Why this Union? : Shifting from an intergovernmental scheme to a delegated federation : the case of European integration

During the European sovereign debt crisis, Europe as a political reality has been challenged and questioned. Unlike many European integration scholars seem to think, this situation is neither unique nor special. Practically the whole world has the nation-state as the basic polity unit, and practically all of them are under one or other form of pressure coming from transnational issues since the slow but firm process towards globalization started two centuries ago. At the core of these tensions an essential question may be located: why do polities select a specific form of collaborating and not other? Why do certain forms of federations and confederations rise while others are left aside or behind? And which are the answers for all these questions for the European case? In the short term, intergovernmental organizations tend to reproduce themselves. But this self-reproduction tend to show the actors that the tension between risk sharing and moral hazard that is at the core of any federal process cannot be solved without deep integration and commitment that is better enforced through an external, delegated actor. Moreover, the duality between intergovernmental mechanisms and delegated authorities that lies in the root of the EU is such that is what will make transaction costs affordable for nation-states, as organizations already exist and do in fact hold policy capacity. This duality is better understood through a path dependency analysis. Through specific critical junctures, these organizations arise and become competent and competing with the inter-governmental ones. Relevance to Development Studies When it comes to discuss about governance and democracy nowadays, probably the main issue at a stake is how to merge current international challenges with the current nation-state scheme in which world governance lies. The European sovereign debt crisis is probably the clearest example in the recent times of how does an international economic phenomenon challenge the existing governance mechanisms in a specific polity that was already trying to build new institutions to embrace possible changes. No region in the world escapes to this phenomenon, regardless of the choice of the decision-making institutional devices. In this case, focus will be put on those based on liberal democracy governing a market economy. It may be discussed if there is or there is no development without democracy. But what is clear is that there is no development without economic governance, without a functioning (even when it is under conflict, discussion and reconsideration) scheme to deal with the distribution of resources. A political answer to the fundamental economic questions that, nowadays, imply reconsidering the classical nation-state as well as its sources of financing and legitimacy.