Donna Bahry,
Doctor of Philosophy, Professor of Political Science at Vanderbilt University.
Rethinking Asymmetrical Federalism.
Introduction
The design of the federal system has prompted a long and contentious debate in Russia
since 1991. Efforts to balance central state interests with ethnic, regional and local
diversity have generated a succession of different approaches, from the federal treaty in
1992, to the Constitution of 1993, to region-by-region treaties and agreements from 1994
on. The net result since the mid-1990s has been an asymmetrical federal system with
substantial differences in powers across different regions. New initiatives by President
Putin in the spring of 2000 represent an effort to remake the system once again.
Much of the debate focuses on the issue of asymmetry.1 To its adherents,
this plural brand of federalism allows needed flexibility for a country that includes
eleven time zones and one of the most ethnically diverse populations in the world.
Tailoring particular terms to individual regions provides the opportunity for local
resolution of local problems. It also offers the prospect of broadening democracy, by
increasing representation and opportunities for participation beyond the level of the
central state.
Critics, on the other hand, point to several drawbacks. One is an issue of principle:
asymmetry, so the argument goes, challenges the underlying assumption of equal rights
under democratic government. And differential powers based on ethnoterritorial criteria
imply the preeminence of group rights, while democracy should give primacy to the
individual. Other critiques rest on more pragmatic arguments. Differential powers across
regions can add to the difficulties of coordination across institutions and policies; and
inhibit the ability of the central state to reallocate resources across jurisdictions. The
ultimate criticism, of course, is that centrifugal forces can unravel the state itself.
While all of these arguments have some merit, they miss a crucial point. Asymmetry is a
common and growing feature of democratic federations, especially those with compactly
settled ethnic minorities. Individual territories and groups enjoy special status and
rights ranging from the cultural and linguistic to the political and economic realms.
Moreover, even unitary systems have increasingly devolved authority to the regional level
and granted asymmetrical rights to different regions in recent years. Globalization and
broad societal changes have made highly centralized states less and less able to cope with
demands for economic, social, and cultural development. The response has been to
reconfigure the allocation of state power between central and subnational governments.
Thus the idea of negotiated, asymmetrical federalism is hardly unique to Russia. My aim
here is to provide a comparative perspective on it, by exploring the sources of devolution
over the past 25 years, and the various forms of asymmetry in selected countries.
Patterns of Federalism
Federal systems, as Watts (1994; 1996) argues, have emerged in three broad waves since
the mid-nineteenth century.2 The first wave developed with the formation of
nation- states in Western Europe and the British Commonwealth, as cities, states and
regions coalesced into larger units. This integrative form of federalism was exemplified
in Germany (1870), Switzerland (1848), Canada (1867), Australia (1901), the U.S. (1787),
Austria (1918) and Brazil (1891). The defining characteristic, according to Stepan, was
the primarily voluntary decision by smaller units to pool their sovereignty.
The second wave accompanied decolonization in the post World War II period. In this
case, newly emerging states confronted a mismatch between administrative boundaries
established by colonial powers on one hand, and pre-existing ethnic, linguistic or
religious communities on the other. Federalism thus provided a compromise, allowing the
creation of new nation-states while recognizing internal diversity. Examples of this
attempt to knit together distinct populations ranged from India (1950), Pakistan (1956),
Indonesia (1945-49), Malaya (1948) and Malaysia (1963), to Nigeria (1954), French West
Africa and the Mali Federation (1959) (see Watts, 1996). In many cases, however, these
efforts to forge new states were unsuccessful as various groups and territories pushed for
independence and some federations simply dissolved.
The third wave has had a broader geographical focus, and a different trajectory.
Beginning in the mid-1970s, it has primarily brought devolution in existing nation states.
Central governments have increasingly handed responsibilities downward to the regional and
local level, and recognized special political and economic status for specific regions and
groups. Examples include devolution and recognition of special status for Quebec and the
Northern Territories in Canada; federalization of previously unitary states in Belgium and
Spain; and decentralization of economic and social policies in a host of other cases.
This emphasis on devolution and asymmetry can be traced to several broad trends in the
global economy, in politics, and in society over the past 25 years. Shifts in technology
and communications have transformed international trade and capital, and with them, the
economic role of central governments. National borders and economic barriers have
diminished in importance, allowing greater mobility of goods and capital. Protectionism
has grown both more difficult to sustain and more unpopular as an economic strategy. These
developments, plus the rise of the post-industrial information economy, have prompted
widespread reassessments of the efficiency of large, hierarchical firms. The development
of "turbo-capitalism," to use Edward Luttwak's (1999) phrase, has generated ever
greater demand for smaller, more flexible forms of corporate organization that can react
quickly to rapidly changing, global markets.
The same trends have also bred a reassessment of centralized, hierarchical government.
