Tommaso Padoa-Schioppa suddenly passed away in Rome on December 18, 2010, during a dinner he was giving to his friends on the occasion of his 70th anniversary. With this obituary, The Federalist Debate intends to remember a remarkable man and a precious contributor to this review.

Tommaso Padoa-Schioppa has lived with civil and moral dedication his being simultaneously an Italian, a European and a world citizen. Provided with a rigorous intellectual education and an unusual capacity of realizing things, he was able to give on every occasion a contribution to the advancement of humanity. In fact, Padoa-Schioppa has been one of the creators of the euro. Convinced of the necessity for Europe to proceed on the road of monetary unification, he gave the theoretical demonstration of that by pointing out, through the idea of the “quartet”, that it was impossible to go on in the European integration process if the States were allowed to keep the power of changing the value of their currencies.

As the European Community's General Director of Economic and Monetary Affairs, he promoted in the early 1980s all the necessary steps to build the European Monetary System. Delors entrusted to him the preparation of the works of the Committee, set up by the European Council, which drafted the project of a monetary union, later adopted by the Maastricht Treaty at the end of 1991. It was natural then that the Italian Minister of the Treasury, Ciampi, proposed him for the Board of the freshly-instituted European Central Bank, where he dedicated himself to the setting up of the technical infrastructures necessary to make it operational in a very short time.

After he left the ECB, he worked with all his energy and his great talent in the fight for giving the European Union an accomplished federal structure, and to that end he was appointed to the Presidency of Notre Europe in order to continue Delors' work. So he moved from Rome to Brussels, Frankfurt and Paris, and was able to carry out a synthesis of the action of Spinelli and Monnet: he contributed as a founding member to the birth of the Spinelli Group in the European Parliament.

Padoa-Schioppa then accepted Romano Prodi's proposal to take the post of Minister of the Economy in his government, with the task of bringing Italy back to the center of the European unification process. After a few months, the economic trend was reversed and the financial position of the Italian State was back in the virtuous European circle. Debt went down from 120% to 103% of GDP, and the deficit in 2007 was lower than 2%. The economic turn produced by Padoa-Schioppa cannot be questioned, and has been marking the political and economic debate even after he left the Government.

Padoa-Schioppa had become a prominent Italian and European citizen, and could therefore act as a world citizen, in which guise he worked for giving humanity common rules after he became president of the foundation tasked with the unification of the accounting principles of company balance sheets, but in particular with his initiatives, following Triffin's teachings, for a world monetary standard, thus leaving an indelible mark on the future structure of the world monetary system.

The federalist thought was a key reference in his intellectual mindset, and he knew how to translate it into concrete actions. Tommaso Padoa-Schioppa was deeply impressed by his participation in the federalist seminar in Ventotene, Italy, in 2003, where he saw the spirit of Spinelli and Albertini still hovering in the air. And we cannot forget the articles that he gladly wrote for or agreed to be also published in The Federalist Debate, in which he was always urging people, in particular the young, to have a broader vision of the world than one limited to one's nation, and to consider first and foremost the general interest instead of private interest in public life.

We can say that Tommaso was able to carry more than “one particle of sand” to the construction of the future of Europe and of the world, and in this way he rescued Italy from the present dark times.

Europe’s leaders never tire of reminding their constituencies, almost like a mantra, that the major emerging-market countries are overturning the existing global economic order. But when it comes to recognizing that reality in the world’s international financial institutions, they adopt a different tune. This is particularly true of the eurozone.

The eurozone as such has no representation in the international financial institutions. Instead, 12 eurozone countries are represented on the board of the International Monetary Fund via six different “constituencies”, or country groups. The two largest, Germany and France, have a constituency all their own. Ten other eurozone members are part of four other constituencies headed by Belgium, the Netherlands, Spain and Italy. However, these four constituencies also contain more than 20 other countries, most of which are not even EU members.

Together with the Scandinavian and British constituencies, there are thus eight EU representatives on the IMF’s executive board. Given that the IMF’s Articles of Agreement stipulate that there can be only 20 board members, this means that 40% of all the IMF’s executive directors are Europeans, with one-third coming from the eurozone.

The IMF is a prime example of the over-representation of Europeans in international fora. Counter-intuitively, however, the excessive number of Europeans actually diminishes Europe’s influence, because they usually defend national interests, which are often divergent. The net effect is that common European interests are not represented at all.

Contrast this current condition of extended misery with the only sensible long-term solution: a pooling of IMF quotas by all eurozone countries. The eurozone would then have one constituency, or seat, on the Fund’s executive board, filled by a candidate nominated by the eurozone group of finance ministers.

The European Central Bank could also, perhaps, be involved, nominating the deputy of the eurozone executive director at the Fund. In this way, Europe’s fiscal and monetary authorities would be forced to cooperate in shaping their input into IMF decisions. Many countries (including Germany) already follow this “double-headed” approach.

The eurozone representative would be very influential, because he would represent an even larger quota than that of the US. Indeed, the US Treasury’s de facto dominance within the IMF would become a thing of the past.

But, given the scant interest of European Union members in transferring further competences (and juicy international positions) to the EU level, the chances that this solution will prevail seem remote. Germany, in particular, feels that it has no reason to share its IMF representation with other, fiscally weaker eurozone members. And the French seems scared of contagion: once France agrees to a common eurozone seat at the IMF, others could cite it as a precedent to be applied to the United Nations Security Council, where France would then risk losing its permanent seat to a common EU representative.

Until now, the rest of world could only grumble at Europe’s obstinate refusal to recognize its relative decline. Since no European country would agree to give up its seat on the IMF’s executive board, the only way out was to add more and more temporary seats for the dynamic and underrepresented emerging economies.

Such a process, however, cannot go on forever, because with each increase in size the IMF’s board becomes less and less effective. This is why the US has now decided to throw a cat among the European pigeons.

The US (which has veto power) has now taken the stance that it will no longer approve the current higher number of executive directors (24 at present). This has confronted the Europeans with a quandary: if they do not agree to give up some seats on the IMF board, some emerging countries, such as Argentina, Brazil, and perhaps even India, would lose theirs. The EU does not want to be held responsible for this. The pigeons are thus fighting among themselves over who should be sacrificed.

Until now, it could be argued that the eurozone did not have a common fiscal agency that could represent common eurozone interests. But this has changed with the creation of a European rescue fund in the form of the European Financial Stability Facility (EFSF).

