text: Vol. 4, No. 4 / June 2005 Can the Basque region declare "free association" with Spain? Spanish PM Zapatero, Basque Premier Ibarretxe: a handshake does Canada . . . . . . . . . . . . . . C$5.00 not mean a "Yes" Switzerland . . . . . . . . . . CHF5,00 UK . . . . . . . . . . . . . . . . . . . £4.00 India . . . . . . . . . . . . . . . . Rs76.50 Plus: Mexico . . . . . . . . . . . . Mex$20.00 Euro area. . . . . . . . . . . . . . 5.00 • Sri Lanka: parties remain divided USA and elsewhere . . . . US$4.50 • New US law limits class action lawsuits A publication of the Forum of Federations www.forumfed.org • India: Who can aid local governments? The Forum of Federations is an independent organization that was initiated in Canada and is supported by many countries and governments. The Forum is concerned with the contribution federalism makes and can make to the maintenance and construction of democratic societies and governments. It pursues this goal by: • building international networks fostering the exchange of experience on federal governance, • enhancing mutual learning and understanding among practitioners of federalism, and • disseminating knowledge and technical advice of interest to existing federations and of benefit to countries seeking to introduce federal elements into their governance structures and constitutions. The Forum of Federations The name implies a meeting place for federal countries, where they can share and exchange ideas on matters of common interest. And the Forum does play that role. But it plays that role as an international, non-governmental organization, which gives it the flexibility to work all over the world in a great variety of ways. The Forum works with partners on the worldwide Global Dialogue project, a multi-year enterprise that is producing a series of unparalleled resources on comparative federalism. The Global Dialogue brings together scholars, researchers and seasoned practitioners. It has a worldwide range of activities, building from country workshops to global conferences. The Forum also works intensively in a select group of countries, in collaboration with local partner organizations. These countries are India, Nigeria, Mexico and Brazil. The Forum has a vast international network of experts and practitioners. In these country programs and others, the Forum brings this international expertise to bear on the challenges each country confronts. In areas of the world where federalism could be part of a solution to conflicts between ethnic, religious and tribal groups, the Forum also offers its expertise and services. These areas include Sri Lanka, the Philippines and Sudan. The Forum works with youth – young practitioners and academics in federal countries and elsewhere – to help them create a worldwide network to exchange information and ideas on federal systems, and, in co-operation with other agencies and governments, to offer to youth opportunities for advancement in learning about federal practices and federal countries. And the Forum produces a great volume of high quality publications and multimedia products, all directed at busy practitioners and citizens in general. The Forum does not duplicate scholarly and academic work. Its goal is to make expertise and knowledge accessible and useful to a broad public internationally. It is not surprising that Canada provided the impetus to get an organization such as the Forum off the ground. Federalism has long been a central preoccupation of Canadian society. Part of the reason for creating the Forum was to open the windows to the Canadian federal debate and let in air and ideas from around the world. The Forum's inaugural world conference at Mont Tremblant, Quebec, in 1999, achieved that purpose. Hundreds of experts and practitioners from every part of the world gathered in Canada, bringing with them a wide range of perspectives on federalism. There were Russians, Nigerians, Americans, Mexicans, Argentineans, Swiss, Belgians, Indians, South Africans and many, many more. Few had ever participated in such a broad based dialogue on federal governance. The Mont Tremblant Conference led to the founding of the Forum as an ongoing, active institution, based in Ottawa. It also led to the International Conference of 2002, held in St. Gallen, Switzerland with participants from even more countries. One of the great accomplishments of the St. Gallen Conference was to advance the process of engagement and dialogue begun at Mont Tremblant. The Conference's motto was "Learning from each other" and that spirit has continued to guide the Forum's work. After the 2002 Conference, Swiss authorities committed to work more closely with the Forum in a continuing way. One important symbol of that commitment was the appointment in 2003 of a Swiss national, supported by the Swiss government, as the Forum's Vice President of Global Programs. Now the Forum is engaged in a further process of internationalization, all the while maintaining the goal of working as a flexible, action-oriented NGO. Five federal countries so far have signed agreements to support the Forum: Austria, Australia, Canada, Nigeria and Switzerland. Forum of Federations 700-325 Dalhousie, Ottawa, Ontario K1N 7G2 Canada Tel.: (613) 244-3360 Fax: (613) 244-3372 Email: email@example.com www.forumfed.org Forum of Federations' Board of Directors: Arnold Koller, Chair (Switzerland); Bob Rae (Canada); Rui de Britto Álvares Affonso (Brazil); David Cameron (Canada); Alex Ekwueme (Nigeria); Nicholas Haysom (South Africa); Clarence Thomas (Manny) Jules (Canada); Teresa de Madero (Mexico); Narasimhan Ram (India); Gil Rémillard (Canada); Henning Voscherau (Germany); Ronald Watts (Canada); Michael Zorbas, Youth Representative (Australia) Federations What's new in federalism worldwide Vol. 4, No. 4 / June 2005 In this issue Tsunami fails to end Sri Lankan bickering and distrust ..................3 by Rohan Edrisinha While political elites squabble, the most vulnerable suffer India: Delhi, the states and local councils compete for power . . . . . . . . . . . 5 by Ash Narain Roy Should Delhi give direct aid to municipalities? Cover story: Basque proposal of "free association" challenges Spanish federalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 by Violeta Ruiz Almendral Basque leader's Plan not accepted by Madrid US law restricts citizens' chances to go after big corporations in court . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 by Richard A. Brisbin, Jr. Republicans show "flexibility" on states rights Nigeria: Can a handpicked elite group reform the federal system? . . . 13 by Kingsley Kubeyinje Will President Obasanjo's Reform Conference make a real difference? A new constitution for Europe – getting closer to federalism? . . . . . . . . . 15 by Uwe Leonardy How close is the European Union to becoming a federal state? Practitioner's Page: A Bosnian diplomat reflects on a federation on the fault lines of three civilizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 by Vjekoslav Domljan When ethnicity defines religion and language, creating a federal citizenship is difficult Argentina: From "funny money" to fiscal responsibility . . . . . . . . . . . . . . . . 19 by Alejandro Arlia New pact aims to eliminate money printed by provinces Briefs & Updates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 1 From the Editor Five countries plus one commit to framework agreement with Forum As this last issue of Federations Volume Four goes to bed, the Our cover story this issue deals with the continuing challenge Forum of Federations is experiencing big changes. that the Basque Country poses to the Spanish national government. When former Prime Minister Aznar blamed the When this organization got its start in the late 1990s, it was a Madrid train bombing on Basque terrorists he was widely Canadian initiative seeking international interest. That interest excoriated. It was one factor in the surprise election victory of started to show itself in 1999 at the first International Socialist leader Zapatero. Now Basque restiveness is becoming Conference on Federalism in Mont Tremblant, Quebec. a thorn in the side to the new Prime Minister. Following that event, Forum established itself as a Canadian We also have a pair of articles that examine governance issues based organization with an international focus for its activities in post-tsunami India and Sri Lanka. In India, the question of and an equally international board of directors. the extent to which the federal government should deal Almost three years later, following the second international directly with local governments is paramount. The story in conference in Switzerland, Forum and the Canadian and Sri Lanka is of the missed opportunity to find some spirit of Swiss governments initiated a more intense process of accommodation in the wake of tragedy. internationalization. That exercise came to fruition over the As the largest federation (and country) in Africa, Nigeria has past year with five countries signing framework agreements merited significant attention in these pages. This time the story with the Forum. The signatory countries - Australia, Austria, is about President Obasanjo's Reform Convention. This is an Canada, Nigeria and Switzerland - have agreed to provide effort at fundamental reform that has managed to attract critics ongoing support to Forum, to play a role in its governance and both in the Muslim North and the oil-producing but take part in its activities. A sixth country, India, will sign the impoverished Niger Delta. The fissures in Nigerian society are agreement in June. India will also host the next international deep. The memories of the attempted secession of the eastern conference in 2007 or 2008. "Biafra" region and subsequent civil war are still strong three Forum and its partner countries will continue to work hard to decades later. And the whole country smarts from the long engage other countries on a formal basis. succession of military dictatorships. The recently restored democracy survived its first test of a second democratic As it stands, a great many countries collaborate actively with election last year. A root and branch reform of the federal Forum on a project and program basis. This is reflected in the system, that will address such issues as ownership of natural worldwide scope of the Forum's work. That scope is a sign of resources and the fiscal capacity of the states, is still waiting. the great appetite around the world to learn more about what Obasanjo's newest initiative may only be a step in that many call the "federal idea". direction. It is important to emphasize that it is an idea - not a dogma! There is much more in this issue, including a story from the People sometimes say of Forum that it "promotes federalism". USA on changes to the rules governing class action suits that It may seem to be a subtle nuance, but Forum does not do that. will have the effect of sending more cases to the federal court. This is ironic since the measure was sponsored by the normally When Forum engages in governance assistance, dialogue and pro-states' rights Republicans. networking activities it aims to make knowledge and expertise available and to encourage an open-ended exchange of ideas We encourage you to make use of Forum's online library. and best practices. If studying and examining federalism as it There are more than 800 useful documents relating to is actually practiced convinces some that it is not appropriate federalism that you can download free of charge. Just go to to their situation, so be it. Forum will not take that to be an Forum's web site: www.forumfed.org If you have any indication of failure. It is not Forum's job to gain converts to difficulty using this resource, please let us know by writing: federalism, only to assist peoples to make their own choices. firstname.lastname@example.com This magazine was created to fulfill part of Forum's mandate. We also welcome your comments or suggestions about Our goal is not to see federalism through rose coloured glasses anything in these pages, at the email address above or the but to describe how it works in the real world. co-ordinates below. w w w. f o r u m f e d . o r g A publication of the Forum of Federations 700-325 Dalhousie, Ottawa, Ontario K1N 7G2 Canada Tel.: (613) 244-3360, Fax: (613) 244-3372 • email@example.com Editorial: Editor: Karl Nerenberg; Associate Editors: Carl Stieren, Mahalya Havard; Editorial/Administrative Assistant: Rita Champagne Photos: Cover: Agencia EFE, Madrid; Page 3: Nonviolent Peaceforce, Sri Lanka; Page 5: The Hunger Project, India; Page 8: Forum of Federations' video "The Challenge of Diversity"; Page 9: Basque village – Professor Sanda Kaufman, Levin College, Cleveland, Ohio, USA; Page 11: Wired New York, www.wirednewyork.com; Page 13: Nigerian President Obasanjo – www.olesegun-obasanjo.com; Page 18: Bridge in Bosnia – Urban Golob, Ljubljana, Slovenia – www.ipak.org; Page 19: La Razon, Buenos Aires; Page 21: Citizens' Assembly on Electoral Reform, Victoria, British Columbia, Canada; Page 23: Gobierno del Distrito Federal, Mexico, D.F. Federations is published four times per year by the Forum of Federations. Subscription rates are C$20 per year in Canada, US$20 per year anywhere else in the world. Contributions of articles are welcome. Contact the Editors at the above coordinates. The Forum of Federations cannot guarantee the return of unsolicited manuscripts. Other editions: French – Fédérations – Le fédéralisme de par le monde, quoi de neuf. Russian – Spanish – Federaciones: Lo nuevo del federalismo en el mundo 2 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g Tsunami fails to end Sri Lankan bickering and distrust Sri Lanka's elites revert to squabbling and politics as usual while the most vulnerable suffer. BY R O H A N E D R I S I N H A Tsuanmi relief: does it reach When the tsunami struck Sri Lanka and devastated the near the most needy? lives, homes and properties of thousands of Sri Lankans authoritarian across racial and religious barriers, many people hoped that powers something positive would emerge from the tragedy. wielded by the holder of People hoped that the Sri Lankan Government and the the office. rebel Liberation Tigers of Tamil Eelam (LTTE) would at Large least temporarily shed their differences on how to build amounts of on the tenuous ceasefire agreement signed in 2002, and aid can be co-operate in the task of relief and rehabilitation. And they used by the hoped that a sense of urgency and commitment would incumbent trump the struggle for power among the Sinhalese, Tamil government and Muslim communities of Sri Lanka as the island to engage in grappled with the unprecedented challenges posed by the the bane of Sri Lankan