Declining barriers to trade and increased capital mobility suggest growing constraints on
governments' ability to regulate and tax business. The capacity to redistribute revenues
is thus increasingly limited.
The constraints pose a particular dilemma for the state's role as guarantor of social
welfare. The graying of the population in many countries suggests heightened commitments
but limited ability to continue to pay for social welfare programs such as social
security, health care, and public services. The common response has been to trim welfare
at the national level by handing various programs down to regions and localities.3
Central governments can thus reduce their obligations while avoiding the political costs
of cutting or eliminating benefits.
The second broad trend behind devolution is political. The spread of democratization
since the early 1970s has prompted increased concern with representation and
participation, and these, in turn, heighten the role of regional and local governments
(Faletti, 1999). The expansion of democracy below the national level has also come to be
seen as a potential counterweight to the reemergence of authoritarianism.
A third source of devolution stems from broader societal changes during the same
period. There can be no doubt that ethnic and/or communal identity has become more
important -- making questions of cultural preservation, language use, and territorial
autonomy all much more salient. This is complemented by a parallel trend toward
"individualization": the appeal of centralized collective organizations such as
political parties and trade unions has diminished over time, while the role of the
individual has increased. As a result, people are less likely to see themselves as part of
a large centralized organization, and more likely to identify with local communities
(Keating 1999).
Altogether, these trends have led to a paradox, heightening the role of transnational
ties but also enhancing the role of subnational governments. The diminishing importance of
national borders has facilitated increased efforts at integration across countries, as
evidenced in the European Union, and to lesser degrees in NAFTA, Mercosur and other
regional organizations. The same forces have also led to what Michael Keating (1999) calls
a "re-territorialization" of politics, moving the locus of responsibility for
public policies from the central to the regional and local level.
Patterns of devolution
Responses in individual countries have varied from radical and broad devolution to more
measured decentralization, primarily in the economic sphere. Space does not permit a
complete survey of all of them here. Instead, the following discussion focuses on cases
where the change has been most substantial, where unitary governments have evolved into
federal or quasi-federal ones.4
Spain's transformation since the mid-1970s offers one of the most radical examples.
Negotiations over the transition to democracy in the mid-1970s led to recognition of
regional autonomy in general, and of special status for historical communities in
Catalonia and the Basque country. The result, since 1978, has been substantial devolution
of powers from the center to the regions, especially to the two historical communities.5
Spain's seventeen autonomous regions (which include a total of 50 provinces) now have six
co-official languages and far more responsibility for domestic policy.
Degrees of devolution and asymmetry vary by policy area, however. With respect to
economic development, what had been a centralized industrial policy up through the early
1980s has been transformed into a regional concern. Special economic zones were created to
scale down subsidized enterprises in heavy industry and to give regions authority over
investment policy and tax credits (in conjunction with entry into the European Community).
The goal was to help promote research and development, technical training, and the
development of small business (Agranoff, 1994).
In health care, six regions conduct their own policy, while the other 11 have regional
managers to coordinate and implement federal health policies. In welfare, the federal
government stipulates minimum services and provides bloc grants to finance them; but each
region has its own policies and programs. And on budgetary matters, two regions (the
Basque country and Navarre) have a single-channel tax system, while the 15 other regions
rely on shared taxes (Agranoff and Gallarin, 1997).
The Spanish system also proves to be asymmetric in the fields of public order and
international economic ties: the Basque region alone among the 17 autonomous communities
has its own police force (subject to oversight from Madrid). And the Basque country has
its own representative in Brussells (Agranoff, 1994).
In Belgium, national government policies have long recognized the distinct languages
and cultures of the Flemish and Walloon communities, under a unitary state. The 1990s
brought a constitutional change from a unitary to a federal system, with separate
parliaments for Flanders, Wallonia and Brussells, and also for the three main language
communities (Dutch, French and German). The three regions now hold primary responsibility
for much of domestic policy, from economic development, public works and transportation to
foreign trade. Federal government functions include defense, foreign affairs, social
security, management of the public debt, and the criminal court system (Judt, 1999).
Devolution in the United Kingdom has been even more recent. Here, too, some official
recognition had long been given to the distinct communities in Scotland and Wales, while
the state remained unitary. But growing local support for home rule beginning in the
1970s, and changing party fortunes at the national level in the 1990's (from Conservative
to Labour dominance) led to referenda on new legislative assemblies in both regions in
1997.
The two parliaments will differ, however: in Scotland, where local autonomy on some
issues had traditionally been broader, (and the movement for home rule was stronger), the
new assembly has primary powers of legislation in several areas -- economic development,
health care, education and manpower training, housing, social work, regulation of local
government, environmental matters, and the justice system (plus all residual powers not
specifically reserved to the national government) [Keating, 1998]. The Welsh assembly is
to have more limited powers of secondary legislation, i.e., the ability to adjust
legislation from Westminster (Keating, 1998). Both Scotland and Wales have gained the
right to participate in the British negotiations and delegations to the European
Community; and Scotland is now recognized as having the right to a representative in
Brussells.
