Subsidiarity: Meeting the challenge of a changing world

In an era of globalisation, the EU policy mechanism of subsidiarity offers European citizens an opportunity to reassert their democratic power. As the influence of Europe’s individual nation states continues to wane, it could also give policymakers the power to deal with the global challenges they face.

So why is everyone frightened of it?

When subsidiarity was introduced into European affairs in 1992, the world was a very different place. There was no Internet for ordinary people, limited mobile use, the full force of globalisation had not yet made itself felt and China was still struggling to enter the international economy. Then, as now, subsidiarity could be given a simple definition – moving decision-making as close to the citizen as possible. However, our world has continued to change and the implementation of subsidiarity, since it does not exist in a vacuum, needs to change with it.

Facing up to historic changes

Subsidiarity is not abstract an argument, but a fundamental question about how the European Union and its member states take the decisions that are needed to help improve the living conditions and demands of citizens in an interconnected world. How do we find the right governance for living together sustainably on one planet? For me, this fundamental question is framed by two historical changes that are taking place today. The first is one of economic power, which quite clearly is heading east and is symbolised by the rise of China. To a certain extent, Europeans (and Americans for that matter) have to accept that their centuries-old predominance is fading. Though the European Union is still an economic powerhouse, its population represents only 7% of the world’s total – and in a few years this figure will fall to 6%. The second historical change, which is actually linked to the first, is the challenge of climate change. One effect of globalisation is that more and more people are taking part in modern life and getting their share of the economic cake. However, this will inevitably aggravate the plight of the environment. To be sustainable, we need to adapt the traditional western economic model; for if the resource consumption of 7 billion people were like that of the average American – life as we know it would not be possible.

Securing the power to act

So these two fundamental changes – the shifting balance of economic power and the stewardship of the environment – are now confronting our policymakers and our political system. And this is where we come to the role of subsidiarity in today’s globalised world. Though the issues themselves are complex, the reality is very simple: for certain questions, our European nation states are just too small and for other questions they are too big. Take Europe’s dealings with China as an illustration of the former. China is now the biggest market for many car manufacturers and has played a large part in the recent success of German producers such as Volkswagen, Daimler-Benz and BMW. However, China still doesn’t allow a foreign corporation to have a majority holding in whatever company is established on its soil. By contrast, Chinese corporations are able to take over European companies, as has been the case with Swedish carmaker Volvo. So China can unilaterally change the rules of the game. Meanwhile, the experience of high-speed trains and also with solar panels has been that sharing European technology eventually leads to its adoption by Chinese companies – and in a context where equal market access and equal competition is not guaranteed.

However, when it comes to attempting to negotiate with China on such issues, no one European nation state alone is able to exert sufficient influence at an inter-governmental level with a country of 1.4 billion people. A higher level, the European level, is clearly needed. But to take more decisions in common and to strengthen the European negotiating position, real European democracy is needed. Governments would have to accept that they could be outvoted in key areas of political and economic interest in order to create that strength of purpose at the negotiating table. So the debate about European democracy is actually a debate about changes of national sovereignty that we have to accept as small countries in a big world.

Local support for the environment

By the same token, when it comes to fighting pollution and climate change, a lot can be achieved at the local and regional levels – since it involves rethinking public transport, promoting sustainable mobility rather than car dependency, renovating buildings to make them more energy efficient, setting up a house recycling system, etc. So subsidiarity means two things: on the one hand, it means bringing decision-making as near to the citizens as possible – and by looking closely, you often discover just how much can be achieved at a local or regional level. It is reassuring that recent OECD studies prove that countries which devolve more competences to the regional level enjoy an improved overall economic development. On the other hand, subsidiarity also means shifting certain competences to a higher level where results can be delivered. The obvious model for this would be an increase in supranational powers for key areas of common interest at a European Union level, an increase in majority voting in order to provide policymakers with a workable mandate, and a greater role for a modernised and more representative European Parliament. Such a model would also feature an acceleration of decentralisation to the regional level and strong local self-government – thereby strengthening the role of local democracy.

However, this is where things start to get difficult. This is where subsidiarity theory comes up against realpolitik. Our stumbling block is the legacy of the European nation state. We are all historically educated to think in national terms and to respect the competences that have evolved over the centuries, even if they become dysfunctional. Not surprisingly, a political process that would involve national actors giving up certain roles is very difficult. It wouldn’t be easy for a German Chancellor or a French President to say ‘I can’t give you an answer’. So those who represent the existing system have no incentive to engage in a debate about the functional limits of our national structures – and this runs very deep. Even certain decisions of the German Constitutional Court can be read as a power play between the European and the national court.

Breaking the subsidiarity taboo

Today, nobody in European politics dares to address this issue clearly – due its extreme sensitivity with the public, and especially the media. It is clearly unpalatable. But somehow this debate on subsidiarity has to be put on the table, because otherwise you will only get answers by default that are then perceived as being non-democratic – the response to the eurozone crisis being a notable example. Due to the incoherency of the political system, key questions were not answered at a European level. It should be the competence of the European Parliament to decide about the support needed to keep the euro area together, rather than any dependence on a national parliament such as the Bundestag. With a stronger European Parliament, every voice would have been heard and the EU would not be in a situation where a minority can determine the outcome. A vote on a European Stability Mechanism is a decision on the extent to which the consequences of the international financial crisis are shouldered by Greek and Portugese citizens, for example, and how much is shared with taxpayers from countries who are contributing with guarantees. Similar decisions are needed about the conditions under which national policies are developed and implemented to overcome structural weaknesses. At the moment there is an undemocratic situation, in the sense that some national actors are able to put their policy choice at the expense of the majority of Europeans.

The benefits of greater local democracy

That said, the subsidiarity question is not just about moving more decision-making to the supra-national level: the local and regional aspect is ultimately just as important. Without that link with the electorate, European citizens risk feeling disenfranchised by their own political system. The solution here is decentralisation and local self-government. A foundation stone of the European construct – it’s worth noting that the Regional Policy is the European Union’s second largest distributor of funds after the Common Agricultural Policy – EU integration and enlargement has always meant a stronger role for the local and regional level. However, this has not always been completed in a coherent way. To take only one example: while Spain has given its autonomous regions certain key competences, a degree of incoherence remains. Despite the power located at regional level, there is still a dependency of the local and intermediate county levels on the national level. Spain aside, though, it’s important for people to know what falls within the remit of their city and regional authority and what lies elsewhere. Local democracy needs clear responsibilities and structures.

Clearly, subsidiarity at the local level is not just about connecting voters with those who deliver city services – and holding them accountable at election time. It’s a way of providing people with a tangible sense of democracy in action – a sense of power at the ballot box that is now being undermined at a national level because of this growing inability of nation states to exert the same influence as in the past in an interconnected world. Globalisation is indeed lifting many people out of poverty and into a better way of life – but it can also create a conflict with democracy. This is where greater subsidiarity at the local level can give an added benefit – by offsetting the sense of powerlessness that a lot of citizens feel. If mayors and regional presidents were given clearer competences, then at least for these politicians a higher democratic accountability can be assured. Citizens could see that democracy still works.