Perspectives of Federalization of European Union: Comparative Federalism Towards Federal Europe

Masaryk University Faculty of Social Studies Department of International Relations and European Studies

Master Thesis Perspectives of federalization of European Union: Comparative federalism towards federal Europe

Nemanja Todorović, BBA

Supervisor: Prof. PhDr. Vít Hloušek, Ph.D. UČO: 390396 Study Field: PL – EUP Year of Enrolment: 2012 Brno, 2014

I hereby declare that this thesis I submit for assessment is entirely my own work and has not been taken from the work of others save to the extent that such work has been cited and acknowledged within the text of my work.

Date: 15. December 2014 Signature:

This Master’s Thesis is dedicated to the memory of my mother

Acknowledgments

This thesis would not have been possible without the support of many individuals.

My sincere thanks go to my supervisor Prof. PhDr. Vít Hloušek, Ph.D. for his guidance and support during the thesis writing process as well as for his invaluable advice and support throughout my whole Master’s Program.

Also I would like to express my heartfelt gratitude to PhDr. Petr Suchy, Ph.D. because of his devotion to make me better person. A special word of appreciation also goes to Mgr. Jolana Navrátilová for helping all the time, together with all staff members at Masaryk University. Also special thanks to teachers and staff members form University of Konstanz.

At the end, I would like to thank my parents and my sister for supporting me to study at Masaryk University.

Abstract

The European Union is often described as „emerging federation“, but small amount of scientist compare European Union with some other European federal model. The objective of this master’s thesis is to survey the applicability of federal theory and practice in the case of the European Union. The master’s thesis will examine the implications both of the federal concept and of comparative experience of federal political systems - Federal Republic of Germany and the Swiss Confederation. This master’s thesis will try to answer several important questions dealing comparative approach to European Union structure. The most important question will give us answer on defining European Union as federation. This master’s thesis contributes to the comparative approach of European Union and stress importance of using solutions which already exist in the European continent for finding better solution for more democratic governance of the European Union. Legitimacy problems of the European Union cannot be addressed without taking in account all lessons learned from other two European federal models.

Key words: federalism, federation, Germany, Switzerland, European Union, comparative study

Table of Contents

Introduction ...... 8

1. Origins of federalism in thought ...... 11

2. The concepts of federalism, the federal political system and the federation ...... 15

2.1. Federalism ...... 16

2.2. Federal political system ...... 17

2.3. Federation ...... 18

2.3.1. Types of federal states ...... 20

3. Methodology ...... 25

3.1. Case study in political science ...... 26

3.2. Comparative method ...... 29

3.2.1. Comparative approach to the European Union...... 33

4. European Union ...... 37

4.1. Idea of federal Europe ...... 38

4.1.1. Federalist idea in the European treaties ...... 42

4.1.2. Federalism as a theory in the context of the European Union ...... 46

4.2. Institutional structure of European Federalism ...... 49

4.3. Federal-like or “hidden federation” ...... 52

5. Federal experience of Germany and Switzerland ...... 56

5.1. Federal Republic of Germany...... 56

5.2. Swiss Confederation ...... 60

5.3. Comparison of Swiss and German models of federation ...... 63

6. Comparative analysis...... 69

7. Lessons from federal experience for the European Union ...... 83

Conclusion ...... 89

References ...... 92

Determined to lay the foundations of an ever-closer union among the peoples of Europe1...

1 Treaty establishing a European Economic Community (EEC), also known as the Treaty of Rome. Quote from translation of the original text, signed March 25, 1957.

Introduction

Political scientists disagree that whether the European Union should be open to the comparative method. This is because the European Union is, for some of scholars, unique and no comparable to other federal or confederal polities. Most scholars on political sciences say that the European Union and some European federal states have something in common – they are totally unique failing outside of categories we know from other comparative categories from the rest of the world. They need to be subject of unique research which will look on them on their own way. This is almost a rule for all federations in Europe, and federal-like states – Germany, Switzerland, Austria, Belgium, United Kingdom, Spain, Bosnia and Herzegovina and Russian Federation.

On the other side, most scholars of the European Union realise that the European Union is “a sui generis polity that does not fit existing categories and requires a new vocabulary, including terms such as multilevel governance, variable geometry, condominium, consortium” or, in Jacques Delors2 words, an “unidentified political object” (Schmitter 1996). At the end of this master’s thesis, even a new category for the European Union will be introduced – “hidden federation”.

This master’s thesis does not deal with non-federal unitary that a majority of countries in Europe belongs to. Several European countries are federations. The origins of some of them dates back from early modern history (Switzerland and Germany), others become federations later. Some federations are dissolved – U.S.S.R., Yugoslavia and Czechoslovakia, and some have more complex models like Belgium and Bosnia and Herzegovina. The oldest federation in the world which still exists - the United States of America is a role model for many scholars when they examine federations. For purposes of this comparison the United States of America will not be set out in this master's theses, but of course they will be considered as an important historical and theoretical federal state in the first parts of the

2 Jacques Lucien Jean Delors (1925) is a French economist and politician, the eighth President of the European Commission. 8 thesis. In this thesis, for the purposes of comparison, Switzerland and Germany will be used as models for European style federal states.

The objective of this master’s thesis is to survey the applicability of federal theory and practice in the case of the European Union. The master’s thesis will examine the implications both of the federal concept and of comparative experience of federal political systems - Federal Republic of Germany and the Swiss Confederation. This examination of different types of federal models can help us to conclude which type can be proposed for application by the European Union. This master’s thesis will examine the institutional possibilities for the European Union, and give some proposals for more democratic government of the Union in federal terms. This work will try to answer several important questions dealing comparative approach to European Union structure:

 What European federations, Germany and Switzerland, have in common and what are differences between them?  Can we define the European Union as federation?  What are hidden characteristic of the European Union which are federal like?  What are similarities between the European Union and German or Swiss model of federation?  What European Union miss to become real federation according to a definition of federation?

The paper is therefore divided into seven chapters: (1) Origins of federalism in thought; (2) The concepts of federalism, federal political system and federation; (3) Methodology; (3) European Union; (3) Federal experience of Germany and Switzerland; (3) Comparative analysis and (3) Lessons from federal experience for the European Union.

After the first chapter which will give us introduction to the origins of federalism, in the Chapter 2 of the master’s thesis, theoretical approach to the federalism will be given. Types of federal states will be examined, but also separation between federal states from other forms of federal structures will be given. This part will give us a wide view of on the topic of federalism. There examination of several definitions of federal states will be shown, together with some common characteristics of federal states which we will be used in later examinations. In Chapter 3 methodological approach to the topic will be explained. The way how German and Swiss federations will be examined, and how similar or same patterns in

9 functioning of the European Union and these federal states will be finding. Also two definitions of federal states will be given, which we will use in later work with comparison. Master’s thesis will give a principal basis whit which we will see similarities and differences of federal systems of Germany, Switzerland and the European Union. The other definition will be much deeper with common structural features of a federal political system. Thesis will use these features for comparative analysis of European Union and two federations we choose. Later in Chapter 4 a broad overview of the development of the European Union in terms of community similar to the federation will be given. Conclusions of this Chapter 4 will be a clue is the European Union, according to its institutional design and characteristic federal like structure, federal or federal like polity. After that the case studies of Germany and Switzerland will be given and show differences and similarities between them, and also some conclusions which we can use for the advices and proposals for a better organising the European Union. At the end, comparative analysis of the European Union and two most significant European federations will be shown. This comparison will prove is the European Union some kind of federal structure and show us where are the weak link in the chain in the European Union model. According to those findings some solutions for improving the European Union in federal terms will be given, taking into account main critiques together with findings of German and Swiss model and advantages of both of them. At the end, brief conclusions about the lessons for the European Union will be shown.

Comparative studies on the European Union are important because of several reasons. This kind of studies can help the scholars to understand the problems in functioning and democracy in the European Union and to give solutions for them. Nobody can pick a model of for the European Union and just implemented it into some constitutional act. Any federal or some other model for the European Union need to fit the particular circumstances of the Union, its history, specific socio-economic, associative or cultural players and so one. Even where similar institutions exist in the European Union and some other country, different conditions can make them operate totally differently.

This master’s thesis contributes to the comparative approach of European Union and stress importance of using solutions which already exist in the European continent for finding better solution for more democratic governance of the European Union. This thesis will find the weak links in the European institutions, which are not useful in the building federation in the European continent but also will underline those who do so.

1. Origins of federalism in thought

Federalism is an old concept which appears much before all present day forms of federalism which we can see in present day definitions. Many authors try to find the basis for a federal model of government in various historical unions which appear around the globe, basically in Europe. Many European scalars are early contributors to federalist thought, from the beginning of early modern time and many of them argue something which we can define as origin of federalism.

Federalism haves positive and negative connotation. Some of these connotations came from theory and some of them of practice of federalism. Federalism itself can have various forms. If we think in terms of state, federations are states formed by states which retain a certain degree of autonomy but transfer some authority to the centre to carry out specific functions. The combination of shared-rule and self-rule which lies at the heart of the federal idea is fundamental here (Watts 1998: 2).

The first modern model of federalism invented by Philadelphia convention in 1787 and later spread to all parts of the globe: Canada, Brazil, Argentina, Australia, India and Malaysia. In Europe, Germany, Austria and Switzerland have federal constitutions, Belgium, Bosnia and Herzegovina, together with Russian Federation and Georgia has become more complex federal systems and Spain has moved towards an even more complex one. For sure, all countries mentioned above are different in many forms of federal model. Some of them are just normative federations and some of them are really complicated types of states. But for sure, some of them can be used as role models for federations around the world.

Even some Ancient unions sometimes can be harbingers of present day federations. Several ancient chiefdoms and kingdoms, such as the fourth century BC ancient Greek League of Corinth or Noricum Celtic tribal unions in Central Europe after that, together with the Holy Roman Empire, can be a possible precursor of the feral model of government.

Then, in early modern history, non-unitary entities appeared. Some early modern scholars explored the advantages and disadvantages of unitary states in the time they emerged and developed in the seventeenth and eighteenth century. In the work of the “father” of federalist theory, Johannes Althusius or Althaus,3 dating from 1612, which describes society, is close to the theory on federalism. In his view, the basis of society is the contract: coexistence, cooperation and a respect for the autonomy of every group (Tombeur 2003, 1). In the work, “De statu regorum Germania” (1661), by Ludolph Hugo4, he follows on from Althusius’ work. In addition to the confederations of states and decentralised states, he also describes federal states. He focused on states with a “double” government and deeply criticized it. The last but not least is the work of Montesquieu5 - “L’esprit des lois” (1748). In it Montesquieu submits that a federation has advantages for some regions: small states cannot split up into smaller entities, and large states have the power to defend themselves, protect their interests against external threats, and have more funds from taxation. He argues that federations provide advantages of both kinds of states (Tombeur 2003, 1).

A very old example of formal but not unitary statehood is the Old Swiss Confederacy (1291 - 1798). In 1291, the term confederation first time comes into practice as an alliance of three valleys of central Alps. In that time common interests of the three valleys were trade and security. This name for such kind of alliance, and also as the official name of Switzerland remains still.

Several eighteenth century peace plans for recommended some kind of confederal arrangements. For example the 1713 Peace Plan of Abbé Charles de Saint-Pierre6 argues that if there is rebellion in any state, or some third part attacks state, all other need to give help by military forces.

According to Michael Burgess it is notable that the single most important area that has been identified as the critical factor in the origins of both confederations and federations has been defence and security. In his masterly historical survey of confederations that briefly sketched out the theory and practice of federal unions in Switzerland (1291–1798; 1815–48), the United Provinces of the Netherlands (1579–1795), German Bund (1815–66) and the United States of America (1781–89) (Burgess 2006: 76). Confederation or confederacy

3 Johannes Althusius (c.1563 –1638) was a German jurist and Calvinist political philosopher. 4 Ludolph Hugo (c.1630–1704) was the first to distinguish confederations and federations. 5 Charles-Louis de Secondat, Baron de La Brède et de Montesquieu (1689 –1755) was a French lawyer, writer, and political philosopher who lived during the Age of Enlightenment. 6 Charles-Irénée Castel, abbé de Saint-Pierre (1658–1743) was a French author and philosopher. 12

(league or alliance) it is the union of entities for common action to various issues. Usually confederation is created by the treaty, but also can be created by the common constitution. Some central government of the confederacy deals only with some really important common issues - defence, foreign affairs, or a common currency. Various confederations were made during the turbulent time of European and American history.

A relation among states or entities inside of confederations varies. It is the same when we take into account relations between members and confederal central government. Some confederations are similar to the intergovernmental organisation, but some other has much more similarities with federations. In fact, during the seventeenth and eighteenth centuries, the modern idea of the centralized, homogeneous nation-state led to a conventional definition of federalism as the loose linkage of such states in confederations. In the end, modern statism contributed greatly to the disappearance of confederations or confederal arrangements during the second half of the modern epoch, between the late eighteenth and the mid-twentieth century, as the idea of the nation state became the norm (Elazar 1999, 1).

Federalism is born in the United States. American experiment with federalism started in the Continental Congress in Philadelphia after the Declaration of independence on 4 July 1776. One year later congress adopted the constitution – The Articles of Confederation and Perpetual Union. Until 1781 conges worked without any framework and definitions of its powers. Thirteen founding states ex-colonies of British colonies in America that later established the United States of America made its first act and define the United States as a confederation of sovereign states. This document served as the first constitution of United States.

On 4 March 1789, general government under The Articles of Confederation and Perpetual Union was replaced. New federal government under the Constitution was made as a strong federal government with a head of state as head of executive, the president of the United States. Except president, the Supreme Court and taxing powers of federation are introduced. The American federal model established in 1789 was based upon a set of core principles that were consciously imitated by others, and in consequence it helped to spark an enduring analytical debate about what it meant to be “federal”. In this sense the American federal precedent corresponded simultaneously to both theory and practice (Burgess 2006: 9).

The biggest contribution on theoretical federalism and in the past in was given by group of tree fathers of the United States of America - Alexander Hamilton7, James Madison8, and John Jay9. These authors issued series of 85 articles under the title - The Federalist Papers. Articles were issued in 1787 and 1788 as essays for promoting the ratification of the Constitution of United States. The main findings of The Federalist papers underline that the United States of America need to emphasise democratic government that could guarantee peace and security and guaranty prosperity to all citizens of the United States.

It should not surprise us that this singular focus upon defence and security with respect to the origins of federal unions or confederations should extend beyond unions of states to federations, especially if we begin our survey with The Federalist Papers. Even the briefest of glance at the first nine papers confirms that security (external and internal) and foreign affairs are most important for the federation.

One of the most influential contributors to the intellectual debate about federalism William Riker was not slow to reaffirm “the primacy of the military motive” in the adoption of what he called the “centralized federalism” of the new compound republic (Burgess 2006: 76). Riker also underlines a significance of the military and diplomatic advantages of federation form The Federalist Papers.

This chapter gives us introduction in federalism thinking, and it will be useful in later investigations about historical origins of European integrations taking into account thinking on federal Europe. Scholars of federalism and especially scholars of the European Union federalism, really take care of historical approach to federal model, because building of one federation is never ending process, the process of adaptation, changing, negotiations, consensus etc. In next chapter, terms federalism and federation will be examined, and also we will give some definitions of these terms, together with types of federal states.

7 Alexander Hamilton (1755 or 1757 – 1804) was a founding father of the United States, chief staff aide to General George Washington. 8 James Madison, Jr. (1751 – 1836) was an American statesman, political theorist and the fourth President of the United States (1809–1817). 9 John Jay (1745 – 1829) was an American statesman, diplomat and first Chief Justice of the Supreme Court (1789–95). 14

2. The concepts of federalism, the federal political system and the federation

Federalism theory attempts to explain how federations emerge and how federations are organized and how they functioning and should. In this chapter of the master’s thesis we will deal with concepts of most important terms of federalist theories, and how they fit in different approaches to federalism theories. On the other side, a practical implications of these theories into examples of federations and types of federations will be examined.

At the beginning, this master’s thesis will try to explain central terms of the federalism, the federal political system, and the federation which will be used later on. Many important scholars try to debate and define these terms. The global theory in general misses common terminology and also a common definition of federalism and other terms.

Let us first try to see the etymological root of those terms. Definitions recognize the etymologic background of the Latin word “foedus” which means “covenant”. The French from fédération, comes from Late Latin word foederatio, which come form from Latin foederare. Present active foederō, come from nominative foedus (genitive foederis), which can mean treaty, agreement, contract or league or pact (OED10). In German language situation is much clearer because federalism and federal (for principle as such for federal state) have use totally different names. The German terminology distinguishes between “Föderalismus” for federalism and “Bundesstaatlichkeit” for federal (state). In many instances, definitions that seek to describe the abstract principle involve elements that solely belong to the definition of the federal state (Gamper 2005: 1299).

Most important scholars of federalism Paterson King, Kenneth Where, William Ricker, Ronald Watts, Daniel Elazar and Michael Burges have its own way to give definitions of the tree most important terms of federalist concept. Important distinction has

10 Online Etymology Dictionary: http://www.etymonline.com/ 15 emerged between these terms, so in this chapter, we will explain those terms and give various present day definitions which later will be used in our examination.

2.1. Federalism

On the beginning we will underline that some federal political order is one which is “the genus of political organization that is marked by the combination of shared-rule and self- rule” can be mentioned (Watts 1998, 120). So federalism is the theory or driving force of such an order. Because of that federalism as a term is pretty much philosophical and normative term. Burgess (2000: 27) describes the process of federalism as: “It is ideological in the sense that it can take the form of an overtly prescriptive guide to action, and it is philosophical to the extent that it is a normative judgment upon the ideal organization of human relations and conduct.”

