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ISSN: 2038-7296 POLIS Working Papers [Online]

Istituto di Politiche Pubbliche e Scelte Collettive – POLIS Institute of Public Policy and Public Choice – POLIS

POLIS Working Papers n. 234

March 2016

Is a Federal or even a Quasi-Federal State?

Albert Breton and Angela Fraschini

UNIVERSITA’ DEL PIEMONTE ORIENTALE “Amedeo Avogadro” ALESSANDRIA

Periodico mensile on-line "POLIS Working Papers" - Iscrizione n.591 del 12/05/2006 - Tribunale di Alessandria The members of are proud to publish one of the last paper by Albert Breton, coauthored with Angela Fraschini.

Albert Breton passed away on February 13, 2016. Born in June 1929, he was Emeritus Professor of Economics at the University of Toronto, . He and his work were also well known and appreciated in Italy, where he frequently was a visiting scholar.

Albert Breton received his PhD in Economics from Columbia University, New York. He taught among others at Montréal University, Carleton University, Université Catholique de Louvain, London School of Economics, Harvard University, Università di Perugia, Université de Paris I (Panthéon­Sorbonne) and Institut de Sciences Politiques de Paris. He carried out research for the Institute for Social and Economic Change (Bangalore, ).

He authored over 130 books and papers on (fiscal) federalism, constitutional political economy, economic and political science.

He was special counselor to the Prime Minister Pierre Trudeau for ten years in the 1970’s, vice president of Applebaum­Hébert Federal Cultural Policy Review Committee (1979 ­1982) and member of the MacDonald Royal Commission on the Economic Union and Development Prospects for Canada (1982 ­ 1985).

Member of the board of directors of the National Theatre School of Canada, he was an Officer of the Order of Canada (since 1984), member of the Royal Society of Canada (since 1979), Honoris Causa Laureate at University of Manitoba and past president of the Canadian Economic Association. A book in his honor was published in 2000 by Cambridge University Press.

Albert Breton was a corresponding member of the POLIS Institute and coauthored papers with some of us. We have all lost a great colleague and a friend. Is Italy a Federal or even a Quasi-Federal State?

Albert Breton – University of Toronto (Canada)

Angela Fraschini – Università del Piemonte Orientale “A. Avogadro” (Italy)

Abstract Constitutional adjustments over recent decades, but especially the important constitutional reforms of 2001, have led to significant increases in the degree of decentralization of the Italian Republic, at least formally. These changes have induced a number of knowledgeable observers to conclude that if Italy was not a federal state, it was on its way to becoming one. We consider the same question by making use of a widely accepted model of the assignment of powers. We make use of the "reduced form" of an up-to-date version of the Breton-Scott organizational cost model – a reduced form which allows us to concentrate on coordination activities and costs. To understand coordination, we must acknowledge that powers are

Edgeworth complements – modification of one power has repercussion throughout the constitutional system. In all decentralized states, coordination activities are vested in institutional bodies. In Italy, they are vested in a System of Conferences. We describe the legislative framework of that System and, following that, we document how it has operated in practice. We come to the conclusion that Italy does not appear be on its way to becoming a federal state.

Keywords Government - Federal State – Federalism - Intergovernmental Relations

JEL Classification H70 - H77 - H79

January 2014 ------

1 Introduction

In the tripartite classification of governmental systems as either confederal, federal, or unitary, Italy is generally taken to be a unitary state. It is, however, a governmental system that has seen a continuously increasing degree of decentralization, particularly since the 1970s.1 In particular, following the important constitutional reform of 2001, all levels of government have been formally granted equal constitutional status and, as a consequence, the central government is no longer in a position of formal hierarchical supremacy vis-à-vis the other jurisdictional levels.2 Moreover, in the amended Article

117 of the Constitution there are now two lists of powers: one enumerating the powers assigned to the central government, and another the powers that are concurrent; furthermore, all the powers that are not listed are now assigned to the regions, whereas in the original pre-2001 Article 117, the powers of the regions were enumerated and all other powers were assigned to the central authority. Finally, in matters included in the list of concurrent powers, both the central and regional governments can legislate, but the central government can only set general principles, not the operational details which it is the prerogative of the regions to formulate. All of this can be and has been adduced as evidence of genuine (not only formal) increased decentralization.

