignty in other spheres, an example being the foreign policy. Despite the fact that the European Union can sign treaties with third parties on behalf of its member states, the governments of the member states can also sign international treaties autonomously (Hix and Hoyland, 2011, p. 12). However, in federations, this can be done only by the highest level of governance.

To sum up, the European Union is a worldwide unique integration project, which cannot be easily described and understood by using a single theory. This essay applied the theory of federalism in the case of the European Union and showed, that federalism can be used to explain a wide range of the characteristics of the European Union. However, the EU still has some aspects that cannot be attributed to a federal system and therefore the European Union cannot be as a whole explained by federalism and cannot be classified as a federation. Federalism is to a high extent useful in explaining the system of the European Union multi-level governance, as the EU has a supranational and also national level of decision-making. Like in the cases of federal systems also the governance levels of the EU have their own separate competences. Additionally, they also share powers in some policy areas to achieve greater efficiency. Federalism can be also useful for explaining the adoption of the direct elections of the European Parliament and the significant increase in its powers over the years. Same goes for the increase in the number of areas decided by qualified majority voting in the Council of the EU. Another significant feature which has the European Union in common with federal states is the supremacy of the European law over the national law of its member states, and the direct effect of the law and also of the decisions made by the EU institutions on the citizens. Unlike federations, the European Union does not have a constitution, but its role is in the context of the EU supplemented by the Treaties. However, even though that federalism can explain many of the EU characteristic features, it cannot be used for the explanation of the absence of an exclusive right to the use of coercion, the absence of general single currency, or the EU’s small budget and its financial dependence on the member states. In conclusion, federalism can be highly useful in explaining many aspects of the European Union, especially its multi-level governance, division of powers and allocation of competences. However, because of how unique the system of the EU is, federalism cannot be used to explain all of its features.


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