customers of region A. It may be easier for A and B if such a solution is worked out by a federal arbiter than by means of bilateral agreement. Central governments in turn may be keen to take on such a role, as it allows them to increase the scope of their activities and to serve a publicly felt need. Federal courts may welcome this development as well, as they can now rule on a larger number of competencies.
However, central governments will never absorb the full implementing authority in these policy fields. This would force them to invest considerable amounts of money in setting up the necessary bureaucracies and in bearing the full political costs of potential implementation failure. Conversely, the regions may be keen on retaining some of the authority for implementation as well. This way, they would retain some say in centrally regulated policies and be able to shift the blame onto the central governments whenever poli- cies fail. Furthermore, regions which previously imposed a lower standard (region B in the above example) may be particularly keen on implementing these policies. This may provide them with some leeway in applying the higher standards which region A or the federal government proposed.
Consequently, in a large number of policy areas in which the central government assumed regulatory competence, the regions retain implementing authority. In sum, in the field of regulatory policies, the distribution of competencies would be in many respects reminiscent of ‘administrative federalism’ (Kelemen 2004: 1–22).
Table 4.1 Distribution of competencies in Western Europe’s multilayered setting
BEL ESP GER ÖST SUI UK
Constitutional Distribution of powers (legislation) International (economic) relations
Defence F C F F F C
Treaty implementation F/R C F/R F/R F C
Citizenship F C FL/RA FL/RA F-Frame C
Immigration (into federation) F C FL/RA F C C
Immigration (between F C FL/RA F R C
regions)
Dominant pattern F C FL/RA F F C
Macroeconomic stabilization (fiscal and monetary policies) Functioning of economic union
Trade and commerce F C FL/RA F F C
External trade F/R C F C
Interstate trade F
Intrastate trade F
Currency F C F F F C
Banking F C FL/RA F F/R C
Bankruptcy C C
Dominant pattern F C FL/RA F F
Taxation
Customs/Excise F C F F F C
Corporate tax F C FL/RA F F C
Personal income tax F C FL/RA F F/R C
Sales tax/VAT F C FL/RA F F C
Debt and borrowing
Federal public debt F C F F F C
Foreign borrowing F/R C/R F/R F F/R C
Domestic borrowing F/R C/R F/R F/R C
Dominant pattern F C FL/RA F F/R C
Allocative or developmental programmes Transportation and
communication
Roads and bridges R C/R FL/RA F/R F/R R
Railways F R F F F C
Air F/R C/R F F C
Telecommunications F/R C F F F C
Postal services F C F F F C
Broadcasting R C F/R F/R F/R C
Continued
Table 4.1 Continued
BEL ESP GER ÖST SUI UK
Allocative or developmental programmes Agriculture
Agriculture R C FL/RA FL/RA F/R R
Fisheries R C/R FL/RA R
Resources
Mineral resources R C F C
Nuclear energy F C F F F C
Education
Education and research C/R R
Primary and secondary R R R F/R R
education
Post-secondary education R C F-Frame F F/R R
R FL/RA
Research and development F/R FL/RA F/R FL/RA R
Cultural affairs
Culture R C/R R R R
Language F/R C/R R R FL/RA R
Environmental policy
Environment F/R C/RA FL/RA F/R FL/RA R
C/R Law and security
Civil law F C FL/RA F/R F R
Criminal law F C FL/RA F/R F R
Organization of the courts F C FL/RA F R R
Police (internal security) F C/R FL/RA F/R R C
R
Local Government R C/R R R R R
Dominant pattern F or R FL/RA F or R FL/RA C or R or F or R Health policy
Health care and sanitation F/R R F/R R R
Hospitals F C/R FL/RA FL/RA FL/RA R
Social policy
Unemployment insurance F C FL/RA F FL/RA C
Income security (subsistence) F C FL/RA F F C
Social services R C/R R FL/RA R
Pensions F C F F FL/RA C
Dominant pattern F or R C FL/RA F or R FL/RA C or R Legend: F⫽Federal; C⫽Central; R⫽Regional (in Belgium, Community or Region):
FL/RA⫽Federal legislation and regional administration; F-Frame⫽Federal framework legislation.
Source: General distribution of categories and data for Austria, German and Spain based on Herperger 1991: 49–54, and Watts 1996: 118–22; data for Belgium based on Alen and Muylle 2003;
data for UK (Scotland only) based on Bogdanor 1999: 204, and Hazell 2000a: 4.
3.1. Testing the predictive value of the legislative and functional theories of federalism
Which of the alternative theories is best suited to predict the distribution of competencies in Western Europe’s federal or regionalized states? Let us con- sider the two theories which make claims with regard to the distribution of powers in the widest range of policies: the functional and the legislative the- ory. Table 4.1 clearly illustrates that, in Western Europe, the functional the- ory of federalism has a higher predictive value than the legislative theory.