The changes have led some observers to suggest that Italy should be considered a de facto quasi-federal or possibly even a federal state. For example, Francesco Palermo and Jens Woelk (2007, 18) have expressed the view that "at the moment, Italy can best be

1 For a brief of decentralization in Italy, see, for example, Palermo and Wilson (2013), Pola (2008), and Breton and Fraschini (2003, 65-69).

2 The formal and formally have meanings that vary with the context. The precise we give to the two words will become apparent in Section 3, especially in subsection 3.3.

2 described as a devolutionary asymmetric federal system in the making. The term devolutionary is appropriate because powers have been transferred from the national government to the regions; [and the term] asymmetric reflects [the fact] that there are two types of regions and the implementation of federalism differs from region to region …"

Palermo and Woelk know that Italy is not a federal state, as the title of their paper makes clear, but it is a state that one can expect will become a federal state. Earlier, Beniamino

Caravita (2002, 25-26) had written that "[a]lthough this reform [that of 2001] was hotly debated, it adapts Italy to the phenomena of regionalization and federalization of public powers." Caravita goes on to note that the reform has created institutions in what he identifies as "the new more 'federal' Italy … " (our emphasis). More recently, Tommaso

Edoardo Frosini (2009, 1) has suggested that "[W]ith the 2001 reform … Italy has taken its first steps toward a federal system. In fact, Italy has gone from a regional system in which [the] central government enjoyed all the powers combined with a limited role for local government to a system that can best be defined as 'federalist like' (our emphasis). It is not federal, but 'federalist like' "because the federalisation process has not yet been completed … ". In their excellent overview of developments in the analysis of virtually all dimensions of federalism, Ehtisham Ahmad and Giorgio Brosio (2006, 1) write: "In unitary states such as and Italy, quasi-federal constructs have been adopted", thus acknowledging the unitary character of Italy, but with a twist that mimics those of the aforementioned scholars. A more or less general consensus is nicely captured by Lucio

Levi's (2009, 6) characterization of that twist as "Italy's zigzag path to federalism."

In an earlier paper (Breton and Fraschini, 2003) on vertical competition in Italy, we took as given that the Republic was a unitary state – a state in which all powers are

3 constitutionally owned by the center even if some of these powers had been decentralized to the periphery3 – but that the presence of what we identified as "institutional commitment" devices, practices, and/or conventions allowed competition between governments located at different jurisdictional tiers to generate efficient decentralization equilibrium outcomes that were stable, in the sense that they did not unravel through arbitrary repossessions of powers by the authorities at the center whenever competition was deemed by these authorities to be unfavorable to them.

Let us now examine in more detail the three conditions just mentioned: a) decentralization of powers; b) asymmetry in the design, implementation, and administration of policies; and c) vertical competition over powers. In one form or another, these conditions are to be found in all federal governmental systems, but also in bona fide decentralized unitary states such as and Spain. These conditions cannot therefore tell us whether Italy is a federal or a quasi-federal state. Nevertheless, the question of whether a such as Italy is a federal or quasi-federal state is not only interesting in itself, it is important for an accurate understanding of federalism. In other words, states that are formally identified as federal differ from each other in all sorts of ways regarding matters that define governance, and they vary over time in the degree to which they are federal. It is therefore possible that that are not formally recognized as federal may, by the creation and the re-structuring of some institutions of governance, become de facto federal states.

As should soon become clear, an understanding of federalism (and indeed of political decentralization generally) must give pride of place to an analysis of the division

3 On the significance of the ownership of powers in the identification and classification of governmental systems, see Breton (2000).