First different forms of normative concept will be shown. First one is more common to the Anglo-Saxon world and the second one is much more European. The first is taken from The Federalist Papers and advocates balance in citizen preferences. The other one founded on a more ideological basis, typical of many European advocates of federalism (Burgess and Gagnon 1993: xvi) including philosophical advocates of federalism as a utopian system. Both approaches have one in common - they see federalism as a call for integration and political freedom which need to combine shared-rule and self-rule in democratic terms. In the sense of ideological approach federalism is both a process and a structure.

Preston King, defines federalism as “an institutional arrangement, taking form of a sovereign state, and distinguished from other such states solely on the fact that its central government incorporates regional units in its decision procedures on some constitutionally entrenched basis” (King 1982: 20). In King’s view, the constitutional basis of the federation, the autonomy of the territorial or functional units, with their own decision-making power (self-rule), and the participation of those parts in the decision making of the whole structure (shared rule), are the essential characteristics of a federal system of government. Riker defines it as “a political organization in which the activities of government are divided between regional governments and a central government in such a way that each kind of government has some activities on which it makes final decisions” (Riker 1975, 101).

Daniel Elazar also says that federal principles are concerned with the combination of self-rule and shared-rule (Elazar 1987: 5). According to Elazar federalism can be measured in any type of organisation. It is a meter of the level of autonomy of the parts and of the whole, and of cooperation on an equal footing compared to the hierarchy while the organisation of government cannot be unilaterally modified either by the whole or by one part (the federation of federal state) (Tomberu 2003, 1).

2.2. Federal political system

The term federal political system, on the other hand, is not a normative but a descriptive term. Elazar has defined it, which provides for the combination in some form of shared-rule and regional self-rule (Elazar 1987: 5). Elazar identifies a lot of political organizations that can fit into a definition of the federal political system, and where federalism can be measured. This organisation are federation, confederation, federacy, associated statehood, league, regionalized union, constitutional regionalization, and constitutional home-rule, all of which embody, although in different ways, a combination of shared-rule and self-rule. So there are not only federations, but also unitary systems which have elements of regional self-government.

The term federal political system also includes federacy. This refers to a fundamentally asymmetrical relationship between a smaller polity and a larger polity whereby, the former has greater internal autonomy than the other segments of the latter, but in return foregoes significant participation in the governance of the larger polity, and where any change in this relationship must be determined by mutual agreement of both parties (Elazar 1987b: 55 and 1991: 190). Except federacy, we can also mention Elazar definition for associated statehoods. It is a similar fundamentally asymmetric relationship, but one in which either the larger federate power or the associated state may unilaterally dissolve the relationship according to procedures established in the constituting document (Elazar 1987b: 55-57). Elazar define some examples of those associated statehoods - the Aaland Islands and Finland, the Azores Islands and Portugal, the Faröe Islands and Denmark, Greenland and Denmark, Guernsey and the United Kingdom, the Isle of Man and the United Kingdom, Jersey and the United Kingdom, the Madeira Islands and Portugal and so on. In this group some de facto federalise of indigenous and native people with some unitary of other federal

17 states can be put. The Sami in Scandinavia and also many aboriginal peoples self-rule elsewhere in the world are part of this group. Next term Elazar find important to stress is some kind of quasi-federal connections with some states as Liechtenstein and Switzerland, Monaco and France, the Netherlands Antilles and the Netherlands, San Marino and Italy, prior to the reunification of Germany - West Berlin and the German Federal Republic and Macao and Portugal (before been returned to PR of China) (Elazar 1987b: 55-57). Plus there are more varieties of this category of federal political systems. For sure there are more examples and it is possible to put more states in these definitions, and in the future, there will be more political innovations which can be set into these definitions. But the most important things are that all of them will express the combination shared-rule and self-rule. Federal systems constitutionally provide institutions for common policy-making and administration on certain specified matters and also constitutionally protecting the integrity of the constituent units and their authority to act in a specified area of jurisdiction (Watts 1998, 6).

2.3. Federation

The term federation refers to a special type of federal political system. It happens that not only in common language, but also in some academic articles, people mix those terms. Several important scholars try to define federation as a specific entity which is made under the federalism. Like this two terms can be easily distinguish.

The term federation refers to the specific form of federal system, which was invented by the United States founding fathers in Philadelphia in 1787. Watts distinguishes federations as a group from previous forms of federal political systems which were usually confederal in character and from federaces, or associated statehood, or regionalized unitary systems is that federations involve co-ordinary (non-subordination in the exercise of authority) in the constitutional relationship between the federal government and the governments of the constituent units (Watts 1998, 6). Every of this governments have its own power and cannot influence the other one. King defines federations as “[…] an institutional arrangement, taking the form of a sovereign state, and distinguished from other such states solely by the fact that its central government incorporates regional units in its decision procedure on some constitutionally entrenched basis” (King form Axford 2002: 272), Burges agrees with this specific organizational form which includes structures, institutions, procedures and

18 techniques. It is a tangible institutional reality. And it can be distinguished from other forms of state relatively clearly (Burgess 2000: 25).

According to Watts (1998), each order of government has his authority and none can govern in the others (this immediately exclude unitary systems which subordinate lower units, and also authoritarian federations where the federal government govern sub-federal). In order to establish a coordinate relationship between the federal and the constituent unit governments, federations have usually exhibited the following institutional characteristics11:

 two orders of government each elected directly by and acting directly on their citizens;  a formal constitutional distribution of legislative and executive authority and an allocation of revenue resources between the two orders of government, including some areas of autonomy for each order;  provision for the guaranteed representation of regional views within the central policy-making institutions, usually through a regionally based second legislative chamber;  a written constitution supreme over all other law, not unilaterally amendable by either order of government, and with amendments requiring the consent of at least a majority of the constituent units;  an umpire in the form of a court or referendum process to rule on disputes between governments;  processes to facilitate intergovernmental relations for those areas where governmental responsibilities inevitably overlap or are interdependent (Watts 1998: 6).

This are basic criteria by which somebody can distinguish are federal political systems can be a federation. These are not political categories, and also not constitutional ones. These criteria have much more with the institutional design of one state, and also with operating of such institutions.

In this definition of federation, fulfilling all institution characteristic, many federations can be putted: United States, Switzerland, Canada, Australia, Germany, but also Argentina, Mexico, Brazil, Nigeria, etc. Also Belgium, Bosnia and Herzegovina and Austria, together with Russian Federation form Europe.

11 More in Chapter 3, section 3.2.1. 19

This need to be seen as the basic framework of federations, because federations appear in a lot of different variations. There is no ideal model of federation, and also among all world known federations, there is no two of them which are the same. Watts (1998) give a specific list of variations among federations:

 variations in the number, relative population and area, and relative wealth of the constituent sub-federal units12;  variations in the degree of ethnic homogeneity among the regional units and within each regional unit;  variations in the degree of centralization or decentralization in the powers and responsibilities exercised by the two orders of government and the resources made available to them;  variations in the degree of symmetry or asymmetry in the distribution of jurisdiction or resources among the constituent units;  variations in the character of the federal institutions, including whether these are presidential, collegial or parliamentary in form, and in the structure and role of the federal second chambers;  variations in the structure and scope of the judiciary and the role of judicial review and  the variations in the institutions and processes through which intergovernmental consultation and collaboration are facilitated (Watts 1998, 7).

Watts list of institutional characteristics will be helpful in later comparative study of the practice of two federal political systems and the European Union, which will be seen in Chapter 6.

2.3.1. Types of federal states

There is many forms of federations, and almost every of them are different. For our future comparison, it is important to see how we can divide federations, and what types of federation we have in the modern world. Of course in this section, special attention will be made over Germany and Switzerland and their place inside of this typology.

Federations as any other state in the world are just one of various models of the states. Federations can be various types of republics and also various types of monarchies. Just it is

12 Federal units are sub-federal entities, which may be referred also as a state, a province, a canton, a Land, etc. 20 important to stress that federations need to be democracies. Because every federation has its own character we can say that there is as many types of federations as there are federations. This sentence will be proven when we discus two models and also the European Union.

In very first stance it is possible to distinguish federations by historical origin. Burgess (2000) distinguishes federations between the republican-presidential model, the Westminster model, and hybrid model. The Westminster model is typical for states of the Commonwealth and other states of former British Empire. Role models for such federations are Canada and Australia. When India was formed in 1946 it had similar model, which slightly change by constitutional changes later on. On the second place is the republican- presidential model which is made in the United States. This model becomes a role model for federations in both Americas. Mexico, Argentina, Brazil have similar presidential structure as the United States. At the end we have hybrid model – German and Swiss federations both belongs to this model of federations. This type of federation arises from various historical circumstances and changes in cooperation and coordination between sub-federal units. This is a typical model for Europe where, except these two states, we have also Austria and even Belgium.

Federations are also different in terms of organisation. Various authors classify federations in different ways. Every way depends on some criteria for distinguishing them. For the purpose of this theism we still present five different types of federations.

In the political process of creation of a federation it we can find two important momentums which can effect on later type of federations which will be mentioned. In this process we can distinguish two types of federations: “bottom up” and “top down” federations (federalisation and de-federalisation model). The bottom up model is the speficicum from the early history of making the Old Swiss Confederations. Several autonomous and/or independent entities form the federation. This is also the case for the United States or Canada. Reverse top down model is model when some unitary state become federation. Here we can mention Belgium as a model. But here we need to stress even processes in some countries as the United Kingdom or Spain, where we see this type of forming federation like state. This difference in the political process of the creation of the federation usually has an effect on the type of federation: federalisation is aimed at solidarity and is consequently centripetal, while de-federalisation aims to ensure the recognition of identities, and is therefore centrifugal.

That is why federations which develop from the bottom up aim at cooperation, while federations which develop from the top down aim at autonomy (Tombeur 2003: 1-3).

At the second place, for our investigation, is important to stress the existence of jurisdictional and functional federations. Here distinction is made on criteria of three powers of the movement on the same level of federal level. Where are executive, legislative and judicial power in case of Germany and Switzerland? In both countries those powers are spread across the levels of federation. This type of federation we call functional. In this kind of federation there is big interdependence in agars. On the anther side there is a jurisdictional type of federation. In this type two or three powers are united at every level of federal government. This is typical case for the Westminster model of federation.

If we look at autonomy of the funds form which federation finances its budgets, we can say that there are two types of federations based on autarchy or solidarity. In autarchic system is important that financial autonomy exist on both levels of the government. On the others side if federation collects majority of taxes, and then divides them among the sub- federal states, this is form of federation which is solidary. Differences between Germany and Switzerland in thins meter are big, and we will deal with this in Chapter 5.

Federations can be organised in an exclusive or competitive way. They are distinguished by degree of separation between the policies areas measured in the distribution of powers across the two levels of government. In other words, it is examined whether there are many or few policy areas in which both levels are competent. In exclusive federations, most of the policy areas fall the whole or predominantly under one level of government, either the federal or the regional level. This means that the federal and regional rules are rarely in competition with each other and consequently there is little need for a hierarchy between the federal rules and the regional ones, or for another juridical solution. This is the case in Belgium, where many areas are wholly or virtually wholly assigned to a particular level of government. On the other hand, in competitive federations, most policy areas are spread across both levels of government. This is the case in Switzerland.

A distinction can also be made between inter-state and intra-state federations. For this, the criterion is the type of organisation of the dialogue and any cooperation which takes place between the federation and the federated states, and between the federated states themselves. Inter-state federations use so-called intergovernmental conferences with representatives of both levels of government as the most important forum to reach joint

22 decision making. This is the process in Belgium and Canada. Intra-state federations aim at joint decision making with institutions which are either federal or regional. For example, in Germany the representatives of the two levels discuss and decide together in a parliamentary chamber of the federation (the Bundesrat). Also, we can distinguish peripheral or centralized federations. In peripheral member states have majority of competencies, and in centralised, really small amount.

Separation of powers or dual federalism is the federal system where institutional autonomy of different levels of government, aiming at a clear vertical separation of powers (Börzel 2003: 3). Both federal and sub-federal levels of government have autonomous responsibilities. Competences of the levels of government are divided by policy sectors, for which one level of government have legislative and executive power. All state aperture of this kind of federations are duplicated. In this case representation of federal sub-federal levels into federal level. Second chamber of parliament in this case is organised according to “senate” principle – federal sub-federal levels are represented by equal number of directly elected representatives. Sub-federal levels can only ask the federal government for some kind of cooperation, but not strict influence to legislative procedure. This dual structure is also reflected on the fiscal system, where sub entities have fiscal autonomy. This is a typical United States model of the federation. In Europe, Switzerland is the closest to this. Switzerland allocated the administration of federal competencies to the sub-federal entities – cantons which is similar o the next model of cooperative federalism.

Distribution of powers, or cooperative federalism it is a prototype of the German federal concept. It is based on a functional division of labour among different levels of government (Börzel 2003: 3) while the central federal government makes a law - sub-federal levels are there to implement such a law. In this system there is no institutional dualism. In this type of federal state competences are shared among the levels. This “division of labour” is really important in one since, it is that federal sub-federal entities are represented on central levels and defend their interests on the institutional level. In this sense, the second chamber of Parliament is champers of territorial representatives, where representatives represent governments of sub entities. Usually their number also represents their size. This also reflects tax system, where there is joint taxation where sub entities collect taxes, but federal state can redistribute them.

Both of these models of federations represent a really good solution for our future discussion. Because of that we will mention them trough this master theses several times, during the investigation of the German and Swiss federal model, but also we will try to find some of the characteristics of this two types of federal states in European Union structure.

3. Methodology

Comparative studies identify options that might the other way be overlooked, not identify, unforeseen or that may flow from particular arrangements. Through similarities and differences between German and Swiss federations and the European Union, we can identify problems and give some proposals for solutions for the European Union and its “federal model”.

In political research, we took some phenomena (as in our case is federation) which influence to some people, institutions, or countries etc. and try to describe it. Phenomena like this can be some everyday things like: how some people will vote, or how coalitions will be formed, how state alliances are formed, or relations between parties, states and so on. To study political phenomena we use two general types of approaches: extensive approaches and intensive approaches (Swanborn 2010, 1). In an extensive approach we collect information about the relevant features of a large number of instances of a phenomenon. We can do this by a survey for example. Alternatively, in intensive approach, a scientist focuses on only one specific instance of the phenomenon to be investigated in deep. These two approaches are crucial for every political science research. In our specific case intensive research will be used, because of three cases to compare.

Methodology has importance for every piece of science and it is a component of any analysis, whether it is applied in the theoretic or practical world. Every scientific work, have one or more methods. That is the case with comparative politics as a field of political and social science, and also with this thesis. Some methods have a cross field or even universal appliance, meaning that they can be used in one or possible all professional fields with little or no adoption. Some of methods can be used for deterrent types of data, different orientation of a research and so on. This chapter gives us an introduction in understanding of the methods of comparative politics – comparative analyses and case study which will be used in this work.

Comparative politics is the study of differences and similarities among political systems. We can look on comparative politics in several different ways. One of them is to look at one individual political system in broad context. With this we need to describe political institutions, main policies and at the end to define are they same, similar or different from some other political system. Comparative politics it is often understood as that branch of political science concerned with comparing countries (Verba 1991, from Della Porta 2008: 199).

In political science, and in other branches of social science, some researchers are case oriented. In this case oriented studies research one need to understand complex relationships between institutions and other players. While variable oriented studies want to find generalised relationships between some variables. Of course, both approaches are widely used and really important in political science.

In the literature on comparative politics, there is a lot of varieties of the definition what is comparison, the comparative method is defined here as one of the basic methods of establishing empirical propositions (Lijphart 1971, 682). So, a comparative method is not the most important method, but just one of methods which is broadly used in political science. Other methods are basically statistical, experimental and case study method which we will explain in the later section.

3.1. Case study in political science

To understand the role and meaning of case study within political science today we need to start with basic explanations. The scientist can see similar patters which can appear or fail to appear in some events, institutional frameworks, or countries. Those features can be same, similar or not some similar, or at least totally different. Observation and a narrative explanation of these cases is really important for beginning of every research. With this observation we can answer simple questions – what to research and what to observe.

Case study it is widely used type of quantitative research which is really important for social and of course of political science in general. Case study was one of first scientific methods which were used in science. This method is widely used in all branches of science. It is used much before any clue on using statistical methods and even computer data processing.

Case studies have continued to maintain a strong position in political research, still producing scientific works that receives praise (Gerring 2004: 341). The most important thing which is connected to case study is that it is a method of observation and narrative explanation, and totally not numerical. Because of this, there is a risk of contaminating the case study with the information which can be unclear, so lot of professional researches want to avoid this method (King, Keohane and Verba 1994: 27-28, 63-65). But in some moments and especially in the beginning of every big research case study can be crucial. Here we will provide a basic explanation of case study and give its potential value. At the end we will explain how case study will be used in our case.

Let us first define the case. According to several authors, a case is a phenomenon, or an event, chosen, conceptualized and analysed empirically as a manifestation of a broader class of phenomena or events (on definitions from Vennesson 2008: 226 and King, Keohane and Verba 1994: 51-53). So case study is research based on empirical investigation of mostly one or of several cases (not number of cases). The aim of case study is to explore the features of every case which need to be investigated, and on the other side to explain its characteristics and to find out some theoretical patterns and explanations. According to Gerring (2004) case study is best defined as an intensive study of a single unit with an aim to generalize across a larger set of units.

A case study is itself not a method of examining a case or creating an illustration of the case, but rather a way of defining cases (Gerring 2004: 341-342). So researchers combine case study method with other methods with which they can analyse data which they found in the case study (in our case we will, after case study, use comparative method to compare different cases and different features of the cases). Case study is just observation of some features, characteristics, qualities, mechanisms and etc. It is just starting a point for our future analysis. The reason for this is that there is often too little information available to perform a quantitative study of the given research question. Scientist use case study like the same kind of pre-research before specific research. With case study scientist can make starting point for theories which they can use in later research.

Vennesson (2008: 226-228) stress several points related to the definition of case study. First, the case is not just a unit of analysis or an observation, understood as a piece of information or data. It is not a data category, but a rather a theoretical category. On second place, determination of the case is a product of theoretical conceptualisation of the researcher.

