The difference that federalism makes to Europe

Richard Laming

The European Union may not be the only factor that has brought peace to Europe, but it is certainly a major one. A set of international institutions founded on the rule of law has changed utterly the way in which different European countries relate to each other. A continent of complex societies, contrasting histories and entwined interests has seen conflict replaced by cooperation and war replaced by peace.

But what is it about the European Union that has enabled it to work so well? There have been attempts to unify Europe before, but never with such success nor with such prospects. What is the difference this time?

The reason is that the institutions and policies of the EU have been founded on the principles of federalism. Lessons have been learned from failed attempts at integration in the past so that those mistakes do not have to be repeated. The federalist approach towards political institutions has created something of substance and solidity, which can withstand crises and the occasional resurgence of populist feelings.

It is federalism that has enabled European countries to reconcile their different traditions with their common interests, all the while enhancing the democratic rights of their citizens. This article will explain why.

What is federalism?

To start with, it is necessary to explain what is meant by federalism. It can be understood best if it is reduced to two essentials:

(1) Federalism proposes government at more than one level, with a written constitution dividing policy competences between the different levels. The allocation of power between the different levels can only be changed with the consent of all levels affected rather than unilaterally by only one level on its own.

(2) Federalism proposes that each level of government should have a direct relationship with the citizens. Each level draws its democratic legitimacy directly from the citizens, usually via direct elections; and its decisions take effect directly on the citizens too.

In a confederation, by contrast, while there is more than one level of government, only one of those levels will have such a direct connection with the citizens. The other levels will draw their legitimacy or implement their decisions indirectly, via that main level of government rather than directly in their own right. As a result, they will tend to be less powerful. A confederation is a multilevel system of government that concentrates power at a single level, while a federation sees that power dispersed.

Looking at these two models of multilevel government, federalism and confederalism, this article will describe different aspects of European integration and explain the distinctive difference that federalism has made. We start with the central element of any political system, its constitution.

The European constitution

A constitution is a written document that defines the system of government, explaining and authorising who does what. The European Union is founded on a series of treaties, starting with the Treaty of Rome, that perform this purpose. However, because these treaties have accumulated over time, each one based on, but making amendments to, its predecessor, and because each treaty is the result of a negotiation among all the member states, each of which must be entirely satisfied with every detail of the negotiation, those treaties fail to perform this purpose clearly. It is hard for experts to identify who does what and how; and if it is hard for experts, it is even harder for the average citizen.

Federalists propose that the accumulation of treaties be replaced by a clear and simple document which would define and limit the powers of the Union in a way that everybody could understand. This, we recall, is what a constitution is for.

In addition to this basic benefit of clarity, a constitution could also bring the following advantages:

Connect the European institutions more strongly with the citizens. This would increase their legitimacy. For example, the next president of the European Commission could be chosen from among candidates nominated by the political parties that contest the elections to the European Parliament, rather than the name simply emerging from a discussion limited to the heads of government of the member states. (Federalists conceive of the EU as being a union of states and citizens, and not merely a union of states.)

Strengthen the powers of national parliaments within the EU. The Council of Ministers, which represents the member state governments in the institutional system, should meet in public in the manner of a legislative assembly rather in private in the manner of a diplomatic gathering, and its members – national ministers – should be held to account for their speeches and voting records in the parliaments of their home countries. (Federalists do not believe that European democracy should be created at the expense of national democracy.)

Give citizens more rights within the Union. This includes human rights, social rights and civil rights, through adhesion to the ECHR and by giving legal force to the Charter of Fundamental Rights, but also through giving them more opportunities to participate in the political decision-making processes of the EU. The right to petition the European Commission, the right of access to information, and above all the creation of effective European political parties, will make the EU more accountable to the citizens whom it is supposing to represent. (Federalists think that the rights of the citizens should be recognised and protected at all levels of government.)

The alternative view of the European Union, by contrast, does not want to increase the legitimacy of the European institutions – in this view, they draw their legitimacy from the member states alone – and in fact might wish to reduce their legitimacy because it fears them as a rival to the selfish role of the member state governments themselves. Similarly, national parliaments and even the citizens should participate in the EU only to the extent that their respective national governments will permit.

