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The Federalization of the Republic of Moldova: Opportunities and Risks

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Igor Botan / December 9, 2002
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Since federalization has been recently proposed as a solution to the separatist conflict in the Republic of Moldova, debates have spurred on which type of state is more viable in such cases, the unitary or the federal one formed of territorial units that enjoy a certain degree of autonomy? The proponents of federalism have outlined the following opportunity such a project offers: a federation is founded on state efficiency plus political freedom.

According to federalists, the federal state provides optimum conditions for the balancing of various territorial, national, social, economic, financial, political and other interests.

Also, it is largely believed that federalism can result in a more efficient activity of the state administration. Hence, under the pressure from local governments the central administration works more efficiently, while the former are more concerned with working out solutions based on their local resources. Yet, it is believed that the founding principles of unitary and federal states are converging. In this sense the efficient and peaceful functioning of certain states that are not de jure federations, such as Italy and Spain, are considered along federal states. The Spanish Constitution adopted in 1978 enshrines the democratic standards by which the country is to abide, but avoids making any reference to “federalism”, and refers instead to the “state of autonomies”, although constitutional law experts consider that Spain is a federation de facto. Considering this, it is yet to be determined which formula, the federalist or the regionalist one can be more efficient in fighting secessionist movements through centripetal trends. The thing is that secessionist movements exist not only in unitary or federal states with a medium to low level of development, but even in rich federal states, such as Canada and Australia. Hence federalization is not a panacea against separatism, and the attempt to solve a separatist conflict through federalization raises a number of issues. The basic one is concerned with finding the optimum balance of interests in a state. In different countries federalism is applied depending on local peculiarities. Therefore it is important to establish the principles for constituting stable federations.

Basic factors characterising federations

There are five factors, which need to be examined.

  1. The modality of establishing federations. According to this factor, federations are unional and decentralized. An example of such federation is the United States of America, which for security and economic reasons joined into a federation. Other federations constituted as a result of the decentralization of unitary states are India, Russia and Canada. Such federation can be constituted in the result of an agreement with a region. The draft statute proposed by the OSCE for Moldova falls into this category.

  2. Separation of vertical powers. According to this factor, federations are classified according to the delegation of powers by the subjects of the center, or, on the contrary, the decentralization of power that comes from central authorities. It is obvious that the method of delimitating powers is directly dependent on the method of constitution examined above. This factor is one of discord between Chisinau and Tiraspol. For these reasons the OSCE draft is favorable to Chisinau.

    It is significant that in modern federations the legal norms working at the central level have superiority over the local norms when these relate to areas subject to federal regulation. As a rule, this is stipulated in constitutions.

    The settlement of disputes between the federal center and the federal subjects is the task of Constitutional Courts. For example, in Spain the Constitutional Court has resolved almost 600 of disputes between central and local authorities over 10 years since the adoption of the Constitution. Most often these problems arouse in areas related to economy, agriculture, and public works. Calls for constitutional justice have been made both by the central authorities and the regional ones. Still, almost 2/3 of cases brought to constitutional justice has belonged to regional authorities. Also in Spain, apart from the methods of solving conflicts between central and local authorities through the Constitutional Court, there exists the possibility to solve conflicts through the Court of Accounts. As a rule, the Court of Accounts has powers of control over regional budgets. In the OSCE draft agreement references to the role of the Constitutional Court in settling disputes are missing.

  3. The harmonization of elements of coordination and subordination between the federal center and the federal subjects. According to this factor, federations are classified as centralized and non-centralized. In the case of centralized federations obvious priority is given to national interests over the ones of federal subjects. In India, for example, the Parliament has the right to adopt laws that fall within the competence of the subjects if these are voted with 2/3 of votes. The non-centralized federalism is achieved based on agreements that stipulate expressly the competencies of the federal center and the ones of the federal subjects. Examples are the USA and Canada. This principle of delimitating between national and territorial interests is also known as subsidiarity.

    In any case, of exclusive central administration competence are such areas as federal legislation, foreign policy, defense, the customs and tariffs regime, public finances, the financial-banking system, national transport and communications, as well as the framework for basic human rights.