Every case comes from some theoretical choices researcher made before. On the third place it is important to say that under case study, we can watch our phenomena not only in preset institutions but also in the past. This is a common misunderstanding of a case study. Because some case we cannot just look in one moment. We should observation our case over some period of time and detect changes in the case. And on the last fourth place we need to say that in case study research, data can be collected in various ways, and it can be both qualitative and quantitative. The main point is how we can analyse them after.

Scholars use case a study method to develop and evaluate theories, and to formulate hypothesis to explain. Vennesson identify four main types of case study, each corresponding to a different purpose (Vennesson 2008: 227-228). First, the descriptive case study (configurative-ideographic) is a systematic description of the phenomena with no explicit theoretical intention. Some authors argue that this is not a really good scientific method, but on the other side there is sciences (like history), where descriptive dimension is the main part of research. This is the case with some new things which are explored, and where there is no any previous knowledge, description, and theory. In this case studies are particularly popular to use when there is little previous known information about the chosen research question. Second, Vennesson (2008: 227-228) explain the interpretive case study (disciplined configurative) uses theoretical approach to provide an explanation of particular cases, which can lead as well to an evaluation and clarifying of the theories. The third is a hypothesis- generating and refining case study, which seeks to generate new hypotheses inductively and/or to refine existing hypotheses. Vennesson argues that here researcher can better explain some variables, and also can test some theories, and maybe redefine them. This is really useful for some cases which are not so usual, and need to be explaining better. At the end the fourth is theory-evaluating case studies are used to assess whether existing theories account for the processes and outcomes of selected cases.

The terms of case study are in general defined by a plan of research, research design which is chosen and other thinks in research which is crucial for it. Gerring (2004) give one example and describes that some country can, for example, be in a number of things depending on how it is defined as such. A case study of a country may underline several cases based on what is examined, such as democratic or political features of the country (Gerring 2004: 342). So in our case we will underline federal features in both Germany and Switzerland and also in the European Union.

At the end we can summarise that this meted is usually used to collect and organise empirical data. Case study can have numerous observations, and can be used in historical manner. This is a main misunderstanding of this method. According to some authors (Gerring 2004, Vennesson 2008) a case study can be even on half of whole scientific work in political science, or at least a good start of some bigger research. It is important to stress that this kind of research need to be accompanied with some other quantitative or qualitative method, which can analyse the collected and organized data. Quantitative as statistical methods usually do not respond well to data from case studies, but qualitative do so. In our case that is comparative analysis which we will explain in the second part of this chapter.

In Lijphart’s (1975) view, case study stands apart from other methods in that it cannot produce empirical generalizations, nor be used to test hypotheses. The case study is a system for questioning, not for answering (Stretton 1969: 247), and its context-dependent, ideographic knowledge is considered less useful for social sciences than the general knowledge derived from a high number of cases (N-case variable-oriented studies).

In our specific case, we will for sure use historical observation of our three cases over time – Germany, Switzerland and much breather analysis of the European Union and its federal model. We will use a combination of interpretative case study together with theory- evaluating case study method. Our cases studies can be divided into two parts. The first part if more formal and it deals with main case which is the main framework of the study. Then the second part comes which is informal. In the second part it is crucial for our next step – comparative analysis.

3.2. Comparative method

This part of the Chapter 4 focuses on comparative analysis, which has a central place in political science research. It is one of basic scientific methods of social and, of course, political science. The comparative method discovers empirical relationship among variables. Comparative method has for sure a lot of weaknesses and limitations, but also great strengths and potentials. In this chapter we will define a comparative method, and show its difference from other methods which are used in political science. Also we will explain how we will use a comparative method in our case comparison.

Lijphart (1971, 682) define a comparative method as one of the basic methods of establishing general empirical propositions. Other methods are experimental, statistical which we will explain shortly and a case study method which we explain in the previous section. On the other side, comparative method can be defined as method of discovering relationship among variable, and as we say before, not method of measurement. This is not method of measurement anything. Some authors call comparative analysis “original measurement” (Kalleberg, form Lijphart 1971, 683), which means that it is not a metrical ordering but still give us strict point to the topic we analyse. It is important to stress that comparative method is not just a technique which we use in research. It is the more comparative approach which can combine other techniques and different analysis. The nature of comparative method stresses the stronger and deeper knowledge of particular case, because of that this method is one of intensive method of research. In this kind of depth study of particular events will allow clearer conceptualization and analysis of the relationships that exist and emerge in a particular case, and on the basis of these insights a generalization is made for additional cases (Collier 1995, 465).

All tree of basic methods (experimental, statistical and comparison) need to be used according to specific research design and the way how they fit into hypothesis and research in general. Because of often terminological confusion between terms of comparative analysis and comparative method, we will first explain this term. Sometimes these terms are used as a synonym, which his not correct. The term comparative method is used for an approach within comparative analysis that provides an alternative to the experimental and statistical method. When the number of cases is too low (small-N) for statistical manipulation, the investigator approximates it though without the same degree of confidence – by systematic comparative illustration (Smelser 1976: 157). The comparative method supplements with logical reasoning the lack of a sufficient number of cases for, for example, statistical method.

The main reason why here we use the comparative method not any statistical method is really simple. The main difference between them is that our case deals with a really small amount of cases. When we have a bigger amount of cases, it is normal to use some of statistical method. So, large-N researches design covers many cases and it need to be deal with a statistical methods, while small-N studies deals with only a few, which is the job for comparative methods (Della Porta 2008: 199). It is true that at the end statistical cases can give us more valid result, but amount of our data not allow us to deal with statistical methods.

Some authors argue that number of cases which can be enough to switch form comparative to statistical method is more than twenty.

Smelser and Lijphart stress that the logic of the comparative method it is the same as logic of all other methods used in political sciences. It attempts to develop explanations by the systematic manipulation of parameters and operative variable (Smelser 1976: 158 and Lijphart 1971). Like experimental and statistical method, comparative method also wants to establish empirical relation between variables. Focusing on a small-N, case-oriented comparison usually points at similarities and differences through dense narratives, with a large number of characteristics being taken into account, often together with their interaction within long-lasting processes (Della Porta 2008: 204).

Here we should stress weaknesses and strengths of comparative method. As we sad before, intensive research can give us more valid results than extensive approach. So comparative method of few cases may be more promising that a more superficial statistical analysis of many cases (Lijphart 1971: 685-686). Some scientists use the comparative method in first stages of research due to formulate a hypothesis. Then they can use statistical method in second phase where they can test the hypothesis in a large amount of cases.

In one thing comparative method can be dangerous. It is sometimes the fact that in comparative analysis we can focus on some negative and not so significant findings and somehow attach to them without any reason. This comes from same nature of comparative method, many because it is narrative and descriptive. We can reduce situations like this by using some advices which Lijphart (1971) give us in his scientific works. Mainly the most important things are to focus our research and comparison on really comparable vases. In this contest “comparable” can be defined as similar in characteristics (variables in scientifically terms). The point is to maximise comparability. It is also important to focus our comparison on really key characteristics. It is important not to have so many variables we need to compare. Comparative analysis needs to avoid to become overwhelmed by a large amount of variable. We can scan a lot of variables, but it is important not to include all of them. Other question will be how many cases we will compare, and we will explain that in next part of this chapter.

A comparative method deals with the small number of cases, and it is normal for using in political science when we need to compare institutions, institution frameworks or some other phenomena. So comparative method is really good for comparison of features for

31 federal morels in Germany and Switzerland and those who appears in European Union institutions. Eisenstad (1968) argues that comparative analysis is only scientific method available for the studies of institutional processes and relations (from Della Porta 2008: 202).

In our specific case, we will use a comparative method to compare specific characteristic of federal states among two selected cases – Germany and Switzerland and the European Union as sui generis entity. This comparison will help us to identify crucial moments in development of this federal states or the European Union. Also, comparison will help us to conclude does European Union fit in selected definitions of federations and maybe give some proposals for solutions for the European Union and its “federal model”.

Basically comparative case analysis is the comparison between a small sample of cases to analyze historical processes, mechanisms or particular behaviours in relation to a given theory. We cannot complete this chapter without making some kind of connection between case study method and comparative method. Case study method is really closely connected to the comparative method, because some case studies (and selections of cases in general) are an integral part of comparative method.

Comparative case analysis is a technique for comparing and analyzing the structure and behavioural dynamics of a phenomenon investigated through a series of related empirical studies. The nature of comparative analysis points to the quest for a clearer and stronger knowledge on particular cases. Case study is focused on a single case (in our case German federation, Swiss federation and European Union). By analysing just one case we cannot make any valid generalisation or the ground for establishing a hypothesis of any kind. Acceding to Lijphart (1971: 639) both case study method and comparative method has major drawbacks. But because of these limitations, a challenge to use them in research and in comparative politics in general is crucial. It is important to minimize their weaknesses and to capitalise their strengths. Only like that using together these methods can be really useful.

In our specific case, it is important underline what to compare and how to characterize it. First of all we will do case study analysis of cases of the German federation, Swiss federation and at the end of the European Union. Here we will discover and highlight all features of the federation and federal model that appears in a institutional framework of these countries an also the European Union. At the end we will compare this cases one to another. We want to find out, does European Union have all features and characteristic of federation we can find in cases such as Germany and Switzerland.

3.2.1. Comparative approach to the European Union

When we try to compare federal states, we need to have specific attributes in the mind, which will help us in that comparison. Scholars of comparative federalism disagree on the institutional requirements of a federation (Swenden 2006: 7). Because of that, we will first try to define them. The problem comes from a interpretative framework of federalism. We need to see what institutional characteristics of federal state are, and what characteristics turn state into federation. Because of that in this thesis, firstly characteristic of existing federations will be examined, buy case study of both of them.

Daniel Elazar defines a federation as a polity compounded of strong constituent entities and a strong general government, each possessing powers delegated to it by the people and empowered to deal directly with the citizenry in the exercise of those powers (Elazar 1987: 7). According to this definition, Elazar means that federation sub-federal governments (of member states) should both have direct link to the people. In a real term, state level authorities can act without any authorization from the federal level government. Elazar’s definition does not clarify whether or not the constituent entities must be territorial in character (Swenden 2006: 7). Daniel Elazar and Kenneth Wheare identify federations as political systems which provide a specific method of distributing powers between two tiers of government – federal and state government (Swenden 2006: 9). Both of them examine relationships between the citizens and both federal level government and state level.

Now we will try to use some definitions in comparative terms. Several authors already did comparative studies on different federal states in cotemporary world among them most famous are Kenneth Where, William Ricker, Ronald Watts and Michael Burges. All of them have their own way to provide quality comparative analysis of federations and federal political systems.

Burgess (2006: 135 - 136) stress that there is five principal basis for the study of federal political systems. This principal basis are only way to see similarities and differences of federal systems in the world. In our case we will try to look for these five principles in cases of Federal Republic of Germany, to Swiss Confederation and of course to European Union. According to Burges (2006: 136) this fife basis are follows:

1. The structure of federations; 2. The sociological basis of federation;

3. The political economy of federation; 4. Political parties and party system and 5. Constitution reform and judicial review.

Structure of federation is starting point of Burges view. The point is in recognising federation as a part of one of three models which are already explained in the Chapter 2. According to Burges’ three models of federations - two Anglo-Saxon models: the Westminster model and the American republican-presidential model and at the end a hybrid mixture of both types which we can define as historical model of European federations. The second basis is sociological basis of federation. Here we need to we need to investigate existence of different existence of a particular social cleavage which is important in a federation. This can be different type of socio-cultural cleavages, national identities, traditional regional traditions and similar. The political economy of federation is the third basis and it is connected with nature of distribution of economic power between entities in federation. Political parties and party system and as a fourth basis, where we will examine existence of federal parties, regional parties, and how they work. At the end, one of most important thing is constitution reform and judicial review as a right of member states to or any other interest groups to change constitution. Every of this five basis can show us some attributes of federal systems, and help us to understand them better. In our case here we will on the first place see basic characteristic of the states and what makes them federations. With case study we will underline difference between systems of sovereign countries– Germany and Switzerland, and European Union on other side.

Later we will examine, by comparative analysis, Watt’s definition of a federation we mentioned in Chapter 2. In our case we will take into account both Germany and Switzerland but we will deal the most with the case of European Union. Watts specifies as common structural features of a federal political system the presence of:

(1) Two orders of government, federal level and state level, each acting directly on their citizens; (2) A formal constitutional distribution of legislative and executive authority and the allocation of revenue sources between the two orders of government ensuring some areas of genuine autonomy for each order;

(3) Provision for the designated representatives of distinct regional views within the federal policy-making institutions, usually provided by the particular form of the federal second chamber; (4) A supreme written constitution not unilaterally amendable and requiring the consent of a significant proportion of the constituent units; (5) An umpire (in the forms of courts or provision for referendums) to rule on disputes between governments; (6) Processes and institutions to facilitate intergovernmental collaboration for those areas where governmental responsibilities are shared or inevitably overlap (Watts 1996: 7).

Roland Watts provides a more concrete definition of a federation, but he still leaves us with considerable room for interpretation. For instance, observers may disagree on which and how many “legislative, executive and fiscal resources” each order of government should possess in order to have “genuine” autonomy. We will try to compare this characteristic among the states, and find it in model of the European Union.

According to Swenden (2006: 10) whit its definition Watts live big space for interpretation, firstly in place of character of the federation, lover level units, and its role into federation. So, except this Watts characteristic, there are maybe several more characteristics we need to add according to Swanden. This additional characteristic are:

(I) On the first place territorial character of federations. We find this really important factor in defining the federal structure of one country. Adding it as a requirement allows us to distinguish federations from some of the constitutional polities which allocate autonomy to minority groups such as religious or language communities who live dispersed throughout a territory (Lijphart 1979). (II) The second, additional characteristic, which is closely related with the first one, is existence of democratic government and democratic state structure. Like this we will distinguish federations form counters in which structures there are some governing of territorial units form the federal level (like for example in late U.S.S.R. or nowadays United Arab Emirates). Notion of self-rule is the really important for defining federations. (III) And at the end secession of one or more sub entities. Normally, federations do not allow unilaterally secession of sub entities. Secession of one sub entity needs to be subject to the consent of federation and other entities which want to stay.

A Table 3.1. lists all nine characteristics of a federation according to Watts and Swenden, and applies them to Germany and Switzerland. In Chapter 6 we will apply all of these nine characteristics to the European Union, taking into account similar and different characteristics in these countries.

Common structural features of a federations Switzerland Germany

Two orders of government, federal level 1 and state level, each acting directly on their √ √ citizens

A formal constitutional distribution of legislative and executive authority and the 2 allocation of revenue sources between the √ √ two orders of government ensuring some areas of genuine autonomy for each order

Provision for the designated representatives of distinct regional views within the federal 3 policy-making institutions, usually provided √ √ by the particular form of the federal second chamber

A supreme written constitution not unilaterally amendable and requiring the Supreme Court and 4 √ consent of a significant proportion of the the people constituent units

An umpire (in the forms of courts or 5 provision for referendums) to rule on √ √ disputes between governments

Processes and institutions to facilitate intergovernmental collaboration for those 6 √ √ areas where governmental responsibilities are shared or inevitably overlap

7 (I) Territorial character of federations √ √

Existence of democratic government and 8 (II) √ √ democratic state structure

Right on secession of one or more sub 9 (III) √ √ entities

Table 3.1. Standard characteristics of a federation applied to Switzerland and Germany (from Swenden 2006)

4. European Union

Can we say that the European Union is some kind of new federal model? We are needed to show that the European Union is doing not belongs to one of three federal models we mention before. Daniel Elazar suggested that in the late twentieth century we were “in the midst of a paradigm shift from a world of states, modelled after the ideal of the nation-state developed at the beginning of the modern epoch in the seventeenth century, to a world of diminished state sovereignty and increased interstate linkages of a constitutionalised federal character” (Elazar 1982). The world started to change rapidly after World War II. Complex interactions among the states, especially in economic terms, but also in the terms of security made significant changes in the world we know before World War II. A lot of institutions appear after the War which Elazar call “federalist revolution” (Elazar, no year).

The idea from Europe spread all over the world. Today the continental unions are not nothing unusual, and also limiting of political sovereignty for the sake of greater benefits of the states. The African Union, the Association of Southeast Asian Nations (ASEAN), and Union of South American States (UNASUR) together with its predecessors the Southern Common Market (Mercosur) and the Andean Community of Nations (CAN) are just most important organization which uses European integration as a role model.

In this chapter we will investigate the European Union, together with European Communities and its federal character. Also we will show the federal character of European common institutions. It is important to show that in European case classical federalism exist in some extends, but without federal state. Ideas of federalism and its complex structure do not allow us to put the European Union in definition of federation(s) we know today. Michael Burgess (2000) stress that "the European Union is conceptual enigma” between federation or supranational entity, and we will show that European community building had totally different path then any state building and national integration like in federal models of Westminster and Presidential.

4.1. Idea of federal Europe

Thinking about federal Europe, emerged in the continent in the past century. For the majority of Europeans, both World War I and World War II meant the beginning of the demolition of the continent and extermination of the European civilization. Future wars in Europe need to be must be prevented on any possible way. Majority of authors, politicians and common citizens draw the concussion that Europe need to find a way to overcome nationalism, and future wars. The Continent needs to be able to maintain peace, cooperation and lot of common projects due to avoid any big conflict in the future. Axles for this peace must be two warring sides in almost all the wars of modern times – France and Germany, the peaceful Europe need to be a common project of these states.