Funding the next intra-eurozone rescue will be rather cumbersome and costly, because financial markets distrust complicated structures like the one set up to finance the EFSF. This suggests a golden opportunity for Europe to make a virtue of necessity by pooling its access to much-cheaper IMF funding.

If, for example, Ireland (or Spain) needed emergency support, the other eurozone countries could simply agree to lend it their IMF quotas. The troubled country could then rapidly obtain a large IMF loan, given that the eurozone countries’ quotas total about €60 billion – and that IMF loans can easily reach multiples of the quota.

Creditor countries like Germany would also gain, because they would not need to extend vast sums in guarantees to the EFSF while still safeguarding their interests within the EFSF’s existing structure. All eurozone members, then, have an interest in concentrating in a smaller number of constituencies, with the EFSF representing their collective interests within the IMF.


This article was originally published by Project Syndicate (http://www.project-syndicate.org) on 5 October 2010, and as a CEPS Commentary (http://www.ceps.eu) on 4 October 2010

The 2008 financial and economic crisis accelerated the tendency toward a multi-polar redistribution of power, replacing American mono-polarism. Although the US remains the mightiest military power, it still cannot control world politics. In war the US may defeat all its enemies, such as the Taliban and Saddam Hussein, but it has proved unable to build the peace. This confirms Hegel’s remark regarding Napoleon – ‘‘the powerlessness of the winner’’ – and applies particularly to the asymmetric wars in Afghanistan and Iraq. Despite the irreversible decline of its power, US behaviour continues to be inspired by the Westphalian principles of absolute state sovereignty and it is unwilling to recognize supranational authorities not subject to its control.

The current most significant proof of this attitude is its opposition to any thought of renouncing (to use Giscard d’Estaing’s famous expression) the “exorbitant privilege” of the dollar as an international reserve currency. Thus the US carries on printing money to finance its colossal deficit abroad – brought about by excessive consumption and by wars – and in effect to devalue its debt with the result that the world is now paying the old declining power’s bills.

In world politics the US has increased the international disorder and monetary instability, and it is now clear that the power system called pax americana is approaching its end. Tomorrow’s map of world power will be shaped by a new international leadership not limited to the G8 countries, but including the BRICs (Brazil, Russia, India and China) and other emerging actors in world politics and the global economy. The BRICs still belong to the Westphalian world and are naturally proud of their own identity and independence, but while eager to assert their influence in the world, they are nevertheless involved in regional integration processes through organizations such as MERCOSUR, the Eurasian Economic Community, the South Asia Association for Regional Cooperation and the 2009 China-ASEAN Agreement on a 90% of tariff barrier reduction. Within these great world regions the development of federal arrangements following the EU model offers a political formula that can tame nationalism and avert the tendency toward the formation of dominant regional leaders such as Brazil, Germany, India, Japan, Nigeria etc.

The EU is an example of how nation-states can change their way of settling disputes, by moving from power politics to the rule of law. Violence as an instrument for interstate conflict resolution has been abandoned and replaced by a mutually agreed legal order. European unification is the process of constructing peace through a progressive constitutionalization of inter-state relations. In effect, therefore, the EU can be defined as being a post-Westphalian community.

The possibility that the birth of a new global order could spring from another world war cannot be excluded. It would be in keeping with the constituent role traditionally played by warfare. Today, however, the resort to war is restrained primarily by the existence of weapons of mass-destruction which would cause such widespread devastation that it would leave neither winners nor losers. In effect, the use of such weapons would amount to collective suicide.

Secondly, the unbearable cost of the armaments race, worsened by the financial and economic crisis, has convinced the great powers to stop seeking military superiority and driven them instead to pursue security through cooperation rather than competition. Thirdly, globalization has exposed how powerless individual states and even international organizations are in their attempts to govern the world market. This realisation has triggered a concomitant tendency toward cooperation in their attempts to solve the financial and economic crisis without a reform of the Bretton Woods institutions: that is, without strengthening the international organizations.

Moreover, neither the old nor the new protagonists in world politics and economics seem fit to bear the burden of safeguarding world order alone. If history confirms this diagnosis, we will be able to assert that the cycle of the American monopolarism, begun after the collapse of the communist bloc, was not the latest but the final attempt by any single state to achieve world hegemony.

When power is distributed unevenly, the predominant states are inevitably inclined to violate international law. It is the balance of power that leads states to respect common rules. It follows therefore that this type of political mechanism – that is, the current evolution of world power relations toward multi-polarism – can open the way to strengthening and democratizing the UN. In other words, the rise of new actors in the world system of states can be the trigger for institutional change within the UN.

According to Modelski’s theory of long cycles, we can observe that the world today is going through a “coalition-building” phase. New global actors are emerging as protagonists of a new global order. Hence the need, through “macro-decisions”, to devise new institutions able to constitutionalize international relations and thereby take the first steps in the long-term process leading towards a World Government and a World Federation.

This new world order will take shape gradually and peacefully. The International Criminal Court is part of a project to extend the principles of the rule of law to the global level. The G20 affirmation shows that the emerging countries have acquired the power to qualify for a seat at the negotiating table where the economic global order will be reshaped. Already in the IMF’s Executive Board the emerging economies have increased their weight. By 2012, the top ten shareholders will be the US, Japan, four European countries and the four BRICs. The super-majority requirement for decisions (85% of voting power), hence also the US veto, still remains in place.

It was not the EU but the governor of the Chinese Central Bank who, in 2009, unexpectedly raised the problem of replacing the US dollar as the world reserve currency. In his proposal he quoted the “Triffin dilemma” – that is, the theory of a federalist economist who demonstrated the inherent contradiction of using a national currency, namely the US dollar, as the international reserve currency. He proposed launching a process which would lead to a single world reserve currency. If achieved, this would represent a giant step forward towards World Federation. It would have an impact similar to the creation of the euro as a forerunner to the establishment of a European Federation. To give an idea of the expected timeframe for a project of this complexity the creation of the euro took thirty years to achieve. Moreover, the European Union is still not a full federation though the institutional evolution towards this goal started in 1950. The establishment of a World Federation is likely to be similarly slow and difficult, but the aim is nevertheless essential for the achievement of world peace and prosperity.