The difference between the federalist view of Europe and its alternative are clear, and the reasons to prefer the federalist view are compelling.

Enlargement

If the idea of a constitution has been a dominant theme of debate about the future of Europe in recent years, enlargement has been a second one. Founded with only six member states in 1957, the Union grew to as many as 27 member states by 2007. This expansion alone shows the success of the European Union, but it is important to ask why it has expanded. What lies behind enlargement?

The most significant statement of the principles underlying enlargement of the EU is the Copenhagen Criteria, agreed by an EU summit in Denmark in 1993. These criteria set down three principles to which aspirant member states must adhere:

democratic government and human rights
a competitive market economy
the goal of political union

Each of these three principles is an expression of federalism within the EU.

First, the commitment to democracy and human rights is, as we have seen in the previous discussion of the constitution, a key part of what the EU is. Citizens are entitled to a direct stake in the political institutions that govern them, and this direct stake is not to be denied by the intervention of an intermediate level of government. It is therefore essential that the standards and principles of democratic government are applied throughout. A confederal approach to Europe might be less careful to ensure that this is the case, because it lacks the notion that citizens of different member states might be entitled to equality with each other.

Secondly, the existence of a market economy depends on laws that regulate competitive behaviour, product and environmental standards, and the rights of workers and consumers. In the European Union, these laws are European laws. They are agreed at the European level, and apply directly and equally to citizens and companies throughout Europe. (Sometimes, they have to be transposed into national law in order to take account of the differences in national administration, but this does not undermine this basic principle.) This goes beyond the traditional notion of a customs union to create a single market. As a result, each company in Europe has access to what is effectively a home market of 500 million consumers, and the advantages that flow from this in terms of choice, price competition and economies of scale benefit us all. A confederal approach to the economy would have retained protectionist barriers and so led to a less prosperous Europe.

Lastly, the requirement that new member states accept the commitment to political union is an expression of the fact that the European Union is still changing. It is defined by its treaties, but these treaties have been created in reaction to external circumstances and, as those circumstances change, the treaties must be expected to change in parallel. A member state that believes that the EU is a traditional international organisation, which exists solely for the benefit of the member states governments alone and not for the citizens directly, will possibly find the EU an uncomfortable club of which to be a member. That 27 member states are now happily enjoying the fruits of membership with many more hoping to join is evidence that the EU system works.

Europe in the world

The 27 member states of the European Union, together, have a population of 500 million and a GDP of around 12 trillion euros. They are responsible for 15 per cent of world trade and emit 20 per cent of all greenhouse gases. They have more than 2 million men and women in their armed forces, are the source of 40 per cent of the world’s arms exports and account for one quarter of the world’s military expenditure. By any standards, Europe has the potential to be a world power.

To possess strength on this scale has two implications. First, such strength means that Europe can, if it chooses, act to advance its own interests and defend its own values. Its individual member states cannot do this on their own, but acting collectively they can. This is a choice that they can make.

The second implication is more serious. It is that the European Union, by virtue of its size and importance, has an impact on the rest of the world whether it wants to or not. In 2007, it imported more than 1400 billion euros worth of goods and services: an EU policy that reduced this volume of imports would have a considerable impact on the countries that depend on the EU as an export market. With power comes responsibility.

Federalists have strong views about how this power should be exercised and how this responsibility should be discharged.

Taking these two in reverse order, federalists argue that Europe has a responsibility to defend the values on which it is founded and also to advance them elsewhere in the world. This does not mean to impose them on the rest of the world (we have seen recently the tragic consequences of this misunderstanding), but rather to promote them and to argue for them. These values are, of course, those represented by the Copenhagen criteria: Europe should not expect others to follow rules that it will not follow itself.