There is a clear dominance of the central governments in steering the most important instruments of macroeconomic stabilization. Monetary policies are certainly set at the central level but, in general (Switzerland is an excep- tion), the centre also controls the legislative instruments for setting or rais- ing the most important taxes. Typically, these are the personal income, corporate income and Value Added Taxes (VAT). Although the centre may not ‘collect’ (administrate or implement) these taxes itself, it uses their revenues to finance some important social (redistributive programmes) in health and social policy. The centre clearly dominates core welfare legisla- tion, particularly in unemployment and pensions. However, in some federa- tions (Austria, Switzerland and Germany) the regions retain an important role in implementing these policies. Furthermore, in the UK, Scotland has acquired legislative and implementing powers in health policy (but remains dependent upon the centre for financing these policies). This puts Scotland at odds with the other cases, where health is at best a shared policy.
As the functional theory of federalism would have it, the regions are much more active in education and cultural policies. The cross-border nature of some transport mechanisms (for instance air transport) is more likely to gen- erate central regulatory control than that of others (bus transport, for instance). In this sense, the centre only assumes developmental functions in policies which, by their very nature, require substantive cross-border coordination.
Obviously, the empirical findings beg the question why we find so little evidence in support of the legislative theory of federalism. I put forward two main reasons for why this is the case.
First, Paul Peterson developed his two theories with the American context in mind. The American political system has some institutional features which make the predicted outcome of the legislative theory more likely than in Western Europe. The US presidential system is marked by a loose party structure and comparatively strong legislatures which are elected by the first- past-the-post system (Weaver and Rockman 1993). For legislators ‘first past the post’ acts as an incentive to seek ‘a personal vote’ (Ferejohn, Cain and Fiorina 1987). They can do this by approving developmental projects that respond to the specific desires of the constituents whom they represent and by avoiding policies which disperse benefits. In the central legislature,
constituencies coincide with the states or regions (Senate) or subsets thereof (House of Representatives). Weakly disciplined parties cannot prevent indi- vidual legislators from adopting such ‘pork barrel’ attitudes. With the excep- tion of the UK all or most of the central and regional legislatures of our cases are elected by a system of proportional representation, usually involving a strong list component. The majority (Switzerland stands out as an excep- tion) are parliamentary. Leaving aside Switzerland, they are marked by rela- tively strong party discipline and cohesion. Therefore, there is less scope to pursue policies that are exclusively seeking regional constituency benefits.
Second, the theory of legislative federalism does not entirely think through the impact of rational-choice attitudes on all policy actors, central and regional alike. Short-term electoral benefits may stimulate central legis- lators to increase developmental programmes and to reduce redistributive programmes. However, regional legislators are concerned with their re-election as well. As electoral districts for regional (legislative) elections are normally subsets of districts for central (legislative) elections, members of a regional legislature could seek to blame federal instead of regional policy-makers for reducing service standards or increasing overall levels of taxation. If they communicate this message successfully, the aggregate group of regional voters may be persuaded to vote against federal legislators for their
‘shirking’ behaviour on the occasion of the first next general elections (Gilette 2001: 126). More developmental programmes may be kept at the regional level, and the centre may be inclined to uphold a stronger commitment to redistribution.
3.2. Some observations on the predictive value of the regulatory theory of federalism
The legislative theory of federalism seems of limited value for explaining how competencies in Western Europe’s multilayered context unfold.
Kelemen’s ‘regulatory federalism’ builds on similar ‘rational-choice’ assump- tions, but arrives at different outcomes. Although his empirical analysis does not consider large-scale developmental or redistributive programmes, it pre- dicts a distribution of regulatory competencies in which the centre and the regions settle for an ‘administrative’ form of federalism. In general, Germany, Switzerland and Austria have adopted such a distribution of tasks, even in the non-regulatory policies that were not touched upon in his com- parative study (Kelemen 2004). However, would we find a similar distribu- tion of competence in Spain, Belgium and the UK?
At one level, there is reason to believe we would. Spain, Belgium and the UK display a ‘centrifugal’ form of federalism or decentralization. Because of their multinational character, the central governments of these states may be willing to cede implementing authority, without giving up legislative control as well. This is most obvious in the case of Spain and Britain. In both states, the centre is associated with a majority nation (the Castilians,
the English). Conversely, the regions or minority nations may not wish to acquire legislative and implementing authority at once. This would make them vulnerable to policy failure at a moment when they still lack experi- ence in the implementation of policy and have to build up an autonomously recruited regional bureaucracy.
In contrast, there is good reason to assume that the regions of these multi- national states may wish to expand their role in regulatory politics in time.
As minority nations, they seek to maximize their levels of political auton- omy, possibly more at home than in the centre. In multinational states, the minority nations may contest the authority of the state and seek to capture full control of policy measures which are still shared with the centre. In Belgium, recurrent Flemish demands to increase the ‘homogeneity of policy packages’ (to be understood as the further devolution of policy sections in their regulatory, fiscal andadministrative dimensions) prove this point. In a multinational context, to obtain implementing authority may just be a stepping-stone towards acquiring corresponding regulatory autonomy.
There is insufficient space to discuss the distribution of environmental competencies for each of our multinational states, let alone for all the cases in this study. Yet, we can have a quick look at the distribution of environ- mental legislation to see whether the regulatory theory of federalism holds.
