The Solution is Competition among Institutions

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Although Giovanni Bognetti's perplexities about the feasibility of a European Constitution with a radically liberal and market-oriented flavour are well founded, Frank Vibert's project is also open to substantial criticism. A «European minimal state» or confederation such as the one hypothesized by Vibert would fail to combat the powerful interest groups which jeopardise the liberty of the system. It is true, though, that all thrusts towards centralisation need to be contained. In this respect, the theory of competitive federalism provides a number of interesting pointers. The main priority is to offer incentives both to vertical competition (between top European institutions and national states, and between states and regions) and horizontal competition (among the national states themselves and among regions). Hence the need to learn from the experiences of other federal states. First of all, it is necessary to make a clear-cut distinction between the competences of European institutions and those of national states. Secondly, compulsory referendums may be envisaged for transfers of competence from one level to another. Finally, a specific set of tools has to be developed to control expansionist tendencies in the fiscal sphere – albeit acknowledging the need for small but guaranteed European sources of revenue.