4 of powers among the jurisdictional levels of governmental systems. To put it differently, a model of the assignment of powers is needed. We will make use of the model proposed by Breton and Anthony Scott in 1978, replacing the "constituent assembly" as the equilibrating device in that model with vertical competition as in Breton (1996) and in

Breton and Fraschini (2003) – a conceptual substitution inspired by the work of Pierre

Salmon (1987a and b) on horizontal competition. The Breton-Scott model – now more appropriately identified as the Organizational Cost model to acknowledge the contributions of other students of political decentralization and federalism besides Breton and Scott – has received the endorsement of distinguished economic students of federalism and decentralization such as James Buchanan and Marilyn Flowers (1980,

1987), Richard Musgrave, Peggy Musgrave, and Richard Bird (1987), Robert Inman and

Daniel Rubinfeld (1997) and Stanley Winer (2000).4 The model's building-blocks are in the nature of organizational activities5: they are, on the demand side, the signaling of their preferences by citizens plus their inter-communal mobility, and on the supply side, the administration (the conduct or the running) of governments and the coordination of their decisions. Of these four, only coordination, as it relates to powers, is explicitly required to deal with the question of Italy's constitutional status. The other three activities are concealed, but are effectively used by citizens and governments when engaging in

4 In the fifth (1980) and sixth (1987) editions of The Public Finances. An Introductory Textbook, Buchanan and Flowers, in their recommended "Supplementary Readings" at the end of the chapter on federalism, refer students to Breton and Scott (1978) as providing "a modern discussion of the economics of federalism", which we take as an authoritative endorsement of the theory. Musgrave, Musgrave and Bird (1987, 506) make use of the Breton-Scott model to offer an interesting "positive theory" of intergovernmental grants which again can be taken as an endorsement of the model.

5 In the private, as distinguished from the public sector, such activities have been identified by Coase (1937) as transactional activities that give rise to transaction costs.

5 vertical competition and are therefore at work in the background. The model we use can therefore be thought of as a "reduced form" of the more general model, somewhat like the one used by Breton, Scott and Fraschini (2011) to explain the different patterns of environmental governance in Canada, the , and Italy.

We begin, in Section 2 subsection (2.1), with an analysis of powers and of the attendant notion of heads of powers. In subsection (2.2) the problems that arise when an exogenous shock alters a particular configuration of powers and heads of powers are analysed. That leads to a discussion of coordination in subsection (2.3). In contemporary

Italy, the institutional framework that was put in place to implement intergovernmental coordination is known as the System of Conferences. Section 3 is devoted to a description, analysis, and critique of that System. In Section 4, we attempt to answer the question which serves as title to the paper. Section 5 concludes.

2 Understanding Powers and Coordination

2.1 Powers and heads of powers

Given that our concern is strictly focused on whether Italy is a federal or quasi-federal state, we restrict ourselves to the division of powers between the central and the regional governments. The evidence presented in the Introduction related to the division of powers in Italy is sufficient to establish that such a division exists, but is silent regarding the problems that are attached to that division.

6 A power is the authority granted to, or acquired by, a public or a private body to legislate, regulate and/or have a general capacity to act in particular areas or domains.

Virtually all powers confer authority to act in more than one area.6 It is therefore impossible to say a priori how a particular power will be sub-divided among the various bodies in which authority to act may have been vested. In other words, it is impossible to say how powers will be bundled under particular heads of powers, or how they will become re-bundled after an exogenous disturbance. For example, in Canada the power to define what is a crime and what constitutes criminal behaviour is assigned to the federal government, while the responsibility for the implementation of criminal law is granted to provincial governments, as is the responsibility for the maintenance of courts − except the

Supreme Court of Canada. This multi-dimensionality of powers is one reason why concurrency is so widespread and why, under one heading or another, explicit or implicit doctrines and/or rules of paramountcy are formulated and used. Furthermore, the many dimensions are not fixed for all time − their number and their meaning change with circumstances and the appearance of new problems. Thus the interpretation by the courts of Section 91(2) (related to "Trade and Commerce") of The Constitution Act, 1867 −

Canada's Constitution − was altered by as much as 180 degrees over a century, essentially through a re-definition of what constitutes "national" and "local" markets.

6 It is well to keep in mind that governments can act without having a constitutional power to do so. To illustrate, they can induce action by offering cash payments and/or in-kind support. For a discussion of alternatives to constitutional powers, see Breton and Salmon (2009, 176-179).