politics – patronage. Money, loans, natural disaster. permits and other favours are generously doled out to Unfortunately, after some brief signs of hope, Sri Lanka's friends and supporters. The opposition will oppose any now almost legendary, bitter, petty and personal projects and program that facilitate this while the competitive politics resurfaced, and in the past six months incumbent government will inevitably seek to maximize its has obstructed an efficient and fair response to the political influence through the use of patronage. challenges posed by the tsunami. The ideological and political differences within the ruling The tsunami inflicted the most damage in the eastern and coalition have surfaced in the aftermath of the tsunami. The southern provinces of Sri Lanka. Fishing communities on major grouping, the People's Alliance, is centrist, willing to the coastline were particularly affected. The east is probably work with the private sector and international financial the most multi-ethnic province in the island with all three institutions, while its junior partner, the JVP, touts North main communities almost equally represented there. It is Korea and Cuba as its economic models, is deeply also part of the region claimed by the LTTE as the Tamil suspicious of the private sector and has almost a homeland. The southern province is primarily Sinhalese, pathological hatred for the World Bank and IMF. but also the political heartland of the two political parties On the ethnic conflict, the People's Alliance is committed to that formed an alliance of convenience to secure a majority peace negotiations and engaging with the LTTE, while the at the April 2004 parliamentary elections. JVP has been reluctant even to recognize the existence of an The present Prime Minister – and presidential aspirant in ethnic conflict, preferring to label the conflict a problem of 2006 – has his political base in a district that the junior terrorism. partner in the ruling coalition, the Sinhalese nationalist These significant differences did not manifest themselves People's Liberation Front (JVP) considers its main political when the two parties opposed the policies of the "liberal" base. These demographic and political factors (in the case of and pro-business United National Party (UNP) that was in the east) and subtle political rivalries (in the case of the power from 2001 to 2004. It was easy to agree on broad south) have contributed to tensions and difficulties that criticisms, many of them well founded. The UNP's undermined the efficacy of the responses to the challenges economic policies marginalized the poor, those in the rural of the post-tsunami phase. areas, the farmers, while favouring the rich and the corrupt. As well, the UNP's negotiations with the LTTE were Patronage and ideological cleavages excessively pragmatic and weak on principle, commitment The broader political context also contributed to the rather to human rights and pluralism. confused response. Next year, 2006, is a presidential But when the current coalition found itself in government, election year in Sri Lanka. The stakes are high given the economic and political realities demanded positive, more specific alternatives on both major challenges. The divisions Rohan Edrisinha teaches at the Faculty of Law, University of between the two parties emerged and President Colombo, Sri Lanka. He is also a founder, Director and Head of the Kumaratunga (of the larger, more moderate party, the Legal Division, Centre for Policy Alternatives, a Colombo-based People's Alliance) struggled to keep the coalition united independent public policy institute. Mr. Edrisinha contributed the and committed to common policies Sri Lankan section of a chapter on "Adopting Federalism" in the Forum's "Handbook of Federal Countries, 2005", published by The tsunami struck on December 26, 2004, in a political McGill-Queen's University Press. context of deep division within the government, division F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 3 between the ruling coalition and the main democratic initiatives that favoured federalism as means toward opposition group, and division between the Government of conflict resolution. Sri Lanka and political parties in the south and the LTTE in the north and east – two areas that they claim as Tamil Fear of LTTE seeking the advantage homeland. Another complicating factor was the fact that the Liberation Tigers of Tamil Eelam had, after the protracted military Weak bear the brunt of the devastation conflict, wrested control from the Government of Sri Lanka The initial response of the Kumaratunga administration was of a significant part of the northern and eastern provinces perfectly consistent with the centralizing political culture of of the island, and exercised de facto control over them. The Sri Lanka. The coalition parties which had always opposed LTTE had set up its own institutions including a police the authoritarian presidential system and had pledged to service, courts and various types of administrative abolish it, had no qualms about strengthening it even mechanisms in these areas. Though the campaign for a further by creating a series of institutions directly under the federal type solution to the conflict continued, there were control of the President with little if any mechanisms for many skeptics who believed that the sole objective of the parliamentary oversight, transparency and accountability. LTTE, even during the negotiations, was to convert the de Two weeks after the tsunami struck, the government facto control it exercised over parts of the north and east announced the formulation of a Comprehensive into de jure control over the whole of that region. In other Development and Infrastructure Rebuilding Action Plan and words, their continued aim was to set up an independent the establishment of an institution somewhat pompously nation state in the north and the east of the island. titled the Authority for Rebuilding the Nation. This theory of the skeptics received a boost starting in There were also the related concerns that those most October 2003 when there were indications that the LTTE affected by the tsunami would not be consulted or was trying to distance itself from an agreement reached in participate in the design of programs to deal with their own Oslo in December 2002 during the Norwegian-facilitated rehabilitation or be adequately compensated for the burdens peace talks. The LTTE, which had until then demanded the they would have to bear with respect to their relocation. so-called four Thimpu Principles – nationhood, a traditional Tamil homeland, the right of the Tamil nation to For example, the worst affected group in both the east and self determination and complete equality – agreed to clarify south was the fishing community. Rehabilitation plans some of the ambiguity in the Thimpu principles by sought to prohibit fisher folk from returning to the beaches agreeing to explore a federal solution based on internal self- and imposed strict limits on the construction of housing determination within a united Sri Lanka. close to the seashore. However, there was to be no similar prohibition on hotels and guesthouses, owned and managed Many considered this agreement to be a significant by the politically influential business community in the breakthrough, but the talks broke down just as a roadmap country. Furthermore, given the fact that fishing for implementing this agreement and a human rights communities had, rightly or wrongly, lived for years on the accord were to be discussed. Other factors certainly beach fronts, the relocation programs should have included contributed to the breakdown in the negotiations in March mechanisms to deal with the new challenges posed by 2003. However, the reluctance on the part of the Liberation storage, transportation, security of boats, equipment and Tigers of Tamil Eelam to endorse the Oslo formulation and other trappings of fishing life. the absence of any reference to it in an October 2003 set of proposals for an interim self-governing authority The debate over federalism strengthened the argument of the skeptics who believed that a significant hard-line element of the LTTE remained The establishment of presidential task forces to coordinate steadfast in its goal of an independent nation state. the post-tsunami responses and the proposed Authority to Rebuild the Nation were completely at odds with the The squabble over the visits and itineraries of foreign direction in which the country needed to go if radical dignitaries, where they should visit and whom they should constitutional and political reform was to be the basis for a meet, though unfortunate, needs to be understood in the political solution to the island's protracted ethnic conflict. context of the deep suspicion and distrust that exists between the Government of Sri Lanka and the Liberation The parties in the ruling coalition had promised to abolish Tigers of Tamil Eelam. The Government, distrustful of the the unpopular, centralizing executive Presidential system. LTTE's commitment to a solution within a united country, The President and her party believe that a solution had to feared that the LTTE would exploit a visit to a tsunami- be based on federal principles and indeed had facilitated affected area under its control for publicity that would the drafting of new constitutional proposals, which were fortify its campaign for international recognition and quasi-federal in character, in 2000. legitimacy. The Liberation Tigers of Tamil Eelam, on the The opposition party, the UNP, and its leader seem to other hand, viewed the Government's attitude as yet recognize that any real solution to the ethnic conflict had to another example of its centralized, "majoritarian" mindset. provide a viable alternative to LTTE demands for Tamil As things stand now, the post-tsunami challenges have self-determination. Liberals from the three main made a complex and difficult situation even worse. communities and civil society groups have campaigned Nevertheless, the campaign for a just political solution over the past twenty years or so for a solution on federal based on federalism and internal self-determination, lines as a way of reconciling the competing interests of the democracy, human rights and pluralism needs to continue. stakeholders to the conflict. Sri Lanka has no alternative if it wants a just and durable Both the initial response and the proposed institutional peace. response from the government went counter to these 4 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g India: Delhi, the states and local councils compete for power BY AS H N A R A I N R OY Who was more to blame for bypassing federalism during the tsunami crisis in India – the federal government in Delhi or the states? It was hard to tell, because everyone's fingers were pointing to the other person. Chief Minister Jayalalitha Jayaram of the state of Tamil Nadu accused the federal finance minister of seeking to "totally bypass the states in undertaking rehabilitation works" in the tsunami-affected areas of India. Meanwhile, about 100 presidents of the smallest local governments – panchayats – from 23 tsunami-ravaged districts had to plead with state governments for a role and involvement in the Members of a local panchayat in India: should federal government relief go directly to the local level? rehabilitation measures that were already underway. Their specific concerns were job-retraining programs and small business loans. change the norms for implementing the "Rajiv Gandhi Rehabilitation Package for Tsunami-affected Areas". As per The panchayat presidents made their demands at a the federal finance minister, the job-retraining programs conference organized by Delhi-based Institute of Social and small business loans part of the rehabilitation measures Sciences. Panchayat presidents from heavily tsunami- were to be implemented only by the public sector banks. ravaged parts of India – Tamil Nadu, Kerala, Andhra An outraged Jayalalitha responded: "It was the state Pradesh and the Andaman and Nicobar Islands – all governments which undertook the search, rescue, attended the conference in Chennai on January 29. evacuation, cremation/burial of the dead and the organisation of relief camps in the first phase without Opposing Delhi as a career waiting for any financial assistance from the federal Some of the leaders of regional parties in India have made government". career out of their anti-Delhi rhetoric. (Tamil Nadu has a The main opposition party to the Congress Party, the fair share of them). However, when it comes to devolving Bhartiya Janta Party or BJP, sensed political gains. It also power further down to panchayats, that zeal is missing. The demanded the immediate withdrawal of Rajiv Gandhi's provincial leaders and political formations, who fight for name from the Tsunami relief package. It charged the sufficient autonomy for self-expression within the federal federal government with working "against the spirit of the system, can easily change tack. Their motto could be: "Do constitution and against the spirit of the federal setup". The what we say – don't do what we do". Tamil Nadu government finally had its way, with the That the tsunami tragedy should sharpen this "on-again, federal finance ministry announcing that financial relief off-again" antagonism between the federal government and would also be implemented through the state governments the sub-national entities makes the irony even starker. concerned. On January 29, Finance Minister Chidambaram made a Federal government on defensive statement to the press on the rehabilitation package which the Tamil Nadu Chief Minister (Jayalalitha) had criticized India has shown the world a promising model in as undermining the authority of the state governments. decentralized governance and its experiments in That same day, panchayat presidents were meeting in democratic decentralisation have earned it praise globally. Chennai and taking the national agencies and state And yet, the irony of electoral politics is that the governments to task for keeping the local government empowerment of local government institutions itself has representatives on the margins. And that initiative had the begun to generate considerable heat and dust between the blessing of another federal minister, Mani Shankar Aiyar, federal government and the states. Local rule by the village who was present for the entire meeting. councils or panchayats is a state responsibility and yet it was Tamil Nadu's Jayalalitha was on a firm ground. She wrote a federal law in 1992 which made the panchayats to the Prime Minister seeking his immediate intervention to "institutions of