But, thinking about united Europe or some kind of common institution of Europe goes back two centuries before. British philosopher William Penn13 in 1693 after the wars which take place in the continent during his life in Europe wrote about some kind of "European diet, or parliament"14. Even Napoleon Bonaparte, in the conversation with Felix Markham on the island of St. Helena underlined that "Europe thus divided into nationalities freely formed and free internally, peace between States would have become easier: the United States of Europe would become a possibility.15” Later, polish scientist Wojciech Jastrzębowski16 in his book “About eternal peace between the nations” for the first time used concept of the United States of Europe. He published 77 articles in 1831 where he described the United States of Europe like some kind of international organization. A similar term was used by famous French writer Victor Hugo in 1849. Hugo made speech at the International Peace Congress held in Paris where he talked about "a supreme, sovereign senate, which will be to Europe what Parliament is to England" and stressed "A day will come when all nations on our continent will form a European brotherhood... A day will come when we shall see ... the United States of America and the United States of Europe face to face, reaching out for each other across the seas."

13 William Penn (1644–1718) was an English real estate entrepreneur, philosopher, early Quaker and founder of the Province of Pennsylvania.. 14 Murphy, A.R. (2002). The Political Writings of William Penn. Liberty Fund. 15 Markham, F. (1966), Napoleon, Penguin Books USA Inc 16 Wojciech Jastrzębowski (1799-1882) was a Polish scientist, naturalist and inventor, professor of botanic, physics and zoology. 38

The preparations for the Great War stopped thinkers to work on project of common continental union. But after the war, debate emerged again. The twentieth century thought about federal Europe is connected with Austrian nobleman Count Coudenhove Kalergi17. In 1923 Kalergi founded the Pan-European Movement. That was and still is first organization to promote pan-Europeanism and federalism on the continental. For Kalergi “Europe as a political concept does not exist. This part of the world includes nations and states installed in the chaos, in a barrel of gunpowder of international conflicts, in a field of future conflicts. This is the European Question: the mutual hate of the Europeans that poisons the atmosphere. (....) The European Question will only be solved by means of the union of Europe’s nations. (...) The biggest obstacle to the accomplishment of the United States of Europe is the one thousand years old rivalry between the two most populated nations of Pan-Europe: Germany and France...” (Kalergi, 1923). Kalgeri words spread all over Europe, and on the First Pan- European Congress held in Vienna in 1926 he brought together politicians from both sides of the World War I, also academia and journalists. It is interesting to stress that Kalergi successor on the place of president of Pan-European Movement was Otto von Habsburg, former Crown Prince Otto of Austria-Hungary. Von Habsburg from 1979 until 1999 even served as a Member of the European Parliament for the conservative Christian Social Union of Bavaria (CSU).

Aristide Briand18, made a contribution on view of Europe of nations based on political cooperation of European states, together with solidarity and prosperity. Briand who serves 11 times as French Prime Minister and also a Nobel Peace Prize laureate, in 1929 gave a speech before the Assembly of the League of Nations. In his speech he made contribution in the idea of federal Europe. Briand sad: “I believe that a sort of federal bond should exist between the nations geographically gathered as Europe countries; these nations should, at any moment, have the possibility of establishing contact, of discussing their interests, of adopting common resolutions, of creating amongst themselves a bond of solidarity that allows them, on suitable occasions, to face up to serious circumstances, in case they arise. (...) Evidently, the association will take place mainly in the economic domain: this is the most pressing question...”(Briand 1929). John Maynard Keynes19 famous British economist, find good point

17 Richard Nikolaus Eijiro von Coudenhove-Kalergi (1894–1972) was an Austrian politician, geopolitician, philosopher. 18 Aristide Briand (1862 –1932) was Prime Minister of France during the French Third Republic and was a co- laureate of the 1926 Nobel Peace Prize. 19 John Maynard Keynes (1883-1946) was a British economist. 39 in Briand's approach on economically and socially based European federation which also was acceptable to the Germany of that time. Briand also presented Memorandum on the organization of a system of the European Federal Union in 1930 to the League of Nations. It was the first official document that is mentioned European federation. But all problems in functioning of the League of Nations, together with economical problem in that period of time draw attention to some other priorities. Federal Europe remained only ink on paper of Aristide Briand. In Europe of that time economical crisis and new wave of nationalism spread really fast. New war was certain. We can conclude that even people of those times saw the neediness to make some peace axis between two biggest European nations. These nations will remain on opposite side in World War II, but as we know both of them will contribute the most in forming the European Union.

After the World War II new ideas of federal Europe appear. The most important and highly quoted is the speech of former British Prime Minister Winston Churchill in 1949. Churchill pronounced a speech in celebration at Zurich University. For many authors this speech was the first step towards modern European integration in post-war period. “I wish to speak to you today about the tragedy of Europe. (...) Yet all the while there is a remedy which, if it were generally and spontaneously adopted by the great majority of people in many lands, would as if by a miracle transform the whole scene, and would in a few years make all Europe, or the greater part of it, as free and as happy as Switzerland is today. What is this sovereign remedy? It is to recreate the European Family, or as much of it as we can, and to provide it with a structure under which it can dwell in peace, in safety and in freedom. We must build a kind of United States of Europe. (...) The first step in the recreation of the European Family must be a partnership between France and Germany” (Churchill 1946). This speech become world famous, and also the partnership of France and Germany, which is underline again became inextricably in integrations of the continent.

After this in 1947, more than 800 European intellectuals and politicians formed the European Union of Federalists. The event took place in the in The Hague and it gathered a lot of followers ideas of federalism but also several of them with more a traditional approach of cooperation in Europe. The first outcome of the debate in the late 1940s was the Council of Europe, created in 1949. The British and Scandinavians, among others where not to agree more binding cooperation and the real delegation of sovereignty (Burgmans 1966b, Gouzy

1968 from Laursen 2011: 9). But, Council of Europe did not help a lot in basic post war fears of France, and the economic problems of Germany after the war.

Problems aroused in control over coal and steel production and trade in post-war Europe, especially in French and British zones of post war Germany. France gained control over one of the most productive areas of Germany – Saarland, while British zone was Ruhr area (central part of North Rhine-Westphalia with cites of Dortmund and Essen). Firstly allays wanted to demilitarizes all German areas, and also to limit production of coal and steel in the Ruhr and Saar area. But, after the joint initiative of the British Foreign minister Ernest Bevin20 to the French Foreign minister Robert Schuman, this policy was reversed in 1947. Autonomously France attempted to gain economic control under Saar under the Monnet Plan21. France wanted to permanent control over Saar area by establishing the Saar Protectorate which was very criticized form the Alay side (Britons never organize new state over Ruhr, but established some kind of International Authority for the Ruhr. In the time of really big US domination especially after the Marshall Plan22 for Europe (and Soviet influence form the east) the French Government was forced to find solution for the arising problems for control over large coal and mineral deposits of Germany. France and its political elites did a historical step which becomes the headstone of all future European integrations.

In 1959, under advice and persuasion of Jean Monnet, Robert Shuman Foreign Minister of newly established made Fifth French Republic, propose what has become known as Shuman Plan. In the Shuman Declaration of 9 May1950, he stated: “Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity. The coming together of the nations of Europe requires the elimination of the age-old opposition of France and Germany. Any action taken must in the first place concern these two countries” (from Laursen 2011: 9). The French government proposes that Franco-German production of coal and steel as a whole become placed under some common High Authority. This High Authority will be placed in the framework of some organization which will remind open to other countries of Europe. “The pooling of coal and

20 Ernest Bevin (1881–1951) was a British Labour politician. 21 The Monnet plan was proposed by French civil servant Jean Monnet after the end of World War II. It was a reconstruction plan for France that proposed giving France control over the German coal and steel areas of the Ruhr area and Saar and using these resources to bring France to 150% of pre-war industrial production. 22 Marshall was the American initiative to aid Europe, in economic support to help rebuild European economies after the end of World War II. 41 steel production should immediately provide for the setting up of common foundations for economic development as a first step in the federation of Europe…” (Shuman Declaration 1950). This plan was so important that he not only building an organization for common market of coal and steel, but also rapprochement and more close ties of France and Germany which will guarantee peace in the continent. Both countries have had to make certain concessions, but at the end both countries had advantages of this. Both countries agree to pool coal and steel resources, and Germany (newly formed the Federal Republic of Germany) will return full political control over its territory (at least in the Ruhr, because France delayed the retuned of Saar till referendum in 1955). The European Coal and Steal Community were established by the Treaty of Paris in 1951. The treaty was signed by France and Germany, and also by Italy, Belgium, the Netherlands and Luxembourg. All of these courtiers had its own reasons to enter the Community. The European Coal and Steal Community becomes the first international organisation based on the principles of suptrantionalisam (ECSC).

4.1.1. Federalist idea in the European treaties

The United States of America as federal state was created by constitutive assembly trough some kind of “big bang”. The European Union has been created gradually, starting with the Treaty of Paris and establishing the European Coal and Steel Community in 1951 and ending with the European Union as we know with the Treaty of Lisbon 2009.

Institutions organised by the Treaty of Paris give direction for creating real sense of community, with solidarity among states and people of Europe. It was very much an open contract with required a lot of decisions later (Laursen 2011: 11). Preamble of the Treaty of Paris did not use the term “federation” as Shuman declaration did. The preamble stress that European states are aware of the fact that Europe can be built only by concrete actions which create a real solidarity and by the establishment of common bases for economic development. Also European states want to assist through the expansion of their basic production in raising the standard of living and in furthering the works of peace (...) HAVE DECIDED to create a European Coal and Steel Community and to this end have designated as plenipotentiaries… (Treaty of Paris).

The European Coal and Steal Community established the first common institutions of Europe (after the Council of Europe). A High Authority was composed of independent members, appointed by member states. A Common Assembly of the Community was

42 composed of members of national parliaments. Special Council composes of two ministers from every member state and at the end Court of Justice. As we see the Community framework was really similar as state design of member states fallowing three branches of power.

Here we will stress one really important fact: Court of Justice of the European Community has fashioned a constitutional framework for a federal-type structure in Europe (Stein 1981: 1). This Court wilts all its competencies underline difference between community law and law of member states. With this principle, community law soon became directly integrated into national systems of law. This principle had led to expanding of area of competence over time. In the first years of forming the Community, the Court was the most important federal-like institution.

One more thing, the European Coal and Steal Community become took an interest in scientific circles. Scientists have begun to study European integration and the first theories of European integration appear. The political science theory of the new process of integration in Europe was first developed by Ernst Haas in The Uniting of Europe. He saw the European Coal and Steel Community as a “symbiosis of inter-ministerial and federal procedures” (Haas 1958:526 from Laursen 2011: 11)

Really soon after the Treaty of Paris, the Treaty of Rome was prepared for signing. The official name of treaty was the Treaty establishing the European Economic Community. This treaty led to founding the European Economic Community on 1 January 1958. This treaty establish more powerful executive branch – the European Commission. Another step towards federalism was made in 1979, when members of the European Parliament were directly elected for the first time. The Treaty of Rome treaty was amended in 1992 by Treaty of Maastricht establishing European Union with the European (Economic) Community as one of three pillars. The treaty was renamed the Treaty establishing the European Community. For the first time European citizenship was introduced. It is supplementary to national citizenship and affords rights such as the right to vote in European elections, the right to free movement, settlement and employment across the EU, and the right to consular protection by other EU states' embassies when a person's country of citizenship does not maintain an embassy or consulate in the country they need protection in (Article 20). The Amsterdam Treaty, officially the Treaty of Amsterdam amending the Treaty of the European Union, the Treaties establishing the European Communities and certain 43 related acts entered into force on 1 May 1999. Amsterdam slightly changes the Maastricht. This treaty gives headstone to Common Security and Defence Policy of European Union with the emphasis on projecting the EU's values to the outside world, protecting its interests and reforming its modes of action. The Treaty of Nice in 2001 amended Treaty of Maastricht. It reformed the institutional structure of the European Union several years before eastern enlargement in 2004. Nice was really important treaty in terms of federal approach. This treaty for the first time form establishing the Community/Union give conditions which need to be fulfilled to take some decision in the Council. First of all Treaty of Nice change voting wages for member states and also introduce wages for new members. For decision it need to have double majority of member states and votes cast, and in which a Member State could optionally request verification that the countries voting in favour represented a sufficient proportion of the population of the Union.

The federalist idea was put back on the agenda in 2000 by German foreign minister Joschka Fisher in his famous speech at Humboldt University in Berlin on 12 May 2000. Fisher saw a tension between “the communitarisation of the economy and currency on one hand, and the lack of political and democratic structures on the other”. The new geopolitical reality of Europe after 1989 made enlargement a necessary, but enlargement would require decisive and appropriate institutional reform (Fisher 2000: no pagination). So he outlined his “personal vision”: Question upon question, but there is a very simple answer: the transition from a union of states to full parliametnarisaiotn as a European Federation, something Robert Schuman demanded 50 years ago. And that means nothing less than a European Parliament and a European government which really do exercise legislative and executive power within the Federation. This Federation will have to be based on a constituent treaty (...) (Fisher 2000). The federation that Fisher called for would be a “lean European Federation”. There would be a “division of sovereignty between the Union and the nation states” based on the principle of subsidiary. This would not mean the abolition of the nation state: “… the nation state, with its cultural and democratic traditions, will be irreplaceable in ensuring the legitimating of a union of citizens and states that is wholly accepted by the people” (Fisher 2000). In case that the majority of member states would not be ready “to take the leap into full integration”, he wondered whether a smaller group of member states might emerges as an “avant-garde” or “centre of gravity” which might push ahead (Fisher 2000).

Fisher's speech raised a great debate about the future of the European Union. Debate rose so much that there were a lot of comments from all sides of the political and academic branch, and also by the citizens. Fisher’s speech sparked a new debate on the finalité politique of European integration (Marhold 2002 from Laursen 2011: 15). Under the excitement of new enlargement and also under whole pressure by academia in that movement Europe wanted to does another powerfully step towards federalism. Europeans started to draft European Constitution. Really soon after the first next meeting of European Council under Belgian presidency, a European Convention was founded. European Convention was a body founded by the European Council in December 2001 and it was chaired by former French President Valéry Giscard. Role model for European Convention was the Philadelphia Convention that led to the adoption of the United States Constitution. The Convection was composed of two members form every member state parliament, one form government and one from opposition, 16 Members of European Parliament, and two Commissioners. The Convention finished its work in July 2003 with their Draft the Treaty establishing a Constitution for Europe. One of the biggest step forward federalism in this Treaty and in the same Constitution was proposed framework of qualified majority voting in the Council. The Treaty establishing a Constitution for Europe was signed in Rome on 29 October 2004. After the French and Dutch referendum rejections of the Constitution for Europe, European Council decided to hold a "period of reflection". The Action Committee for European Democracy (or Amato Group, because it was charred by Giuliano Amato, a former Prime Minister of Italy) was a group witch unofficially working on rewriting the Treaty establishing a Constitution for Europe into what became known as the Treaty of Lisbon. Amato Group made changes which declined every constitutional character of the Treaty.

If we analyse treaty of Lisbon there is several properties which are federal, but some of them which are put in it just to make differentiation between it and previous proposal for constitution of Europe (Treaty establishing a Constitution for Europe). In Article 1, there is line which sad that the Union shall be founded on the present Treaty and on the Treaty on the Functioning of the European Union (Article 1). This is important to stress that with those leaders of the union, used terminology which is normal for international agreements, and not low terminology of traditional constitutions which we already know in Europe. Beginnings of the treaty avoid mentioning will of people, and still starting with the “High Contracting Parties”, which are in this case member states. There is no symbols of the unions (flag, motto) are also not into Lisbon Treaty. But on the other way it in the treaty it is visible that

45 more and more competencies are transferred to the European Union together with more competences of European Parliament in legislation process. On the other side, Qualified Majority voting in the council of ministers is most important institutional change which Lisbon agreement made, together with establishing of office of Hang representative of foreign and security policy. According to authors, differences between Treaty establishing a Constitution for Europe and Treaty of Lisbon are slight, and majority of them are just symbolic.

Among those removed articles was preamble, which spokes about the origin Union, and all articles about symbols of Union. The Treaty of Lisbon was signed by the member states on 13 December 2007 and in 2009 comes into force. The tree pillar system was abandoned because European Community becomes integral part of the European Union. The treaty was amended and renamed as the Treaty on the Functioning of the European Union. For the first time the Charter of Fundamental Rights of the European Union is integral part of one Treaty. This tartly is basis for more democratic accountable and transparent union of not only states, but also citizens of the Union. The fifty-five articles protect certain political, social, and economic rights for both European Union citizens and residents. On the other side the Treaty expanded the use of qualified majority voting in the Council in almost every policy area outside taxation and foreign policy.

The main difference between Constitution of United States and Lisbon Treaty is that Lisbon is contract between the states to formulize European Union as single entity with its own institutions. So it is some kind international treaty not a constitution itself. But because of that that the European Union is hybrid entity of legal and political terminology and the much more important thigh because governments which are signers of the treaty represent citizens of the countries we can conclude that the Treaty of Lisbon is constitutional charter like treaty.

4.1.2. Federalism as a theory in the context of the European Union

Many theorize have emerged in past several decades, which attempt to explain the processes of integration in European continent. Scholars try to see how and why European Union becomes this kind of entity we know it today. Dozens of authors deal with theory of European integration and its processes. Till now we describe federalism as ideology or maybe better to say political philosophy. But here is important to stress theoretical perspective of

46 federalism, and look federalism as one of the theory of integration. For political scientist theories are important because then help us to understand working processes, developments, and allow us to hypothesize about future of European Union. In this section we will look at federalism as one of theory of European integration. This theory, we will help us in the end to give critique on the European Union, and also give some proposals for improvement in federal way.

After the World War II two ideas emerged together with two theories of integration in European continent. First idea is that European countries need to build cooperation among themselves trough the integration of some really important functions, basically in economic terms. This idea led to functionalism as a theory of European integration. Second idea is importance of establishing Europe as political federation which led to federalism as idea of European integration.

