Year LXVI, 2024, Single Issue
The Role of the European Institutions
in Governing the Balance Between
Sovereignty and Subsidiarity*
GIULIA ROSSOLILLO
Introduction.
The relationship between sovereignty and subsidiarity in the functioning of the European Union is a complex issue, which I would like to address in general terms, by seeking to demonstrate why the principle of subsidiarity has not been fully implemented within the Union despite being envisaged by the Treaties, and also by exploring the link between the failure to implement this principle and the institutional structure and operating mechanisms of the Union itself.
My considerations here will be based on a broad definition of subsidiarity, understood as the principle according to which, in a political system (especially a multi-level one), decisions should be taken at the lowest level (i.e., the one closest to the citizens) at which effective measures can be adopted.
As this definition implies, the principle of subsidiarity pertains to two spheres: the economic sphere, in which it serves to identify the level of government capable of adopting the most effective decision, and the sphere of democracy, wherein it is entrusted with ensuring that the said decision is adopted at the lowest possible level, so as to allow citizens greater participation in decision-making and greater control over decision-makers.[1]
Subsidiarity and the Criteria of Effectiveness, Democracy and Political Accountability.
The Treaties establishing the European Union make explicit reference to subsidiarity. Article 5, paragraph 3 TEU states that: ‘Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.’[2] Under the terms of Article 5 TEU, this principle applies only to the Union’s shared competences and thus to those areas in which, under the Treaty, both the Union and the states can intervene. Within these areas, the principle of subsidiarity serves to establish, on a case-by-case basis, which of the two levels of power is entitled to exercise the competence in question.
This provision, being concerned with ensuring that the decision is taken by the level of government best able to ensure its effectiveness, clearly focuses on economic subsidiarity. The prioritisation of this aspect of subsidiarity should not surprise us, given the importance that has always been attached, within the EU, to the objective of creating a single market.[3]
However, the Treaties, requiring that decisions be taken as close as possible to the citizens affected by them, also apply the principle of subsidiarity in its democratic sense. Indeed, Article 1 TEU, albeit not actually mentioning subsidiarity, reads ‘This Treaty marks a new stage in the process of creating an ever closer union among the peoples of Europe, in which decisions are taken as openly as possible and as closely as possible to the citizen.’
Economic subsidiarity (allowing effective decisions) and democratic subsidiarity are closely interrelated. Indeed, the principle of subsidiarity, to be fully applied, requires that decisions be taken by an authority (level of government) that has all the means necessary to exercise its competences effectively, and therefore has the financial resources and tools needed to implement them; however, it also requires that, within a given political community, all decisions adopted at a certain level of government be taken by subjects who are politically accountable to the citizens of that community, and therefore answerable to them both for the decisions and for their implementation. In other words, the principle of subsidiarity, if applied only partially, i.e., excluding the democratic dimension, would be weakened by the citizens’ powerlessness to sanction any violation of it.
The idea of political accountability as a criterion of subsidiarity clearly emerges from the jurisprudence of the United States Supreme Court relating to the Tenth Amendment of the American Constitution, according to which ‘The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved for the States respectively, or for the people.’ Although this provision sets out the principle of attribution rather than that of subsidiarity, it has been interpreted in an interesting way by case law. In particular, in a 1993[4] ruling relating to the identification of radioactive waste disposal sites, the Supreme Court of the United States identified a link between the attribution of decision-making power to a certain level of government and the issues of democratic legitimacy and accountability to the citizens.
The issue being considered was whether the United States Congress (i.e., the federal level of government) should have the power to oblige states to adopt legislation regulating the disposal of radioactive material. According to the Supreme Court, which rejected this hypothesis, the existence of this power would constitute an infringement of the Tenth Amendment. Moreover, the fact that the legislation would not actually be adopted at the federal level (even though the federal government would be forcing the states to adopt it) would have the effect of separating decision-making power from political responsibility, making the state authorities accountable for a decision that actually stemmed from the will of the federal government, while at the same time keeping the latter, the true source of the obligation, completely free from political responsibility, given that it could not be blamed, by the citizens, for adopting the decision. In short, it was decreed that introduction of the aforementioned power would generate an inconsistency that would undermine the federal structure.
Subsidiarity and the Institutional Structure of the European Union.
How are these reflections relevant to the European Union? Can we say that the principle of subsidiarity, as outlined here, applies to the functioning of the Union?
To answer these questions, we must consider whether the EU, when faced with issues demanding solutions at a supranational level, is able to act both effectively and in a manner that complies with the above-illustrated need for correspondence between the level of decision-making and that of political accountability, in short whether the principle of subsidiarity is respected in both its economic and its democratic dimension.