self-government" and the third tier of India's federal government. The federal government has Ash Narain Roy is on the Faculty of the Institute of Social reason to be unhappy about the tardy progress in the field Sciences, New Delhi. of democratic decentralization in some states and the states F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 5 have their own valid reasons to fear transgressions of the It was the advent to power of the first non-Congress Party federal system. government, the BJP-led United Front government in 1996, that marked the beginning of what that coalition's During the Chief Ministers' conference on rural Common Minimum Programme called "an alternative development through panchayats in June 2004, Prime model of governance based on federalism, decentralization, Minister Manmohan Singh came out with a proposal for accountability, equality and social justice…" It made the block funding of districts by the federal government to most forthright commitment to strengthen federalism. As it fight rural poverty. However, several state governments, said, "we pledge to represent the will of the Indian people including Tamil Nadu, Bihar and West Bengal, cried to strengthen the forces of political federalism which, in the murder. They fiercely opposed the idea of direct funding of Indian context means a strong national government, strong panchayats by Delhi. states and viable local bodies". Here again the Tamil Nadu government took the lead and From 1996 onwards, federalism has asserted itself by the warned the federal government against taking away the growing strength of the regional and smaller parties and constitutional federal powers of the states. While West their influence with all successive federal governments. Bengal found the proposal "unacceptable", Andhra Pradesh sought a "substantial allocation of funds at the discretion of The Congress party's perception of federalism, the role of the state government for utilisation depending upon the the regional parties and coalition has undergone a specific need of an area". The federal government was thus metamorphosis. Congress once dismissed regional parties forced to beat a hasty retreat and assured the states that it as chauvinist and forces of disintegration. The demands for would not do anything to disturb the existing autonomy by the Dravida Munnetra Kazhagam (DMK) arrangements. party in Tamil Nadu and the Shiromani Akali party in the state of Punjab were forcefully decried by the Congress India is currently going through a phase of what may be party as secessionist. characterized as "competitive federalism". With the advent of the Congress-led United Progressive Alliance It was Congress that conjured up the bogeyman of strong government, this competitive approach seems to have states causing a weak national government and vice versa. become a new hobby of legislators and provincial leaders. As political scientist Rajini Kothari puts it: "This bogey was Suddenly India looks like a land of a "million mutinies". based on a theory about the nature of power relations that was not just phoney; it was downright fraudulent. For it In July 2004, the assembly of the state of Punjab refused to face up to the central issue in any democratic unanimously tossed aside water-sharing accords with its setup: distribution of power." neighbouring states of Haryana and Rajasthan, and pledged to withhold its water resources for its residents alone. It led to a lot of embarrassment for the Congress Gains by regional forces Party in Delhi as Punjab's Chief Minister Amarinder Singh There has been a sea change in the way Congress now defied his own party leaders including Sonia Gandhi and looks at coalition and federalism. The regionalist DMK Prime Minister Manmohan Singh and refused to withdraw party today is prominently represented in the Manmohan the controversial resolution. The Punjab Government's Singh cabinet. The Congress has learned the lesson the hard controversial decision to annul all inter-state river-sharing way. An analysis of the vote share won by various parties agreements posed a threat to the federal nature of India. during the 2004 general elections in India shows that the The Manmohan Singh Government had little option but to regional parties are growing at the expense of the national pass the ball to the Supreme Court. parties. As if to take the cue from Punjab, the assembly of the state The share of votes of both the BJP and the Congress has of Uttar Pradesh passed a resolution seeking re-inclusion in dropped from 23.7 per cent and 28.3 per cent in the 1999 the state of two former districts – Udhan Singh Nagar and Lok Sabha to 22.2 per cent and 26.7 per cent in 2004 Hardwar – currently part of the state of Uttaranchal. Seven respectively. The combined vote share of the BJP and the years ago, when Uttaranchal was being carved out of Uttar Congress has dropped to less than 49 per cent from 52 per Pradesh, all kinds of arguments based on topography, cent in 1999 and 51.4 per cent in 1998. The disadvantaged ethnicity and the region's history were put forth by the castes, the intermediary castes, the peasantry…and the Uttar Pradesh government not to allow these regions to go regional parties have become the new stakeholders. with the new state. By laying claim to these districts again, that state's government has raised an issue with far- To a certain extent India has already reached a stage of reaching consequences. multi-layer governance with Delhi, the states and the panchayats enjoying autonomy and particular responsibilities. It has dismantled the notion that the strong Delhi no longer fires state governments states would necessarily imply a soft national government. At the height of last year's anti-Delhi agitation in Manipur On the contrary, it would help in correcting the regional in North-East India, the state government threatened to imbalance and erosion of state powers that has taken place pass a resolution changing its status as a "disturbed area" over the years. which would have the effect of making the Armed Forces (Special Powers) Act inoperative. What the Punjab and Economic liberalisation has been marked by a decline in Manipur governments did may have appeased local people public investment, the progressive weakening of the but their methods have set a questionable precedent. A few Planning Commission and the emergence of the states as years ago, the federal government would have fired the critical stakeholders in economic growth. This has defiant state government; this time around, it cajoled the transformed the federal system. Delhi is no doubt still state government not to precipitate a constitutional crisis. powerful but it is seen more as a regulator and not as That itself is a big change. intervener. 6 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g COVER STORY Basque proposal of "free association" challenges Spanish federalism It may be scenic and prosperous but the Basque Country is still restive. BY V I O L E TA R U I Z A L M E N D R A L Three years after Franco's death, Spain adopted the Constitution of 1978. For the past 26 years, it has been widely supported by Spanish citizens, including the Basques. Now, just when the Spanish model of "asymmetric" federalism was gaining respect worldwide as a successful model, another challenge has emerged. That challenge is the Ibarretxe Plan, a document that throws the future of Spanish federalism into question. Spain The Plan, named after the Basque Country's Premier or Lehendakari, Mr. Juan José Ibarretxe Markuartu, is a proposal by the Basque Country to enlarge its political authority by becoming a "freely associated state" to Spain. Formally, the Plan has been presented as a reform of the Basque Country's "Statute of Autonomy "(Estatuto de Autonomía). In practice, its actual implementation would entail a major constitutional reform. According to the Spanish model of government, every territory has the right to assume a significant range of powers, based on a The Basque Country is just one of 17 Autonomous Communities that make up Spain. constitutionally prescribed negotiating process. In this way, the idea of asymmetric Spain's constitution federalism is clearly was approved by In memory of Guernica embedded in the The claims for greater autonomy by the Basque Country are Spanish Constitution 88 per cent of not new. For more than two centuries, this region has of 1978. maintained a somewhat tense relationship with the Spanish those who voted in Why then, should the government. Ibarretxe Plan be a referendum in Like other regions in Spain – Catalonia, Andalusia and causing such a great fuss and political December 1978. Galicia – the Basque Country expected its "situation" to be resolved and autonomy granted under the new democratic turmoil? regime inaugurated in 1978. The makers of the Constitution Some – mainly conservatives – claim that it will bring about met the challenge by providing the legal means for certain the "destruction of the unity of Spain". But the problem regions to obtain ever greater levels of autonomy. For the with the Plan does not lie so much in its content, but rather Basque Country, this meant the approval of its Statute of in the context in which it arises, as well as in the process that Autonomy in 1979, commonly known as the Gernika Statute, the Basque Government has been pursuing in order to named after the famous Basque town of Guernica, bombed attain its objectives. for Franco by the Luftwaffe and immortalized in Picasso's famous painting. Violeta Ruiz Almendral is professor of tax and finance law at the Ever since, the Basque Nationalist Party (Partido Nacionalista University Carlos III de Madrid and the author of several works on Spanish fiscal federalism. For Federations magazine, she wrote Vasco) has ruled in the region and it has never really ceased "Taxes, transfers and spending in Spain: the regions and the centre to claim a greater level of political authority or the Basque seek the right balance" in February 2002; and "More power for Country, albeit within the context of the original Spain's municipalities?" in November 2002. "constitutional consensus". F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 7 Only 17 months elapsed from initial constitutional discussions in August 1977 to the Constitution's approval in a referendum by 88 per cent of those who voted in December 1978. Now this consensus is in question – or has been irremediably shattered, as some claim – and the Basque Nationalists and an allied party have decided to go solo in proclaiming greater autonomy. Whether this is the result of the previous eight years of former Spanish Prime Minister José María Aznar's centralizing politics, or rather a way for the Basque Nationalists to capitalize on Basque nationalist support and be kept in the government of the Basque Country, is not certain. The dark side What few in Spain want to talk about is that there is In the Basque Country, the sense of national identity remains strong. another side – a dark side – to the context of the Ibarretxe Plan that has been poisoning the whole process. That side is terrorism. The ETA, a Basque terrorist The Basque Nationalist Party has clearly acknowledged and group created in the sixties to fight Franco's dictatorship, expressed its concern for this situation. The Basque greatly increased its activities precisely when democracy Nationalists claim the Ibarretxe Plan will put an end to had become a reality. Since then it has killed more than 900 terrorism and its consequences. people, injured more than 5,000 and kept many different But, and as good as the intentions of the Basque parts of society under a death threat. Nationalists may be, all evidence points to the opposite. At present, every The ETA is still alive and kicking. On February 9, a bomb politician in the Basque blast in Madrid's main convention centre injured 40 people. Country – Basque or The Basque Its apparent inaction in the last few months may have a lot Spanish – who is not a more to do with a desire not to provoke the anger of nationalist, cannot leave Nationalists claim Spaniards who were outraged by last year's major terrorist home without a bodyguard. The same is the Ibarretxe Plan attacks in Madrid than with an actual change in ETA tactics. Such was the view held by most experts at the true for many others – Basques and Spanish – will put an end to recent Club de Madrid summit on terrorism, held one year after the massacre. who are members of the terrorism and its media, the judiciary, The content of the Plan university professors and consequences. a long list of Basques The Ibarretxe Plan intends to enhance the political that either do not authority of the region almost to the point of granting it the support independence or status of a country within a country. have different views that do not exactly coincide with the ETA's. Yet the political The text of the Plan calls for the recognition of the Basque supporters and voters of the ETA represent only 10 per cent nationality, with a special stress on boosting the use of the of the Basque electorate. Basque language, currently known and spoken by less than 20 per cent of Basque citizens. Along the same line, the The threat also affects a number of people, not politically proposal opens the possibility of secession, by means of a defined, who refuse to pay the so-called "revolutionary referendum. As well, it would create a Basque Country tax" levied by the terrorist groups through a very Supreme Court and give the Basque government exclusive consolidated and efficient network of threatening letters authority on a number of matters that it currently shares and sharing of information. All official data confirms this with the Spanish government. These include education, situation, as well as the existence of a sort of Basque immigration and the general electoral system. The Plan also Diaspora. More than 300,000 Basques have left the country calls for the right to have direct diplomatic relations with in the last few years, a high figure when we consider the and representation at the European Union, a claim that region's current population of just over 2.1 million citizens. would probably require amending the European Constitution. In contrast, the Basque Country is not only a beautiful and otherwise tranquil region, but also one of the richest in The controversy over these reforms and one of the reasons Spain, with one of the lowest unemployment rates in the why they have been rejected in the Spanish Parliament is country, about 7 per cent. It has a per capita GDP income of that they require a deep constitutional reform, which would 24,934 , only slightly lower than Madrid's 27,153 , and entail a referendum in the whole country, not