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Our argument can be summarised in four points:
The current debate centring on whether or not the European Union should evolve into a federal system misses the mark. We have demonstrated that the EU already constitutes an emerging federation.
As far as material sovereignty or action capacities are concerned, the EU represents a multi-level system of governance with negotiating networks encompassing public and private actors spanning various sub-national, national, and supra-national levels. Federalism provides a constitutional language that conceptualises dividing and sharing formal sovereignty in such a multi-level system of governance.
The real issue, then, is whether the emerging European federation should be primarily based on a system of shared or divided sovereignty. We have discussed both concepts in reference to German co-operative federalism as compared to US dual federalism. The German model is based on a strong representation of the state executives at federal level and on shared competences which include a joint tax system. The US model divides competences between the two levels of governance and, thus, neither requires a strong representation of state executives at federal level nor a strong federal `taxation and spending' capacity.
While the US model might appeal to those afraid of a strong European federal state, the emerging European federation has, so far, evolved along the lines of a shared, rather than a divided, sovereignty. `Americanising' the EU essentially implies the abolition of the European Council and the Council of the European Union as the representation of Member State governments at European level. Otherwise, the European federation would degenerate into a mere confederation of states-a `finalité politique' which Joschka Fischer certainly does not have in mind.
On balance, we would advocate a model of shared sovereignty for the emerging European federation, because it matches the multi-level governance structure of the current European order more closely. Such a model could incorporate elements of the US system, in particular, a directly elected president of the European government which would enormously increase its legitimacy. However, and unlike the US system, the European parliament should provide for a second chamber with a strong representation of Member State governments. Such a system combines several advantages over a federal system with a strict separation of powers:
a) It resonates with the current institutional design of the European Union which is fundamentally based on shared, rather than divided, competences as well as on a strong representation of the Member State governments at European level. The Council of the European Union, for example, could easily evolve into the second chamber of the European Parliament.
b) Dis-entangling and dividing up the formal sovereignty between the EU level and the Member States fundamentally contradicts the multi-level governance character of the EU, where material sovereignty (or action capacities) are shared in networks across and between the various levels. It also contradicts fundamental features of the modern welfare state in Europe.
c) A directly elected president of the European government would legitimate and partly counterbalance the dominance of executive interests in the European federation. The president could also generate the legitimacy required for an incremental increase in the `taxation and spending' capacity of the European Union as a crucial feature which would distinguish a true federation from the current EU.
One problem remains: where does the democratic legitimacy of such a European federation come from, given the heterogeneity and plurality of European societies which are unlikely to evolve into the political and social solidarity usually identified with a nation-state? Although another paper would be necessary to tackle this problem, we submit that framing the issue in terms of the presence or absence of a European demos misses the point. Instead, the real problem is the lack of a strong European party system which integrates diverse ideological, social, and political interests along functional, rather than territorial, lines. The German party system, for example, counterbalances the territorially defined executive dominance of co-operative federalism. In the absence of a vertically integrated party system, we need to rely on the legitimacy-generating functions of governance networks of public-private partnerships. These transnational networks allow for the incorporation of diverse functional interests and may constitute spaces of public deliberation provided that membership and participation are open and inclusive, rather than closed and exclusive, and that decision-making processes are transparent and subject to public scrutiny.