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Decentralization – the Need of the Hour for Europe

Submitted by on 27 Nov 2013 – 10:07

By Professor Franz Schausberger, Professor for Modern History, Member of the Committee of the Regions of Europe, former Governor of Land Salzburg


The 2009 Lisbon Treaty has strengthened the subsidiarity principle, enshrined local and regional identity, encouraging several Member States to carry out institutional reforms to enhance decentralization. In general terms, the degree of decentralization has therefore increased in many countries in recent years.

Although EU Member States are under no obligation to choose a particular model for their institutional structure or for decentralization, it has to be pointed out that the EU treaties recognise and respect local and regional self-government, showing that the EU sees local and regional democracy as one of the foundations of its own legitimacy.

However, the effects of the financial and economic crisis that erupted in 2009 and the following debt crisis had negative effects on the process of boosting decentralization.

Hence we have to note a contrary trend in some Member States, in which the financial autonomy of local and regional authorities or the right to self-government at sub-national levels has been substantially curtailed.

National and European public debates in the context of the current economic and financial crisis were often combined with the erroneous assumption that the behaviour of sub-national authorities is preventing national budget targets from being hit, despite the national states’ main responsibilities for the crisis.

Financial and debt crisis are seriously threatening the real economy of cities and regions.

In some Member States the situation is used as an excuse to further centralise powers, to devolve powers without providing corresponding financial resources or to rationalise, reduce or abolish sub-national bodies altogether, which will end up weakening local and regional democracy, a trend that is based on the mistaken assumption that transferring public services to the central government level will make them more cost-effective.

On the contrary, the relationship between national governments and the European institutions has profoundly changed. The national states are not able to solve their budget problems autonomously, so the budget surveillance power is shifted more and more to Brussels.

As a reaction, in many of the Member States the economic criteria in the current economic and financial crisis have distorted the democratic foundations of regional and local autonomy. This violates the European principle of subsidiarity.

Specificly in times of crisis, the benefits of regionalization and decentralization should be used to overcome these severe problems: in many policy areas, decentralised executives are significantly more efficient, both from the point of view of cost and in terms of the quality of services and their proximity to the citizens.

Local and regional authorities, as grassroots institutions, are aware of people’s needs and are best placed to define and respond to their needs at a time of crisis.

In these difficult times it is important for the people of Europe to identify with their regions and cities, which play a particularly crucial role as a counterweight to the increasingly international, global and therefore anonymous, nature of job markets and economic relations.

Strong regional and local authorities can make a key contribution to reduce the current social and economic disparities between Europe’s regions, helping to reduce the negative consequences of a rural exodus from poor regions to big cities. There is a positive connection between decentralization and successful, sustainable European regional policy.

As studies are showing, cohesion policy produces better results in devolved Member States. Cohesion policy is implemented particularly inefficiently in centralised Member States since centralised administrations are often unfamiliar with regional problems and challenges and therefore the sub-national authorities should be much better involved in the management of the funds.

Functioning local and regional administrations and effective decentralization should be based on the principles of subsidiarity, proportionality and multilevel governance and conducted through democratically elected and fully representative bodies that are accountable to their people.

In this respect, all EU Member States are called on to establish an appropriate legal framework for their sub-national authorities at the highest possible level.

The European Commission’s recent report on public finances in the Economic and Monetary Union concerns financial decentralization and highlights the fact that own resources, i.e. independently raised sub-national taxes, are a more efficient funding tool than transfers from central government.

Regions that are primarily financed from their own resources manage the available funds in a responsible manner and therefore have solid public finances. Therefore the Member States should replace transfer payments, as far as possible, with own financial resources.

These are numerous good reasons for strengthening regions and municipalities in Europe. It is essential that any vision for the future of Europe includes the regional and local levels.

I think a Convention on these subjects is necessary, including greater recognition of local and regional democracy in future treaties, considering to what extent decentralization together with effective local and regional self-government could become a condition for EU membership.

In this sense decentralization has to be put on the European agenda.