Moving towards sustainable development and a better quality of life


“Those of us wanting a unified Europe, the European integrationists, must leave behind the half-measures and pragmatic false compromises and learn again what really matters to us. The United States of Europe. Nothing more and nothing less. The current crisis has shown us that half-measures cannot withstand harsh realities, nor can false compromises. It has also shown that European visionaries were the true realists. And that only the path towards the United States of Europe can provide a real alternative to failure”
J. Fischer¹

1. During the last two years a deep crisis has ravaged the world economy. The main industrialised countries have been heavily hit; less the new emerging economies. The governments have tried to face the crisis with the traditional instruments of expansionary fiscal and monetary policies. A full recession has been avoided, but rich countries are not completely out of the crisis. This dramatic experience has shown that there is an urgent need for change. In the past century, the main objective of economic policy has been to promote GDP increases, that were identified with a rising welfare. But this is no longer the case in the new world economy. In many countries GDP increases, but the quality of life is not improving at the same rate. The pressure on natural resources is unsustainable. Looking for more and more energy sources, natural disasters follow, as the oil spill in the Gulf of Mexico shows. Globalisation and the ensuing increased worldwide competition apparently oblige many countries to dismantle their welfare system and to trim down environmental protection. Thus the time seems ripe for moving urgently from uncontrolled growth towards sustainable development and a better quality of life.

While the crisis of the world economy has been originated in the financial sector, it has been rapidly spreading into the real economy. It has arisen out of a fundamental disequilibrium within the American economy, where demand has for many years outstripped the value of output, with an ensuing permanent deficit in the trade balance, twinned to a budgetary deficit in continuous expansion and to a growing indebtedness of the private sector. From 1976 to 2007, the richest 1% of the American households seized 58% of the total increase in real income. As a consequence of this growing inequality in income distribution, in the US the banking system has been largely involved in supporting the demand either of houses (and other durable goods) or consumption goods, disregarding the over-use of natural and material resources, and thus favouring the emergence of the twin deficits and the worsening of the global environment.

2. The uninterrupted growth of the world economy has been supported during the last two decades by a spectacular increase in productivity, ensuing from a worldwide expansion of a huge wave of technological development, following the implementation of the ICT revolution originated in the US. But the model of growth prevailing in the United States is now obsolete since it is largely based on a resource-exhausting, consumption-oriented demand, and the American economy remains the most energy-intensive in the industrialised world. Furthermore, the increase in consumption for the American households is largely satisfied through cheap imports coming from industrialising countries. It is true that this US demand supports exports from these areas, but in this way real resources move from the less rich countries of the world towards the richest one.

The balancing role played by the US in supporting the growth of world economy in the period after the 2nd World War – with a surplus in the trade balance funding the deficit in capital accounts – is now totally absent. After the adoption of the Marshall Plan, European states were obliged to import consumption goods from the US, since domestic production was totally disrupted as a consequence of the war and these imports were paid through the inflow of American funds. But in this way were supported at the same time both the conversion of the US economy from military production to the production of civil goods and the recovery of the European economy. Now the twin deficits in the US are financed through capital imports from the rest of the world.

Unfortunately, all over the world the American model of growth has been largely followed. This model – that is still generally prevailing – has characterised the second half of the last century, but should now be radically changed. For most countries, the main factor determining the growth rate was a technological development of an imitative kind. It was sufficient to import the best technologies from the most advanced countries to raise productivity and to increase the standard of living. But many countries have now reached the technological frontier and are unable to restart growth through import of technologies from abroad. If a new phase of growth has to be kicked off, a renewed capacity of innovating must be promoted and the production of new kinds of goods and different production processes should be envisaged.

3. A better quality of life is the main objective of the new model of growth, but the achievement of this goal requires as a first step a deep change in the pattern of consumption. In rich countries, goods should be purchased, in greater quantity than today, that satisfy real human needs and improve welfare. Many of these goods are immaterial – for instance, personal services, cultural goods, natural resources, environmental quality. Furthermore, in the post-industrial world, following the ICT revolution and the ensuing increase in labour productivity, working time could diminish, thus creating space for more leisure. Consequently, demand for enjoying cultural and natural goods could increase. At the same time, a larger quantity of material goods should be made available for satisfying basic human needs in the poor countries of the world. This is the first step for starting an endogenous process of growth in those countries as well.

Production processes too should be modified in depth. Environmental protection should be considered side-by-side with profit-maximisation and competitiveness in evaluating the effectiveness of the methods of production adopted by firms. In this evaluation, energy-saving and the trimming down of the use of natural resources should be considered as important parameters. More efficient capital goods could increase productivity, thus providing room for higher wages and better conditions of life for the workers.

4. In rich countries production processes are largely energy-intensive. This is particularly true for the United States that consumes a quarter of the world oil production even though it has only one-twentieth of the global population. As President Obama has recently remarked, the time for clean energy is now and the use of so much energy for unit of GDP should be decreased.

As it is well known, climate change is linked, to a great extent, to the burning of fossil fuels. To fight global warming the use of fossil fuels should be largely cut down. A carbon-energy tax could be effective in promoting both energy-saving through the higher prices of energy brought about by the energy share of the tax, and fuel-switching, since the carbon share of the tax favours the use of fuels with less carbon content. Hence the tax could promote a curbing of CO₂ emissions and a conversion of the productive structure along the path towards a low-carbon economy. Part of the revenue flowing from the energy-carbon tax could be used to promote innovation in the field of renewable energy or in exploiting new energy sources, while competitiveness of the countries implementing the tax could be protected by introducing custom tax adjustments, that is burdening imported foreign goods with the same tax levied on domestic production.

5. At the world level, the pattern of growth followed in the past is now unsustainable since the global environment is unable to support the enormously increased pressure on natural resources. The foreseen expansion of world population from 6 to 9 billions will intensify global competition for natural resources and put a further pressure on the environment. The world was ecologically in equilibrium when only one billion people were rich and energy-consuming. Now, luckily, the ratio between rich and poor is reversed and a new equilibrium could be reached only if the consumption of natural resources and the exploitation of energy sources are decreased in the rich countries since, from the point of view of equity, it is more and more unacceptable that more than one billion of the bottom poor be excluded from a reasonable standard of living.

Furthermore, it is true that, while the availability of consumption goods has been continuously increasing, even in the affluent societies many essential needs are not adequately satisfied. Hence, policy measures supporting across-the-board consumption demand are not an effective way out from the current crisis. More selective policy measures are needed and a process targeted to the promotion of a sustainable development – from an economic, social and environmental point of view – must be started as soon as possible.