Human rights and democracy are the fundamental basis of what we understand by our way of life. A market economy, respecting the needs of social cohesion and the limits posed by the natural environment, is the best way to secure prosperity. And federalists understand that neither democracy nor prosperity can be secured by countries acting alone. Shared action through shared institutions is needed to boost the world economy and, above all, to ensure that it is environmentally sustainable. Among all the world’s international institutions, the European Union is uniquely founded on this notion, and so it has a unique duty to explain the roots of its success.

To meet this responsibility has implications for how it should act. It was noted that Europe has the potential to become a world power, rather than suggesting that it actually is a world power at present. If Europe is to act effectively, this potential must be fulfilled.

In one area of policy, namely in the commercial field, Europe has become a world power already. The European Commission negotiates on behalf of the member states in the World Trade Organisation (on the basis of a mandate agreed by the national governments) and as a result the EU is extremely influential in regulating world trade. A consequence of creating the original customs union was the parallel introduction of the common external tariff: companies in third countries that wished to export to the EU were faced with the same tariff, whichever EU member state they were exporting to. The decision about the level of that external tariff therefore became an extremely important decision, which the European Commission used in order to persuade other countries such as the United States to join it in an overall reduction of trade tariffs around the world.

Federalists propose that the model followed in trade negotiations should be followed in other areas of external policy, too. The European Commission, which is required in the treaties to act “in the general interest of the Community”, should be the chief representative of the EU when dealing with other countries around the world. It will do so on the basis of a mandate agreed by the member states and, where appropriate, the European Parliament, too. This is the way to create a European voice around the world that is coherent, effective, and also expressing what the European countries and European people actually want to say.

Opponents of federalism often argue that the different European countries do not have enough in common to be able to share a common voice around the world, and even if they do have common interests, nevertheless it is an important principle that each member state should be free to make its own foreign policy decisions.

Federalists reply to the first of these arguments that it simply is not true. Everywhere in Europe wants to enjoy peace and security in an increasingly unstable world. Every European country needs a secure and reliable source of energy, without becoming too dependent on a single supplier such as Russia. And no European country will be spared the adverse consequences of climate change, should it be allowed to unfold.

The federalist answer to the second criticism – that national governments should retain the right to independent foreign policies – is based on the understanding of how important those arguments in the previous paragraph really are. How can it make sense, in the name of the vanity of national governments, to persist with institutional arrangements that we know do not work? It took the federalist approach to create the single market and to enlarge the Union. The same federalist approach should be adopted in the face of the next big challenge to confront the EU.

European citizenship and the democratic deficit

Both supporters and critics of the European Union complain about the democratic deficit in the EU institutions. Perhaps the critics do not realise that the term “democratic deficit” was coined by federalists in the first place.

The original meaning of the term, back in 1977, was the fact that Europe could not act in the way that its citizens wanted it to. The EU lacked a transmission mechanism to turn the desires and needs of the voters into proposals for European policies and laws. At that time, the European Commission lacked a strong connection with the European Parliament, and national governments were rarely questioned on their actions at European level by the political processes within the member states. In addition, even when a proposal for action did emerge at European level, it required unanimous agreement among the member states before it could become law. This was the period of “Eurosclerosis”.

Since then, the EU institutions have been reformed dramatically. First, in 1979, the European Parliament became directly elected rather than nominated by the national parliaments. It now has a direct mandate from the citizen: as we have explained, this is an example of federalism. Secondly, the Single European Act of 1986 introduced Qualified Majority Voting (QMV) for a number of important areas of policy, and each subsequent revision of the treaties has extended QMV still further. Thirdly, the Commission is now more strongly connected with the European Parliament. The Maastricht treaty in 1992 gave the European Parliament the right to approve the appointment of the Commission; in 1999, the Parliament forced the entire Commission to resign in protest at its performance; and in 2004, the Commissioner nominated by the Italian government was rejected by the Parliament and had to be replaced. And lastly, there is an increasing level of openness in the workings of the Council: still inadequate, perhaps, but still far in excess of comparable meetings of other international institutions such as the IMF or the G8.