just the higher than both the Spanish average of 20,020 and the Basque region. EU's 21,172 . The region also has an annual growth rate of 2.9 per cent. In other words, it is not the economic situation But the Plan is also being criticized for what it does not that is driving Basques apart or forcing them to leave, but a intend to reform; namely, the Basque Country's taxation very strong social division. system which has not been practically modified since its 8 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g the party failed to win an absolute a majority. It forged a working majority, however, with the support of the nationalist Partido Comunista de las Tierras Vascas (Basque Country Communist Party). The result is that the Ibarretxe Plan is still on. The escalation in rhetoric has been growing constantly, with Mr. Ibarretxe accusing Spanish Prime Minister Zapatero of being "just as" authoritarian as former Prime Minister Aznar, who had been in office from 1996 to 2004. Meanwhile, the conservatives claim that a too young and tender Zapatero does not have what it takes to conduct the debate and put an end to the Plan. The fact is that in clear contrast with the highly centralized and not exactly "dialogue-friendly" position of the previous government, the Socialists have shown a different predisposition. They have allowed the discussion of the Ibarretxe Plan in the Spanish Parliament, where the Basque Lehendakari was given the opportunity to fully explain and discuss the Plan. What now? With a Basque Nationalists coalition ruling the Basque parliament, Spain's young democracy is faced with what probably constitutes its biggest challenge since it began in 1978: how to resolve the regional question. Mr. Ibarretxe has already announced his Government's intention to go on with the Plan because he says only the Basques should have the right to decide their future. The Basque Nationalists categorically reject the idea of a referendum by Political roots stretch back across centuries: the Basque village of Getaria on the Atlantic coast. the rest of the country. Spanish newspapers are full of opinion columns these days. enactment in 1981. Many experts claim that the system The fact is, however, that nobody really seems to have a leads to an over-financing of the region. clue what would happen if the Basque Nationalists proceed with the Plan. The Spanish Constitution has a Rejection then Basque election provision empowering the Spanish government to "suspend" the political autonomy of a The Plan was approved in the Basque The Ibarretxe Plan Community when it challenges the "general Parliament by an absolute majority on December 30, 2004. The "small print" intends to enhance interests." Legally, it has that option. Politically, it would toll the death knell for the consensus of that majority, though, is that the the political on Spanish decentralization. Basque Nationalist Party was able to pass the Plan only with the votes of authority of the A possible solution could be a sort of "return Herri Batasuna, a political party that region almost to challenge" from the Spanish government. had been declared illegal on the Instead of ruling out the approval of the Plan on grounds that it was the political wing the point of the grounds that it is unconstitutional, the of terrorism. Herri Batasuna members granting it the Spanish government could pass special voted on the Plan because the Basque legislation to establish its own terms. That Parliament had refused to expel them status of a country would be something similar to the Canadian after the ban. within a country. Clarity Act of 2000, which sought to establish the basis upon which the Canadian government After that, the Plan was thoroughly would negotiate with a province following a discussed in the Spanish Parliament secession referendum. The Canadian Act and overwhelmingly rejected by a requires a "clear question" and a "clear majority" without vote of 313 to 29 on February 1 on the grounds that it was otherwise defining those. It leaves that up to the federal clearly a constitutional reform. Parliament should the situation arise. Following that rejection there was a heated and ugly That approach might not be appropriate to the "Basque campaign leading up to Basque Country elections on April question" which has political roots that stretch back across 17, 2005. Because the Herri Batasuna could not participate in the centuries and is nourished by long memories of the elections, another political group, Aukera Guztiak (whose repression. A political solution of some sort seems the best name means "all the options") was created with virtually option. Sadly, the present context, with terrorism looming the same actors. This group was, in turn, banned by the large, may not offer the tranquility needed to undertake a Constitutional Court, which offered to lift the ban only if major constitutional reform. the party rejected terrorism. The group refused to do that. The Basque Nationalists won the elections nonetheless, but F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 9 Prices are in Canadian dollars and do not include shipping costs. 10 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g US law restricts citizens' chances to go after big corporations in court … and the Republicans show flexibility in their dedication to states' rights. BY R I C H A R D A . B R I S B I N , J R . Will Washington's new legislation governing class action how the Bush administration is redesigning the American lawsuits mean the end to huge settlements by big tobacco system of judicial federalism. There has been a shift in the and major polluters? boundaries provided for in the constitution between the separate federal and state judicial systems and this shift That's the charge made by the critics of the Class Action benefits private sector interests. Fairness Act of 2005, passed in February by the United States Congress at Class action lawsuits as social policy the urging of New courthouses In 1938 the United States Supreme Court first President George aside, will the W. Bush. adopted Federal Rules of Civil Procedure that Federal Court Supporters of the permitted plaintiffs injured by the same event have room to Act say it will only take on class to join together as classes in suits. spell the end to action suits? frivolous lawsuits In civil rights suits during the 1950s and 1960s, by lawyers who African Americans successfully used these take a percentage class action provisions to challenge racially cut of every award discriminatory governmental policies. to their clients. In 1966 the Supreme Court revised the Rules. Opponents say it The revision permitted federal lawsuits to will severely restrict secure government recognition of action against constitutional rights for racial and religious industries that minorities, the mentally ill, and recipients of pollute and sell governmental services. products that cause injury and death to Soon lawyers filed state class actions alleging a consumers. wide range of common injuries from business financial practices, manufactured products The Act limits the such as asbestos, tobacco, firearms, power of the states' pharmaceuticals, and autos, and the judiciaries in class environmental degradation caused by action lawsuits. corporate dumping of pollutants in streams These are suits and on land. Class action suits became an about a common institution in America, an institution that was injury brought on regulating industry and causing the creation of behalf of large numbers of unrelated plaintiffs. The social policy. plaintiffs in such lawsuits often claim that a commercial product or financial service has caused injury to consumers. Pushing cases to the federal court The most important thing about a class action suit is that The Class Action Fairness Act is a "sea change" in US law. It every person who has suffered from a product or service in reshapes American judicial federalism, private class actions, the manner defined in the lawsuit identified in the lawsuit and corporate power. – not just those who file the lawsuit – is entitled to a share in the compensation. In some cases that affected a large The act changes the right of plaintiffs in class action suits to part of the population, industry was forced to pay huge choose where their case will be heard. This is called settlements. "diversity jurisdiction" in the legal system. When drafting the United States Constitution of 1787, the Framers avoided The new "fairness" Act was strongly endorsed by business political controversy by establishing a dual court system. associations and corporations and its passage illustrates The existing systems of state courts received jurisdiction over crimes within their borders and most civil disputes. Richard A. Brisbin, Jr. is Associate Professor of Political Science The federal courts acquired jurisdiction over crimes and and a Benedum Distinguished Scholar at West Virginia University. civil conflicts to which the federal government was a party He is the author of "A Strike Like No Other Strike: Law and or that arose on federal lands or occurred across state or Resistance During the Pittston Coal Strike of 1989-1990" (2002), international boundaries. and "Justice Antonin Scalia and the Conservative Revival" (1997), among other books. F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 11 Two centuries ago, Congress permitted the federal courts – supposedly will teach this defendant and others not to as well as state courts – to hear "controversies between engage in the harmful activity in the future. citizens of different states" or what has become known as diversity of citizenship cases by passing the Federal Judiciary Punitive damages, rarely limited by state law, are a Act of 1789. The aim was to prevent "home cooking" or the discretionary award that can extend into the hundreds of prejudice of state courts against out-of-state parties. millions of dollars. They provide an economic incentive to file class actions when the compensatory damage would be Moreover, the Supreme Court determined that the the relatively small cost of a consumer product such as a defendants in diversity cases could "remove" their cases contraceptive device or a recording on compact disc. In from state to federal court only by showing the dispute cases heard by federal courts, however, some laws limit arose under federal constitutional or statutory law or there punitive damage awards and the Supreme Court has was "bad faith" or discrimination against them by a state established guidelines to control such damage awards. court. Federal jurisdiction of class actions therefore sometimes can permit corporate defendants to avoid large and costly The Class Action Fairness Act significantly enhances the role punitive damage awards. of the federal courts to decide cases involving citizens of different states. With a few exceptions, it requires federal courts to consider any class action if more than one-third of The political divide the class members are from more than one state. This Behind the legal changes made by the Act lurks a bitter situation is likely with most cases concerning injuries political division. American business, especially through caused by manufactured products. the interest group the United States Chamber of Commerce, has regarded class action litigation and pro-consumer Also, the Act makes it much easier for the corporate decisions of judges as against business interests. Business defendants in class actions to petition to remove their cases sees in such decisions increasing insurance costs, to federal courts. The defendant need not show judicial bad expenditures on risk management, restrictions on the faith, only minimal diversity of citizenship among members exploitation of natural resources, and legal fees. It claims of the class, one hundred members in the class, and an these costs diminish the competitiveness of American firms aggregate of $5 million at issue in the suit. This change in a global economy and cost American jobs. makes it possible for firms to avoid having their suit considered by state court juries drawn from communities Business has sought to advance its interests through its with a large poor, minority, or politically liberal population contributions to candidates, largely those of the Republican that might be disinclined to support corporate interests. Party, and lobbying to restrict class actions and revise other legal rules that increase insurance costs. Minorities, These changes increase the authority of federal judges to consumer, and environmental interests and their attorneys consider conflicts and set policy when "have-not" injured have sought to counter business influence through parties and rights claimants sue state and local contributions to and political alliances with federal and governments and corporations. state legislators of the Democratic Party. The passage of the As if that weren't enough, the Act changes the rules on Class Action Fairness Act of 2005 signifies a victory for multiple-party suits. It establishes a new form of "mass business interests in this conflict. action" in American legal practice. For 100 or more Ironically, however, the Act is a Republican-supported shift plaintiffs who do not qualify as a class for a class action of duties and power to the federal judiciary. Since the 1930s, suit, if they are arguing the same issues of law and fact, the Republican Party has stood as a defender of the states their lawsuit now counts as a "mass action" case. The Act and decentralized government. It has opposed a greater says that in a mass action case, any individual defendant role for the federal government and sought more freedom claiming $75,000 or more has to have his or her case held in for American business from federal regulation. Its federal court, while those claiming under $75,000 would be spokesmen, such as House Majority Leader Tom DeLay, left to litigate in a state court. Defendants can use this law often rail against an "activist" federal judiciary. to "divide and conquer" those suing them in such cases. Nonetheless, the Class Action Fairness Act allows business to Cases in which plaintiffs suffer minimal losses, such as federalize litigation and create new activities for the federal small overcharges for a product, will often be too costly to judiciary, a judiciary that Chief Justice William Rehnquist – litigate. As well as once again increasing the authority of a conservative Republican - already considers to be in a federal courts, this provision might reduce the legal costs "funding crisis." for corporations. The lesson of the Act is that federalism is far from being an The act also changes how lawyers for the plaintiffs are paid. immutable principle of American constitutional Attorneys for class plaintiffs are usually paid by governance. Instead, federalism is often trotted out as a "contingency fee". But how this contingency fee is symbol to justify certain partisan political objectives. But calculated has now been changed by the act. The lawyer is threats to federalism and the centralization of power in the paid a percentage – usually twenty to forty percent – of the federal government, such as those that often concern monetary award in cases they win. If they lose, they are not American business and the Republicans, sometimes just paid. disappear. The time they disappear is usually when they The act also has the potential to change remedies for might hamper the ability of business to make money. That injuries. Beside compensation for injuries, in American state has happened with this Act's expansion of federal judicial courts judges or juries can additionally award the plaintiff power and resulting reduction of state judicial "punitive damages" as penalty against the defendant that responsibilities. 