6. A policy promoting the recovery of the economic activity worldwide is the unavoidable first step to be adopted to favour the kick off of a process achieving sustainable growth. In the affluent societies this policy should not be targeted to a further increase in consumption demand, but to the strengthening of a new and more balanced economic and social model, environment-friendly. Investments are essential to achieve this goal, as well as a redistribution policy aimed to cutting down existing inequalities in income distribution, with the ensuing negative economic and social effects. But consumption should be supported in the poor countries through a Keynesian policy at the world level targeted to the achievement of the Millennium Development Goals spelled out in the Millennium Declaration adopted in September 2000 by the United Nations, committing Member States to a new global partnership to reduce extreme poverty and setting out a series of time-bound targets with the deadline of 2015.

The transition to a sustainable development pattern requires the implementation of a plan including expenditure projects in different areas:
-    research and development expenditures and promotion of higher education, to strengthen the competitiveness of domestic production;
-    public and private investments in advanced technologies and support to champions in the new leading industries;
-    financing projects to improve the quality of life for the citizens (water and air quality, sustainable mobility, renewable energy, urban renewal, efficient personal services, especially for weak people – babies, old people, the disabled);
-    investments to promote conservation and to enlarge utilisation of cultural goods and natural resources;
-    investments for completing worldwide the existing network in the fields of transport, energy and telecommunications.

7. In the traditional economy, growth depends on unceasing increases in demand and enhanced production-efficiency through market incentives. Prices reflect the balance between demand and supply and provide the right incentives for an efficient allocation of the production factors. But in the new economy, the external costs of production and consumption activities due to pollution and to the use of natural resources should be internalised into prices to avoid market failures and to maximise welfare. This outcome could be achieved through the use of economic instruments (environmental taxes, emission trading system) and of command-and-control measures. But the costs of an environmental policy are translated into higher prices, either with taxes or with command and control measures, and these higher prices curb demand increases of goods and services. Hence, the question follows: is economic growth hampered by an environmental policy?

In the literature about environmental policies an important role is played by the Porter hypothesis that the constraints deriving from environmental policy oblige firms to promote technological innovation and, consequently, prop up economic growth. Porter suggests that innovation concerns product and production processes, but also new management practices, with an ensuing decrease in production costs. As a matter of fact, countries with rigid environmental constraints show higher rates of productivity increases: Germany, the most performing export country worldwide, is one of the most advanced in environmental protection as well. Hence, it seems justified to draw the conclusion that in the long run there is no trade-off between economic growth and environmental protection.

8. In the old model of growth, GDP changes are widely used to evaluate the effectiveness of an economic policy: but GDP by itself is not an efficient indicator of welfare. Environmental damages are not computed in GDP, while expenditures caused by environmental degradation increase GDP. If an efficient policy of prevention of diseases is implemented, health expenditures decrease and welfare apparently is worsened. This example shows that a new set of indicators is needed to measure welfare. The overall aim of this set is to favour policy measures able to improve the quality of life, both for current and future generations, through the creation of sustainable communities able to manage and use resources efficiently, and to tap the ecological and social innovation potential of the economy, ensuring prosperity, environmental protection and social cohesion. The conclusions of the Stiglitz-Sen-Fitoussi Commission promoted by the French President Sarkozy represent a useful first step in the right direction.

9. The condition of life in urban areas represents an essential feature of the quality of life. Everywhere in the world, progress is generally taking place within the cities and people concentrate in these areas, in the developing countries too. But congestion and pollution are endemic in urban areas, with external costs that bring about a worsening in the quality of life. Furthermore, given the increasing ratio between urban population and means of transport, urban mobility is not guaranteed to everybody. Urban life is particularly poor for the weak layers of the population, especially babies and old people.

Then, a first problem that must be urgently addressed is ensuring mobility to all the urban population, while simultaneously promoting a progressive reduction in the use of private vehicles. An unavoidable pre-requisite to achieve both these goals is to carry out a policy providing a coherent planning of urban development, that takes care – as a relevant priority – of environmental needs. As a second step, the growth of an efficient network of different kinds of public transport should be ensured and funded. But the implementation of this plan requires a lot of money and a long period of time. It follows that, if the final goal has to be achieved, during the transition period the use of private vehicle should contribute to the funding of the mobility plan through a system of road pricing, like that already implemented in London, Singapore and, with different characteristics and objectives, in Milan; a system that is able to reduce progressively the use of private vehicles and to provide at the same time the money to fund the investments needed to develop the public transport network or alternatives modes of transport.

10. One of the worst effect of urbanisation is the difficulty to guarantee a sufficient food production to feed the population in the poor countries as well as in the rich ones. In developing countries, a large part of the population is fed through self-production of consumption goods, that becomes impossible when people are urbanised. A green revolution aiming to productivity-improvements in the agricultural sector is quite important. But agricultural-policy measures per se are not sufficient. The rate of population growth should be checked and this demographic policy should be backed by measures targeted to supporting a process of decentralisation of economic activities, so that the agglomeration effect pushing people to move to the most congested urban areas could be balanced.

11. Some conclusions could be drawn from this analysis. The transition to an environment-friendly world is in march. But it has to be recognised that the process of changing the current economic model at the world level requires a multilateral effort. No single country could reach this outcome acting alone. But, if it will be able to reach a political unity through a federal link, Europe has the possibility to play an important role in this process, showing that it is possible to overcome the national dimensions, that are totally inadequate in the modern world to achieve a sustainable development.

A federal Europe could adopt a new set of indicators of welfare, as it has been suggested by the Stiglitz-Sen-Fitoussi Commission, and advance along the path already pointed out in Article 3 of the Treaty of Lisbon on European Union stating that “the Union’s aim is to promote (…) the well-being of its peoples”. The investment program needed to kick-off a new phase of growth could be funded with the emission of Union bonds. In this way, while member states should be obliged to comply with the Maastricht constraints, guaranteeing financial stability, a growth policy could be implemented by the federal government, adopting the golden rule of public finance that debt is only allowed when funding expenditures for investments – and not consumption. Hence, with such virtuous behaviours the existing trade-off between stability and growth could be dismissed.