The Single European Act also gave birth to the single market programme, the foundation stone of modern European economic prosperity, and this, ironically, led to the second definition of the democratic deficit.

The European single market was created, as has already been explained, by European laws. Each law would remove the barriers to trade in a particular field that were created by previous national laws. Rules on product standards and safety, for example, were harmonised to ensure that different national laws were not used as an excuse to bring back protectionism. (This is the difference between a single market and a mere customs union.) However, so successful and extensive was this programme of creating new European laws in place of former national ones that voices began to be raised about where these laws were coming from. Even with the institutional progress described above, the EU still falls short of the processes of parliamentary democracy with which we are familiar within each member state. Rather than being a description of the European Union doing too little, the democratic deficit became a description of it doing too much. Policy-making had out-stripped legitimacy.

Correcting this side of the democratic deficit has been an important aspect of recent treaty amendments, notably in the extension of the powers of the European Parliament over EU legislation. Having formerly been only consulted, now it has the right equal with the Council of Ministers to decide on most legislation (this is another good example of federalism within the EU). Federalists argue that this process must go further.

Specifically, the elections to the European Parliament held every five years should become an occasion when the future of the EU is debated and discussed. The identity of the next president of the Commission and the programme of law and policy that the next Commission will follow should become central elements in the decision of how to vote. Too many voters cast their votes on national grounds or for national reasons. This needs to change. To some extent, these changes will depend upon reforms to the institutions – power for the European Parliament, for example, over the whole of the budget, as proposed in the Lisbon treaty – but they will also require more cohesion and solidarity among European political parties and better reporting of European politics in the media.

The role of communication in European politics is important. Partly because the EU is new, partly because the distances are greater, partly because the languages are different: what might be taken for granted within a single country needs to be explained and confirmed across Europe. In particular, we need to be wary of the gulf between rhetoric and reality. Promises should not be made that cannot be kept, neither about what the EU can do nor about what the member states can do without it. The truth is that both need each other and pretending otherwise risks making matters worse and not better.

For in the end, the central measure of the success of the EU is what it means for the average person. Citizens of EU member states have acquired a range of rights under the EU treaties in other member states as well as their own – the formal notion of European citizenship was introduced in the Maastricht treaty of 1992 – but true citizenship is a more rounded concept than merely a legal one. It rests not only in the written treaties but is also reflected in the practices and feelings of the political society and of the community as a whole. Bringing an end to the democratic deficit therefore requires the full acceptance of the European dimension of public life in each member state. European integration is not only happening abroad, it is also happening at home.

The economy and the euro

Perhaps nowhere is the European dimension of the way we live now more pronounced than in the economic sphere. Companies operate in a Europe-wide single market, not 27 different home markets. That means that the regulations that apply to them are European; increasingly, so are their sourcing policies, their marketing strategies, and the career opportunities they offer their staff. If the 19th century saw the consolidation of national markets and the end to local protectionism, our present era is repeating that experience at the European level.

In that light, a natural accompaniment to the single European market is the single European currency, the euro. It clearly shows the nature of federalism in Europe, demonstrating both the importance of the supranational level and its direct effect on the citizen.

The supranational level is shown in the replacement of the former national currencies of the member states of the eurozone with the euro itself. The economic logic for this is the same as that for the single market. Companies are able to trade more easily across national borders if the costs and uncertainties of dealing in multiple and fluctuating currencies can be abolished. That much is straightforward.

However, to be able to abolish forever the possibility of variation in the relative values of different European countries requires a confidence that the relative values established now can be sustained indefinitely. That confidence depends in turn both on the extent of integration between the different national economies and also on the political willingness to find common solutions to issues that are unknown at present but may arise unforeseeably in the future.

For this reason, the economic project of creating the single currency is also a political project. In many ways, the political aspect is in fact more important than the economic. The federalist approach to the European Union does not neglect or deny this. Attempts to portray the euro as an economic issue and not a political one risk adding to the democratic deficit in Europe and not reducing it.