In case of the European Union, federalism is one of theoretical schools of European integration which emerged during the process of building European Communities or later Union. For federalists European Union is complex mix of institutions, structures and procedures which certainly look really federal. The federal school was constructed as ‘a way of bringing together previously separate, autonomous or territorial units to constitute a new form of union’ (Wiener and Diez 2004: 26). Key federalist thinkers include Peterson King, which introduced idea of federalism as theory of integration into literature. King describes federalism as “the original and persistent driving force of federation” (King from Weiner and Diez 2005: 29).

Much federalist influences a lot European idea. Altiero Spinelli23 was prominent European politician, member of European Parliament, whose strategy of democratic radicalism was important for crating fist parliamentary assembly for Europe. Jean Monnet had totally different ideas from Spinelli. Monnet had strategy of building European communities step by step, trough economic ties which will during the time lead to federal Europe. Monnet’s approach was really influential during the first decades of united Europe. In his texts, Monnet wrote in about the construction of a federal Europe saying it would be created by “avoiding issues which might conceivably call national sovereignty directly into question...[and]...by adding institutional pieces to a larger jigsaw in incremental fashion”

23 Altiero Spinelli (1907–1986) was Italian advocate for European federalism and founding father of the European Union 47

(Weiner and Diez 2004: 35). Spinelli criticized Monnet and his approach, saying that Monnet’s instructions will remand weak (later we will mention this when we speak about European Parliament, European Commission and their role in contemporary European Union).

According to federalist thinkers, the aim of the united Europe is to integrate different entities of the continent but not to assimilate them. In that kind of united Europe, all countries and institutions will be partners, and will preserve diversity of member states. According to federalist school of thought “previously discrete, distinct, or independent entities come together to form a new whole union in which they merge part of their autonomous selves while retaining certain powers, functions and competences fundamental to the preservation and promotion of their particular cultures, interests, identities and sense of self-definition” (Wiener and Diez 2004: 29). The point is in acknowledges differences which are important in societies by fading some balance between self and shared rule. By the influence form the United States, and their federal system federalists focuses on major issues for one state – they think that federation need to have control on the security, both internal and external. According to this, central power of federal union needs to have control over security, police and similar home units, and defence. This is important because, with this control federal state can control violence among groups inside the state which are not satisfied. Federalism as a theory of integration has great impact on European communities and European Union. All European values and ideas are taken from the theory of federalism. The problem is in reality of European institutions and their capabilities. After the World War II, courtiers of Europe sit together to make cooperation, to prevent any future war. In this since very important issue was building any common European security project. Federalist by their ideas really contributed in attempts to establish on the first place European Defence Community and of course some kind of European police (much more than Europol). For federalist thought after the World War II this project were only way establish real federation in European. They emphasised the need for a executive power of common Europe to “regulate relations among states as governments do internally among citizens” (Hill and Smith 2005: 20). Main guiding forces according to federalist theory are political elite. Strong leaders, political groups, parties and individuals share interest in building such a structure. This transnational elites, with common ideology build union, by making single treaties (constitutional ones) based on shared competences between member states. Federalism in the 48 context of the European Union is the application of federal principles to the process of European integration where the term integration refers to the sense of a coming together of previously separate or independent parts to form a new whole (Weiner and Diez 2004: 31). Main critiques of federalism as theory come from across the Atlantic. Andrew Moravcsik made significant contribution to the theory of European integration by critique of federalist theory. In one of his essays Moravcsik describes European Union and gives its definition. For him European Union is: “an especially weak federation” (Moravcsik 2001). So even sceptic, Moravcsik still see European Union as some kind of federation. He even stresses some other definition of it “as something qualitatively different from existing federal systems” and much preferring to refer to it as “a particular sort of limited multi-level constitutional polity designed within a specific social and historical context” (Moravcsik 2001). According to Moravcsik, the European Union is lack of some really important concept to really call itself federal. The most important one is that the European Union “EU plays almost no role in most of the issue‐areas about which European voters care most, such as taxation, social welfare provision, defence, high foreign policy, policing, education, cultural policy, human rights, and small business policy” (Moravcsik 2001: 163-4).

Federalism as theory is more normative than analytical and it give us answer only on question why we need to form European federating, without no reason why national states want to do that. At the conclusion of this master thesis, it will be shown several solutions for the European federation, or improvement of European Union to the European federation taking in account main implications of Federalism as a theory in the context of the European Union.

4.2. Institutional structure of European Federalism

For investigation federal structure of European Union it is really important to do complete analysis of institutional design of the European Union. Institutions of European Union grow with every new treaty, especially in past 25 years. Structure of federalism of European Union combines vertical power, which is sharing competencies between European Union institutions and member states, and horizontal which is classic separation of power between legislative, executive and judicial. Institutional design of European Union follows design on any federation (any federal state). Basically European Union combines normal

49 separation of powers with federal elements. European Union has tree branches of power which are represented in tree main institutions – European Council and European Parliament, European Commission and European Court of Justice. All this institutions have direct and indirect effect to European citizens.

Before power bodies of European Union we have on even much more powerful. The European Council is one of most powerful bodies of the European Union. The European Council comprises the heads of state or government of the member states, along with the council's own president and the president of the Commission. The High Representative of the Union for Foreign Affairs and Security Policy also takes part in its meetings (Treaty of Lisbon). While the European Council has no formal legislative power, it is a strategic (and crisis-solving) body that provides the union with general political directions and priorities, and acts as a collective presidency (Treaty of Lisbon, Article 13).

Then we have the most powerful body of the state-like structure of European Union. The European Union's legislative authority is divided between the Council of European Union and the Parliament. In bicameral legislature structure of European Union the institution which represent the “upper chamber” is the Council of European Union (sometimes still refer as the Council of Ministers as in previous Treaties). The Council of European Union represents the executive governments of the European Union member states. The Council in some cases have much more powers in some intergovernmental of European Union (like foreign policy, economic coordination etc). The decisions in the Council are made by qualified majority voting in most areas, unanimity in others. We will compare later work of the Council with the German upper chamber – Bundesrat.

The next important body is the European Parliament, which is composed of directly elected representatives – Members of European Parliament. Today the Parliament is composed of 751 members, who represent the second largest democratic electorate in the world. The Parliament is the first institution of European Union, and share power with the Council of European union. The biggest critique on European Parliament is tenth even it has legislative power, it does not possess legislative initiative, as most national parliaments of European Union member states. In recent years Parliament gain a much more power buy uniting forces of the European political parties. Under pressure of the parliament last European elections in 2014 have big effect over electorate and become first elections in the

50 history of European Union where parties and party leaders of European Parliament stand up for more democratic procedures of election the collegial cabinet of European union.

Executive power is like in every member state cabinet –in this case the European Commission. Commission is led by President of European Commission, which can be called Prime Minister of European Union. He/she basically comes from European party group which have majority in European Parliament, and in from 2014 Elections it was candidate which was head of the list of the European political party. Commissioners are appointed by the upper chamber on a proportionality basis (firstly member states and then party groups in European Parliament) and are subject to a vote of approval by the European Parliament (Kelemen 2003: 193). The biggest critique on the working of the European Commission is that the Council of European Union has veto power on decisions made by Commission.

The judicial branch of European Union is headed by a supreme court, the European Court of Justice, composed of judges selected by the member state governments. The European Court of Justice is the most important institution witch work under the federation like model. The European Union has begun creating a system of lower federal courts, first with the establishment of the Court of First Instance (CFI) with provisions for the establishment of specialized judicial panels (Treaty of Lisbon). Member state courts are integrated into the judicial system through the preliminary ruling procedure that allows them to refer cases to European Union courts (Kelemen 2003: 194).

After this five most important federal like institution of the European Union, we can mention several more established as specialist administrative bodies – several agencies, European police – Europol, European Central Bank that together comprise an emerging “fourth branch” in the EU’s institutional structure (Kelemen, 2003).

Powers of institutions of European Union are highly fragmented. In Tsebelis’s (1995, 2002) terms, the EU is a polity replete with veto players; for Lijphart (1999: 42-47), the European Union has the characteristics of a consensus democracy. We can conclude here that according to the institutional design, the European Union is really state-like entity. The European Union is really decentralized, federal union of states and citizen’s with limited public duties, obligations and responsibilities which is built upon unity in diversity (Burgess 2006: 238).

4.3. Federal-like or “hidden federation”

One thigh why sometimes authors differ in looking on the European Union as federation is because of different views on federation, and different definition they use. It is important to stress that Moravcsik use some definitions which derives from American presidential federalism. Because of that his findings always put the European Union far from real federation. European Union needs to be seen as some new model of federation, something totally new in theory and practice.

Europeans started with single steal and coal community and put a goal that that community every decade become bigger and bigger with new competencies and new institutions. Building of federal European is totally different that building of Westminster or Presidential model of federation. Europeans shift from functionalism to constitutionalism in one moment of existence of the European entity. European Union is not a federation in convectional since that we have seen in textbooks. It is not a state. But it is nonetheless a political union with strong federal and confederal elements and conspicuous policy outputs that broadly equate with the domestic policies of national states. It is, in other words, a new kind of federal–confederal union that we can classify either as a ‘new confederation’ or a new federal model (from Burgess 2000: 37).

Hueglin and Fenna (2006: 32-33) define these characteristics as follows: “In federal systems of government, sovereignty is shared and powers divided between two or more levels of government [,] each of which enjoy a direct relationship with the people”. Obviously, the European Union fits well with the second and third criterion of the definition, but it fails short of fulfilling the first one.

In previous chapter five principles of Burgess (2006) in the case of Germany and Switzerland was explained. But what about European Union in the basic principles of federation according to Burges. First if we look at the structure of European Union, it cannot be putted in any model of existing federation. European Union is sui generis and totally different entity than anything which exists before. There is lot of signs of cooperative federalism in European Union case. This cooperative features are basically present in the cases of exclusive competences of the Union, where member states need to support working of the union, and to do all administrative job. In the case of European Union division of powers and competences are organised on territorial basis where we have direct effect of two

52 orders of government, European and member state one, with certain responsibilities that belong to them. In division of power and institutional design European Union looks like any other federation.

If we look on sociological basis, European Union is formed on the ground where strong national states already existed. This is really important for our last chapter about future of the European Union. Both member state nationalisms and linguistic diversities are really strongly preserved in European case. Here one thing is much more important, and that is slight common European identity.

Political economy of European Union is very complex, and it is not organised in all aspect under federal rules. Economical theory of federalism is basically closely contacted to focal federalism as a most important part of political economy. Common fiscal policy in European Union does not exist. Focal deficit of European Union is one of the main characteristics of democratic deficit of European Union. In normal federations, federal state collects taxes (executive power collecting is in hands of sub-federal states) or there is sharing of amount of taxes which is collected by federation and within collected by sub-federal state. Then federation allocate revenues, by transfers to sub-federal governments, providing them necessary funds to work and provide their citizens normal life. In this sense it is important that in there is solidarity between sub-federal states. In European case, 85% of European own resources stem from national budgets, so we can say that in economical (fiscal terms) European Union is subordinated to member states. Something much closer to common fiscal system becomes the European Fiscal Compact established after the crisis in 2012. But this treaty has one important problem, ant it is that it is international treaty outside the European Union legal framework (even not signed by tree member states). Monetary Union, together with common market, are most importance features of European Union as a federation. European Central Bank is one of most important institutions of European Union as political union.

Political parties on European level worked under the form of umbrella party organizations. Parties are independent in working in member states, but on European level, and especially in European parliament they get together to synchronise their policies. The oldest party on European level was confederation of social democratic parties which was formed in 1973, in propose of gathering European social-democrats which already sit together in previous Parliamentary Assembly of European Communities. In this moment

53 almost all major parties in member states are members of one of 12 European level parties which are differed on ideological level. There is visible cooperation between parties even on elections in member states, buy support of the colleagues form other member states. The working of European umbrella parties is also bottom-up approach (with slight influence of Brussels/Strasbourg political elites which are unimportant in member states).

At the end European Court of Justice is according to many authors one of most important federal institutions of European Union. In areas of competence of the European Union, European Court of Justice can do, according to the Treaty of Lisbon, judicial control to acts of the European Council. Also National Parliaments and the Committee of the Regions may request judicial review. It is interesting to mention, that in cases of common foreign and security policy there is no jurisdiction of the European Court of Justice (Article 19, Treaty on European Union). Before Treaty of Lisbon, there was only one way to change European Treaty - Intergovernmental Conference. But, in the Treaty of Lisbon, revision procedures are described in Article 48, and there are two ways for revision: ordinary (for key amendments) and simplified (for amendment of policies and internal actions). Except intergovernmental conference, according the new rules also European Parliament and national Parliaments can ask for revision of the Treaties. For any changing of any European consensus of member states need to exist, but also every treaty need to be ratified under the procedures of member states (by national parliaments or referendums).

Principal basis Germany Switzerland European Union

The structure of Sui generis hybrid Hybrid federation Hybrid federation federations federal entity

Sub-state nationalism, linguistic diversities, Sub-state nationalism, Linguistic diversities, The sociological basis territorial identities, territorial identities, religious differences, of federation religious differences religious differences communal tradition and communal tradition

Taxation in hands of Taxation in hands of The political economy federation, Subordinated to the both federation and of federation administrated by member states cantons Länder

Political parties and Strong federal parties, Strong federal parties, Umbrella parties with party system with bottom up with bottom up bottom up structure

structure structure

Constitution reform Consensus and and judicial review Special majority in Double majority of the ratification by every both federal chambers people and cantons (revision of member state constitution) Table 5.1: Michael Burges five principal basis for the study of federal political systems.

After this examination it is clear that the European Union do not fulfil some basic principles of federal states (case of economy and some structural basis), but on the other side it is really visible that on sociological, political and legislative side European Union have all important features of federal states. But still, regarding this features, European Union is some kind of “hidden federation” if we take into account its structural and institutional design. In next chapter, we will test European Union under the Watts’ common structural features of federations, and see how Union is close to them.

5. Federal experience of Germany and Switzerland

The European Union can be also sometimes described as a model of “cooperative federalism”. This term need to be explaining much more trough looking what that means in the cases of real federal nations. In this chapter together with short case studies of Federal Republic of Germany and the Swiss Confederation we will stress the biggest similarities and differences between federal models of this sates and the European Union. We will show what cooperative and executive federalism is in the German and Swiss case, which will help us to distinguish it from some kind of European “intergovernmental federation”.

5.1. Federal Republic of Germany

Federal ideas in Germany are not new at all. They can be traced back to the Holy Roman Empire and also can be found in first modern pan-German institutions as the German Bund (1815–66), the North German Confederation (1867–1871) and in what in 1871 was the German Empire till 1918. As Burgess stress “the main stumbling block to placating the consistent sceptics of Germany’s federal tradition has been the weakness – or complete absence – of liberal democratic roots” (Burgess 2006: 95). Even German Bund appear in the time of liberal revolutions across the European continent, liberal democratic did not made a significant effect of forming and governing such a entities in those time. It is important to mention next entity after the World War I - the Weimar Republic (1919–33), which many scholars see ass federal predecessor of what is now the Federal Republic of Germany, which is formed in 1949.

Federal Republic of Germany Bundesrepublik Deutschland (German)

Capital Berlin - and largest city

Area 357.168 km2

Population2014 estimate 80.716.000

Federal states 16 Länder

Government Federal parliamentary constitutional republic

Cabinet of Germany Executive (Chancellor and the cabinet ministers)

Upper house: Bundesrat Legislature Lower house: Bundestag

Judiciary Federal Constitutional Court

23 May 1949 Formation + reunification 3 October 1990 Table 5.1.: Basic data about Federal Republic of Germany

William Riker, one of the leading political scientist in the sphere of federalism, together with number of historians, look on events after World War II who led to establishing the German federation as we know today. Germany was “dominated by American occupation forces who wished to impose federalism both as an alternative to the Morgenthau Plan24 of Balkanizing25 Germany and as an expression of their provincial conviction that federalism was a good thing” (Burgess 2006: 95). Also Ricker stress that this kind of federal constitution Germany adopted (Das Grundgesetz or the Basic Law) in hope that one day West and East Germany will be united again. The western sectors of Germany, controlled by France, United Kingdom and United States, were merged on 23 May 1949 in the Federal Republic of Germany with Bonn as a provisional capital of federation. German Basic Law emphasized its stance that the separation of West and East Germany was an artificial and temporary status quo. These facts become true in 1989 and definite in 1990.

There was a strong historical background of forming federal units of Germany. Some of them were historical units of the German Empire and some of cities had their own strong autonomy (of High German and Hanseatic federal traditions). On the other side North Rhine–

24 So called Suggested Post-Surrender Program for Germany. 25 Balkanization is process of fragmentation or division of a region or state into smaller regions or states. 57

Westphalia, Baden–Württemberg and Rhineland–Palatinate were constructions of the Allied forces and Allied control zones and previous historical units. Bavaria as the biggest state was a product of historical circumstances during long time differentiations between north and south, Catholics and Protestants. In 1949 Germany had 11 federal states (Länder) and after 1990 it has 16 Länder. Each state has its own constitution, parliament, government, administrative structures and courts.

First of all, power in Germany is distributed between a federation and Länder, in sovereignty on federal level, but also partially or shared sovereignty with Länder. The Basic law distinguishs three types of competencies: Exclusive federal competences, concurrent competences and Länder competences. Exclusive federal competences are reserved for federal level, such as foreign affairs, defence, currency, transport and immigration. On the other side Länder have designated competencies “notably in the domains of education and culture but they are also competent in numerous other fields where the Bund does not exert its legislative powers” (Sidjanski 2001: 8).

The German federation has the power to adopt “a framework” according to which the Länder are required to legislate. This is really important for our investigation about the European Union, because this is really similar with European practice. According to Article 288 of Treaty of Lisabon a directive shall be binding, as to the result to be achieved, upon each Member State of European Union to which it is addressed, but shall leave to the national authorities the choice of form and methods. The similar system exists in Germany.