    One of the most important problems of federations refer to the constitution of two-chamber parliaments, especially of superior chambers based on the equal representation of federal subjects (Switzerland), or on the proportional representation with the number of inhabitants (Austria, Germany). In the superior chamber of the German parliament each subject is represented by at least three deputies, subjects that have more than 2 million inhabitants are represented by four deputies, and subjects with more than 5 million by five deputies. Members of the superior chamber are Prime ministers and ministers of Lander. According to the German Constitution, almost half of federal laws need to be approved by the superior chamber.

    Within the competence of local authorities usually fall problems of self-administration, such as culture, education, local budgets, health assistance, public order. Yet, things are not as simple because the central authorities retain a number of leverages of influence over their subjects. In Germany, for example, the federal authorities have the right to adopt laws related to the local public administration. The Spanish Constitution provides for a series of areas of competence that can be offered to autonomies. As a consequence, one cannot talk of a random approach; all competencies granted to autonomies are negotiated between the central power and the local one and are included in an agreement, which is to be mutually observed. Such an agreement between central and regional authorities exists in Italy too, although Italy is not a de jure federation, and it relates to the rights of each region. By all appearance the OSCE draft provides for the constitution in the Republic of Moldova of a non-centralized federation.

  4. The distribution and exercise of powers. From this perspective federations are classified as binary and cooperative. Chronologically, federalism has evolved from the binary system whereby the distinction between the powers of the center and regions is very clear to the cooperative one. In cooperative federations powers are blurring to allow the optimum efficient solution for current problems. Cooperative federations are the USA, Germany and Austria.

    It is worth mentioning that the subjects of current federations are not sovereign. In none of the European Constitutions are the rights of federal subjects provided for. In the constitutions of Switzerland and Spain it is expressly stipulated that territorial units do not have the right to enter into alliances or conclude political treaties with each other without the authorization of central governments. Thus, federal subjects are denied the right to conduct foreign affairs independently. In Switzerland the cantons last signed international treaties on their behalf in the 1940s. The German Lander can sign international treaties only in such areas as culture, education and science. Moreover, to enter this kind of treaties they need the approval of the central government, which decides whether such treaties touch upon the German foreign policy interests or not.

    Since federations are self-organized systems, they might devise heterogeneous development. To balance such trends many of the extant federations entail mechanisms of homogenization providing for convergence schemes for less developed regions (Germany and Russia). In this sense an eventual federation in Moldova should provide for a mechanism of redistribution of incomes from Transitria to Gagauzia. The industrial potential of Transitira is accidental, including due to the indirect contribution of Gagauzia which was imposed an agricultural specialization.

    Still, the major role in regulating relations between the center and the federal subjects belongs to the financial-fiscal policies, and not the restraint of competencies.

    Germany is a renowned innovator in the field of financial relations in a federation. The German model rests on the mechanism of financial autonomy. The federation and its subjects are independent financially in that they are to fund independently the activities that fall within their constitutional competence. It is exactly for this reason that the distribution of tax returns between the Federation and the subjects is done based on their powers in order to ensure the functioning of central and regional structures. The income and corporate tax returns are distributed equally between the center and the subjects, and the VAT due to the subjects is established by law. Also, the German Constitution provides for the redistribution of incomes to balance the incomes of citizens from various Lander. The central government offers subsidies to “poor Lander”, so that the income per capita in all Lander be equivalent to at least 95% of the country average. It is believed that this way the German cooperative federalism is distinct from the American federalism where citizens vote “with their feet” migrating to states where the living standards and the prospects for economic development are higher. The American system has advantages too. It is believed to be the duty of federal authorities to make sure the economic situation and the population’s incomes are high enough for the population not to migrate. Otherwise states risk suffering substantial losses due to the fact that the money that they get from the federal budget is proportionate with their number of inhabitants.

    It is worth mentioning that the rights of federal subjects are not limited to financial autonomy. According to the provisions of a number of federal constitutions the subjects can have their own constitutional and legal regimes. The political reform in Belgium directed towards federalization started with the introduction of constitutional provisions related to the establishment of regional parliaments and governments in the Walloon region, the Flemish region and the Brussels region.