12 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g Nigeria: Can a handpicked elite group reform the federal system? A new "Reform Conference" has its work cut out for it. BY K I N G S L E Y K U B E Y I N J E Almost since the restoration of democracy in Nigeria in appropriates for itself more than 48 per cent of revenue, 1999, many, especially in the south, have complained that leaving the states and local governments without sufficient the country isn't "truly" federal. The central government is funding. Many feel that the federal government should not too strong, they argue, and dominates local and state have more than 30 per cent. governments. President Olusegun Obasanjo has responded to this Oil, "indigene-ship" and retooling the presidency criticism by convening a "National Political Reform The recently convened conference, headed by retired Conference." The President and the 36 state governors Supreme Court Justice Niki Tobi, will tackle various handpicked 410 high-profile delegates who will do a root- contentious and divisive issues, including resource control, and-branch examination of Nigeria's political system over a an agenda championed by nine southern states from whose three-month period. At the end of the deliberations, the region the country derives its oil wealth, which accounts for delegates should come up with recommendations that at least 90 per cent of the country's foreign exchange could fundamentally change the practice of federalism in earnings. the country. Another contentious issue is the question of "state The delegates include such eminent of origin", under which Nigerians have been figures as Chief Emeka Anyaoku, classified as "indigenes" and "non-indigenes" and immediate past Secretary-General of as "settlers" and "non-settlers". the Commonwealth, retired Gen. Ike Nwachukwu, two-time foreign affairs In Nigeria, the fact that one was born in a minister, Prof. Adebayo Adedeji, particular state or has resided therein for a great former Executive Secretary of the UN many years, does not automatically confer the Economic Commission for Africa and status of, to use the Nigerian term, an "indigene" Prof. Jerry Gana, two-time minister and on the person. A Nigerian not classified as an a serving Presidential adviser. "indigene"( legally considered indigenous to a region) can be routinely denied certain rights. For This conference is the first exercise of instance, a non-"indigene" cannot contest elected this kind since the country got its office in that person's state of residence but must independence from Britain in 1960. do so in the state of origin of his or her father. Southern discontent is one motivating factor. But so is a general Delegates will also have to consider what would Will Obasanjo's reform be the best political structure for the country. discontentment about the operation of conference produce popular While some Nigerians insist that the present a federal system that currently favours results? a politically and financially strong federal-state-local government structure should be federal government to the detriment of retained, some others want a return to what they weak state and local governments. call "regionalism," which was practiced in the early years of independence. Under the discarded regional Critics of the present structure, such as Governor Bola structure, the then four regional governments were both Tinubu of Lagos state in southwest Nigeria, have often politically and financially strong. They controlled the argued that while the country professes federalism, in resources in their respective areas, earned all the monies reality it is run like a unitary state, with an overbearing and only paid royalties to the federal government. federal government. The conference would also have to decide whether Nigeria Tinubu and a number of other state governors have often should retain the present presidential system, patterned on challenged the federal government in court, for the US model and generally seen as expensive or whether "overstepping" its constitutional bounds. Tinubu and his the country should return to the parliamentary Westminster like have consistently called for the practice of "true model. This system was practiced in the country in the federalism" and the introduction of "fiscal federalism" in early 1960s. the sharing of federally collected revenue. They are not comfortable with the fact that the federal government The delegates have constituted themselves into 19 committees and are now meeting behind closed doors. Their reports will be discussed later at plenary sessions where recommendations for reform will be worked out. Kingsley Kubeyinje is an editor with the federal government- owned News Agency of Nigeria (NAN), a wire service. F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 13 Some believers; many doubters report, whatever it says. In addition, political analysts and observers say the National Assembly has the power to While many political actors such as Don Etiebet, leader of refuse constitutional backing for the decisions taken at the the main opposition All Nigeria Peoples Party, believe that conference. at the end of the day, the conference will proffer solutions to most nagging national issues, some are of the view that When the National Assembly gave him a cold shoulder, the nothing substantial will come out of the talks, for which the president was forced to look elsewhere for the money. president is committing 932 million naira Although the government has yet to disclose how the (US $7 million). money was raised, it is believed that the president took it out of his hefty security allotment, for which he normally Those who believe that the conference will end up merely does not have to account. as a talk shop point to the "no-go areas" outlined by Obasanjo. For example, delegates are barred from looking into the possibility of any ethnic group or any of the North and South – can the twain meet? nation's six political zones – south-east, south-west, south- More significantly, many fear that unless deft political south, north-east, north-central and north-west – pulling moves are made, the conference recommendations may be out of the federation, either now or in future. rejected outright by a section of the country – the predominantly Muslim northern Nigeria — which was not The delegates are also forbidden from discussing religion, in support of the idea in the first place. in spite of the fact that many blood-letting riots which had occurred in the country were instigated through religious The North is Nigeria's most populous region, dominated differences. While a good number of Nigerians prefer that by the country's largest ethnic group, the Hausa, and the country be considered a secular state, others insist that northern elites have been skeptical about the motives for it be regarded as a "multi-religious" state. Still others the conference, which they fear is an attempt to diminish believe that it would be best to Islamize the country, a fact their region's political stature and influence. reinforced by the fact that some Northern governors have implemented Islamic Sharia law in their states and expect Indeed, northern leaders have raised a number of strict compliance from all. objections, which if not properly handled could jeopardize the conference's outcome. For example, a group of Some of those who believe that nothing useful can be prominent northern leaders led by the powerful Sultan of achieved through the government-sponsored conference are Sokoto, Muhammad Maccido, have consistently denounced planning an alternative event, that they call the "Pro- the composition of delegates, insisting that it was skewed National Conference" (or "Pronaco"). The brains behind in favour of Christians, who are predominantly from the this alternative meeting, which the government is south. They have opposed the fact that both the conference somewhat jittery about, include Nobel Laureate Prof. Wole chair and the secretary are Christians, even though the Soyinka, Chief Anthony Enahoro, who in 1956 moved the secretary is from the north. President Obasanjo has since motion for Nigeria's independence, fiery Lagos-based succumbed to the pressure and appointed a southerner, lawyer Chief Gani Fawehinmi and a host of other human who is also Muslim, as co-conference secretary. rights activists. The "Pronaco" conference may take place sometime in June. To drive home their objections, a number of Islamic groups have threatened to wage Jihad against the federal Some critics also believe that since the government single- government, if their objections were not quickly and handedly appointed all the delegates, those delegates will adequately addressed. Some of the groups insist that do the state's bidding and implement the government's another Muslim be appointed as co-chairman. agenda, often citing a well-known Nigerian proverb that "only ingrates bite the fingers that feed them". Much as It is a fact that the idea for the convocation of what was many delegates have tried to allay that fear, the emergence then referred to as a "sovereign national conference" recently of a draft constitution (associated with pro- originated in the south, particularly in the southwest. government delegates) further aroused the suspicion Southwestern Nigerians still have bitter memories of the among many Nigerians that the federal government, for surprise annulment of the June 12, 1993, presidential one, has a hidden agenda, one that notable includes the election which the late Moshood Abiola, a politician from much-rumoured ambition of President Obasanjo to serve a that geo-political zone and a billionaire businessman, was third term. While the present constitution prescribes only almost certain to win. That annulment by the then military two terms of four years each, the draft constitution administration of Gen. Ibrahim Babangida, a northerner, prescribes a single six-year term. And some delegates, such was seen as a clear evidence of the north's unwillingness to as Greg Mbadiwe, are already campaigning for the have citizens of other parts of the country govern Nigeria. prolongation of Obasanjo's stay in office, when his second Before that election – acclaimed by international observers term expires in May 2007. as the fairest and freest in the nation's history – six northerners had ruled independent Nigeria for a In addition, the National Assembly (the official name for cumulative period of 28 years and 4 months since October the federal parliament) has tacitly distanced itself from the 1960, compared to only three years by two southerners. conference – and by inference its decisions – by refusing to approve the 932 million naira the president sought for Now, with a President from the Southwest, and powerful hosting the conference. Indeed, 52 members of the political forces in the North, Nigerians are still grappling Assembly dragged the president to court for organizing the with the ethnic and regional tensions that caused a civil conference, which they say is unconstitutional. Although war in the 60s and 70s and a number of coups and counter- the group has withdrawn the suit, many believed that the coups since then. parliamentarians are determined to trash the conference 14 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g A new constitution for Europe – getting closer to federalism? The proposed new constitution has power-sharing provisions that could turn the EU into something more closely resembling a federation. BY U W E L E O N A R DY By June 2005, the new European Constitution will have faced the voters in referendums in several EU countries – Subsidiarity in the including France, whose former president, Valéry Giscard d'Estaing, wrote the draft. No one knows whether these European Union referendums will pass or not. Some countries may even want to amend the constitution before it is ratified. In line with Article 3b of the European Maastricht But does the draft constitution give the new Europe a Treaty, subsidiarity means that decisions in a federal structure? multilevel system of governance should be made as close to the people as possible. Subsidiarity, in other Some critics deny that the constitution has any federal words, is a political principle of guidance rather than elements at all. But even before the constitution was a legally binding stipulation. This means that its drafted, the EU had these significant federal characteristics: application requires negotiated agreements. • Direct legislation: EU laws have always Thomas O. Hueglin, From the International Conference automatically come into force for individuals and on Federalism 2002, St. Gallen, Switzerland, Report of corporations (and other "legal persons") without the Work Sessions 6 and 18 on Decentralisation and Good need for member countries also passing those laws. Governance And the EU's legal rules have since gained supremacy over the relevant provisions of national laws. (This resembles the role of the national or federal features has been set out as a political program for a government in a federal country.) federal state, although one of a unique and • Division of powers: The resulting division of unconventional type. legislative powers between two different levels of • The technical and legal detail of the Constitution government – the marks the most substantial step yet towards a European Union genuinely federal structure for the EU. The and the member introduction of rules for how to divide legislative states (including Is the "flexibility powers between the Union and its member states is their regions) – is the clearest federal clause" really a clear sign of federalism. element