7 2.2 Edgeworth complementarity

We assume that the bundling of powers under particular heads is a response to forces which can be analysed by using propositions derived from the model of Edgeworth complementarity, as reformulated in terms of supermodularity by Paul Milgrom and John

Roberts (1995). In standard neo-classical economics, complementarity requires that production functions (and preference orderings) reflect domain convexity (i.e. convexity of the bundles), functional differentiability, continuity, and so on. With the supermodular concept, one can drop these assumptions and use the idea of complementarity to give theoretical content to notions such as "fit" and "system effects" (Milgrom and Roberts,

1995, 180). The approach has made it possible to account for clusters of characteristics or of activities in business enterprises – characteristics or activities that, in other words, "fit" together. The increased versatility leads to the following definition: "activities are

Edgeworth complements if doing (more of) any one of them increases the returns to doing

(more of) the others" (Milgrom and Roberts, 1995, 181, italics in original).

To apply the supermodular notion of Edgeworth complementarity to heads of powers, we must adapt Milgrom and Robert's definition: powers are Edgeworth complements if making a greater use of any one of them under a given head, increases the authority of the others under that same head. That definition implies that the power to legislate in matters related to education, for example, may give authority to design and implement policies in respect of the size of classrooms, of the qualification of teachers, of the textbooks to be used, of graduation eligibility, and so on. If the policies form clusters whose elements "fit" together, they are Edgeworth complements and the rate of return

8 (the marginal value or benefit) on each one of them will be positively correlated to the yield on all the others.

Edgeworth complementarity implies that a competitive invasion (say) of one policy area by a government located at a different jurisdictional level will negatively affect the value of all other policy domains under that head. In addition, we should expect that in possibly many instances the degree of Edgeworth complementarity among powers that continue to be domiciled in the head affected by the invasion will be different post- invasion from what it was pre-invasion. It should therefore come as no surprise that a competitive invasion will often be resisted and lead to the adoption of countervailing defensive strategies, but it will also often lead to interjurisdictional negotiations and to coordination. To form a view regarding the incidence of coordination compared to other reactions, we must consider what coordination entails.

2.3 Coordination

It is useful to distinguish between two dimensions of coordination. The first can be described as the coming to an agreement on a particular matter, such as resolving how the flow of a cross-border river is to be maintained. The resulting agreement, like private commercial contracts, are the product of negotiations, and like private contracts will be incomplete simply because it is not possible to incorporate all future contingencies in the agreements. In the case of private commercial contracts, contract law makes it possible to address the problem. In the words of Michael Trebilcock (1993, 17): "… the law of contracts … provide[s] a set of default or background rules where the explicit terms of a

9 contract are incomplete …". In the absence of the equivalent of contract law, the parties to an agreement may decide that they will reconvene every three, five, or seven years to review the agreement and deal with the contingencies that had not been foreseen when the agreement was initially reached. Other procedures, such as mediation, arbitration, or an appeal to an "outside" referee, may be used. Another approach is to do what was done in Italy, namely to legislate a framework aimed at formalizing coordination among government bodies. All of these procedures should be considered part of the process of negotiation and are therefore part of the cost of coordination.

The second dimension of coordination pertains to implementation, that is to the operation of the bodies that will carry out the activities needed to do the coordinating.

That too has costs. If sometimes the costs of reaching agreements can extend over time, the costs of implementing agreements end only when the coordination ends. The total cost of coordination will therefore be a function of the overall costs of negotiations and of implementing the agreements these have generated. The negotiations, in turn, will be more difficult – more costly – the greater the degree of Edgeworth complementarity among powers located in the relevant heads of power and among the public policies housed in the appropriate powers.7

7 For a discussion of other factors that affect coordination costs, see Breton (1996, especially pp. 209-213), Scott (2009), and Breton, Scott, and Fraschini (2011).

10 3 The System of Conferences

3.1 Foreword

At the end of Section 1, we noted that if Italy is to be identified as a federal or quasi- federal state, it is because the System of Conferences functions in such a way as to permit genuine coordination on matters of concern to all the autonomous actors operating at the central and sub-national – regions, provinces, and communes – levels of the Italian governmental system. In what follows, we begin (subsection 3.2) with a brief description of the formal legislated framework of the System of Conferences. In a second subsection

(3.3), we briefly investigate how the System functions in practice and discuss what that implies for the question of whether Italy is a federal or a quasi-federal state.

