GO 357GO 357The Political Economy of The Political Economy of

RegionalismRegionalism

Walter HatchWalter Hatch

Colby CollegeColby College

““A Europe of Regions”A Europe of Regions”

The EU: integrating nation-statesThe EU: integrating nation-states

The EU:The EU:integrating local governmentsintegrating local governments

In PrincipleIn Principle

Subsidiarity: decisions should Subsidiarity: decisions should be made at the closest be made at the closest

practical level to the citizenpractical level to the citizen

In realityIn reality

A Democratic DeficitA Democratic Deficit

Regional PolicyRegional Policy

Treaty of Rome (1957) is designedTreaty of Rome (1957) is designed

to promote regional integration … to promote regional integration …

““by reducing the differences existing by reducing the differences existing among the various regions and the among the various regions and the backwardness of the less-favored backwardness of the less-favored regions.”regions.”

Structural FundsStructural Funds

European Social Fund (ESF)European Social Fund (ESF) European Agricultural Guidance and European Agricultural Guidance and

Guarantee Fund (EAGGF)Guarantee Fund (EAGGF) European Regional Development European Regional Development

Fund (ERDF)Fund (ERDF) Financial Instrument for Fisheries Financial Instrument for Fisheries

Guidance (FIFG)Guidance (FIFG) Cohesion Fund (not a regional fund)Cohesion Fund (not a regional fund)

Regions in the EURegions in the EU

Why?Why?

Maintain cohesion in midst of Maintain cohesion in midst of disparitiesdisparities• Germany vs. PortugalGermany vs. Portugal• Belgium vs. GreeceBelgium vs. Greece

““Sidepayments”Sidepayments”

New ChallengesNew Challenges

Dramatic income disparityDramatic income disparity• GDP per capita in Luxembourg: $65,600GDP per capita in Luxembourg: $65,600• GDP per capita in Latvia: $6,800GDP per capita in Latvia: $6,800

Dramatic employment disparityDramatic employment disparity• 2% jobless in Warwickshire (UK)2% jobless in Warwickshire (UK)• 30% jobless in Reunion (FR) and 23% in 30% jobless in Reunion (FR) and 23% in

Vychodne (Slovakia)Vychodne (Slovakia)

Creating a MonsterCreating a Monster

1/3 of EU budget1/3 of EU budget• ¾ if CAP included¾ if CAP included

Annual budget of about 30 billion Annual budget of about 30 billion euros ($37 billion)euros ($37 billion)

Seven-year budget of about 235 Seven-year budget of about 235 billion euros ($290 billion) for 2000-billion euros ($290 billion) for 2000-20062006

For 2007-2013: 336 billion euros For 2007-2013: 336 billion euros ($413 billion)($413 billion)

Structural FundsStructural FundsCurrent Budget (2000-06)Current Budget (2000-06)

Billion EUR; commitments in 1999 prices

Old Winners and LosersOld Winners and Losers(pre-enlargement)(pre-enlargement)

Net winners: Spain, Portugal, GreeceNet winners: Spain, Portugal, Greece Net Losers: UKNet Losers: UK

New Winners and LosersNew Winners and Losers(post-enlargement)(post-enlargement)

Net Winners: Poland, Malta, Latvia, Net Winners: Poland, Malta, Latvia, Estonia, etc.Estonia, etc.

Net Losers: Spain, Portugual, GreeceNet Losers: Spain, Portugual, Greece

Structural Funds for EU-15Structural Funds for EU-15(2000-06)(2000-06)

million euros; commitments in 2004 prices

FranceFrance

SpainSpain

PolandPoland

Inter-regional integrationInter-regional integration

NewhouseNewhouse

Wealthy regionsWealthy regions Transnational but not international Transnational but not international

economic complementaries economic complementaries Secessionist impulsesSecessionist impulses

CataloniaCatalonia

Jordi PujolJordi Pujol

PadaniaPadania

Umberto BossiUmberto Bossi

Toward a system ofToward a system ofmulti-levelmulti-level

governance governance