At the federal level, the transition to a low-carbon economy could be funded by a carbon-energy tax, while at the urban level road pricing could guarantee the transition to a sustainable mobility model. If Europe succeeds, this could be a strong incentive for other countries to follow the same path. But the success of the European policy requires a radical change in the existing institutional structure. Only a federal Europe could play this role, implementing an effective economic policy backed by an external policy promoting a positive European role in the transition to a multilateral world.

12. This positive evolution of the economic perspectives of the world economy has been supported by technological growth, and globalisation has given the possibility to new countries to be included in the industrialised world. But a global effort is required to include in the process the bottom poor countries as well. The African continent represents the black hole in this process of balanced growth. As a matter of fact, not only equity, but also efficiency requires that income distribution should be improved between and within the different countries. This is a difficult, but decisive task, and in this area too Europe – with its past experience in the promotion of income growth in the new countries joining the Union – could show that a positive outcome is possible. Combining the promotion of environmental protection and a better quality of life with a fair distribution of income within the European continent and all over the world, a federal Europe could show that a policy aiming to raise welfare for human beings everywhere in the world is possible.

Now it is up to the European people to promote the building up of an effective federal Constitution, overcoming the dramatic limits of the existing European Union, confirmed with overwhelming evidence by the economic slowdown of the last two years that has shown how the current European crisis is only superficially a financial crisis. As Krugman rightly remarked, “to make the euro work, Europe needs to move much further toward political union, so that European nations start to function more like American states”². Fischer also has recently reminded us that the recent European meltdown “in essence is a political crisis caused by the political weakness of the EU and the euro area”. And he added that “if the EU is unable to act as one, then the euro area can and must act as its vanguard, firstly within the Treaty and, if that brings no results, or they prove too slow, outside the Treaty, but in its spirit and in the interests of the Union”.

It is up to the governments to take this decision, but it is the role – and the duty – of the federalist movement to promote an initiative mobilising the public opinion and pushing European governments to act urgently.


1 Joschka Fischer, “The United States of Europe”, Lecture to the Heinrich Heine University, Dusseldorf, June 1, 2010
2 Paul Krugman, “The Making of a Euromess”, in The New York Times, February 15, 2010

Multinational countries live in a state of permanent trouble, all the more so if economic anxiety makes solidarity an issue and ideologues and politicians dream of cultural homogeneity. Federalism has proved to be the most viable way to satisfy both the need for union and the desire for autonomy; it decentralizes sovereign power and civil society alike. My concern here, however, is not with discord within multinational states, but with the sentiments of disunion arising within countries marked by cultural and political unity. Perhaps an army forced them together, or ambitious or idealist intellectuals fostered their national feelings. Whatever their history, now these people display common characteristics even if they are also locally distinct. Political institutions contribute to constituting a nation no less than language, religion, and literary and folkloric traditions. A people that has been living under a unitary political system for several generations is, after all, a people without memories of federation. Today this elementary fact is acknowledged even by those intellectuals who dream of a federal Italy. “It is not easy”, Gianfranco Miglio (a former leader of the Northern League) wrote, “to construct a federation in a country that does not have a 'federal culture'”. Nothing is more illogical than a Jacobin federalism. To impose a federation is like trying to bottle wine in the wrong season or shield it at the wrong temperature. Sooner or later the bottle will burst. As one cannot force the art of making wine, so one cannot force mutual trust. A federation needs both a strong sense of peripheral autonomy and an equally strong sense of national sympathy: these are the two souls of a “federal culture”. The rationale of federalism is “subsidiarity”, which denotes a system within which the units maintain the autonomy they need to deal with the spheres of action that pertain to them, but cede authority to a higher level in pursuit of common goals (security, peace, freedom, well-being). The retention of local autonomy may foster sympathy for the larger society. Neither autonomy nor sympathy, however, can be imposed by decree. My main concern here is with European single-state federalism. But in Europe today domestic and international dimensions are so intertwined that notions of “inside” and “outside” are increasingly blurred. The road to single-state federalism crosses the highway of supernational federalism.

Both the unitary modern state and the idea of federation thrived in the age between the dynastic and religious wars of the sixteenth century and the two world wars of the twentieth. Two years after the St. Bartholomew Day massacre, Jean Bodin published De la république, a classic text celebrating the indivisible, unlimited and centralized power of the state as the mighty guardian of domestic order. In the midst of the wars that followed the revocation of the Edict of Nantes, William Penn wrote An Essay Towards the Present and Future Peace of Europe, in which he argued that only a European confederation could guarantee a durable peace. Many of the men and women who fought against Nazism and Fascism belonged to the tradition of Penn. Despite their different political allegiances and mutual isolation they reached similar federalist conclusions. The leviathan-state had put an end to social anarchy, but opened the door to a no less frightening international anarchy. The federalists of the 1940s interpreted World War II as a European civil war, and blamed the conflict on absolute state sovereignty. Attempts to unify Europe were not new, and they did not necessarily guarantee peace. After all, both Napoleon and Hitler were universalists. They sought to create a great Europe unified under the respective banners of Rationality (and Christianity) and Aryan civilization. The Napoleonic wars destroyed the myth of the territorial state as the guarantor of domestic and international order; World War II ended the nightmare of a continental leviathan. The two myths were complementary expressions of the hegemonic project of the nation-state. Napoleon's Europe was an expanded France; Hitler's, a vast Germany. Most World War II partisans saw continental federation as the only feasible alternative to the state's power vocation, domestic and supernational. They spoke of a new European order composed of a “network of local voluntary associations, vehicles of direct democracy, united within a European federation”. Local autonomy and transnational co-operation would, in James Wilkinson's words, get rid of the “old nation-states [which were] bellicose and unresponsive to the needs of their citizens”. All federalists prized political and cultural pluralism. Their models were the medieval city-republics and the guilds. Harold Laski thought the modern theory of sovereignty was intrinsically statist and portrayed himself as a “frank medievalist”. Fragmenting sovereignty was a way of lightening its burden. Carlo Rosselli complained that the state gained power by expropriating from civil society all of its “numberless forms of association, as rich in their content as they were free and limited in extension”. The many versions of federalism are all set against rationalist political ambition: to create a “mortal God” with an indivisible and irrevocable power over all its subjects. Modern right- and left-wing federalism were born in reaction to Jacobin democracy. Both shared David Hume's admiration for the United Provinces and their ability to keep a people “from uniting into large assemblies” by dividing them “into many separate bodies” so that they could “debate with safety” and prevent “every inconvenience”. Hume's preoccupation was shared by the authors of the Federalist Papers – a text that, notwithstanding its nationalist orientation, became a manifesto of latter-day European federalists.