3.2 The legislated framework

The System of Conferences has been in existence for over a quarter of a century. It is made up of three bodies:8 i) the Conferenza permanente tra lo Stato, le Regioni e le Province Autonome di Trento e

Bolzano – the Central Government-Regions Conference;

8 In fact, there is a fourth Conference which is not, however, considered a part of the System of Conferences, namely the Conference of the Regions. It is a "spontaneous body" – in that it is not a product of legislation – which facilitates coordination among the regions. That Conference also prepares the documents that are shared among the regions and then submitted to the Central Government-Regions Conference (under i).

11 ii) the Conferenza Stato-Città ed Autonomie Locali – the Central Government-Cities and

Local Governments Conference; and iii) the Conferenza Unificata – the Unified Conference which brings together the

Conferences listed under i) and ii) to consider issues of common interest to regions, provinces and municipalities.

The formal purpose of the Conferences is to enable coordination of decision- making and policy implementation among governments located at different jurisdictional tiers whenever events such as exogenous disturbances, new public policy demands, or new manifestations of vertical competition make that necessary. In other words, the

Conferences exist to permit and even foster confrontation and deliberation among central, regional and local governments with, as an objective, the generation of Acts – a portemanteau expression that includes advices, agreements, accords, and other instruments pertaining to the implementation of coordination. In particular, the

Conferences are intended to allow governments at all jurisdictional levels to search for common viewpoints and to compromise on issues that are different in different parts of the country.

In the matter of coming to a decision on whether Italy is a federal or quasi-federal state, the Central Government-Regions Conference plays an all-important role. For this reason, it is the Conference on which we focus most of our attention.9 That Conference was established in 1983 by an Administrative Decree following an inquiry by the

Parliamentary Commission on Regional Issues. It is the body where coordination among governments of the two jurisdictional levels that have legislative powers can be carried

9 Were we concerned with decentralization as distinguished from the federal status of the country, we would have had to pay more attention to the Conference listed under ii) in the text.

12 out – where, in other words, the regions can have a say in the decisions of the national government's Cabinet on matters of common interest.

The Central Government-Regions Conference is made up of 22 members. To appreciate who they are, it is useful to know that Italy is divided into 20 regions of which

5 are autonomous. Every region has a statute that serves as a regional constitution – 15 regions have ordinary statutes, while 5 have special statutes that grant them extended autonomy. Each of the 20 regions has a president. One of the autonomous regions is

Trentino-Alto Adige / Südtirol which is constituted of 2 autonomous provinces (Trento and Bolzano), each with its own president. All of these 22 presidents, however, are not members of the Central Government-Regions Conference. Indeed, the two presidents of the autonomous provinces of Trento and Bolzano hold the Presidency of the Autonomous

Region of Trentino-Alto Adige / Südtirol on a rotating basis. Thus, at any point in time, the members of the Conference are: the presidents of the 19 regions (excluding the president of the autonomous region of Trentino-Alto Adige / Südtirol); the 2 presidents of the autonomous provinces of Trento and Bolzano (one of whom – on a rotating basis – also represents the region of Trentino-Alto Adige / Südtirol); and the Minister for

Regional Affairs – appointed by the Prime Minister – who convenes and presides over the Conference.

In 1988-89, the rules and procedures under which the Conference was to operate were defined and its functions clarified. These were further extended in 1997. At the same time, the advisory role of the Conference was strengthened by making it mandatory for the national Cabinet to seek the opinion of the Conference in regard to all bills, regulations, and decrees dealing with legislation relating to regional matters. Indeed,

13 Article 4 of Decree n. 281/1997 states that "the central government, the regions and the autonomous provinces, implementing the principle of loyal cooperation, can conclude (at the Conference level) accords in order to coordinate the exercise of their powers and carry out activities of common interest." These accords are, however, not legally binding.

This fact notwithstanding, we underscore, as a harbinger of constitutional evolution in

Italy, a declaration (n. 31/2006) of the Constitutional Court to the effect that "the principle of loyal cooperation" implies that the parties that sign an official accord are bound by that commitment.