I would argue that the answer is no.
To begin with, there are essentially two limits to the action of the European Union that, by compromising its effectiveness, prevent the principle of economic subsidiarity from being implemented. The first is linked to the economic model underlying the integration process, which still heavily influences the functioning of the EU. In fact, the process of European unification was originally undertaken with the idea of creating an economic integration organisation that would give rise to a single market, but have no political head, and therefore no government. In this context, it was perfectly acceptable for the executive role to fall to a technical body, the Commission, whose members were chosen for their expertise. Even though the organisation’s initial structure has evolved significantly over the years, the European Parliament’s role has been strengthened, the Union has been assigned new competences, and a single currency has been created, the lack of a democratically legitimised government has remained a constant.
The Union therefore has no political head, and when political decisions are necessary, it is the European Council (made up of the heads of state and government) that adopts them, by consensus or unanimously. However, adopting these decisions is a lengthy process that is conditioned by the states’ right of veto. As a result, whenever decisions are reached — sometimes this proves impossible —, they tend to be weak, compromise solutions. Furthermore, although these decisions are adopted at a European level, they are not the result of a unitary European will, but rather the sum of the wills of the states, which have undertaken to decide jointly on certain issues that are now beyond their individual reach. This however does not equate with the emergence of a true common interest at supranational level.
The second limit is that the Union lacks the resources necessary to exercise its competences efficiently and effectively. The EU budget is, as we know, quite limited and almost entirely absorbed by agricultural (including environment) policy and cohesion policy. Furthermore, not only is it insufficient to address the challenges of recent years (as we saw during the Covid crisis, and have since seen in the wake of Russia’s invasion of Ukraine), it is largely financed by state resources and decided unanimously by the member states. It is therefore extremely difficult to increase the size of the budget (no state wants to deprive itself of additional resources), and the EU therefore remains almost totally dependent, financially, on its member states. Efficient European policies are, of course, impossible to implement without financial autonomy[5] and sufficient funds. Full respect for the principle of subsidiarity would therefore require a correspondence between the level of exercise of each competence and the ability to independently procure the resources necessary to exercise it.
Moving on, it is clear to see that these elements also impact the democratic side of subsidiarity. In fact, when a decision is adopted at European level by the European Council or the Council, there is a discrepancy between the level at which it is reached and the democratic legitimacy and accountability of the body that actually adopts it. Indeed, while the governments’ representatives in the Council and European Council are democratically legitimised at national level and answerable to the electorate of their respective states, they are not subject to any form of democratic control at European level. Consequently, even though the decisions taken by these bodies are attributed to the European authority, they are actually the result of compromises reached between the national governments, which however are not answerable for them at either national level (as accountability is obscured by the need for compromise, and it is also in the states’ interest to attribute it to Europe) or at European level.[6] This leaves the citizens with no control over the decision-maker (a situation that would be rectified were the European Council to be replaced by a government democratically legitimised by the European Parliament), and therefore means that the principle of democratic subsidiarity is not respected either.
Subsidiarity and the Functionalist Nature of the European Integration Process.
The factors highlighted above also have repercussions on the member states’ capacity to exercise their own competences, and for this reason limit the implementation of the principle of subsidiarity at state level, too. As previously indicated, the functionalist character of the integration process and the very genesis of the European Union were decisive in this regard.
In fact, the European Economic Community was founded on the assumption that while the Union’s institutions would be given the powers necessary to create the single market, the states would retain those relating to other areas. This division of powers, however, soon proved to be illusory, as the need to regulate the market and abolish internal barriers also made it necessary to create a single currency and forms of cooperation also in other areas (such as foreign policy), outside the market.
The resulting distribution of competences and functions was therefore not the result of a constitutional design based on a rational choice and inspired by the principle of subsidiarity, but stemmed, rather, from the need to address, as they arose, the needs of the moment and also the balance of power between the actors in the process.[7]
As here pointed out, the attempt to use an institutional structure designed for the management of a market to achieve different objectives has left the European authorities unable to address many challenges at supranational level. This, in turn, has limited the member states’ ability both to manage national policies and to pursue decentralisation internally. Being unable to count on a European level of government equipped with the institutional mechanisms and resources necessary to address challenges of a continental dimension, the member states have in fact had to continue trying to manage issues that are now beyond the scope of their capabilities. Consequently, they remain unable to free up the resources that would allow them to focus on problems of a national or subnational dimension. All this amounts to a way of exercising competences that completely fails to comply with the principle of subsidiarity. Where subsidiarity would require European-level decisions, the European institutions lack the necessary tools and decision-making mechanisms, leaving the member states as a whole still bearing the burden of setting and finding the required resources. The problem is, this mechanism absorbs resources and the decision-making capacity needed to address the issues whose size dictates that they should, according to the principle of subsidiarity, be dealt with at national level.[8] In short, the capacity to address problems effectively is lacking both at national and at European level.