The second aspect of federalism – the direct impact on the citizen – is also demonstrated by the euro. You can tell it from the very fact that the new currency has a name. Rather than simply fixing the exchange rates of the old national currencies and carrying on as before, the EU adopted a much bolder course of creating a new currency of its own. This ensured that citizens would see the same benefits as governments and big business. It will take time to establish an integrated market for banking and other retail financial services, but it is coming. It will make Europe a new reality for all who live within it. Every time a European opens her purse or looks in his pocket, the new Europe – the euro – will be there. The need to breathe life into the European idea, to take it from a set of treaties, laws and regulations and turn it into a living political community, is itself served by the euro.

It is clear from what has already been written that the European economy, even with the single market and the euro, is still a work in progress. More work is still needed. There are aspects of the single market, such as energy and financial services, which are still incomplete. Many member states of the EU still have not joined the euro. Other European countries have not yet joined the EU. All of these are economic questions as well as political ones, political as well as economic.

Lastly, it is not possible to discuss the European economy without also discussing globalisation. Great changes are taking place in the way the world works. This means that the ability of the EU to develop its own economy depends increasingly on its ability to act at the global level. European economic prospects depend on the policies pursued by other countries and by international forces such as the global corporations. An effective presence of the EU on the world stage is necessary in order to advance an agenda of economic competitiveness, and to defend social and labour standards. The future of the European economy and the future of the European Union are inextricably entwined.

The policies of the European Union

The European Union is based on the idea of the social market economy. The preceding pages have looked at the market, but it is not correct to ignore the social. If federalists are right to insist on the fact that citizens must benefit from European integration, then the concerns of citizens must be at the heart of what the European Union does.

What are those concerns? They relate to security and the fight against terrorism and organised crime; they include the need to protect the environment and resist the effects of climate change; they call for a social dimension to the single market, to protect family life, and ensure equality for all parts of a diverse community. They are not merely a matter of prosperity, they are a matter of the quality of life.

Some of these issues are integrally linked with the single market, and so obviously require action at the European level. The rights of workers, for example, or the protection of consumers have implications for competitiveness and should not become excuses for a return to national protectionism. Others relate specifically to cross-border phenomena – the trafficking of women, for example, or the protection of the marine environment – where no single country could ever achieve its objectives on its own. And still others require resources and commitment on a scale that exceeds the capacity of any individual member state: the development of technology for satellite communications and renewable energy are vivid and urgent priorities here.

There is a long and important list of tasks for the European Union to fulfil. Each of them is an argument for a more democratic and effective Union. But they are not arguments for a centralised or bureaucratic Union. These common priorities must be addressed by the EU in a way that reflects the diversity of the states that are its members.

And not just the diversity of the member states, either, but also the diversity within those member states, too. The idea of multi-level government leads naturally to a revival of interest in Europe’s regions and local communities. These too are an expression of democracy, and should be empowered to act on the issues that can be dealt with closer to the citizen.

Some people might think it a paradox that the development of cooperation at European level also encourages decentralisation, too, but not the federalists. Their idea of Europe is that government at all levels should be at the service of the citizen and not the other way round. Political power should be dispersed and controlled, not exploited or abused. Decision-makers should be accountable for their actions, not hiding behind a cloak of secrecy. It is undeniable that the new challenges facing Europe require a new approach to political power, and the federalist approach shows how this can be achieved with success.

Conclusion

Simply to compare the past 50 years with the previous 50 years is to show the progress that has been made in Europe. War and the threat of war have been banished for good. Governments and citizens can instead busy themselves with the mundane but ultimately more rewarding challenges of increasing their economic prosperity without undermining their wider quality of life.

This European achievement has not come about by accident. It is founded on a new set of political institutions, shared by the different member states and accountable to them all. More than that, the institutions are accountable to the citizens, too. They may not yet be democratic enough, or effective enough, or accountable enough, but much has already been achieved. That is the difference that federalism makes to Europe.

This article was written by Richard Laming, secretary of Federal Union. He may be contacted at richard@richardlaming.com. The opinions expressed are those of the author and not necessarily those of Federal Union. 12 January 2009.

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