of the about flexibility or European structures does it hide some Exclusive and shared powers and the defining feature of a federal Up to now, there were only a few exclusive powers of the system. real constitutional European level in various scattered provisions of the While these dangers? existing Treaties on the Community and the Union. The bulk of the powers the EU exercised in practice were characteristics were in derived directly from the politically defined wide objectives existence long before the of the Union. This has over the years led to expansion of Constitutional Treaty powers by the EU, which many member states came into life as a draft, that Treaty has continued the EU's acknowledged in their own constitutions or rules of evolution in a federal direction still further. constitutional interpretation. • The name of the Treaty makes a political claim. By its The proposed division of powers lists them and defines intent to "establish a Constitution for Europe" in law, exclusive and "shared" legislative powers. To the shared it shows that the Union already has state-like features powers, the EU has added "areas of supporting, in many respects. The further development of these coordinating and complimentary action". The exercise of the "shared" powers - in fact the EU's priorities - is subject to the principle of subsidiarity (see Box 1 and Box 2). Thus the Uwe Leonardy is the former Head of the division dealing with shared powers are regulated by one of the central features constitutional matters of the Lower Saxony Mission to the German of federal systems. Federal Government and former Senior Fellow, Centre for European Integration Studies University of Bonn. He is the author A new wide-ranging and controversial "flexibility clause" of "Is Europe heading toward a federal constitution?" in now also legalizes action by the Union if this "should prove Federations, Vol. 1 No. 5. necessary, within the framework of the policies defined ... , F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 15 to attain one of the objectives set out in the Constitution, the Constitution. Instead, in defining the shared powers, and the Constitution has not provided the necessary the new Constitution merely subtracts the exclusive powers" (See Box 2). Although the "flexibility clause" was powers from the EU's list of powers and adds "supporting, based on a (weaker) existing clause, some critics see it as a coordinating and complimentary actions". dangerous instrument. To limit the EU's right to use of these "shared powers", the Two significant issues arise from these new parts of the Constitution resorts to the principle of subsidiarity without constitution: binding that use to any legally defined criteria. This does • Is the Constitutional Treaty's division of not adequately answer the demands for a clearer and more responsibilities between the Union and its Member efficient division of powers between the Union and its States sufficient? And is it efficient? Member States. • Is the "flexibility clause" really about flexibility or does it hide some real constitutional dangers? The fact remains that subsidiarity is legally ambiguous and subject to political manipulation. The result is a kind of a circular solution. In the area of shared powers, in which Defects in the rules the member states continue to exercise authority where the Whether the shared powers meet European priorities is the institutions of the EU do not make use of theirs, the most relevant test of the choice of the shared powers in the conditions for laying claim to these powers and the constitution. However, the choice of shared powers of the requirements for making use of them can only be clearly EU is not based on such concrete criteria as the established by concrete criteria. maintenance of legal or economic unity as necessitated by But there is another factor in determining rules for the division of powers. The Constitution enumerates no fewer than 202 provisions for binding legal acts of the Union in a The European Constitution on wide variety of categories (European laws, framework laws, regulations and decisions). But none of these flexibility and subsidiarity provisions is linked in any legal way to the Constitution's rules on the division of responsibilities. The Constitution Article I-11 - Basic Principles, Paragraph 3 "Subsidiarity" does not indicate which of those legal acts are to be Under the principle of subsidiarity, in areas which do not fall within considered as deriving from either the EU's exclusive its exclusive competence, the Union shall act only if and insofar as powers, its shared powers, or its other powers. In that the objectives of the proposed action cannot be sufficiently sense, the rules for the division of powers seem to be achieved by the Member States, either at central level or at regional rhetorical rather than constitutional norms. and local level, but can rather, by reason of the scale or effects of The effect of the "flexibility clause" is to give the Council the proposed action, be better achieved at Union level. the power to alter the Constitution's divisions of powers The institutions of the Union shall apply the principle of subsidiarity without requiring an amendment to the Constitution. That as laid down in the Protocol on the application of the principles of gives the clause significance far beyond mere adaptation in subsidiarity and proportionality. National Parliaments shall ensure the context of existing constitutional rules. If you consider compliance with that principle in accordance with the procedure the enormous efforts necessary for ratification of the set out in that Protocol. Constitution by all member states, then granting power to the EU to modify the power balance in the Constitution Article I-18 – the "Flexibility Clause" seems out of proportion and extremely questionable. Flexibility clause Not cause to reject the constitution 1. If action by the Union should prove necessary, within the The fact is that there are provisions in the European framework of the policies defined in Part III, to attain one of the Constitution that should evoke some concern. But to say objectives set out in the Constitution, and the Constitution has that does not imply any plea for the rejection of the not provided the necessary powers, the Council of Ministers, Constitution in its national ratification procedures and acting unanimously on a proposal from the European especially not in the upcoming referenda. No constitution Commission and after obtaining the consent of the European has ever been perfect from its very beginning. A Parliament, shall adopt the appropriate measures. constitution can only be improved once it exists. Still, its 2. Using the procedure for monitoring the subsidiarity principle faults need to be identified in time. referred to in Article I-11(3), the European Commission shall That applies particularly in a situation in which the EU has draw national Parliaments' attention to proposals based on this to consider other applications for membership. Because Article. these include such problematic ones as Turkey and 3. Measures based on this Article shall not entail harmonisation of Ukraine, the EU may need all its creativity and must be Member States' laws or regulations in cases where the open to considering brand new ideas. The creation of a Constitution excludes such harmonisation. fully federal "United States of Europe" by a core group of countries, and the use of this new state as a nucleus of a Further reading: less supranational European Union, could be one of those Official website of the European Convention: brand new ideas. It could also be an alternative, if the http://european-convention.eu.int/ Constitutional Treaty fails to stand the test of the Full text of the constitution: referenda. http://europa.eu.int/constitution/index_en.htm 16 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g Dr. Vjekoslav Domljan of Bosnia A Bosnian diplomat reflects on a federation on the fault lines of three civilizations Dr. Vjekoslav Domljan, the Ambassador to Canada Bosnia. Along these cultural faults lines many stresses have existed for a long time. Similar to geological faults, the East- from Bosnia and Herzegovina, led the team that prepared the first development strategy for the Council of Ministers of Bosnia and West fault line has existed since the ninth century. The Herzegovina, "Entrepreneurial Society", under the auspices of European-Islamic fault line has existed since the 14th the World Bank. He was the Bosnian representative for financial century. Both have been the scene of frequent eruptions. property succession for post-Communist Yugoslavia. Bosnia is located at the intersection of the Western European (Catholic and Protestant), the Eastern European (Orthodox), "If the state is strong, it will crush us; and the Islamic (Muslim) civilisations. The country has if it is weak, we will perish." served as a flashpoint many different times. - Paul Valéry Future eruptions could well recur. In Bosnia, one's At different times in history, Bosnia and Herzegovina was part of the Roman, Goth, Slav, Hungarian, Ottoman and Ivo Andric, a native of religion is almost Austro-Hungarian empires. When the Austro-Hungarian Bosnia who was always tied to Empire crumbled at the end of World War I, the country, awarded the Nobel Prize commonly known as Bosnia, was made part of the Kingdom for literature in 1961, one's ethnicity and of Yugoslavia. After World War II, it became part of described the Bosnian language. Communist Yugoslavia under Marshal Tito. Yugoslavia drama in his novel The broke apart a decade after Tito's death, first with the almost Bosnian Chronicle: peaceful secession of Slovenia and then with the war ending How is it possible for this country to become stable and orderly … in the independence of Croatia, Bosnia's northern if its people are divided as nowhere else in Europe?... the centre of neighbour. War tore apart Bosnia from 1992 to 1995, ending the spiritual life of each of these … groups is far away, in a foreign with the Dayton Peace Agreement signed by all parties in land, in Rome, Moscow, Istanbul, Mecca... and God alone knows Paris in December 1995. where, but at any rate not here where the people are born and die. Bosnia is a beautiful country, full of rugged mountains and And each group considers that its well-being is conditioned by the peaceful valleys, medieval ruins and modern hotels, where disadvantage of each of the other … faiths, and that they can make some tourists are returning again. A page of the official progress only at their cost…. And each of them is expecting tourism site of Bosnia describing the city of Mostar, heavily salvation from somewhere outside, each from the opposite damaged in the war, says it all: "Recovering from the direction. devastation is no easy task... the physical aspect of A Canadian scholar, Vern Neufeld Redekop, described deep- reconstruction is the easier bit, soul healing comes a bit rooted conflict as having the character of a "zero-sum slower." game" with high stakes, in which each side becomes The hollow tree in Vancouver's Stanley Park is the perfect convinced that they can only win at the expense of the metaphor for Bosnia. The tree is empty inside, with a huge other. As in other parts of the world, the deep-rooted rivalry hole into which tourists often drive their cars to have their in Bosnia has caused a strong decline in support for pictures taken. By a strange twist of fate, the tree is alive, compromise and unity. with a huge treetop full of green leaves. The tree is like Bosnia - an existing but fragile state. Strong units, weak centre In Bosnia, one's religion is almost always tied to one's A zero-sum game? ethnicity and language. If one has Croat ancestors, he or she A historical atlas shows Bosnia criss-crossed by fault lines is likely to be Catholic and speak Croatian. A person of Serb running from the Baltic and Black Seas to the Adriatic. ancestry is extremely likely to be an Orthodox Christian and These fault lines separate three civilizations and converge in speak Serbian. Someone of Bosniak descent is most likely to F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 17 be Muslim and speak resolution of intractable conflicts in Bosnia. Since friction Bosnian. However, a between ethnic groups has polarized the country, the speaker of one language High Representative has tried to introduce and/or can easily understand the strengthen central political institutions and reinforce the other two. Reading across Council of Ministers. However, initiatives to enforce the the three languages is a central level to hold Bosnia together, and resist bit more difficult, because disintegration of the country are mainly attempts of Bosnian and Croatian imposing unity rather than encouraging its growth from only use the Roman within. alphabet, while Serbian prefers the Cyrillic. Mostar bridge was rebuilt, but how long The High Representative himself has tried to generate will it take Bosnians' lives to mend? some unity by taking actions such as establishing the Within Bosnia, there are Indirect Taxation Office at the central political level, to two distinct constituent units: the Federation of Bosnia and tax and generate original revenues, with taxation Herzegovina (the Bosniak-Croat Federation), and Republika headquarters in Banja Luka. Such actions are, however, Srpska (the Serb Republic). The fact that there are two units second-best solutions, because they were not initiated by the – rather than a larger number, as in most federal countries - Bosnian government. poses a greater challenge for Bosnia. Ronald L. Watts, one of the world-wide leading writers on federalism, has described Justice and jobs? two-unit federations or unions as ones which sharpen polarization, produce impasses and lead ultimately to After the end of the war, Bosnia did not have the necessary instability. structures and conditions for institutional development and conducting policies. In this vacuum, each High And the ideological pendulum has recently swung in Bosnia Representative in turn designed and imposed programmes from a point dangerously far on the left to one dangerously to resolve the country's most important problems. far on the right. The absolutism of the common has been Currently, two of these problems are justice and jobs. replaced by the absolutism of particularity, or more precisely Communist internationalism has been replaced There are structural impediments to the pursuit of justice. with ethno-national balkanization. Most citizens cannot afford to pay high court costs and legal fees when they are victimized. The new "top-down The present institutional arrangements fail to reflect capitalists", who