  5. The way of functioning, the difference in the status of subjects, the internal organization of subjects. According to this factor, federations are classified as symmetric and asymmetric. Most stable federations are symmetric with few elements of asymmetry. This means that all federal subjects are equal, although small exceptions are made that are not related to their legal status (USA, Germany, Brazil). These differences are usually related to the factors that lay at the foundation of a federation, national or territorial and which are very important for the establishment of a federation. From this point of view, for instance, Russia is rather an asymmetric federation, being made up of republics, oblast’, kray, autonomous entities etc. The republics have more rights than other subjects, which determines the latter to seek equal rights facing strong resistance from the republics. It is believed that asymmetric elements generate chaos. In Moldova it is not clear yet whether the type of federation that is being proposed is symmetric or asymmetric. Likewise, we do not know yet whether the parliament and other bodies of the federation will be bodies of Moldova as a federal subject. The example of Yugoslavia has shown that the latter formula is extremely dangerous.

    Therefore in federal states the central powers have the right to introduce the emergency state in the autonomies when there is such a need, but as a rule central authorities avoid turning to such measures. Hence the importance of the structure of law-enforcing institutions.

    For example, according to the Swiss Constitution, the Swiss Confederation guarantees the territorial integrity of cantons as well as their sovereignty within the limits provided for by the Confederate Constitution, the constitutions of cantons, people’s freedoms and rights. Where necessary the confederate authorities can introduce the state of emergency in cantons and can suspend the citizens’ rights and the powers of canton authorities.

    We have already shown that there is no federation, which would provide for the rights of subjects to secede, and such cases are solved including by military means (for example, Western Australia in 1938, Russia in 1995). Still, many secessionist conflicts occur, as for instance Singapore seceded from Malaysia in 1965. Hence federations are not very different from unitary states. The basic principles are the same: common territory, a community of people who own the sovereignty, common power bodies at national level. To ensure the stability of federal systems it is necessary for the internal relations to be quite strong and for none of its constituent parts to have priority over others. The relations between the center and the subjects should be mutual. As soon as these principles are breached, federations collapse. The international experience has shown that for federations to be stable federal centers need to hold a series of exclusive powers and the capabilities necessary to ensure territorial, economic, political, and socio-cultural integrity.

Risk and stability factors in a federation

Talk about ethnic federalism and its efficiency has been more intense lately. Most federations are constituted according to the territorial criterion (USA, Germany, Australia) and the federal subjects have equal rights. This type of federations are usually more stable than the ones constituted by ethnic principles. In countries where federations are constituted by the ethnic criterion there are trends towards secession and the creation of autarchies. Therefore, a number of experts, especially Russian, have argued that the federations constituted on ethnic principles are not viable.

Criteria of assessing the stability of federal states

These criteria can be classified as internal and external. The internal ones refer to the criteria based on which the territorial or ethnic federations have been founded, the role played by a certain ideology, the level of democracy, the perception by citizens of the federal choice.

The importance of such external factors as the geographical distance from the powers of the time, the experience of a unifying war against colonial power (followed by a long period of external security), rich natural resources, has been widely shown upon the constitution of the USA.

If we were to determine a scale of stability of federations based on the above factors, as extremely stable, relatively unstable, and stable, the following classification would obtain:

  1. Extremely unstable. Federations constituted on ethnic and ideological criteria that collapsed — USSR, Czechoslovakia, Yugoslavia;
  2. Relatively unstable. Federations in permanent crisis — Canada, Belgium, India, Nigeria, Russia;
  3. Relatively stable. Multi-ethnic states with elements of federalism, but which resolve their ethnic problems based on regionalist projects (Italy and Spain);
  4. Stable. Federations based on the territorial criterion and ethnically homogenous, such as Germany, or homogenous in terms of diversity, such as the USA. According to the degree of stability the ethnically homogenous unitary states such as France can be included in the same category.