The Central Government-Regions Conference is also consulted on the general criteria regulating the distribution of resources among the regions, on the determination of parameters to be used for intersectoral planning, and is compulsorily consulted – sitting as Unified Conference – on the Document of Economic and Financial Planning and on the Bill of the Finance Act (the budget law). The Central Government-Regions

Conference must meet at least twice a year, and on a request of the regions and of the autonomous provinces of Trento and Bolzano.10 Only rarely are decisions taken by majority vote. They are generally unanimous for a reason noted below in subsection

(3.3).

In addition, in 2011 (legislative Decree n. 68), a permanent Conference for the coordination of the public finances (Conferenza permanente per il coordinamento della finanza pubblica) was created to promote, among a number of things, the reconciliation of interests among the various levels of government involved in the implementation of

10 The Central Government-Cities and Local Governments Conferences must be convened at least every three months; and whenever the President deems it is necessary, or on request of the presidents of the Associazione Nazionale dei Comuni Italiani, (ANCI), the Unione delle Province Italiane (UPI), or the Unione Nazionale Comuni, Comunità ed Enti Montani (UNCEM).

14 the rules of fiscal federalism. That conference was placed under the jurisdiction of the

Unified Conference, but is autonomous from it. At present, the relationship between the two bodies is far from clear.

The Central Government-Regions Conference meets, in a "Community Session", at least every six months or at the request of the regions and the autonomous provinces to deal with European issues of regional interest.

3.3 The System in practice

The 1997 reform – the one that extended the functions of the Central Government-Region

Conference – led to a significant increase in the number of meetings of that Conference and in the number of Acts adopted – from a yearly average of 87 Acts in the eight years preceding the reform to a yearly average of 262 Acts in the following fifteen years.11 The activities of the Conference have also contributed to a significant reduction in litigation before the Constitutional Court. This reduction is consistent with the view that following the "disorientation" caused by the reform of 2001 (see Section 1), both the central and the regional governments adopted rules and behaviours that have led to a greater degree of coordination than hitherto (Bile, 2008).

The evidence is, however, somewhat ambiguous. In Section 2, we noted that coordination is an activity or a sequence of activities that is costly. It follows that the quantity and the quality of coordination will vary over time, over issues and subject matters, and with changes in the "priors" of the persons involved. To illustrate, during the

11 Presidency of the Council of Ministers, http://www.statoregioni.it. – our calculations.

15 XIIIth Legislature (May 1996-May 2001), under the rule of left-of-centre national

Cabinets, the recommendations of the Conferences, especially those of the Unified

Conference, were taken to be binding by both the national Executive and Parliament; whereas, during the XIVth Legislature (May 2001-April 2006), when national Cabinets were right-of-centre, there were clashes within the Conferences, and the national

Executive often did not take into account the views expressed by the regions, or it tried to act without the involvement of the regions, thus requiring interventions by the

Constitutional Court to generate by judicial decisions what coordination had failed to achieve (Bin and Ruggiu, 2006, 921).

Another problem that reduces the effectiveness of the System of Conferences generally and of the all-important Central Government-Regions Conference in particular to act as agencies capable of generating the amount of coordination needed to address the sort of problems discussed in Section 2, is a basic lack of symmetry. This manifests itself in the fact that in that Conference, the regions can voice their opinions on the legislative bills of the central government, but the latter, to avoid constitutional litigation, cannot ask for a discussion, in the Conference, of the bills of the regional governments.

All in all, it seems almost impossible to dispute the proposition that the Central

Government-Regions Conference and the other Conferences are, in effect, advisory bodies to the Executive of the national government: the latter convenes the Conferences, chairs them, and sets the agenda as well as the time schedule for the submission of bills and draft of legislative decrees. In other words, even if the law does specify that the

Central Government-Regions Conference must meet at least twice a year, and on a request of the regions and of the autonomous provinces of Trento and Bolzano, it remains

16 that under current arrangements all Conferences are initiated by the national Executive when it tables a bill, adopts a ministerial decree, proposes an allotment of funds, and so on. It is also a fact that the national Executive often presents measures to the Conferences so late that the latter do not have the time needed to analyze them and to submit comments. As a consequence, the Conferences have in reality no decision-making power.