The reforms needed to implement the principle of subsidiarity.
So, if the objective is to create a European Union that is capable of acting and giving voice to the interests of its citizens, and at the same time divided into multiple levels of government whose competences are decided in accordance with the principle of subsidiarity, then the European Union requires profound reform. In short, it is necessary to modify, in a democratic direction, the decision-making mechanisms of the EU in all the areas in which the intergovernmental method is still applied, transfer to the Union those competences that the states are no longer able to manage, grant the Union financial autonomy (the ability to fund itself), and give it a government that is democratically legitimised by the European Parliament. Many of these reforms are contained in the proposal for the reform of the Treaties that the European Parliament approved last November. In this proposal, the Parliament calls for the opening of a Convention to address the need to profoundly change the current structure of the European Union. It is time for the governments to heed this appeal.
[*] This text is based on an address given during a debate on Sovereignty and Subsidiarity: Two Souls of European federalism held in Ferrara on 13 April 2020 and organised by the Debate Office of the European Federalist Movement.
[1] In this regard, see for all M. Bartl, The Way We Do Europe: Subsidiarity and the Substantive Democratic Deficit, European Law Journal, 21 (2015), p. 25.
[2] The principle of subsidiarity was also set out in similar terms in the 1984 Draft Treaty establishing the European Union (also known as the ‘Spinelli draft’), Article 12 of which stated that in the areas of shared competence, the ‘Union shall only act to carry out those tasks which may be undertaken more effectively in common than by the Member States acting separately, in particular those whose execution requires action by the Union because their dimension or effects extend beyond national frontiers.’ The Single European Act, instead, mentioned this principle only with regard to environmental matters, and it was not until the Maastricht Treaty that a general formulation similar to that found in the Spinelli draft was adopted. On the relationship between the insufficiency of state action and the added value of Union action, see K. Lenaerts, The Principle of Subsidiarity and the Environment in the European Union: Keeping the Balance of Federalism, Fordham International Law Journal, 17 n. 4 (1993), p. 877.
[3] According to M. Bartl, The Way We Do Europe: …, op. cit., the current formulation of the principle of subsidiarity and its essentially economic connotation are linked to the functionalist nature of the European integration process: ‘In a functional entity, goals and objectives are considered fixed, and the only possible realm of disagreement concerns the choice of the most efficient level of accomplishing predetermined tasks. In contrast, the democratic dimension of subsidiarity is concerned with the citizens’ political self-determination.’
[4] New York v. United States, 505 U.S. 144, 112 S. Ct. 2408, 120 L. Ed.2d 120 (1992). On this point, cf. G.A. Bermann, Taking Subsidiarity Seriously: Federalism in the European Community and the United States, Columbia Law Review, 94 n. 2 (1994) pp. 420 ff.
[5] For further remarks in this direction, referring to environmental matters, see A. Jordan, T. Jeppersen, EU Environmental Policy: Adapting to the Principle of Subsidiarity?, European Environment, 10 n. 2 (2000), p. 68, according to whom ‘the adoption of market-based instruments is limited because of the reluctance of just about all states to surrender control of tax affairs to supranational bodies.’
[6] On this point, see G.A. Bermann, Taking Subsidiarity Seriously: …, op. cit., pp. 397 and 453.
[7] For more in this direction, see. A. Jordan, T. Jeppersen, EU Environmental Policy: …., op. cit., p. 73. On this point, see also G.A. Bermann, Taking Subsidiarity Seriously: …, op. cit., p. 354.
[8] The recently reformed Stability and Growth Pact provides a clear illustration of this point. The decision (dictated by the opposing forces in the field rather than by a rational choice) to create a single currency while leaving the management of fiscal and economic policy to the member states has in effect forced the latter, through the Stability Pact, to impose rigid parameters on themselves as a way to prevent excessive divergences between national economic and fiscal policies from undermining the single currency. However, these parameters, by forcing the states (particularly the heavily indebted ones) to adopt austerity policies, have impaired their ability to use resources and make the investments they need to make in order to exercise their powers effectively and profitably.