Most legislation is adopted at the federal level, and implemented by the Länder, which have a relative freedom as to how they apply federal laws as well as their own laws (Sidjanski 2001: 9). For this reason, the German system (but also Swiss) is often described as “executive federalism”. The system has never ceased to evolve, as is the case of Switzerland, ties between the Bund and the Länder and also between the Länder have emerged. These networks of agreements form the outline for “cooperative federalism”, in which we find the elements, though in a different context, which are at the heart of the European Union (Sidjanski 2001: 9). German Länder together with the federal government cooperates and together they want collectively to solve common problems. Like this federation avoids making laws separately, and rather making it together with constitutional units.

One more characteristic of the German federal system which is similar like one in the European Union is that dual participation of the people (Bundestag) and of the member states

(Bundesrat) at the federal level is usual. Unlike Switzerland where two elected representatives per canton in the Council of States (or United states of America, where two independent senators per state) participate in legislation process, in Germany distribution of 69 seats in the Bundesrat takes into account the variable dimension of the Länder . Basically this deals with number of inhabitants of the land, plus some positive discrimination for really small Länder. Four Länder hold six seats each, one has five, seven Länder have four seats and four have three seats (Bundesrat.de). This example is often cited when referring to the balance of voices in the Council of European Union.

Membership to the Bundesrat is limited to members of government of Länder of Germany. This member can be recalled by governments of their own states. This is the same as the Council of the European Union. Members of the Bundesrat do not act as individuals, but like representatives of their governments. Then need to agree on a government line for every legislative act witch need to pass or be rejected in Bundesrat. States do not have equal voting power in Bundesrat. Decisions in it are taken by absolute majority (Council of European Union under Qualified Majority Voting works very similar which we will see in Chapter 6).

Länder Population Votes Baden-Württemberg 10,736,000 6 Bavaria 12,469,000 6 Berlin 3,395,000 4 Brandenburg 2,559,000 4 Bremen 663,000 3 Hamburg 1,744,000 3 Hessen 6,092,000 5 Mecklenburg-Vorpommern 1,707,000 3 Lower Saxony 7,994,000 6 North Rhine-Westphalia 18,058,000 6 Rhineland-Palatinate 4,059,000 4 Saarland 1,050,000 3 Saxony 4,274,000 4 Saxony-Anhalt 2,470,000 4 Schleswig-Holstein 2,833,000 4 Thuringia 2,335,000 4 Totals 82,438,000 69 Table 5.2. Distribution of votes in the Bundesrat

Länder elections are not in the same time in all German member states, so members of the Bundesrat can come and go in any time of the season period of the Bundesrat. Of course, in Bundesrat there are fractions and similarities in the votes for some legislative acts, but these fractions are not permanent and do not depend much from the party line. But these are just exceptions. Bundesrat don’t change its composition according the topic which is discussed (that is the case of the Council of the European Union). On the other hand, spokesperson from a delegation of every Land can change due to subject and topic which is discussed.

5.2. Swiss Confederation

Lot of scientist and journalist describe Switzerland as some kind of small European Union - “European microcosm”. Variety of ethnic groups, languages, religions and other interests made Switzerland of the most interesting topics for the scientist of federalism. Structural diversity of Switzerland together in combination with political diversities can be significant for stability of government in Switzerland. This stability is even more secured by balanced separation of powers but at the same time balanced by the use of referenda and popular initiatives. From the first days of existence of Switzerland the Eidgenossenschaf (Oath-Fellowship) is guiding line witch preserve and promote the politics of difference and diversity. At the very core of its existence has been the ever-present pulse of the cantons and communes, both rural and urban, which have preserved the vitality of liberty, self- determination and citizen participation in local affairs (Burgess 2006).

Swiss Confederation Schweizerische Eidgenossenschaft (German) Confédération suisse (French) Confederazione Svizzera (Italian) Confederaziun svizra (Romansh)

Capital Bern - largest city - Zürich

Area 41.285 km2

Population (2012 estimate) 8.014.000

Federal states 26 cantons (20 cantons and 6 half-cantons)

Federal multi-party directorial republic with Government elements of direct democracy

Federal Council Executive (7 member executive council which constitutes the federal government and serves as collective head of state)

Upper house: Council of States Legislature (Federal Assembly) Lower house: National Council

Judiciary Federal Constitutional Court

12 September 1848 Formation + Constitution 18 April 1999 Table 5.3.: Basic data about Swiss Confederation

Its federal origins stretch back to 1291 when the three tiny rural Alpine communities of Uri, Schwyz and Unterwalden entered into a league of mutual defence – designated an Eidgenossenschaft – to protect themselves against the encroachments of the house of Habsburg. Middle-aged Old Swiss Confederation was followed by Napoleon’s Constitution for Helvetica in 1803. But modern Switzerland began to take shape after the Congress of Vienna in 1815. After the 1815 really Germanic confederation begin to accept other territories with predominantly French and Italian speakers. Switzerland was re-established and becomes loose confederation of 25 cantons based upon a treaty that guaranteed collective security by mutual assistance. After a really short Swiss Civil war in 1847, a new constitution was introduces in 1848. This constitution was, of course, ratified by popular vote of both citizens and cantos. Switzerland become real federation, even preserved historical name of “Swiss Confederation”. This constitution was revised in 1874 and more recently in 1999, it is

61 the federal constitution of 1848 that contained most of the organizational framework that characterizes the Swiss polity today (Burgess 2006: 82).

Switzerland is made up of 23 cantons or federated states, so it is really comparable to the European Union 28 member states. Swiss parliament is consisted of the National Council, which have 200 elected members, representatives of the citizens of the whole country. Second chamber, the Council of States made up of 46 members, two elected representatives per canton or one for half cantons.

The composition of the Federal government (Conseil Federal) highlights a problem, reflected by the problem of the number of member states of the European Commission after enlargement. The fundamental difference lies in the slow process of integration in Switzerland, which allowed it to consolidate the mutual confidence upon which the Federal Council of seven members is based, that is to say government in the form of an executive body (Sidjanski 2001, 13). The seven members represent the diverse regions and linguistic communities and the principal political parties (two socialists, two radicals, two Christian democrats and one central democrat). Elected by parliament, the Federal Council is made up of two Romands, one Fribourgeois (bilingual canton) and four Germans. These proportions are not fixed and, if the presence of large cantons is desired (Bern, Zurich, Geneva or Vaud) it is variable and does not exclude the election of a political figure from a small canton (Tessin for example). This sharing of political power between seven members of the executive branch of government is proof of a high level of confidence and cohesion, which has not yet happened at a comparable level in the European Union. Even the European Parliament have its own majority made of European parties: European Peoples Party, Party of European Socialists and Alliance of Liberals and Democrats for Europe, and light eurosceptics European group of Conservatives and Reformists, European parliament does not elect their own executive European cabinet. Still there are members of the European Commission as there are member states of European Union.

Several other things we can find similar between Union and Switzerland. Because of interest groups (mainly political and social) there is lot of veto plays inside of Switzerland – parties, cantons, communities, citizens etc. In the Swiss case there is one important issue that appears during history. It is foreign policy of the federation and influence of cantos on it. The different histories and identities of the cantons, including their traditional ties as well as their surroundings, have produced divergent, if not opposing, foreign policies. In these

62 circumstances, surrounded by powerful states (Germany, Austria and France and later on Italy), with the desire to live in peace, Switzerland opted for neutrality (Sidjanski 2001, 13). In international relations Switzerland was seen as peace builder and peace maker, and several times mediator in the negotiations, and even the place of negotiations. In today’s World, the European Union is structured somewhere between the United States and Russia. Even before in the time of the Cold War, the European Communities have good relations with United States on one side, and Soviet Union block on the other, which where their first neighbour. On the other side, some postcolonial states have traditional ties with African, South American and Asian countries. The international responsibilities of member states of the European Union, its political influence in the world and its political potential make the choice of neutrality a non-starter and oblige it to assume its global responsibilities (Sidjanski 2001, 13).

5.3. Comparison of Swiss and German models of federation

At the end, in this chapter, we will explain five principles of Burgess (2006) in the case of the Federal Republic of Germany and the Swiss Confederation. According to Burgess’ types of federations (2006: 136), Germany belongs to hybrid model of federation. In Anglo-American literature, there is there is a tendency for constant emphasizing two other models of federations as real ones (the Westminster model, the republican-presidential model). The Hybrid model of federation combines various elements of both Westminster and Republican-Presidential model. This model is typical for Germany (but also for Austria and Switzerland). As we mention before, this countries have slight difference between. Switzerland belongs of a dual federal model, while Germany is typical case of cooperative model of federation. Also, both countries have written constitutions – the Swiss Federal Constitution (form 1998, adopted in 1999, which replaced the prior federal constitution of 1874, which it just up to date without changing it in substance) and the Basic Law for the Federal Republic of Germany (promulgated by the Parliamentary Council in 1949, and Amended by the Unification Treaty and Federal Statute in 1990). In both cases division of powers and competences are organised on the territorial basis (for territoriality as a structural feature of federation look in the following section), and also in both cases there is presence of two orders of governments, federal and sub-federal, with certain responsibilities that belong

63 to them. Germany and Switzerland slightly differ in a correlation between federal and sub- federal governments (more about interstate relations in fallowing sections).

In the second place we have something which Burges define as the sociological base of federation. Here is important to underline a basis of federal society in our both cases. The idea is that the federation do not lies in the constitution or any institution, but it comes from society. During the history some sociological cleavages form what are now sub-entities of federations. These cleavages can be different: sub-state nationalism, linguistic diversities, territorial identities, religious differences and communal tradition etc (Burgess 2006: 140). Swiss case is very specific in this sense, because in Switzerland we can found combination of different cleavages which are crucial for essence of the Swiss federation. Historically the Swiss federation is formed by communal traditions of old three cantons which in middle ages from Switzerland. These cantos preserve their difference among other ones. Other cantons appear in the time of reformations, and even some of them split in two just because of this religious cleavage. On the third place there is ethno-linguistic difference between cantons of Switzerland. All cantons preserve their difference and preserve their territorial identity, but again all people in the country call themselves Swiss. German case is specific because of existence of historical territorial identities for centuries before unification of state. These cleavages are slightly preserved by today’s borders of the Länder, which are just historical, with the German people speaking German on both sides of administrative lines between them. Two lands Baden-Württemberg and much more Bayern preserved one more difference – strong Catholicism, which differs them from other lands. In Germany some Länder have strong sub-state national identity (Bayern, and Baden as part of Baden-Württemberg, Saxony), while some others, as city states, and preserves their communal tradition of maritime cities.

A political economy of federations is most complex part to explain how federations work. The basic principle in work of federation is solidarity among sub entities and efficiency of the system on the federal level. To examine such an occurrence, we should bear in mind several characteristic of federal systems – its nature of the federation, its governance, federal values in specific federalisms, historical meters etc. Here is a specific question to answer does the federal constitution and the political process relates to the nature and distribution of economic power and resources works under the federal principle. In our case we can confirm that both of our case countries have complex economical linkages between federation and sub-federal units (cantons and Länder). In both Germany and Switzerland economical 64 relations are rally complex. Both states have complex and organised fiscal federal relations. So, in our case we will stick to the main ingredient of political economy – fiscal federalism and tax administration. With fiscal federalism we can clearly explain connections between federation and sub entities. In the Swiss case, taxation lies in the hands of cantons, and fiscal sovereignty of the cantons is guaranteed by the Constitution. The federal law make just a framework of how direct taxation in the cantons shell work, but tax rates are set by cantons (of course directly by the voters through instruments of direct democracy). Other taxes, as VAT and border duties are in case of federation. Germany is different example, in it taxes lies in the hands of federal government, but lands do all administration of the taxes. 95% of all taxes are imposed on the German federal level, and then the income of taxes is allocated by the federation and the states according to the Basic Law. Here comes the miracle of the federalism, changing constitutional agreement for better life of all citizens, states and federation. Because of unification, and much more European integration, Germany need to find way for better allocation of incomes in 1990. Old fiscal equalisation and redistribution in West Germany was made under the well know north-south difference, and new one from 1990 under the west-east one. Even now, western German states pay the price of absorbing these new members of the federation and “uniform living conditions” of all German citizens (Basic Law, Article 72(2)).

In this principle it is important to stress a party structure of political parties in both courtiers of our examination. Both constitutions for Switzerland and Germany combine two principles: responsible government and federalism. In both cases political parties need to balance between these two principles. For example major German party the Christian Democratic Union (CDU) works under the federal principle with affiliations in the German Länder (except in land of Bayern). Functioning of Germany reflects on functioning of party, so the party follow state structure. Every land have its own party organisation which act independently in own territory, but under the program and with support of federal party. For example in land of Baden-Württemberg the affiliation the “CDU Baden-Württemberg” works as party entity, and it is second largest CDU affiliation in Germany. Even CDU is formed in 1945, and even it is ruling party of Land of Baden-Württemberg from 1953, “CDU Baden- Württemberg” is formed later in 1971 when the state parties of CDU Nordbaden, Südbaden, Nordwürttemberg and Württemberg-Hohenzollern (historical parts of the land) merged into a single party. Because of the Catholic heritage and the rural population in the land of Baden- Württemberg (only land with the Catholic majority except Bayern) is often viewed as more

65 conservative than many other CDU state parties. Bayern is quite different example, and in this land CDU do not work as a party on state level. It is replaced by the Christian Social Union in Bavaria (CSU), which is some kind of sister party, which works together with CDU on the federal level. Because land elections are not in the same time, every party has its own structure and its own way of working according to socio-economical structure of the electoral body. One is obvious, that the German political parties really work under bottom-up principle. In Switzerland is the same situation with the parties. Every party has cantonal affiliation, except in some small cantons (for example Appenzell Innerrhoden). Voting in cantonal elections is complex and this is not a place to explain it, but it is important to stress that in almost all cantonal councils (or Grand Councils or Landrats) all four (now fife) main federal political parties are represented. It is the same case like in Germany, that cantonal elections are not in the same time, every affiliation have its own structure and its own way of working according to traditions of canton in which it opiates. At the end, it is important to underline that political parties in Germany and Switzerland follow federal structure in its working. The important is to stress one thing which is similar to these countries, because which is maybe not so connected with its federal structures, but with social ones, is that in both federations’ majority of governments (all governments is Switzerland) are colitis between two or more parties in the parliament.

Question of constitutional reform and judicial review is really important in federal terms. Because the most important characteristic of the federation is distribution of powers between two orders of government the question is who ensure the supremacy of the constitution over all orders of government. In the German and Swiss cases the Constitution and the Basic Law declare implicitly supremacy of the federal constitution (and law). Both federations find a way for adjudicate disputes and resolve conflict between federal and sub- federal governments by different mechanisms – on first place courts and on second elections and in Swiss case referendum. In German case the Constitutional court in Karlsruhe can rule on the validity of federal and laws of the Länder, but in Swiss case the Federal Tribunal have limited competence just on cantonal legislative acts. In the Swiss case validity of federal laws is determined directly by the voters through instruments of direct democracy. Amending the constitution is one more important case which determines federations. Federal constitutions are live categories, they can be changed during the process of building of federations. European federation’s constitutions are not rigid and all constitutions give the right of abandoning it. For example the old Swiss constitution was amendment around 110 times

66 from 1891 till 1998. According to the Constitution form 1998 there is several ways of changing it, but all this ways require one important thing - a double majority of people and cantons for congaing and amending the Constitution. In case of the Federal Republic of Germany special majority in both federal chambers – Bundestag and Bundesrat, is needed for any change. That means that majority of state governments of German Länder need to be in favour of constitutional changes.

To conclude like this, Kenneth Wheare stress that the federation is a political system this applies the “federal principle”. By the federal principle, he means the method of dividing powers so that the general and regional governments are each within a sphere co-ordinate and independent (Wheare 1963: 10). This principle is dominant in the organisation of Switzerland and week in Germany. In Germany dividing powers is result of bigger role of federal government in the legislation process, and Länder governments in administration such legislation. The point is that competences are shared and not separated among federal level and state level. That is crucial characteristic of German federal model – separation of legislating and implementation of legislature. According to many authors it is a division of functions rather than a division of powers (Swenden 2006: 7). This form of German federalism can be also called functional or administrative federalism. Indeed, Germany (and to a lesser extent also Switzerland) have been defined as “joint decision federations” (Scharpf 1994). If we put European Union in this context we will find lot of similarities in this kind of administrating European level legislature.

This interdependence of federal level government and state governments is clearly shown in composition of the German second chamber (Bundesrat or Federal Council). Bundesrat members are members of state governments of German Länder. Wheare thinks that this show really strong impediment to the independence of the federal government (Wheare 1963: 26). Members of Bundesrat advocates German regional interested in the federal legislation. Heidrun Abromeit and Klaus Von Beyme argue that for regional executive leaders with a seat in the second chamber, regional administrative interests have been made subordinate to federal party interests. As a result the second chamber has turned into an important vehicle of federal government support (if political majorities are congruent in the central lower and upper chambers) or obstruction (whenever the political majorities are incongruent) (Swenden 2006: 9). The result of this is that according to Abroment Germany is more “concealed unitary state” then federation. He concludes this by looking at everyday practice in German Bundesrat.

According to this, both Federal Republic of Germany, and Swiss Confederation, fulfils all five principles of federal states (look Table 5.1). In next chapter we will examine the same principles on the case of the European Union, and see the fulfilment of these principles in that case.

6. Comparative analysis

Again we will stress that European Union is neither a sovereign state nor an international organization. The European Union is rather and entity in which member states, sovereign ones, have agreed to pool part of theirs sovereignty. Member states pool their sovereignty in matters of the single market, trade and commerce, agriculture, fisheries and some parts of justice and home affairs, but retain it over other parts of justice and home affairs, key aspects of foreign policy, health, social policy and most aspects of their welfare states, and most other polices (Wolinetz 2011: 29 from Laursen 2011). This situation might suggest that the Union is not at all a federation, but would better fit with the definition of confederation.

