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Democracy and Federalism in the EU: A Liberal Contractualist Perspective

What powers should small states hold in the European Union? Currently small states play important roles within the federal elements of the Union, but their future status is at stake. In a federation there are two tiers of government: a central unit and regional sub-units. Each tier enjoys final authority with regards to some functions, without reference to the preferences of the other (RIKER 1993, 509). Moreover, regional governments are represented in the central decision-making processes (KING 1993). In confederal arrangements sub-units can veto decisions, and even leave the confederation. Hence in federal procedures, both member states and directly elected representatives play political roles. To be sure, the EU may never become a full federation: territorial and functional internal sovereignty is not forthcoming (cf. SCHMITTER, this volume). Nevertheless, starting with the European Coal and Steel Community, the European institutions have had strong federal elements. Historically, in the case of Europe as in other systems of pooled sovereignty, the prominent role of states is no doubt due to the actual "social contracts" among formally equal sovereign members. As an example, consider the High Authority of the Coal and Steel Community, not strictly an intergovernmental executive but responsible to a European Common Assembly. The High Authority was also checked by the intergovernmental Council of Ministers. Introduced by the Netherlands, this feature ensured the interests of smaller states within the community (PINDER 1993). As general economic integration followed in the EEC in 1958, the executive body - the Commission - continued to enjoy broad powers, yet clearly under the control of the Council of Ministers.The Single European Act of 1985 introduced federal elements: majority voting in the Council enhanced its ability to remove market distortions, and the European Parliament gained in power. The 1992 Maastricht Treaty on European Union added to the central powers by increasing Community influence over currency, and by establishing the economic and monetary union (EMU) by 1999.Thus the central EU institutions enjoy supra-national powers, authorized to enact laws and regulations even contrary to the will of individual governments. State governments have given up some sovereign powers, since central decisions may override them. All the same, states retain the power to block common decisions, sometimes through requirements of unanimity, and sometimes through qualified majority voting. And the Principle of Subsidiarity confirms a commitment to the sovereignty of member states, limiting the competencies of central institutions, albeit in unspecified ways.