Federalism fights on two fronts: the supernational and the domestic. On the one hand, it seeks to limit the power of each state in order to reach not a “mere suspension of hostility” but a condition of mutual trust. On the other hand, it advocates a division of sovereignty and rejects the principle of one-nation – one-state. The architects of the European Union saw the new order not as a way of dissolving and weakening national identities, but as the only legitimate way “to preserve them and allow them to flourish vigorously in all their diversity”. Their aim, Altiero Spinelli wrote, was not “one single European state, designed to become a European Nation, but a Federation of Nations in which citizens will jealously guard their own traditional home country while becoming at the same time citizens of the Community”. The European Union is not likely to become another United States, where one defines oneself first as an American and then as someone who comes from Illinois. In the United States, identity goes from general to local. In Europe, things are different: one is first of all Italian, then European. Generally speaking, Europeans share multiple loyalties, which need not be a source of conflicts. Hence the role of the European Supreme Court, to which European citizens – both as individuals and as members of cultural groups – can appeal against their own states. Institutions of this kind are meant to generate the habit of multiple belonging while fostering a democratic culture of rights. Although the domestic and supernational strategies of federalism go together logically, historically they have been pursued separately. Until the last century, the federation remained a project of national unification. Carlo Cattaneo advocated a United States of Europe along with the United States of Italy, but his political commitment was to the latter. He thought one could construct a large federation by beginning with small ones. In the nineteenth century, the primary goal was political liberty rather than peace. The enemy was mass democracy and unlimited majority rule. The first generation of federalists were the Girondins, the second the Proudhonians, who opposed Mazzini's democratic nationalism as vehemently as their ancestors had opposed Rousseau's (and Robespierre's) republicanism. The horrors of world wars led federalists to switch their focus from the domestic to the supernational. Their main goal became peace and democracy. In his inaugural speech as the first president of the High Authority of the European Assembly (1950), Robert Schuman declared that the “essential political objective [of the federative process is] to make a breach in the ramparts of national sovereignty which will be narrow enough to secure consent, but deep enough to open the way towards the unity that is essential to peace”.

Altiero Spinelli, one of the spiritual fathers of the European Union, provided a very simple and convincing rationale for a supernational federalism. He thought that a European federation would open the door to domestic federations. He inverted the political strategy pursued by the federalists of the previous century: after almost a century of unitary statism, regions and local communities had lost the vigor to fight for a federation, but the federal enterprise could acquire new strength through Europe. Once the states begin to release portions of their traditional sovereign functions to the European Community, decentralization might “give birth again to a free local political life”. The European motto would then be ex uno plures, because the proliferation of peripheral autonomies proceeds from the very process of continental unification. Jurists and political scientists rightly insist on the “democratic deficits” of the European Union, which they trace to Jean Monnet's “functionalist” approach. Monnet's policy of dealing with prime ministers, while leaving the people temporarily outside, rested on the conviction that the union had to be prepared by transforming the habits of ordinary men and women in dealing with each other. Europeans had to be “persuaded” by practice that they could approach problems in “the same way” as nations that were different and divided but co-operating. As Spinelli had foreseen, the more the peoples of Europe perceived themselves also as Europeans, the more the centralized state would relax its ties. A supernational federation promoted one of the most interesting contemporary phenomena: a process toward autonomy and regionalism within the European nation-states. Until the early 1970s, only Germany was a federation among the states that became part of the European Community. Today other states have reached a stage of quasi-federation. The movement toward decentralization is particularly strong in those countries that have both a nondemocratic legacy and a strong centralist tradition. Italy implemented a system of regional government in 1970, Spain in 1978, and France in 1982. This process, however, began in the name of national unity, not federalism. The Italian, Spanish, and French constitutions proclaim the respective states to be “one and indivisible”. They promote a certain degree of regional autonomy while assigning to the central state the task of redressing socio-economic disparities among the regions. Regional autonomy can be seen as a de facto federation, a physiological evolution of the unitary state once it becomes democratic and is no longer surrounded by potential enemies. Freedom and the loosening of fear encourage the expression of difference. A supernational federation unites what the territorial state had separated (internationally) and dissociates what the territorial state had unified (domestically). The novelty introduced by the European Union consists in the fact that, whereas federalism has traditionally been a process of unification (within a single state or among several states), today it can be both a unifying and a divisive force. Since its emphasis on autonomy and pluralism tends to re-open the arguments about national aggregations, in the short term decentralization may create instability. In the long term, however, it could bring former partners closer and even promote new kinds of associations. Historically, federalism designated a process of union. The United States became a country when its people united into a federal pact. Germany and Switzerland went from loose confederation to federal union. Until now the reverse process, a unitary state becoming a federation, has never happened without the state's falling apart. When federalism is used as a divisive tool, its natural conclusion is the dissolution of the state. Thus, Czechoslovakia became a federation shortly before it disappeared. This is the reason why regional autonomy may be seen as a safer form of decentralization than a full-blown federalism. But perhaps this is not necessarily so.


This article was originally published in the fall 1996 issue of Dissent

“Cancun may have saved the process, but it did not save the climate” – said a Greenpeace activist at the end of the last Cancun Conference of Parties (COP16) climate negotiations in December 2010.

True. Broadly speaking, what was agreed in Cancun’s COP16 is to continue working together, with more transparency, more cooperation in technology transfer, more money on the table, but without neither the commitment to reduce emissions to a level that could keep global warming under the catastrophic 2 degrees Celsius, nor targets and rules on how to organise the global transition to a low carbon economy. To put it simply; the success of Cancun was to avoid the end of multilateralism in climate negotiations. There were no commitments to replace the Kyoto protocol except for its financial mechanisms. The Kyoto protocol, which back in 1997 was seen as nothing exceptional, is now seen as the panacea and few countries are willing to go beyond it even knowing that Kyoto is insufficient to save us from climate change.

The process was saved but the world citizens continue to lose. The negotiations didn’t collapse but they are far from being able to provide what would be the minimum acceptable compromise for the world citizens: keep global warming below 2 degrees Celsius. In the current format of intergovernmental negotiations, the world citizens are not present in the negotiation table, hence it should surprise no one that they were the losers of the successive COP 15 and 16.