acquired their wealth by privatizing accurately the two important aspirations of Bosnians: socially-owned and self-managed companies, can afford it national unity and ethnic identity. but they are not interested in legal order. They prosper more in disorder. Just as there have been centrifugal forces pulling Bosnia apart, there have also been centripetal forces pulling it The absence of rule of law in Bosnia is caused by the together. On the one hand, differences between Bosniaks, complexity of institutional arrangements, the Croats and Serbs have become more acute; on the other misunderstanding of the situation by foreign advisors, and hand, internal conflicts have been moderated through a mainly by the insufficient implementation of justice by local combination of rules to deal with inter-regional trade, authorities. The High Representative may force the public united action in conducting international trade and central- authorities and regulators to pass a law or a procedure but state level institutions to deal with international institutions. it cannot force them to enforce it. The nationalists in each ethnic group introduce parallel systems in their constituent Political parties mirror the fractured nature of society. The units and modify the formal rules in their tug-of-war with dominant parties are identified according to ethnic the High Representative. differences, making them top issues. There are no parties that emphasize the importance of building up unity and There is still little understanding of which specific finding solutions to urgent economic, legal and social institutional design will work best in a specific country: the problems (mass unemployment, gaps in the rule of law, low approaches of the stronger ethnic side or the weaker multi- social capital, etc.) - problems the former Communist party ethnic side. It takes decades to change social institutions. As (now the Social Democratic Party) neglected. the great Russian satirist Vladimir Voinovich warned, "the Russian system ended, but the Russians remained". Not Consequently, the central institutions of Bosnia are much until Bosnians change their social norms – which will only weaker than either those of the inter-war Kingdom of happen slowly–can new legal, economic and political Yugoslavia or those of the former Communist Yugoslavia. institutions, like those of the EU, be popularly accepted so Both states failed due to unresolved ethno-national they could be incorporated into Bosnian society. problems. The nationalists within each ethnic group in Bosnia are FURTHER READING: primarily interested in institutions they may have under Andric Ivo, Bosnian Chronicle, translated by Joseph Hitrec (New their own control, ruling over territories where their own York : Knopf, 1963). ethnicity is a majority. Consequently, Bosnia, with a Hupchick, P. Dennis and Harold E. Cox, The Palgrave Concise population the size of Montreal, still has armies and even Historical Atlas of Eastern Europe (New York: Palgrave, 2001). secret services organized by each ethnic region, but lacks a Redekop, Vern Neufeld, From Violence to Blessing: How an single police service fighting local corruption, regional crime Understanding of Deep-rooted Conflict Can Open Paths of and international terrorism. Reconciliation (Ottawa: Novalis, 2002). Watts, L. Ronald, Comparing Federal Systems, 2nd Edition After the war of 1992-1995, the Office of the UN High (Montreal: McGill-Queen's University Press, 1999). Representative in Bosnia was mandated to facilitate the 18 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g Argentina: From "funny money" to fiscal responsibility BY A L E J A N D R O A R L I A In Argentina, the past decade was The 24 subnational jurisdictions began by implementing marked by recurring deficits and a "orderly financing programs." Through these programs, resulting increase in indebtedness at all the national government grants financial assistance to levels of government. Progressively the the 23 provinces and the autonomous city of Buenos country became submerged in a deep Aires to address their financial deficits and their economic recession that lasted almost repayments of capital. The latter entities commit four years, from 1998 to 2001. themselves to a series of fiscal objectives that are The city of Buenos Aires designed to lead them to equilibrium. The continued contraction of economic issued its own currency, as activity meant a huge reduction in the did many provinces. As for the accounts of the national government, their levels of taxes collected. The result was progress towards equilibrium was not regulated by that the national and some provincial governments resorted particular programs or laws. It was not even framed by a to alternative tools of financing. A whole series of quasi- new agreement with the International Monetary Fund. currencies were issued. These took the form of credit notes In both cases - the national government and the 24 for local circulation, whose redeemable value varied subnational jurisdictions - the quest for balance was the significantly among the different jurisdictions. As a result, result of a strong political conviction about the importance 11 quasi-currencies were circulating through the nation's of a return to fiscal health and of the national government's territory, many of which suffered a high rate of depreciation re-establishing its role as the single monetary authority and (see box). the main body responsible for fiscal policy. This was a drastic strategy. But the governments thought it As a result, after more than ten years of deficits, the necessary in order to give a measure of liquidity to a highly national government and the 24 jurisdictions achieved depressed economy and to allow them to continue at least a financial balance in the 2003 fiscal year, and went on to minimum level of public obtain a surplus in the year 2004. This spending. underscored the need for establishing The worst point came at the Quasi-currencies harmonized criteria and coordinated end of 2001, triggering the (October 2002 - in millions of pesos. The amounts represent the actions among all levels of greatest crisis in Argentine value of each unit of quasi-currency for each Argentine peso, at government in order to consolidate history. The massive the October 2002 rate. ) the fiscal recovery. deterioration of the economic, political and social fabric Jurisdiction Amount Issued Market Value * Sound management and meant the break-up of the Buenos Aires 2,793 0.95 Cordoba 876 0.84 - 0.88 transparency institutional order, and thus the breaching of most social Corrientes 250 0.40 The progress of these transformations contracts. In this framework, Catamarca 40 1.00 made possible the Fiscal Chaco 100 0.68 - 0.74 Responsibility Act of August 2004. the national government and Entre Rios 260 0.70 This legislation institutionalizes the the provincial governments Formosa 100 0.66 - 0.76 fiscal rules agreed to in the alike entered into suspension La Rioja 27 1.00 of payments. framework of the "orderly financing Mendoza 120 0.90 programs." Tucuman 173 0.85 - 0.90 Orderly financing The Act establishes the adoption of Subtotal 4,739 harmonized fiscal rules that ensure The year 2002 became the National Government 3,300 year to establish order and orderly management in the use of Total 8,039 resources, and favour transparency in new starting points. The Argentine public sector public administration. This facilitates began a massive process of reordering its finances, and by citizen control over public operations and predictability of means of different programs developed in 2002 and 2003, fiscal policy performance. the country achieved monetary reunification, refinancing of The most relevant provisions of the Act are as follows: the municipal, provincial and national debt, and • Application of uniform budgetary categories. These convergence towards financial equilibrium. permit the consolidation of public accounts and comparisons of fiscal information between the nation and Alejandro Arlia is the President of Centre for Federal Studies the provinces and among the latter. (CEFED) in Buenos Aires. F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 19 • Presentation of the projected fiscal framework annually public spending during the 2002 and 2003 fiscal years. It by the national government for the next fiscal year, so was valid to argue that freezing spending at these levels that the provincial administrations have the necessary would not allow a response to society's growing demand information to develop their budgetary projections. for public benefits, basically those linked to social services • Regular and harmonized publication of fiscal and assistance to the most disadvantaged sectors. But the information. The two levels of government must publish economic growth of 2004, and therefore the increase in their budgets, fiscal operations, information on the public fiscal resources, allowed the public sector to increase its debt and the level of activity of the public sector. expenditures to reach 38 per cent of GDP. Even if this ratio • Rules for the treatment of public income and is low in comparison to international levels (50 per cent), it expenditures in the stages of formulation and means a higher starting point than that of previous years. implementation of the budget. In particular, this limits The question of anti-cyclical funds was also controversial. the expansion of primary spending to the nominal Even though everyone agreed with the need for these growth of the Gross Domestic Product. It demands a funds, some objected to the omission of uniform criteria in primary surplus from jurisdictions whose debt servicing the Act, and to the lack of quantitative objectives for exceeds 15 per cent of their current revenues (net after meeting uniform criteria. This "omission" by those who transfers to municipalities.) drafted the Act was based on the belief that it would be not • Establishment of anti-cyclical funds. All levels of possible to oblige any provincial administration to keep a government must create these funds so as to guarantee percentage of its resources to address future adverse the continuity of their operations in critical moments, situations, given the current enormous pressures on their without falling into fiscal imbalance. levels of spending. • Credit sustainability. The Act promotes coordination The crisis of 2001 had a profound effect on the "fiscal measures to assure that basic services are maintained. It culture" of the authorities at the different levels of regulates the access by provinces to new credit, and government. The current reality of fiscal surplus is proof of promotes strategies of recovery for those that are highly this culture change. In that light we can be sure that each indebted, setting as a limit the assignment of 15 per cent administration will know how much it will need in its anti- of current revenues (net after transfers to municipalities) cyclical reserve. for debt servicing. • Creation of the "Federal Council for Fiscal The art of the possible Responsibility." This operates as the means for applying the provisions of the Fiscal Responsibility Act. It is The results of the arrangements made for the provincial composed of the ministers of economy and/or finance of debt were satisfactory. Achieving the 15 per cent the national and provincial governments and of the relationship between services and current net revenues is autonomous city of Buenos Aires. not always possible. In the year 2005 at least eight jurisdictions will not be able to meet the objective. In any The national government invited the provinces and the case, the regulatory framework foresees scenarios in which autonomous city of Buenos Aires to voluntarily adhere to the national government and the provinces will seek the Act. At the same time, the provinces broadened the alternative mechanisms in order to reach such an objective. scope of application of this regulatory framework through the participation - also voluntary - of their respective In this sense, the year 2005 can be seen as a very good municipalities. opportunity for achieving credit sustainability for some jurisdictions that, due to different circumstances, did not Currently, 17 provinces out of 24 adhered the Act: Buenos achieve the same financial recovery as the rest of the Aires, Catamarca, Corrientes, Chaco, Chubut, Entre Ríos, provinces. That is to say, given favourable economic Formosa, Jujuy, La Rioja, Mendoza, Misiones, Río Negro, conditions, and with the resolution of the structural San Juan, Santa Cruz, Santa Fe, Santiago del Estero y problems of provincial and national indebtedness, fiscal Tucumán. year 2005 offers the opportunity to attend to pressing needs of the people. Questions remain With regard to the Federal Council for Fiscal Responsibility, While the need to consolidate the recovery of public there were very important advances made in the first finances at the different levels of government is months of the year. In January 2005, all its members met for indisputable, there are some controversial aspects of the the first time, and set up monthly meetings in which they Act. worked on the operational rules of the Council. As a result, in the coming days the National Executive will approve the One of them is the direct correlation between the increase Council's Regulatory Decree, which will permit its regular in GDP and the performance of current primary spending. functioning beginning in the month of May. The linking of the potential increase of current primary spending to the growth of the Gross Domestic Product has To date it is fair to say that the Fiscal Responsibility Act as its implicit logic the need to avoid diversions of funds has served to consolidate a number of fiscal rules (control that could lead to a new fiscal crisis, in the face of increases of public spending, preservation of budgetary balance, in irreducible costs at some unfavourable moment of the limits on indebtedness, monetary unification) and to deal economic cycle. However, the priority given to fiscal with the financial exposure of different levels of discipline cannot be divorced from the socioeconomic government. Based on the successful experience of fiscal circumstances of the country nor from the commonly reordering in the three-year period 2002-2004, Argentineans accepted basic rules of economic performance. will be able to look back on the past year as one of continued progress toward sound public administration When the Act was approved in August 2004, some sectors and financial stability. were worried by the low proportion of GDP represented by 20 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g Briefs & Updates representative, and one for the list of the party of his or her Referendum results for proportional representation choice. The number apportioned to each party from the list show narrow loss in Canadian province vote is then adjusted to bring the percentage of seats close to the percentage of votes for each party provincewide. Voters in British Columbia, on Canada's Pacific coast, came However, the British Columbia Citizen's Assembly rejected within a whisker of changing their electoral system. The the Mixed Member Proportional Representation system in referendum, held May 17, 2005, was to change the existing large part because the Assembly members did not want the first-past-the-post electoral system to a type of proportional political parties to have any say in which candidate would representation known as the Single Transferable Vote or sit in the legislature. STV. In three other Canadian provinces, proposals for some form The proposal, drafted by a Citizen's Assembly with one of proportional representation are being considered. In member from each New Brunswick and Prince Edward Island, there of the electoral are proposals for a form of Mixed Member districts of the Proportional Representation. In Quebec, there is province, gained a proposal for multi-member districts. 