On the beginning we must stress some biggest differences. Germany is a nation before it is a state. It was a nation even before unification. It is a nation that, in spite of the relative diversity of the German federal states, does not lack basic social, cultural and linguistic homogeneity, in spite of a certain dissonance provoked by East-West split. On the other side Switzerland disparities are often stressed as most important attribute. Both Switzerland and European Union have diversity of languages and cultures, ethnic grouping and religion, social, economic and political structures as well as those of lifestyle and behaviour.

In this chapter we will do comparative analysis both German and Swiss federation and European Union, taking in account Watts’ common structural features of a federal political system. In the chapter we will pay much more attention to the European Union, in order to examine can European Union be considered as a entity which have federal features.

Two orders of government, federal level and state level, each acting directly on their citizens: In this section we need to elaborate how European law have affect on the citizens of the European Union. In German and Swiss case there are articles in both constitutional acts – Basic Law and Constitution about precedence of federal law. Federal law

69 has precedence over Lander and cantonal law, together with general rules of public international law. German constitution even has special Article 31 which underlines that “Federal law overrides Land law.” Under all federal competences federations have direct effect on the citizens, which are under some circumstances transferred to the executive bodies of the sub-state units.

According to the treatises of European Union, one principle is crucial. It is a principle of precedence. According to it, the European law is superior to the national laws of member states. All member states, after join the Union need to change their own constitutions to put this principle into it. This principle applies to all European Union’s acts with a binding force. Along with this principle, there is direct effect of European law. This is fundamental principle of European law, which was enshrined by establishing the Court of Justice of the European Union. The direct effect of the principle, need to ensure the application and effectiveness of European law in the member states. Member states are in charge of applying the European law. This principle of direct effect of European law enables individuals to and companies to apply to the European Court of Justice. However, the European Court of Justice defined several conditions in order for a European legal act to be immediately applicable. In addition, the direct effect may only relate to relations between an individual and a member state or be extended to relations between individuals (Treaty of Luxembourg).

A formal constitutional distribution of legislative and executive authority and the allocation of revenue sources between the two orders of government ensuring some areas of genuine autonomy for each order: It in normal that in both constitutional charters of Germany and Switzerland we have clearly given distribution of powers and competences to the federal and sub federal levels. In both Germany and Switzerland international relations, defence, economic and monetary policy (before EMU), major taxing powers and similar are part of federal jurisdiction. In the cases of distribution of administrative responsibilities form federal to sub federal level exits in both states.

In European Union situation is quite different. European Union started as an economic union, so only in the case of economy (and monetary policy in case of EMU) European Union have full jurisdiction. European Union does not have lot of competencies in international relations and defence over Commons security and defence policy (2002). Accordant the There are three types of competencies of European Union and its member

70 states – strict competences of the Union, shared competences and competences of member states. Article 3 and Article 4 of the Treaty on European Union give list of these competences. According to these articles the Union have exclusive competence in (a) customs union; (b) the establishing of the competition rules necessary for the functioning of the internal market; (c) monetary policy for the Member States whose currency is the euro; (d) the conservation of marine biological resources under the common fisheries policy; (e) common commercial policy (Treaty of Lisbon). It is important to stress that European Union, also, have executive competences for concussing any international agreement. European Union exclusive competences include also conclusion of international agreements, in case when those agreements influence on some legislative acts of the Union (for example relations with WTO). European Union and member states share some competences. Shared competence between the European Union and the member states applies in the following principal areas: (a) internal market; (b) social policy, for the aspects defined in this Treaty; (c) economic, social and territorial cohesion; (d) agriculture and fisheries, excluding the conservation of marine biological resources; (e) environment; (f) consumer protection; (g) transport; (h) trans-European networks; (i) energy; (j) area of freedom, security and justice;(k) common safety concerns in public health matters, for the aspects defined in the Treaty on European Union (Treaty of Lisbon, Article 3). In some areas as research, technology and space, competences of European Union are defined by special programmes of implementation. The similar situation is with some areas of development cooperation and humanitarian aid. (Treaty of Lisbon, Article 3). As we see form this quotes from the Treaty, majority of European Union competencies have lot connections with economical basis form the time of forming the European Communities. It is important also to stress that except agencies of European Union, all other executive factions of the European Union are transferred to member states.

One of the most important and current problems in the European Union public finance concerns its system of own resources and fiscal federalism. Budget of European Union (European Commission in general) obtains most of its revenue indirectly by payments from treasuries of member states (which are totally opposed than in Germany and Switzerland). There is tree different types of this payments from different sources – traditional own resources, VAT based resources and GNI based resources (more than ¾ of all budget of the Union). Because of that we can conclude that this kind of budget of European Union make it depended on member states which case in normal federations is not really. We cannot really

71 say that European Union is not independent in budgetary matters, but for sure it is subordinated to member states.

Provision for the designated representatives of distinct regional views within the federal policy-making institutions, usually provided by the particular form of the federal second chamber: We already spoke about this provision when we deal with case studies of Germany and Switzerland. German Bundesrat is typical example of federal second chamber where federal legislation is directly affected by members of the Bundesrat which are elected by governments of the Lander. In European case, the Council of the European Union is the third of the seven institutions of the European Union as listed in the Treaty on European Union (Treaty of Lisbon) which is part of the bicameral legislature of European Union. The Council is representing interests of the executives (governments) of European Union member states. According to separation of powers, the other legislative body being the European Parliament. The Council of European Union is composed of several configurations of twenty-eight national ministers. Configuration depends on the existing topic for negotiation, specific legislature etc. So basically, ministers of the government of the member states are members of the council, if their portfolio includes policy area which is on the agenda on that meeting of the council, together with the related Commissioner which contribute of the sections of the Council, but do not vote.

Here we will again compare the Council of European Union with really good example of upper house of German parliament – the Bundesrat. As we mentioned before, Bundesrat members are members of Governments of the Lander of Germany. This is totally similar in the case of Council. These individuals can be recalled by Landers governments as it is case of governments of member’s states of the Union. In Bundesrat and also in the Council members are representatives of states and they obtain they state role in the house. Elections in German Lands and also member states of European Union are not coordinated and not in the same time, that means that representatives of the governments in the Bundesrat / Council can come and go in any time. Important feature of both Bundesrat and Council is that it cannot be dissolved. One thing differ Council of the European Union and Bundesrat. Members of Bundesrat do not vary on the topic which is discussed in the house. In the Council, members come and go according to the topic of legislation which is discuses and they are experts in.

But still way of functioning of the Council of the European Union is really similar. As we mention before voting powers differ in Bundesrat form Land to Land (Chapter 5, Table 5.2.).

Voting in the Council of the European Union complicated, and can give us lot of troubles by examine it. So just in brief we will explain voting according to the Treaties and also give some important remarks for Qualified Majority Voting (QMV) in European Union. From the beginning of establishing the Communities according to Article 148 of the Treaty establishing the European Economic Community acts of the Council required for their adoption need to have “12 votes (if the act was proposed by the Commission), or 12 votes by at least 4 member states (if the act was not proposed by the Commission)” (Treaty of establishing EEC). In those time maximum of votes for 6 founding members was 17. The Treaty allocated the votes as 4 votes for France, Germany and Italy as the biggest states in the Communities, 2 votes from Belgium and Netherlands and 1 vote for Luxembourg. Under this system, Luxembourg had no voting power for acts proposed by the Commission. It is clear that each minister in the Council of the European Union represents their national government. They vote under so called qualified majority voting rules. These rules are defined in the Treaty of Nice. For any proposal to pass the supporting side needs to surpass three criteria:

1. 50% (if proposal was made by the Commission) or 67% (all other cases) of the members states, 2. 74% of the voting weights, 3. 62% of the EU population (this criterion is only checked upon request by a Council member) (Treaty of Nice).

In the following table (Table 6.1.) we will list the European Union member states and its voting powers according to Treaty of Nice.

Member state Population Votes Germany 82.54m 29 France 59.64m 29 UK 59.33m 29 Italy 57.32m 29 Spain 41.55m 27 Poland 38.22m 27

Romania 21.77m 14 Netherlands 16.19m 13 Greece 11.01m 12 Portugal 10.41m 12 Belgium 10.36m 12 Czech Rep. 10.20m 12 Hungary 10.14m 12 Sweden 8.94m 10 Austria 8.08m 10 Bulgaria 7.85m 10 Denmark 5.38m 7 Slovakia 5.38m 7 Finland 5.21m 7 Ireland 3.96m 7 Lithuania 3.46m 7 Latvia 2.33m 4 Slovenia 2.00m 4 Estonia 1.36m 4 Cyprus 0.72m 4 Luxembourg 0.45m 4 Malta 0.40m 3 EU 484.20m 345 Table 6.1. Comparison of voting weights. Population in millions as of 1 January 2003 from Bovagnet (2004). Excluding Croatia with population around 4.28m and 7 votes.

It is also important to mention that according to the Treaty of Lisbon, voting in the Council of European Union will be managed by the treaty of Nice till 31 October 2014. But until 31 March 2017 any member statute still can request voting under nice rules, even Lisbon rules are in power. According to new Lisbon rules, conditions of qualified majority are the following:

 Majority of countries: 55%, comprising at least 15 of them, if acting on a proposal from the Commission or from the High Representative, or else 72%, and  Majority of population: 65% (Treaty of Lisbon, Article 16).

How this looks in practice – the Qualified Majority Voting is simple a rule which is used as a means of some kind of pressure for consensus in the institutions such as Council of European Union. Really big majority of all decisions of council are made by unanimous voting.

Before we end with this section, we can explain one more institution of European Union, which is the Comity of the Regions (CoR), which is some kind of assembly of local and regional representatives that provides sub-national authorities (different regions, counties, provinces, municipalities and cities) with a direct voice within the European Unions’ institutional framework. Established in 1994, the Committee of the Regions was set up to address two main issues. Firstly, about three quarters of European Union legislation is implemented at local or regional level, so it made sense for local and regional representatives to have a say in the development of new European Union’s laws. Secondly, there were concerns that there was a widening gap between the public and the process of European integration; involving the elected level of government closest to the citizens was one way of closing the gap. Whit this institution, European Union try to include more and more subnational factors in policy making on level on Union.

A supreme written constitution not unilaterally amendable and requiring the consent of a significant proportion of the constituent units - We spoke about this in Chapter 5. According to both German and Swiss constitutions, changing and amending the constitution cannot be done without special majority of federal states. According to Swiss Constitution there is several ways of changing and amending constitution. All ways of changing required a double majority of people and cantons foe this kind of changes. In case of Federal Republic of Germany special majority in both federal chambers – Bundestag and Bundesrat, is needed for any change. That means that majority of state governments of German Lander need to be in favour of constitutional changes. Changing and amending of European treaties can be viewed as changing a constitution of nay federal state.

In European case, treaty cannot be unilaterally amendable. It needs to be consent of significant part of member states. In case of European Union, revision procedures are described in Article 48 of the Treaty on European Union. The Treaty of Lisbon relaxes the revision procedure whilst improving its attachment to fundamental social rights. It amends the ordinary revision procedure slightly by increasing the participation of the European Parliament and national Parliaments. Above all, the Treaty of Lisbon creates two types of

75 simplified procedure in order to facilitate the revision of certain provisions of the Treaties (Treaty of Lisbon). No meter witch procedure is taken; members of European Union must adopt the revisions. Ordinary revision of European treaties is made by amendments. The Intergovernmental conference of the governments of European member states can adopt some proposals for amendments. This proposals need to be adapted by consensus in the Intergovernmental conference. But in Treaty of Lisbon there is new practice of organising a European Convection before the Intergovernmental Conference. Convention is made of representatives of the head of states, commission and European parliament. The Convention needs to examine proposals for amendments and give recommendations to the Conference. In this case more democratic way is used by involving more actors from parliaments of the states and European parliament.

An umpire (in the forms of courts or provision for referendums) to rule on disputes between governments: In German and Swiss cases Constitution and Basic Law declare implicitly supremacy of the federal constitution (and law). Both federations find a way for adjudicate disputes and resolve conflict between federal and sub-federal governments by different mechanisms – on first place courts and on second elections and in Swiss case referendum. In German case Constitutional court in Karlsruhe can rule on the validity of federal and laws of the Länder, but in Swiss case Federal Tribunal have limited competence just on cantonal legislative acts. In Swiss case validity of federal laws is determined directly by the voters through instruments of direct democracy.

Among all competences of European court of Justice is that this court settles legal disputes between governments of member states and European Union’s institutions. In case of European Union where there is a conflict between the laws of member states and European Union law, European Union law prevails, because "a subsequent unilateral act incompatible with the concept of the Community cannot prevail" (Costa v ENEL (1964)26). There is two important procedures of the court we need to stress - Preliminary ruling procedure when national court ask European Court of justice to ask the Court of Justice for advice due to prevent misinterpretation of European law in member state. The second procedure which is important to stress is procedure for failure to fulfil an obligation when Commission or even

26 Flaminio Costa v ENEL [1964] ECR 585 (6/64) was a decision of the European Court of Justice which established the supremacy of European Union law over the laws of its member states. 76 some other member state can start this procedure agents any member state which failing to fulfil its obligations under European law.

Processes and institutions to facilitate intergovernmental collaboration for those areas where governmental responsibilities are shared or inevitably overlap: Federalism requires consultation, cooperation and coordination between governments. Any federation and sub states need to support each other in the fulfilment of their responsibilities under the constitution. It is normal that federation give administrative and judicial assistance to the sub entities. In both Switzerland and Germany there is lot of examples both horizontal and vertical cooperation. We can divide them in two types – institutional and functional. Institutional relations are relations be twin institutions of federal state such as Bundesrat with governments of the Lander. On the other hand, it could be also some kind of intergovernmental conferences and administrative networks of the issues on horizontal level, among the same ministers of the Länder. Various intergovernmental institutions exist in Switzerland, and according to some authors “federalism without Bern” was really important in making new constitution in 1998. In both countries constitutions stipulates that any disputes between sub states or between states and the federation are will be resolved through negotiation or mediation, and in last instance on the hinges court of federation.

Cooperation between the institutions of European Union and institutions of member states is essential to the proper functioning of the European Union. Indeed, the Court of Justice has recognized the duty of sincere cooperation as a general principle of Community law. While sincere cooperation is not explicitly mentioned in the Treaties, this does not affect its status as a requirement with which all member states and European institutions must comply (The principle of cooperation between the institutions, Europa.eu).

Member States have a duty of sincere cooperation with the European Union institutions. Accordingly, they are asked to support European Union activities and not to hinder their proper functioning. This involves, for example:

 punishing legal entities for violating the legislations of the European Union on all territories of European union equally;  monitoring the European Union law on the territories of meeker states,  cooperating with the Commission in the event of inaction on the part of the Council  Enable the European Union to fulfil its responsibilities (Treaty of Lisbon).

Article 4 of the Treaty of European Union invites the European Union and the Member States to respect and assist each other in carrying out tasks which flow from the Treaties. According to this article European Union shall respect the equality of member states before the Treaties as well as their national identities, inherent in their fundamental structures, political and constitutional, inclusive of regional and local self-government.

(I) Territorial character of federations: With this requirement of defining federation we want to show that federation need to be distinguishing from other models we mention before – such as federal political systems which allocate autonomy to minority groups such as ethnic, religious or language communities who live dispersed throughout a territory. In German and Swiss case we have clear territorial character of federations. All distribution and allocation is done by sub federal unities which are territorially defended.

In European Union, allocation is strict to the member states. European Union respect their essential state functions, including ensuring the territorial integrity of the states, maintaining law and order and safeguarding national security. Treaty of the European Union give us a list of territories of European Union looks this way: Finland, Sweden, Estonia, Latvia, Lithuania, Poland, Slovakia, Czech Republic, Hungary, Slovenia, Austria, Germany, Denmark, The Netherlands, Belgium, Luxemburg, France, United Kingdom, Ireland, Croatia, Cyprus, Greece, Italy, Malta, Spain, Portugal, Canary Islands, Madeira, Azores, Guadeloupe, French Guiana, Reunion, Mayotte. Here is obvious that Treaty look on some territories especially some dependences and overseas territories of Spain, France, and Portugal because of their special status. But even these entities are territories. The law of European Union stay territorially oriented. All other policies of the Union are implemented to member states respectfully, on their territories.

(II) Existence of democratic government and democratic state structure: Both Germany and Switzerland in their constitutional acts underline that they are countries of representative democracy. This democracy in legislative processes in both countries (and especially Switzerland under existence of popular referendum on legislative acts) exists both in federal level and also on the level on sub-state units. Both countries follow the system of tree branches of government, together with lot of independent regulatory bodies, offices of ombudsman and so on. In case of European Union, for sure we have all member states which are democratic countries. Democracy is an important value for the European Union, so it is

78 one of obligations for states which want to be members of the Union. But is European Union democratic?

The institutions of the European Union are the seven principal decision making bodies of the European Union. They are, as listed in Article 13 of the Treaty on European Union: the European Parliament, the European Council, the Council of the European Union, the European Commission, the Court of Justice of the European Union, the European Central Bank and the Court of Auditors. The European Union follows the system of tree branches of government and according to the Treaty of European Union functioning of the Union shall be founded on representative democracy. Citizens are directly represented at Union level in the European Parliament. Every citizen shall have the right to participate in the democratic life of the Union. Decisions shall be taken as openly and as closely as possible to the citizen (Treaty of Lisbon, Article 8).

However, nowadays the European Union is criticized for lacking democratic structures although it keeps on expanding its authority. And to the other side the European Union has suffered for the lack of democracy. Democratic deficit in European Union has emerged as a topic in past decade but debate on this becomes really big in past several years during the crisis. Some authors argue that it is because different historical background of formation of European Union, and also those Unions as an entity is sui generis system. There are different opinions both among scalars and politicians about this issue. Debate emerge in the time of more and more plovers were given to European institutions (with the Amsterdam and Maastricht Treaty, and especially to the Council), and also in this time of global economic crisis. In the last chapter we will deal with proposals how to make European Union more democratic, in terms of federalist thinking.