The case of the Republic of Moldova

Although the draft agreement on the federalization of Moldova is, in our view, one constituted according to requirements, it nonetheless includes a series of drawbacks, the most important of which is the fact that the number of federal subjects is not specified. This renders the situation difficult due to the fact that the Gagauz leaders demand that Gagauz Yeri becomes a federal subject with equal rights. This is one of the electoral promises of the newly elected Governor Gheorghe Tabunscik who had the support of the Communist Party of Moldova. There are no provisions whatsoever with regard to the institution of a constitutional body as it is often the case in existing federations. Instead, the role of such an institution is to be assumed by some state guarantors, a provision that the opposition parties have qualified as undermining the sovereignty and independence of Moldova. It is true that this provision is to be effective only during a transition period. Finally, most curious is the provision in Article 42 which claims the superiority of the federation agreement over the Moldovan Constitution.

If we were to use the scale mentioned above and relate the factors known to be generating stability in a federation to the ones generating instability we would observe that the equation is not in favor of a federal Moldovan state; the subjects of an eventual Moldovan Federation will be constituted on ethnic principles; the ruling party, due to its position, is obliged to promote a policy of reintegration whose program objective is building a communist society; the reintegration is proposed to be effected following a separatist conflict whose causes are seen completely differently by both the elite and the citizens of the parties involved; the guarantor states have overt interests in the Transdnistrian region etc. Considering these factors, the proposed Moldovan federation will oscillate between one extremely unstable and one relatively unstable.

Still, because the federalist solution to the conflict is somehow imposed from outside, the guarantees for stability should be external too, but by states with a record of positive experience in building federations, as well as international organizations.

As a matter of fact it is not even known if the leaders from Tiraspol will accept the draft proposed by the OSCE at all. They are advocating a contractual Moldovan federation, which is to be formed by equal subjects, based on the model of the USA when practically independent states joined together in a federation. According to them, for this to happen the Republic of Moldova needs first to recognize the independence of Transdnistria, and then the two absolutely equal subjects, as founders of the Moldovan State, would conclude the federation agreement. The federation is to presuppose that the sovereignty belongs to the federal subjects who will delegate rights to the federal center. Obviously, if something goes wrong, the subjects can withdraw their delegated powers at any time. It is exactly for this reason that the Tiraspol leaders fail to see any difference between a federation and a confederation. It is very unlikely that Moldova will approve of these proposals. Even if this were to happen, the quality of Transdnistria as a founding party of the federal Moldovan state would mean revolutionizing the Moldovan statehood.

Still, it appears that the Moldovan leadership has rushed to accept the federalist draft and has failed to convince the guarantor states that Moldova would prefer the Spanish federal model. The example of Spain is of particular relevance for Moldova.

In Spain, the majority community is the Castilian one. Along with the Castilians, the Spanish regions are populated by Catalans, Basks, Galisians etc. After Franco’s death in 1975, the country made efforts to modernize and adopt a new constitution. A series of measures were taken in this sense. First, the Spaniards’ main concern was to legitimate the new bodies of central power. A national referendum on the reform of the party system was held which allowed for the organization of free and fair elections. Then the new Constitution was adopted in 1978 within a national referendum. Only then did the process of decentralization and autonomization of territories start. The new Constitution enshrined democratic principles but eluded references to federalism preferring the term “the state of autonomies” in order to discourage separatism. Experts in constitutional law believe that the Spanish autonomies enjoy the rights of federal subjects.

The eventual stages of federalization of the Republic of Moldova

If the secessionist conflict in Moldova is resolved through federalization, then the following stages are to be considered. First, the OSCE draft agreement is to be signed as a political document, then a new constitution and a new electoral law is to be adopted. Next, the draft of the new constitution is to be adopted within national referendum on both sides of Nistru River. This is to be followed by elections to the federal bodies, the adoption of federal legislation, and the adoption of subjects’ constitutions and of legislation to harmonize the relations in areas of national and mutual interest. The next steps will be elections to the representatives bodies of the subjects, the monitoring by international institutions of democratic processes on both sides of Nistru River, the implementation of economic aid programs by the countries and institutions that advised us to accept the federalist solution. In this sense, the President’s initiative to create a Minister of Reintegration makes sense to the extent that the occupant of this position will be tackling the stages proposed here.

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