Many more cases of devolution and asymmetry are focused primarily on the economic
sphere. In China, reforms since 1978 have created a variety of special regimes in
different regions. The first initiative in 1980 designated four southern regions as
Special Economic Zones (SEZ), offering preferential tax policies to lure foreign
investment. That was followed by the creation of 14 "Coastal Open Cities" (COC)
in 1984; 32 "'Economic Technology Development Zones;" 13 "Tax-Bonded
Areas;" 52 "High-Technology Industrial Development Zones," and other
special regimes for regions and localities. (Cho and Tung, 1998; Dutta).6
Efforts to create 57 SEZ's have been launched in the four countries of Latin America's
Mercosur (Argentina, Brazil, Uruguay and Paraguay) [Kotabe, 1998]. The SEZ's, with
differential economic rights, are intended to help stem capital flight and increase
exports. These economic measures have accompanied a more general trend across Latin
America to devolve powers to the regional and local level since the 1980s (Faletti, 1999).
Thus the shift from central to regional and local authority has extended across
continents, and across both new and old democracies. However, while similar trends seem to
be at work in virtually all the cases, both the process of devolution and its results have
varied from country to country. After all, decisions about when and what to decentralize
are inherently political. In many cases, they have depended on the fortunes of political
parties at the national and regional level. Madrid, for example, has varied over the years
in its willingness to cede power to the Spanish autonomies, depending on the strength of
the ruling party/coalition at any given time and the need to form alliances with regional
parties (Agranoff and Gallarin, 1997). And the push for home rule in Scotland and Wales
developed momentum once the Labour and Liberal parties signed on, and the Conservatives'
electoral support eroded (Keating, 1998).
The Dilemmas of Asymmetry
As devolution and asymmetry spread globally, they raise a host of questions about the
implications for democracy, equality, and national integration. With respect to the fit
between democracy and asymmetry, the standard argument, as noted earlier, is that rights
should be guaranteed to individuals rather than groups. But this is a narrow view:
democracy is also about protecting rights of minorities, and guaranteeing representation
and participation. As Stepan (1999b) notes, asymmetric federalism is an effort to
recognize these multiple dimensions of democratic rights.
Whether devolution and asymmetry do in fact broaden democracy, however, obviously
depends on how political institutions operate in specific cases. Stepan (1999b) argues,
for example, that democracy is enhanced where the transfer of authority between center and
regions is subject to open, transparent approval procedures at the national level -- that
is, where devolution is legitimized either through the constitution or by approval in the
national parliament.
Democracy is also enhanced when there are common rules of the game to promote political
competition and accountability within regions.7 Thus, in the Spanish case, the
autonomies hold uniform regional elections, using proportional representation and a common
formula for allocating seats; their legislators face term limits; their cabinets are
limited to ten members; and their legislators may vote a prime minister and cabinet out of
office via a constructive vote of no-confidence (Agranoff and Gallarin, 1997).8
In Germany, each land has its own constitution -- and laender all have the right to decide
on a unicameral or bicameral legislature (only one state, Bavaria - has opted for
bicameralism). Laender also decide themselves whether the executive is directly or
indirectly elected (Boase, 1994).
Finally, democracy is enhanced where there are commonly accepted mechanisms for
resolving the inevitable conflicts that arise over central, regional and local
jurisdiction. In fact, it might be argued that democracy is valuable precisely because it
provides a framework for managing such disputes. Agranoff and Gallarin (1997) note, for
example, that both the Spanish central government and the autonomies have turned to the
constitutional court repeatedly since the 1980s to resolve federal conflicts. In 1981, the
central government challenged 41 percent of the laws and decrees issued by the 17
autonomies; but that number dropped over the years, to seven percent in 1990. Over the
same period, the autonomies (especially the two historical regions of the Basque country
and Catalonia) also raised hundreds of challenges to the national government through the
court system. But the number of challenges from the regions has also diminished over time.
The constitutional court, for its part, has ruled for both sides, upholding the principles
of devolution and asymmetry, but also recognizing the central government's prerogatives in
some areas. In addition to the legal system, some federations also possess other
mechanisms for resolving center-regional conflicts. In Germany, for example, the upper
house of parliament (Bundesrat) holds absolute veto power over questions affecting the
laender.
The question of inequality across regions is similarly complex. By definition, the
provision of asymmetrical powers to regions and localities means that regional policies
should differ, reflecting varied preferences for public goods and services. The problem,
of course, is that regional preferences and regional economic and fiscal resources are
often mismatched. Levels of economic development and corresponding revenue bases vary; as
does economic profile (e.g., between "rustbelt" versus "sunbelt"
regions).