Should we be happy that the UN-type multilateralism survived one more round? Arguably this is the best system that we have and although it has not served the purpose of uniting the world against climate change, it is our only tool in a “politics as usual” scenario. The problem is that in a “politics as usual” scenario the humankind has little chances of surviving.

If the Cancun agreement had been about global disarmament and not climate change, an equivalent of its shady results could be accepted. Some players such as the EU pushed a bit more, some others such as Japan tried to stop it, but overall the result is not a step backwards and hence an acceptable outcome. Fair enough. We can always trust that if we survive another world war we can try to learn the lessons as we partially did after World War II. The problem with climate change is that if the scientists are right and we are facing severe irreversible changes in the climate, the result of Cancun is as insufficient as unacceptable. If achieving the maximum of what is politically possible is not enough to save the planet, there is a need to change the rules of the game or the game itself. In other words, if we accept Bismarck’s quote “politics is the art of the possible” to explain the climate change negotiations, then we have no other option than to change politics until we can make possible what is necessary.

International politics as usual can’t be an option if we want to meet the minimum conditions to have enough chances to survive. A change of the magnitude of what happened in the post-WWII period is needed: At the end of WWII, the world was split as ever and there was an attempt to unite it with the creation of the UN. However, the high conditionality, the absence of real integration, the veto power, the lack of democracy and the persistent intergovernmental approach made the UN weak and irrelevant when important issues were at stake – wars and others kinds of major crisis like climate change. What history teaches us is that the UN kind of multilateralism is not enough to deliver systemic changes.

The other side of the coin was Europe, where a core of countries decided to move ahead with the revolutionary proposal of creating the European Coal and Steel Community (ECSC), a common project with common institutions that with limited but real power managed to achieve a common goal. Had the ECSC waited for the United Kingdom to start the process that was to lead to what is today the EU, we would probably not have the EU today. A parallelism can be drawn for the global Climate Change action, with the US threat to block the process that has conditioned 20 years of negotiations. The system of cap and trade and offsetting of carbon that we have today and which is failing to reduce emissions – but is succeeding in creating lucrative speculative carbon markets – is the only concession given by the US. If the US had continued to play the positive role that it played in the post-WWII period, we would probably have established a system of emission limits managed by a small supranational body that would have delivered a lot better results than the current system. But the US has not been in favour of democratic international institutions since 1946, and we have been paying a high price for it. Likewise, currently the emerging economies might be blinded by the illusion of power and not willing to join a supranational institutions at once. It is necessary to move on.

There are three possibilities to move ahead; the first and full-blown possibility is the creation of a Global Community for the Environment (GCE) empowered to manage the emissions, the transfer of technology and the common actions in a democratic and accountable way. It would follow the model of the ECSC, creating a communitarian body that takes care of the global common interest, a bi-cameral legislative assembly composed of representatives of the people of the community and a council representing the member-states, and finally a judiciary with the role of settling disputes. This would be the optimal way to approach a global problem; with democratic institutions that can take democratic and accountable decisions, minimising the danger of blocks.

A second possibility is the creation of a World Environment Organization¹ whose structure would resemble the current World Trade Organization². It could be created with a treaty and it could do the job if it manages to put in place a good system to settle disputes. This is an old proposal retaken by the German and French leaders, Merkel and Sarkozy, which was proposed to the Secretary General of the UN without much success. The draw-backs of such a solution are that it only protects the interests of the states but neither the interests of the citizens nor the global interest; that if it is to follow the WTO system, the communitarian body – the secretariat – would be too weak to steer anything and that it would be a lost opportunity to engage the citizens in the fight against climate change. The WTO doesn’t have a good reputation among citizens; it is perceived as distant and surrounded by demonstrators and riots. The fact is that despite the procedures can be democratic, the decisions are taken in the intergovernmental limbo far away from the citizens.

A third option is the International Court for the Environment (ICE)³ following the precedent of the International Criminal Court. A global judiciary on climate issues – ruling on the jurisdiction provided by conventions and protocols – is indispensable to avoid the current lack of enforcement of the policies. The ICE would be a first step towards communitarianism from which it would be possible to evolve towards a democratic and accountable system of world relations.

All three options have no chances to succeed in the short term, if all the countries are expected to sign in. It is necessary that a group of countries decide to move ahead – like France, Germany, Italy and the Benelux did 60 years ago with the creation of the ECSC – and set up institutions that are capable to deal with global problems. If we study the impact of the ECSC, we see that building a communitarian approach to fight climate change would not only benefit those who are in the union, it would also benefit those who are outside. For instance, the UK, Poland or Spain profited from the stability, common understanding, vision and good management of resources of the European Community even before they joined the EU. The same would happen for the US and the few other countries who would decide to stay out of the first Global Community for the Environment.

For instance, the US, the first per capita polluter in the world, would benefit not only from the effort of the others to fight climate change, but also because they would understand that it is in the interest of everybody to change the current fossil-fueled economy into a more efficient and de-carbonised one. It is a paradox that a country with a structural fear of state intervention approves that the government continue to use the tax-payer's money to subsidize fossil fuels. This is not only against free-market but also against the world interest. A Global Climate Community would foster the pooling of research and technologies, and the concept of supranational solidarity, and thanks to the economies of scale it would allow a rapid de-carbonisation of the world economy. From a competitive point of view, any country that continues to subsidise fossil fuels would be interested in joining the community, the same as the UK decided that joining the EU was better than staying outside, because of a widening technological gap. A coherent and responsible communitarian management of the transition to low-carbon economy would spark a lot more innovation and productivity than an economy that subsidises fossil fuels. The US would have to join the Global Climate Community before the Tea Party can imagine.

What about China and India? They are becoming the biggest world polluters and hence it will be difficult to strike a deal on capping emissions. However, their opposition to a better governance solution is not of the same nature as the one from the US. A communitarian approach to GHG emissions, eco-efficiency, resource use, biodiversity, energy savings, transnational infrastructure and renewable energies as well as a progressive deal in worldwide converging emissions per capita are possible positive outcomes of setting up a communitarian system based on trust and equality between the members. The EU enlargement process is a good example of the positive and quick spill-overs of a political and economic union. However, whilst the EU is a good benchmark of the positive effects and externalities of setting up a communitarian system, the UN system and more concretely the UN Framework Convention on Climate Change (UNFCCC) is a benchmark of how little can be achieved in horse-trading deals in intergovernmental forums.