Here, this thesis will shortly deal with democratic deficit in European Union. These section findings will helps when we will try to give some proposals for more federal European Union in next chapter. The European Union have two sources of democracy – European Parliament, where citizens of whole Union are represented, and Council of European Union (also with European Council) where citizens of member states are represented. But also there are arguments that also all other bodies of Union suffer form democratic deficit (for example Commission by initiating legislation). There two aspects of democratic deficit we need to stress - absence of public accountability or as a crisis of legitimacy (Moravcsik 2008: 340). In general part of citizens thinks that all decisions in

Brussels are made by euro-technocrats and commission. Reality is totally different. In past two decades social component which result low acceptance of European elections form citizens directly influence democratic legitimacy of the European Parliament. Also we need to stress that on the other side the internal decision-making and appointment procedures remain predominantly committed to the pattern of an international organisation, as before, the structure of the European Union essentially follows the principle of the equality of states (2009, German Constitutional Court). With that more power are in the hands of Council. Every new treaty, from Maastricht, Amsterdam, Nice and Lisbon, try to improve democratic legitimacy of the institutions of European Union. New mechanisms are implemented in the Treaty which can improve visibility of democratic procedures. Moravcsik (2008: 340) arguers that there is no empirical evidence of democratic deficit in European Union, whether we define it as an absence of public accountability or as a crisis of legitimacy. Other authors (Crombez 2003), find that democratic deficit may exist owing to a lack of transparency and an excess of delegation in the legislative process.

(III) Right of secession of one or more sub entities: Both Swiss and German constitutions don’t mention any way of secession sub federal units. During the history just constitutions of USSR and SFR Yugoslavia mentioned such a scenario. Many authors thing that there are several possibilities for that. One of reasons that can weaken up whole federation, another one can be lack of confidence among federal and sub federal level, but also among members.

But this does not mean that there is not chance that any sub entity leaves federation. According to legal articles, leaving of both German and Swiss federation can be done under the normal procedure of changing constitution. So after barging between not only federal government and sub federal state, but also other member states. Reason for this is requirement of majority of both citizens and member states or in German case in both federal chambers for changing the constitution.

According to Article 5027 of Treaty on European Union any member state may decide to withdraw from the Union in accordance with its own constitutional requirements (vote in Parliament, or referendum). If members state makes that kind of decision and decides to

27 Consolidated version of the Treaty on European Union/Title VI: Final Provisions 80 withdraw shall notify the European Council of its intention (Treaty of European Union). For these cases the Council issued some kind of guideline for such a cases. If some state wants to withdraw for the Union, state and Union need to start negotiations on it. After negotiations and agreement, it is important that both Union and state make arrangement for future cooperation. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. Basically it means, that European Union, and ex member state need to make agreement on future relationship, which can be based on some form which exist (European Economic Area, Association Agreement, Agreement Establishing an Association, Custom Union or similar). This agreement shall be concluded on behalf of the Union by the Council, acting by a qualified majority voting, after being debated and accepted in the European Parliament. Whole procedure need to last at least two years (same for accession agreement). It is important to stress that members of European Council and also had of state witch belong to the state witch want to withdraw will not participate in the discussions in front of those institutions. In the Council Qualified Majority voting under Lisbon rule is needed. In the Treaty on European Union there is also mentioning of the procedure of rejoining the European Union. State which has withdrawn from the Union, and asks again to rejoin, shell be subject of the procedure of accession.

Common structural features of a federations European Union

Two orders of government, federal level European Union have direct and indirect 1 and state level, each acting directly on their effect on citizens citizens

A formal constitutional distribution of legislative and executive authority and the Clear separation of competences, but 2 allocation of revenue sources between the subordination to member states in two orders of government ensuring some budgetary affairs areas of genuine autonomy for each order

Provision for the designated representatives of distinct regional views within the federal Council of European Union as a second 3 policy-making institutions, usually provided chamber by the particular form of the federal second chamber

A supreme written constitution not Compromise and ratifications by member 4 unilaterally amendable and requiring the states consent of a significant proportion of the

constituent units

An umpire (in the forms of courts or 5 provision for referendums) to rule on Court of Justice of European Union disputes between governments

Processes and institutions to facilitate intergovernmental collaboration for those 6 Bilateral relations of the member states areas where governmental responsibilities are shared or inevitably overlap

7 (I) Territorial character of federations Strict territoriality

Existence of democratic government and 8 (II) Slight democratic deficit democratic state structure

Right on secession of one or more sub 9 (III) Withdraw from the Union possible entities

Table 6.2. Standard characteristics of a federation applied to European Union

At the end we can conclude that according to Watts’ common structural features of federations European Union fulfil several of them, but some of them are close to fulfilment and some of them are partly fulfilled. It is important once again to underline that European Union started its existence as some form of international organisation, and trough the time emerged in supranational entity (or sui generis entity) similar to federation. According to this standard characteristic we can conclude that European Union have some characteristic fulfilled in a way that it is not obvious or convincing. But, authors investigation shows that some of functions or parts of institutional design of the union is totally federal like (main example is Council as a second chamber). Even institutional design of European Union is federal-like, and main goal of Union is democracy, problem of the European Union remain lack of democracy inside of institutions, together with so much power in the hands of Council. Council remain dominant institution of the European Union, which reduces the significance of real democratic institution which is European Parliament.

In next chapter author will give proposals taken from this comparative analysis which can led as to more democratic and more federal Europe.

7. Lessons from federal experience for the European Union

From Joschka Fisher speech, over the Treaty of Nice and the Treaty of Lisbon, until now lot of studies have been printed which advocates different concepts of the European Union and its future. We can distinguish two branches of thinkers on finalité politique – the federalists and the communalists. Some of them try to find a better solution for working of institutions of the European Union, and on the other side there is lot of them who want to provide some kind of finalité politique for the European Union in form of the federation. In this chapter we will draw a normative conclusion not only from the federalist paradigm of integration but especially from lessons from cases of Switzerland and Germany.

It is known that in European Union sovereignty rights are shared and divided between supranational, national and subnational levels. From a perspective of federalism, and having in mind comparison with Bundesrat, a conclusion is that the European Council is too dominant body. Dominance of territorial inserts in institution design of European Union is really high if compare it to functional infests. But, members of the Council, heads of states and governments of member states are no longer able to deal with important issues without taking in account public opinion of their citizens. In recent years, crisis in Eurozone turned the European Union into different kind of union we know before, which is more visible after the last European Elections in 2014. Situation in member states, anti federalism and euro scepticism, are visible more than ever (especially in some big member states, United Kingdom and France, but also in lack of interest in European politics in small member states).

In Chapter 4, where theoretical part of integration is given, Moravcsik stress that there are tree circumstances that he sees as stating point why the European Union is weak and narrow federation (or even confederation). It is important to stress that Moravcsik findings comes from his comparable trough which stresses the United States federalism as ideal model (republican-presidential model according to Burges). Even we did not take the United States model into account, it is important to mention these tree circumstances, which can help in

83 giving better proposal for the European Union in sense of federalism. Mainly, Moravcsik find out that the European Union lacks in three important circumstances:

(1) Lack of military, police force and any security; (2) Absence of common identity and (3) Existence of strong nation-states prior establishing the European Union.

Here in master’s thesis, we will give brief explanation of these three circumstances.

First one is a lack of military and any security forces in the European Union which is one of the main arguments from any Anglo-American scientist on the European Union. It is important to stress that in 1950s some European countries (establishers of the communities) want to integrate militaries of their contraries by establishing the European Defence Community. Because of lack of support in France, this initiative did not pass. In those time existence of common European military forces was not really been viewed as some important thing, due the existing of the North Atlantic Treaty Organisation (NATO) and highly economical basis of the European Communities. But form the Common Foreign and Security Policy of the European Union (CSDP) things improve. In this point of existence the European Union, from 2004, have the European Defence an agency which works as a body of the Common Foreign and Security Policy with primary role is to foster European defence cooperation. It is important to underline, that forerunners of the agency were not part of the European (Communities) organizational structure (Western European Union and its agencies). From forming of the European Union Military Staff as a department of the European Union which is responsible for supervising operations of military forces of the European Union (EUFOR: Eurocorps, the European Gendarmerie Force, European Maritime Force and EU Battlegroups) things started to become real on the field. It is clear that in the future, it will be possible that this trend continues.

In the second place it is an absence of common identity in the European Union, which remains biggest sociological problem of the euro-federalists. Historically some societies try to promote common European identity, and identified more on lest with Europe. It is important to stress those European institutions by agreements and Treaties give the best to promote common European identity. On the first place, introducing European citizenship, by the Maastricht Treaty in 1992. It is some kind of supplementary national citizenship which affords special rights to citizens (four freedoms and right to vote in the elections of European Parliament). This identity is promoted by various programmes of cooperation in any sense,

84 various cultural and education programs, such as the Erasmus exchange program or the European Song Contents. Not only the European Union, but also the Council of Europe works on this meter. Also European symbols which are widely used not only in Europe, but in countries witch accept European identity (Western Balkans, or even states on the East such as Moldova, Ukraine and Georgia). The European flag is “symbol par excellence of a united Europe and European identity” (Flag, Europa.eu). On initiative of first elected Parliament, the Council stressed the importance of promoting the European image and identity in the eyes of its citizens and the world by using flag as a symbol. On the other side, it need to be underlined that the European symbols are not part of any European treaty (it was part of unsuccessful project of the European Constitution). But, all of these things are not enough for making strong European identity. Lack of identity can be closely related to not interest of European citizens to politics in the European Unions, which leads to crisis of legitimacy of European institutions. Next and last circumstances are closely related to the identity meter, and together they are maybe the biggest issue for the European Union.

That is a prior existence of strong national states in Europe, which is view as third circumstance. From the Peace of Westphalia thought Revolutions in 1948 and all wars in the nineteenth and twentieth century European states gain lot of strengthen in their national identities – with all their political, geographical, and also cultural and ethno-linguistic performances. Even all federations existing in Europe (Germany, Switzerland, Austria and Belgium) gain strong national state identity. On the contrary in other federal models (republican-presidential and Westminster one) sub federal entities were not national states before forming federation. But for example in German case we have strong states even before federation. It is acceptable to see integration of the European Union as process of transformation some economical community into the political union (some kind of state entity). This process is driven by treaties and all the time increasing of the European competencies. At the end, strong national states in Europe, and way how they operate and see its own interests, do not allow to the political elites and citizens to easy give away competencies. Here especially competencies which makes state strong – security, foreign policy and monetary and fiscal policy. Making of Eurozone with the European Central Bank can be underline as the only final successful project of overcoming strong national state interests.

By taking in account Moravcsik findings we will upgrade them by taking lessons from German and Swiss models of federations. From both German and Swiss model of the 85 federation, the European Union can learn so many things. First, as we know the Swiss approach to federation is bottom up. The Swiss federation was developed step by step, as the European one, but after turbulent period Switzerland find its way to finalité politique. In Swiss model considerable political space is left to the citizens. On the German side, it is federation made by constitutional treaty, where federal units, by their elected governments participate in decision making on the federal level. Both federal government and governments of sub states have equal chances to participate in legislative work. At the end we can give two solutions for more functional and the European Union, in sense of federation. The first proposal to the European Union will be closer the German model. This proposal is implemented through two very important elements which deal mostly with institutional design of the Union. The first is to empower the European Parliament and the other is transformation of the Council of the European Union in the second chamber. By this we will answer important question of lack of democracy in European institutions with rearranging European institutions to more federal solution. The second proposal is closer to the European Union as we know today. It derives from the Swiss model of higher participation of citizens in decision making processes on level of the federal state. By this we will answer the issue of accepting diversity of member states, their identities.

The possible lack of democracy in the European institutions, take in account legislative process in them. Idea is to give more powers to the European Parliament, to make normal legislative institution of it and the other one is to reform the Council of the European Union in second chamber of bicameral European Parliament. These improvements are made under the influence of the German model of federation. A federation composed of political units that are also parliamentary democracies having regarding the functioning of its institutions must follow the same logic as well as their component parts. From the beginning of establishing common European institutions, idea of strong European Parliament which will be made of elected representatives was rally strong. This was main idea of several founding fathers of European Union, especially federalist thinker Altiero Spinelli. The biggest criticism on the European Parliament we know today is its secondary role in legislative process in the European Union. This fact is sharply different from what we are used to in modern democratic societies, and especially in Germany where Bundestag is main legislative body of the country. By changing the number of contracts, and the draft constitution, the institution remains the weakest of all European institutions. On the other side the Council of the European Union became the most powerful institution of the Union. With increasing of

86 powers of the Parliament and decreasing some powers of the Council, the European Union will much more take institutional design of Germany which may be improve democratic deficit.

Citizens of Switzerland participate directly in democratic processes in the country. Frequent elections and referendums in Switzerland make common political space for all cantons and citizens – even Swiss citizens are highly differed from socio-cultural side, in the same way as citizens of the European Union. Still European citizens do not find European elections so important, even they know that some important competences depends on European institutions. With building a common political space, strong European identity will be raised. With this Europeans will open so many possibilities for a bottom up approach for building better federation. This is core of way how government of Switzerland works. When citizens really feel European that will encourage European institutions, and institutions of member states to encourage a redistribution and transmission of competencies. This redistribution can be done both at European level, but also to level of member states. This behaviour will encourage and make more powerful European institutions, but also straightening the legitimacy of the decisions of European institutions. In the basis, European citizens will feel more community by sharing activities, projects and similar things. This will also answer the problem of common social level. Free movement of goods, services, persons and financial capital within a common market really miss such a component. By building common political space, common social level will be the next option for the Union.

The European Union respectively can move towards federation in both German and Swiss model or make some combination of two of them. If we take the German model (which Frenchs politicians from the beginning reject), we will have transformation of the European Council into upper chamber of the European Parliament and increasing of influence of European Parliament. Legislative acts of European Parliament, and so far, will be implemented by member states executives. If European federation takes the Swiss model some competencies which are transferred to level of the European Union will be executed by European institutions them self. On the other side member states can have really big autonomy in their work, in competences they have, together with autonomy of their legislative and executive work. On the other hand, really advantage for member states in this case will be that taxation remains in the hands of member states.

At the end we will underline that majority of comparative approaches which was made before, always look model of the United States federalism as a ideal in comparison with the European Union. This approach neglects the fact that the European Union is unique entity with totally different history of establishing. Having that in mind our comparative approach was totally different with lot of lessons witch European Union can use in its future.

Conclusion

From ex Prime Minister of United Kingdom Winston Churchill speech in Zurich in 1949, till re-launching the discussion on the future shape of the European order, by ex German Foreign Minister, Joschka Fischer, European federation is a motive for Europe’s finalité politique. A big question in this very moment is a potential future shape of the European Union in federal sense. This master thesis tries to help to understand where the European Union is now and what solutions it can take form existing two federal systems in Europe with the longest tradition of federalism.

Here providing of definitive answers to the research questions form Introduction of this master’s thesis will be given.

What European federations have in common and what are differences between them? European federations – Federal Republic of Germany and Swiss Confederation, do not take any pattern which is visible in the Anglo-Saxon world (and the rest of the world where these models of federation emerged). Germany and Switzerland defer in several important areas. First one is a type of federal system according to internal structure where German is a typical case of cooperative federal state, and Switzerland is closely to a dual model of federal state. Still in both federations influence of sub federal entities on decision making in federal level is high. In Germany that influence is trough the second chamber – Bundesrat, and in Switzerland not just trough the Council of State but also trough, according to tradition, popular vote of the citizens in referendum. A lot of characteristic of both countries can be useful for any future decomposition of the European Union into a fully federal entity.

Can we define the European Union as federation? What are hidden characteristic of the European Union which are federal like? What are similarities between the European Union and German or Swiss model of federation? In the vision of the great thinker and teacher of federalism Daniel Elazar, “Europe is already in federalism” (Elazar 1979: 3). But Elazar underline that in his findings, federalism as a principle, should not be confused with manifestations of federation (federal state) which Europe is still not in its full capacities. That

89 is why in this master’s thesis introducing the new term “hidden federation” is made. “Hidden federation” describes momentum where the European Union is now. These hidden characteristics are basically connected to an institution framework of the European Union, which is tartly federal like.

European Union share similar characteristic to hybrid federations of European which are a basis of so called “sociological basis of federation”. Especially Switzerland it is miscue of ethnic, language and religious differences, together with high communal traditions. Germany in the other side is the country with a strong local identity of the citizens. Both countries emerged in high developed full capacity federations. One other thing which is common is an institutional character of the European Union, which is already a combination of German sharing of competences and Swiss separation of competences. Institutions of European Union follow the pattern of Germany and Switzerland, as democratic federations, follow separation of powers and other features of any sovereign state. In one point Unions is German like – in existence of the Council of the European Union, as “hidden” a second chamber of the European Parliament.

What European Union miss to become real federation according to a definition of federation? The European Union emerges in a kind of “hidden federation” but not so effective and democratic. European citizens are sceptics about political decisions which are made in Brussels. The European Union needs changes, to work properly and democratically. So according to investigation and several empirical proves of various authors, European Union misses several things to become full federal structure. Among several we can mention common defence, common foreign policy, stronger European identity, but also more democratic decision making in European institutions.

This master’s thesis finds that the European Union is already federal like entity. A conclusion is that strong representation of member states’ interest at Union level together with some reformulating of the powers, competencies, together with giving of new ones to the European Parliament, can be starting point of building better European Union and really important step in promoting federal values. A conclusion is that the European Union needs to make redistribution of competences, complemented by a strengthening solidarity and fiscal policy, build more democratic institutions, and avoid problems with legitimacy. The most important issue, lack of democracy, will be avoided firstly by reformulations and putting the

European Parliament and Council of European union in equal position as the first and second chamber of future European Parliament.

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