To add to the complexity, central governments' capacity to reduce these differences by
traditional methods has grown more difficult, due to the trends outlined above. As Keating
(1999) notes, federal-level governments have experienced a striking loss of capacity to
forge territorial economic compromises by traditional means: "Diversionary [i.e.,
redistributive] regional policy measures:are much more difficult to implement in a
globalized economy because firms have a wide choice of location outside the boundaries of
the state." Thus old strategies for regional protection, such as tariffs,
diversionary regional policies, and state-directed investment strategies no longer prove
as feasible or effective (Keating 1999).
Instead, many central governments have handed more responsibility for economic
development to regions themselves. Central policies often focus on stimulating growth in
less developed regions by promoting local competitiveness -- for example, with credits for
infrastructure, high-technology, creation of special economic zones etc. These steps, so
the argument goes, reduce centralization and regulation, and thereby encourage economic
growth, as demonstrated with dramatic results in China. There, the adoption of SEZ's
yielded average growth rates in eastern regions (i.e., primarily coastal) of 11.4 percent
per year during 1984-1993, while initiatives in Western regions yielded average growth
rates of 8.9 percent per year during the same period (Dutta).
However, most central governments have shown much less of a tendency to devolve revenue
sources to regions and localities. The preponderance of taxes remains concentrated at the
national level, since the ones with the highest yields generally tend to be more easily
and efficiently collected on a central rather than regional basis (Norregaard, 1997). If
anything, the advantages of national governments have increased in this regard, given the
impacts of globalization and increased capital mobility noted above. Thus devolution in
expenditures and in economic policy has not been matched by a corresponding
decentralization of revenues.
The alternative in most cases has been to rely instead on various mechanisms to
re-allocate federal funds, from tax-sharing to special-purpose grants for specific
programs to outright subsidies. And the choice of mechanism seems to depend on the goals
of the central government. Where these goals emphasize cross-regional equalization, as in
Germany and Canada, for example, federal revenue sharing emphasizes explicit
redistribution to offset regional differences in tax capacity (Krelove, Stotsky and
Vehorn, 1997; Spahn and Fottinger, 1997). Where federal goals are more diverse, as in the
U.S., mechanisms for central funding of state and local programs are less explicitly
redistributive.
Finally, the trend toward devolution also raises questions about the prospects for
national integration. It seems obvious that a diminished role for the central government
and divergent policies across regions would exert increased centrifugal pressures on the
national state. Belgium and Canada may be the clearest examples of the difficulties
involved in preserving the federal system overall. But whether they can be preserved
depends in part on identifying the real sources of devolution and responding to them. If
trends toward devolution are indeed products of global changes in economic and social
life, then ignoring them would seem to be a losing battle. The question is how to build
institutions that can adapt.
Conclusions
Asymmetry and devolution have become facts of life in both federal and unitary systems
over the past 25 years. My aim here has been to demonstrate that these are the result of
broader global trends in economics, society and politics. They suggest increasing limits
on the economic effectiveness of centralized states. However, whether regions actually
benefit from these changes depends on how governments at the grassroots adapt to the
global market and to commonly accepted democratic rules of the game.
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Notes
1 For an overview of the debate, see Lynn and Novikov (1997).
2 In keeping with the common definition in the literature, I define a
'federal' system here as one with two or more levels of government holding distinct
constitutional status and separate (if overlapping) jurisdictions.
3 Devolution in social programs would be expected to limit expenditures,
because regional and local governments would find it more difficult to finance them (i.e.,
they have fewer revenue sources of their own to draw on).
4 For a comparative overview, see Keating (1999).
5 Initially, the plan for devolution in 1978 provided for two kinds of paths
to autonomy -- a "fast track" for regions with a historical claim to
differential status such as Catalonia and Basque country; and a "slow track" for
the fifteen others. In practice, all 17 regions have witnessed substantial
decentralization since then.
6 Cho and Tung (1998) write that these different regional economic regimes
vary in emphasis. Some, such as "High-Technology and Industrial Development
Zones," are generally built in university districts of major cities to promote
investment in research and development of high-technology sectors. Others may focus on the
development of local infrastructure to promote greater foreign investment, or on a host of
other incentives to generate economic growth.
7 Note, however, that devolution itself can also complicate the issue of
accountability, as voters are faced with a diverse array of elected officials with
overlapping responsibilities. See Downs (1999).
8 According to the Basque government, legislators also serve full-time, and
may not be members of the royal family, the government, electoral commission, the police
or the armed forces. I was unable to determine whether these provisions apply to all 17
autonomies. The autonomies do differ in defining electoral districts: some have a single
district encompassing the entire region; while others have multiple districts (Mershon and
Hamann, 1999).