In order to solve the current challenges, it is important to leave inter-governmentalism behind and find ways for human-beings to work in the same direction, towards the same goal. For diplomats and politicians climate negotiations are seen as a battle-field where there are winners and losers –funnily those who think they are the winners are those who manage to continue to pollute, and the losers those who have to cut emissions. The truth is that with the current system all the world citizens lose and as we start to feel the effects of climate change so does the faith in democratic institutions and politics in general as an instrument to serve the citizen's problems.

Let us not be blinded by the change of mood after Cancun’s COP16. World emissions continue to increase, and the rhetoric of world cooperation or leaving the solutions to the carbon markets will not suffice. The current economic crisis proves that markets alone – be they financial or carbon markets – will not work; it is the combination of market tools with regulations, democratic control and political leadership that have the power to get us out of the current financial, economic and ecological crisis. And this combination cannot happen without global institutions. Like 60 years ago, history is pushing humankind to the “unite or perish” dilemma. May we be wiser this time.



1 See http://www.guardian.co.uk/environment/cif-green/2009/oct/28/world-environment-organisation
2 See http://www.wto.org
3 See http://www.environmentcourt.com

Jim Stark
Rescue Plan for Planet Earth
The Key Publishing House Inc., Toronto, Canada, 2008


In his book, The Seven Pillars of Wisdom, Lawrence of Arabia speaks about those he calls the “dreamers of the day”, reminding us that such people may act their dream with open eyes and make it possible.

It is important for the future of our world, indeed it is crucial for the future of our world, to dream the big dreams, the ones that have the height, depth and breadth to transform global governance, to achieve a democratically governed world. As the title of his book so clearly articulates, Jim Stark is one of those “dreamers of the day” dreaming of the achievement of democratic world government through a global referendum. His dream is not an abstract, theoretical one though, but rather a systematized programme of concrete details directed to what he calls the “…credible strategy that can get us from the current anarchy among nations to the democratically governed world we so desperately need”¹.

Stark begins his book by setting out what he deliberately calls an “alarmist” articulation of the current context of our world, focusing particularly on the issues of nuclear weapons and climate change. He is passionate, he is graphic and although it is clear throughout the book that he is writing for an audience with some familiarity of the issues of world federalism and/or global governance, he spends enough time describing the dire state of the world so as to be convincing to those who have either not been reading or listening to any form of media for the last decade or who have been living on a different planet.

It is in the second chapter of the book that Stark lays out his particular purpose in writing. He reminds the reader that there are many books that discuss in detail the current dire state of world affairs and that there are a few which explain how a democratic world government would both work and be able to address that dire state. His book, however, “…is basically a plan to compel the creation of such a global institution. It presents a new and powerful political instrument, the global referendum, as the necessary tool that we, the people of the Earth, could use to achieve a democratically governed world in as little as a decade…”².

Very, very admirable is the way that Jim Stark has thought through a global referendum in concrete detail. He uses fact, figures, numbers, geography, tables and charts in an extremely thorough way. He is also extremely articulate and well-reasoned in terms of the need for and the useful methodology of computers, the internet and social networking in the process of a global referendum. These are the areas in which Stark’s thinking and book particularly shine. This reviewer found that every question he raised in these concrete areas while reading the book was answered in the very next section or chapter. Also very concrete and admirably practical is the reality of the organization “Vote World Government”.

More problematic is Stark’s use of boxes and interspersed quotes throughout the book. While this reviewer has some general sympathy for the use of both and found Stark’s boxes and quotes often very applicable to his subject, nonetheless there are too many, and it is a distraction to reading. Also somewhat irritating is his frequent use of the term “omnicide”, to refer to the killing of everything. There are references to it indeed on the internet but as a term still not in common use it is a distraction to Stark’s point.

A more serious critique of Stark’s book arises from current streams of World Federalist thinking. In comments such as those in the box on page 83, the reform of the United Nations is rejected and yet World Federalist policies, priorities, structures and individuals hold together both a critique of the UN and the belief that its reform is quite possible. Stark also seems unfamiliar with the current articulation of incremental federalism as it is laid out in such vehicles as the reports of the World Federalism’s Council Chair³.

Stark writes in a manner that reflects historical thinking in some areas of global context, rather than current realities. This is most clearly seen in his certainty that when the people of the earth clearly understand the depth and breadth of the planet’s problems, they will see the necessity for a democratic world government obtained through a global referendum as the answer. This kind of thinking was recently challenged at the Couchiching Conference for Public Affairs, 2010. In a session entitled “Shifts in Power”, speakers on the subject of China noted that interviews with young Chinese intellectuals clearly indicate that freedom of thought and economic prosperity do not necessarily lead to a striving for democracy. More generally, current conversations on global issues recognize that common acceptance of problems and issues does not necessarily lead to common agreement around the most effective solutions.

Also very noticeable throughout Stark’s book is his tendency to think almost exclusively in nationalist terms. What is missing is a deeper, more articulated understanding that many current global conflicts are regional or intra-state. Climate change, a discussion of which is key to his book, is an obvious example of the regional or trans-state reality of our global context.

Stark’s treatment of religion is quite paradoxical. In the latter part of the book he treats the religious nature of most of the earth’s people with much more serious attention than is usually the case in materials on global governance and world federalism⁴. But while Stark seems to recognize the wide-spread nature of religious belief on the globe, and the reality that religion has been and is sometimes deeply implicated in conflicts, he does not seem to have knowledge of current religious thinking on the very issues with which he is so concerned – nuclear weapons and climate change. In all Stark’s plethora of boxes and quotes, very few come from religious sources, and his major example of religious attitude to climate change⁵ is an extremely dated one from the fringes of one particular religious tradition. Nonetheless, he does sometimes, though without consistency, see religion as a key factor in civil society and one that can be in accord with the vision he is setting out.

Jim Stark’s book, Rescue Plan for Planet Earth, has both its strengths and its weaknesses, but it is a thorough attempt to portray in a concrete, practical way the steps to a democratic world government through a global referendum. Although areas of his analysis need to be re-thought and up-dated, the book serves as a good reminder and good map of the methodologies present, available and necessary as we act and dream together towards global democracy.



1 p. 13.
2 p. 32.
3 The 2010 WFM Council Chair report is a reminder of the inclusive, diverse and interdependent nature of incremental federalism.
4 The speech of the WFM Council Chair at the 2010 Ventotene Seminar, however, has an example of growing change in this regard.
5 p. 19.