Environmental policy is highly regulatory and it is also one of the policies which Kelemen considered in his original study. On that basis, the Spanish and Belgian cases provide mixed evidence for the regulatory theory of federalism.
On the whole, the Spanish case supports the regulatory theory. In envi- ronmental policies, the central state enacts framework legislation, but entrusts the regions with the responsibility to implement these rules.
Regions must comply with the minimum environmental standards which are set by the centre, but they can move beyond the ‘lowest common denominator’. Tanja Börzel has demonstrated that the Spanish regions accepted and even transferred some of their regulatory powers in environ- mental policy back to the centre. Yet, the Spanish regions retained the right to implement these policies and secured a larger contribution of the centre in the financing of these policies. However, this ‘shift of competence’ was driven by the increasing ‘Europeanization’ of environmental regulation in the first place. Furthermore, the regions did not happily consent to an erosion of their competences in environmental regulation. For some time then, they refused to implement central environmental rules, they blocked any communication with the centre and they even sought redress with the Constitutional Court. In this matter, the court sided more often with the centre. Furthermore, domestic environmental groups vocalized their protest against such acts of regional unresponsiveness. Even business groups sided occasionally with the centre because they deplored the high levels of regula- tory uncertainty. Eventually, the regions changed tactics when they realized
that a more cooperative approach could address their grievances without also weakening their influence in the central and European policy arenas (Börzel 2002: 178–208).
However, in Belgium, the responsibility for the regulatory andadministra- tive aspects of most environmental policies is in regional hands. Their imple- mentation is mainly funded by central grants or regional user charges.
Compared with Spain, the EU is less of a ‘centralizing’ than a ‘coordinating force’. The Belgian regions can represent Belgium at the EU (and interna- tional) levels in matters that fall within their area of competence. Therefore, there is no desire to centralize regulatory control of environmental policies.
One recent exception pertains to the regulation of noise level standards caused by air traffic. Air traffic in and around Brussels international airport affects the quality of life of citizens who live in three different regions:
Brussels, Flanders and Wallonia (Gelders and Facon 2004). The absence of one common standard has sparked judicial litigation and the demand by at least one region for recentralizing the right to determine environmental noise levels. Arguably, in the presence of state-wide Belgian parties, the centre might have been compelled to push this matter further. Belgium lacks state-wide parties. Hence, in Belgium the distribution of environmental policies does not entirely conform with the regulatory theory of federalism.
3.3. Whither the European Union? A brief intermezzo
The purpose of this book is to analyse Western Europe’s domestic systems of multilevel governance and to treat them as much as possible in isolation from the European or international context. Yet, in some respects, the EU dimension cannot be ignored. However, the EU fits well into the functional and regulatory theories of federalism. The European Union hits the member- states and the regions of its federal or regionalized states in two important respects.
First, the scale of the West European nation-states in the globalized econ- omy is (or may be deemed) too small to pursue autonomist monetary or macroeconomic stabilization objectives. Therefore, with the exception of Switzerland and the UK, each of the above states has transferred its monetary policies to a European Central Bank (ECB) and subjected itself to a strict reg- ulatory framework. That framework constrains its fiscal and budgetary options (i.e. the Maastricht criteria and the provisions emerging from the contested Growth and Stability Pact). Although the UK and Switzerland do not participate in the common currency, their current trade patterns warrant a close monitoring of the fiscal policies of the euro member-states and the ECB’s monetary strategy.
The EU’s involvement in monetary and macroeconomic stabilization con- firms the general thrust of the functional theory of federalism. In a federal state, these functions would normally be centralized. Therefore, their eleva- tion to the supranational level follows the conviction of some member-states
that these macroeconomic policies are better served by the European than the member-state levels. This said, the EU is scarcely involved in redistributive, let alone developmental, policies. The Common Agricultural Policy and the expanding Regional Policy funds may be considered as a form of European redistribution, but the scale of these programmes is very limited compared with the vast sums which member-state governments pour into their welfare or social security programmes (for a comparison, see Scharpf 1999; McKay 2001). Furthermore, the EU lacks proper fiscal resources (own taxation) to fund these programmes.
Second, apart from establishing the general budgetary framework within which the euro member-states must operate, the EU is also a very active regu- lator, primarily in areas of interstate commerce, trade or, as documented above, the environment. In their analysis of MLG in Europe, Liesbet Hooghe and Gary Marks documented the increasing relevance of the EU in areas of economic policy, social/industrial policy, legal-constitutional policy (justice and home affairs, policing and citizenship) and international relations/
external security. In each of these four policy sections, the EU has become an important regulator, even in some respects (for instance, external commer- cial relations) the only one (Hooghe and Marks 2001: 187–9). However, the regulatory impact of the EU should be put into context. For the EU has turned into an active regulator, particularly in the four policy sections men- tioned above, but it still relies on the goodwill of the member-states or their regions for implementing most of these regulatory policies (Börzel and Risse 2000; Kelemen 2000, 2004; Swenden 2004a). In this sense, the EU exempli- fies ‘administrative federalism’ par excellence, and it is no wonder that this peculiar distribution of functions was incorporated into Kelemen’s regula- tory theory of federalism.
4. The scope of federalism: expenditure and tax