Moreover, "escapes" or "leakages" from the System of Conferences have recently emerged. For example, the bill on fiscal federalism, approved in May 2009, was modified by Parliament following suggestions made by the regional and local governments in

"political meetings" and not through the Unified Conference, which has merely taken notice of the agreements made in those political meetings. Besides, in many instances the regions, through the Conference of the Regions (which, to repeat, is not part of the

System of Conferences), conclude accords and agreements directly with the ministries, accords and agreements that, if the System of Conferences was working effectively as a coordination mechanism, should be ratified by the Central Government-Regions

Conference. Indeed, a reading of the Minutes of the Conference meetings suggests that differences among the regions seldom emerge at the level of the Conference, because conflicts have been taken up and resolved in the Conference of the Regions. In addition, before each session of the Conference, the Secretariat organizes meetings between officials of the national Cabinet and of the regions to discuss technical issues and to find agreed-upon solutions. Generally, only when the main problems have been resolved are the relevant questions put on the order paper of the Conference, which then speedily deals with the topics on the agenda, taking notice of the work accomplished in the

17 technical meetings and concentrating on only few issues. That is the rationale for the view that the Conference is where the parties meet to affirm decisions made elsewhere!

4 Attempting an Answer to the Title's Question

All transactions, including bargaining and negotiation undertaken with the aim of achieving coordination in regards to, say, the formulation and implementation of policies or the discovery of an appropriate "fit" – as defined in subsection (2.2) – of powers under one or more heads of powers, are conducted in particular frameworks or protocols.

Frameworks can be legally designed institutions, such as the Italian System of

Conferences briefly examined in subsection (3.2); but they can take any of a number of configurations. To illustrate, Richard Simeon (1972) has convincingly argued, after arduous field work, that in Canada the protocol is essentially one of "diplomatic" interaction among the executive branches of the federal and provincial governments – the

Canadian mode of coordination that Donald Smiley (1970, 1974, and 1980, especially

Chapter 4) has felicitously called "executive federalism". The various protocols in which transactions are conducted will generally be country specific, and are likely to display weaknesses of various sorts.

In regard to the Italian System of Conferences these weaknesses have been briefly described in subsection (3.3). To summarize, we noted that the legal framework appears to have evolved over the years in a way that grants more authority to the central government and less to the regions. It is even possible that what we identified as achievements of Central Government-Regions Conference, namely the increased output

18 of Acts following the 1997 reform, and the reduction in cases litigated before the

Constitutional Court, could be due to the increased authority of the national government – an increased authority which generates an increase of one-on-one deals.

It is therefore our judgement that Italy is not yet a federal or even a quasi-federal state – it is even possible that the country is less decentralized than what the formal evidence noted in the Introduction seems to suggest. Being aware that it is always difficult to prove a negative, we know that our judgement must be tentative. To put differently, we are aware that documenting the absence of a characteristic of federalism – one, however, which is neither necessary nor sufficient to corroborate that a governmental system is federal – does not prove the inexistence of federalism; it only voids one argument among others in support of its existence.

5 Conclusion

Political decentralization and federalism are fundamentally concerned with the division of powers among the jurisdictional levels of governmental systems. We therefore began our analysis with a definition of powers and a discussion of the complex manner they relate to each other. That complexity implies, we argued, that intergovernmental coordination relating to the division of powers is central to a question such as whether

Italy is a federal or quasi-federal state. We made use of a "reduced form" of the organizational cost model developed by Breton and Scott (1978) in which all organizational activities – except coordination – operate in the background.

19 Coordination is embedded in "frameworks" of various sorts. In the case of Italy, that framework is a legislated System of Conferences. We briefly described that system and depicted how it actually functions. We concluded that the actual modus operandi is such that Italy is not yet a federal or even a quasi-federal state, while at the same time acknowledging the inherent difficulty of proving a negative.

20 Acknowledgments

We would like to thank Giorgio Brosio, Giampaolo Parodi, Pierre Salmon, and Anthony

Scott for helpful comments pertaining to the logic of the paper and to our understanding of certain historical facts. The usual disclaimer applies.

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26 Recent working papers

The complete list of working papers is can be found at http://polis.unipmn.it/index.php?cosa=ricerca,polis

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