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Finding the Balance between Domestic 'Federalism by Devolution' and EU 'Federalism by Integration': The Case of Italy during the Euro Crisis

Constitutions
European Union
Federalism
Regionalism
Emanuele Massetti
Università degli Studi di Trento
Emanuele Massetti
Università degli Studi di Trento

Abstract

Federal systems can be created by two opposite processes. In the classical sense, with the US as a paradigmatic example, federal systems are established by a process of integration of different states (or polities) into one sovereign political system in which the constituent territorial units maintain important self-rule and shared-rule powers. However, like in the well-known case of Belgium, federal systems can also emerge from processes of devolution of powers from the center to territorial units in previously unitary or regionalized systems. Several EU member states have gone some way through both these two processes at the same time, whereby their internal process of 'federalization by devolution' has coexisted with EU's project of 'federalization by integration'. Frictions in this three-level game (regions, member-states and EU) are not new and were initially experienced most in already well-established federations, such as Germany. However, since the inception of the so called 'sovereign debt crisis' in the EU (also called ‘Euro crisis’), tensions between European integration and domestic devolution have become particularly visible in countries, such Italy and Spain, that are still in the process of federalization and, at the same time, very near the epicenter of the Euro crisis. This paper explores these tensions in the case of Italy. The paper focuses on the political handling and the relative outcomes of contrasting pressures: on the one hand, the devolution pressure coming from the project of domestic federalism advocated by some political parties and regional institutions and, on the other hand, the centralizing pressure coming from the recent developments of European integration in response to the Euro crisis (i.e. Fiscal Compact, harmonization of fiscal policy and banking). The analysis focuses on the unfortunate experience of the domestic ‘fiscal federalist’ reform, whose implementation was attempted precisely during the emergence of the Euro crisis (2010-11) and on the recently approved constitutional reforms (January 2016), which will be submitted to popular referendum for the final confirmation or rejection later this year.