57.4 per cent of the initial count of A commission has been appointed by Prince votes, just short of Edward Island (in Canada's Atlantic region in the required 60 per the east) to educate voters about different cent required for electoral systems, draft a referendum question, the proposal to and set a date for a referendum to choose become law. between the existing first-past-the-post system Ironically, the and Mixed Member Proportional initial referendum Representation. The commission will hold public results show the meetings in autumn 2005 and then recommend a proposal referendum date, widely expected to be held overwhelmingly B.C. Citizens' Assembly members' names were drawn before the next provincial election in 2008. passed the other by random, one from each electoral district. criteria, which was In the province of New Brunswick, across the to gain majority Northumberland Straits from Prince Edward support in 48 of Island, a legislative commission has the province's 79 electoral districts (the referendum won a recommended a Mixed Member Proportional simple majority in 77 districts). The results were close Representation system with 36 directly elected members enough to trigger a final count, which was to begin on May and 20 members chosen from party lists. The commission 30, after Federations went to press. For final results, see the recommended a referendum on the proposal in time for a British Columbia electoral commission website at new system, which, if chosen, could be ready for the 2011 www.elections.bc.ca. provincial election. The "Single Transferable Vote" system allows voters to rank In Quebec, a system has been proposed for Mixed Member their candidates on the ballot and creates multi-member Proportional Representation that would have 77 members electoral districts. The voters second choices are also elected in single-member districts and 50 members elected counted in a complex system of redistributing the votes of from party lists in multi-member districts. On this part of candidates eliminated in a number of ballot counts. The the proposal there is general agreement among those Citizen's Assembly considered other options, including favouring proportional representation. A split emerges on keeping the present system, or adopting "Mixed Member the way those 50 members from party lists are to be elected. Proportional Representation", a system used in Germany, The Quebec Ministry for the Reform of Democratic New Zealand, Scotland and Wales, in which half of the Institutions recommends that those 50 members be elected members are elected in single-member districts by a first- in between 24 and 27 districts. Opponents of this system past-the-post system and half are elected from party lists. In charge that this large number of districts biases the that system, each voter gets two votes: one for the local elections toward a two-party system. F o r u m o f F e d e r a t i o n s F e d e r a t i o n s Vol. 4, No. 4, 2005 21 reported South Africa as having surpassed a primary Pakistan's provinces demand larger share school enrolment rate of 90 per cent in 2000. of revenues As of May 20, Pakistan's federal and provincial Germany says yes to EU constitution, French governments were negotiating down to the wire over voters say no allocations to the provinces before Pakistan's budget was approved. Germany's lower house of parliament, the Bundestag, On May 19, Pakistan's Prime Minister Shaukat Aziz said he approved the European Union constitution by more than 95 was working to come to a consensus agreement with the per cent, with 568 in favour only 23 members opposed. Of provinces before the budget was approved. those 23, there were 20 members of the Christian Democrats. At stake was the size of the provincial share of the so-called "NFC award" that the National Finance Commission allocates. The government was proposing that 47 per cent of the NFC resources should go to the provinces, but provincial governments were demanding 50 per cent. In addition, several particular provinces claimed they had been short-changed in the way the NFC resources were awarded to them. Balochistan claimed that they had not received their fair share of the gas revenues, and the North- West Frontier Province claimed that it had not received its fair share of the hydro-electric power generation profits. As of 2000, according to the IMF, Pakistan's provinces raised or collected only 21 per cent of their budgets – the remainder came from their share of the NFC resources and other federal grants. South Africa aims for free compulsory education The government of South Africa will strive to provide free, compulsory education, Education Minister Naledi Pandor said at an event to commemorate the 50th anniversary of the Freedom Charter on May 6. The Charter, adopted in 1955, united the opponents of the white minority government of the day. It brought together the African National Congress, the South African Indian Congress, the South African Coloured People's Congress, the South African Congress of Democrats and the South African Congress of Trade Union into a non-racial united French emotions ran strong during the referendum front known as the Congress Alliance. on the EU Constitution But the charter as a list of demands changed when apartheid was overthrown and a new non-racial The near-consensus in Germany contrasts starkly with the constitution written. It has now become a list of promises situation in France, where a referendum was defeated on that South Africans are holding their government to. May 29. Many voters on the left opposed the new "There are many objectives that continue to require constitution as too "pro-business" while voters on the far rigorous attention. We do not as yet have free compulsory right feared an EU with Turkey as a member. The difference education," Pandor said. between the two countries was illustrated by the scene of dozens of students from Berlin carrying blue-and-yellow "In this regard we have not managed to live up to the spirit EU flags and lobbying French citizens in Paris to vote yes in and intention of the Freedom charter, but it is an issue that the last weeks of the campaign. we are addressing." However, the minister said that the country had made great strides in transforming education. Opposition to President wins Comoros elections "Access statistics at all levels point to widening of National parties from the three autonomous islands in education opportunities for all South Africans," she added. Grand Comoros won 9 of 12 seats in the Comoros legislature, it was announced on April 28. The results were There were 11, 638,356 learners in all primary, secondary, a blow for President Azali Assoumani, who had seized consolidated and middle schools according to a report from power in a coup in 1999. In 2002, Assoumani won election Statistics South Africa for the year 2003. And UNESCO for President with 75 per cent of the vote. 22 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g The parliamentary elections were a result of the South Minister Manmohan Singh warned that it would take more African-guided peace and reconciliation pact reached time to find a solution to the revolt by Naga people in the earlier this year. The agreement was aimed at ending the northeast. conflict between President Assoumani and the Presidents of the three autonomous islands, Grande Comore, Anjouan About 20,000 people have died in the rebellion in Christian- and Moheli. dominated Nagaland since it began more than five decades ago. Bulgaria and Romania set to enter EU Mexico City mayor to run for President The European Union approved the entry of Bulgiaria and Romania in 2007. The European Parliament also said that Popular Mexico City Mayor both countries will be expected to make reforms before Andres Manuel López their entry. The EU officials want both countries to take Obrador will be running for measures to reduce corruption and organized crime. President of Mexico after all. Obrador, who belongs to the left-leaning Partido de la Revolución Democratica Both sides claim victory in Ethiopian election (PRD), who was threatened with prison and therefore Ethiopia's electoral board has started investigating claims could not have run for of irregularities in the presidential vote on May 15, with President, won a reprieve in rival parties claiming victory. early May. López Obrador "Some political parties have submitted complaints on the was threatened with a election process. The board has commenced its first hearing prison term because of the complaints," said the deputy head of the National someone in his city Electoral Board of Ethiopia, Tesfaye Mengesha. government disregarded a Threat of jail lifted for Mexico court order to stop The ruling Ethiopian People's Revolutionary Democratic City Mayor López Obrador. construction of a short Front was claiming it was "on the path to victory", access road leading to a according to Information Minister Berekat Simon But the hospital, over land that was opposition Coalition for Unity and Democracy was also acquired by Lopez Obrador's predecessor but whose claiming victory. ownership was still in dispute. But after a meeting with President Fox of the right-leaning Partido Acción Nacional (PAN), the threat of prison was removed from Obrador. Austria ratifies EU constitution Austria's parliament ratified the European Union's Belgian federal government approves EU constitution by a vote of 181 to 1 on May 11, 2005. One constitution member of the legislature, Barbara Rosenkranz, an EU opponent from the Freedom Party, voted against On May 18, the Belgian parliament approved the European ratification. Only one deputy was absent from the vote. Union constitution by a vote of 118 for and 18 against, with The vote in favour easily surpassed the two-thirds majority one abstention. The Belgian senate had already given its required. In the debate before the vote, during which 30 approval. Complete Belgian approval now awaits the votes deputies spoke, Chancellor Wolfgang Schuessel said the of the five regional legislatures. constitution was a well-balanced solution for an expanded European Union. "It makes for a Europe that is stronger," he said. His colleague Wilhelm Molterer, of the ruling People's Party, told the legislators that the constitution gave ERRATA Austria "more possibilities to influence" the EU. "There's Gay rights in the USA no difference between big and small in this constitution." On May 25, the Bundesrat, the second house of the The author's biography in the Federations Vol. 4 No. 3, Austrian Parliament, was scheduled to ratify the 'Will gay rights be a state-by-state battle in the USA?' constitution. on page 8 was in error. It should have read "Jeremy D. Mayer is an Assistant Professor at the School of Public Policy of George Mason University, Alexandria, VA, USA." Danger of fighting if Nagaland peace talks fail Gays, lesbians and the law in federal countries After four months of peace talks with Delhi, the leader of In Briefs & Updates, Vol. 4 No. 3, the date in the an insurgent group in Nagaland in northeast India warned sidebar saying when "Brazil amended its immigration that there could be fresh violence unless the talks policy to recognize relationships between binational succeeded. same-sex couples." should have read "December 2004", not December 2005. The warning came from Thuingaleng Muivah, the leader of the National Socialist Council of Nagaland after Prime 23 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g Subscribe to Federations Return by fax to the Forum of Federations: (613) 244-3372 or send email to email@example.com 4 issues: in Canada: CAN $ 20 — in EU countries: 20 — in the USA and all other countries: US $ 20 Name: __________________________________ Title:____________________________________ Organization:______________________________________________________________________ Address: __________________________________________________________________________ City, Province/State: _______________________________________________________________ Postal Code:_____________________________ Country: ________________________________ Phone:__________________________________ Fax: ____________________________________ E-mail: _________________________________ Internet:_________________________________ Suggest people to receive Federations free for a limited time Name: ____________________________________________________________________________ Address: __________________________________________________________________________ City, Province/State: _______________________________________________________________ Postal Code:_____________________________ Country: ________________________________ E-mail:____________________________________________________________________________ METHOD OF PAYMENT: ❐ cheque or money order enclosed ❐ please send invoice ❐ charge to my credit card: ❐ Visa OR ❐ Mastercard Credit card no. __________________________ Expiration: _______________________________ Date (mm/yy): __________________________ Signature: ________________________________ 700 - 325 Dalhousie, Ottawa, Ontario K1N 7G2 Canada Tel.: (613) 244-3360 • Fax: (613) 244-3372 firstname.lastname@example.com • www.forumfed.org ✄ 24 F e d e r a t i o n s Vol. 4, No. 4, 2005 w w w . f o r u m f e d . o r g Return undeliverable Canadian addresses to Forum of Federations 325 Dalhousie, Suite 700 Ottawa, Ontario K1N 7G2 Canada Canada Post Publications Mail Agreement no. 40745010