Swiss model for the future of Europe?

Caroline Burleigh // 27 March 2017

What would F.A. Hayek make of the current state of the EU? The renowned economist had a specific vision in mind: The model he promoted was – unlike the highly technocratic, centralised bureaucracy in Brussels- a “limited framework for continental openness, dealing with core federal functions, such as defence, foreign policy and the four freedoms of the Common Market.”


As a fervent advocate of decentralisation and competition, Hayek would have most likely been opposed to the EU’s current centralisation and harmonisation trends. His prescriptions were clearly not considered in the early steps of European integration, which followed the neo-functionalist approach of “sharing sovereignty in an ever-growing number of policy areas”.


Since the Single European Act (1986), we’ve witnessed a continuous expansion of EU competences into various areas of public policy, whether through joint responsibility with member states or exclusive competences. Meanwhile, the EU’s competences remain particularly weak in the aforementioned core federal functions. Hayekian federalism, on the other hand, is meant to safeguard national sovereignty, within a framework of “as much union as necessary, as little union as possible”.  Hence, a painful dismantling of the EU, as opposed to a highly centralised “United States of Europe” are not the only options. There is a “3rd way” – embracing national sovereignty and diversity- that EU leaders ought to consider.


On 25th March 2017, EU leaders gathered on the Capitoline Hill in Rome to celebrate the 60th anniversary of the founding treaties of the European Union. On the same day, there were ‘Unite for Europe’ marches in Rome and other major European cities – such as London, Berlin, Brussels and Madrid – to call for a ‘more democratic and united Europe’.


On 25th March 1957, the Treaty of Rome was signed by the six initial member states – France, West Germany, Italy, Belgium, the Netherlands and Luxembourg – paving the way for further unity, integration, and the longest period of peace in European history. The Treaty established the European Economic Community (EEC), also known as the Common Market. The initial objectives of this European project were to integrate trade and create a market force to be reckoned with. Indeed, the EEC provided a solid foundation with tangible economic goals, after first attempts to foster cooperation in the realms of coal and steel (the European Coal and Steel Community of 1952).


Past assessments of the EU are not exclusively dim: The four freedoms of movement have created prosperity, and fostered cultural exchange through study abroad programs, employment opportunities and facilitated travelling. The latest Summit was an occasion for EU leaders to sign a declaration that will prescribe a path for the next decade. Yet, as the meeting in Rome was not a formal summit, the declaration is more likely to be of a symbolic nature, rather than resulting in detailed policy prescriptions.


Moreover, the mood of the festivities was bound to be overshadowed by differences concerning the management of the migration crisis, sluggish economic growth, and the fallout of Brexit. For instance, a report published by Timbro in 2004 found that per capita GDP in most European countries is substantially lower than in most US states, a trend they reckoned was unlikely to be reversed in the long-run. Only Luxembourg, with its thriving financial sector and high levels of foreign capital inflow, can rival with the USA in terms of GDP per capita. Especially between European countries and the more affluent American states (e.g. D.C, Massachusetts, New York), the gap becomes evident. Although there are certain European metropolitan regions that fare well in comparison, most regions have a GDP per capita well below the poorest states of the USA.


Where do we go from here? Despite historic achievements, there appears to be little room for complacency and dwelling in the past. Perhaps EU leaders should have adopted a more forward-looking stance during the celebrations, and reflected on where we need more Europe (e.g. in terms of migration and border management), and where we need less interference from Brussels. Perhaps less centralised regulation and harmonisation norms in the internal market could re-establish freedom of movement worthy of the name.


The German chancellor Angela Merkel recently envisioned a “European Union with different speeds” where not every country would participate in all steps of integration. However, the EU system already provides different “speed settings”, as not all member states are part of the Eurozone, or the Schengen open border zone. Allowing for further configurations could create confusion. Another plausible scenario, could be an “orderly dismantling of EU structures”. This would entail the gradual transfer of current EU regulatory powers back to the national level, along with the abolishment of the Single Market and the Euro. The free movement of people would end, while free trade of capital, goods and services could potentially be sustained. In addition, a select few competences (e.g. external border management) could remain at a multinational level. The desirability of this scenario is questionable, especially considering the educational and economic opportunities and benefits the free movement of people can provide.


Ultimately, it is interesting to assess to what extent the Swiss federal model – a successful federal state rooted in a pluri-cultural society – provides an example of what a future, more efficient EU could look like. As of yet, there are certain similarities between federal Switzerland and the EU. Both entities are diverse, pluri-cultural societies, although the degree of diversity is far greater in the EU. On the institutional level, however, the EU is facing strongly opposing pressures, both from ‘federalists’ rallying for further integration of a more political nature, and various degrees of Euroscepticism.


In fact, the intricacies of the Swiss political system might be difficult to imitate at the EU level: There are three distinct institutional actors in Swiss federalism – the federal, cantonal and communal levels. Whereas the role of the Swiss communes (lowest level of decision-making, popular citizen assemblies) is not of inferior importance, the cantons are considered the central actors of the political system. They are the “building blocks” of the Swiss state, part of a political culture which highly values autonomy and bottom-up solutions. The division of competences between the three levels is clearly established through constitutional norms, according to which federal law prevails over cantonal and communal law.Likewise, EU law prevails over the national law of member states. Nonetheless, Swiss federalism values cantonal autonomy as much as it values functional cooperation between its different levels. Legislation is mostly brought forth from Bern, leaving the implementation of laws to the cantons and communes. This would roughly equate to EU Directives – which inherently grant national decision-makers discretion in terms of implementation – as opposed to top-down EU Regulations. In addition, each transfer of competence to the federal level requires an amendment to the constitution, which is subject to a mandatory referendum with popular and cantonal majorities. On top of that, a minimum of 30,000 citizens can challenge any law passed by the Federal Assembly. This bottom-up conception of the state is an integral part of the Swiss political system, as well as a safeguarding mechanism against centralising tendencies. The European Commission has also attempted to increase its input legitimacy, by introducing the Citizens’ Initiative in 2011.


However, this is not strictly speaking an instrument of direct democracy, as it does not lead to EU-wide referendums. Replicating Swiss-style direct democracy at the EU level might be impossible. In Switzerland, the federal government is responsible for an extensive welfare system (e.g. health care and pensions), which should clearly remain in the hands of national governments.


Yet, there are lessons to be learned from one of the most decentralised of federations: The EU member states could learn from the Swiss cantons how to offset Brussels’ centralising tendencies by insisting more strongly on the principle of subsidiarity and their national identities. Switzerland appears to be living proof that there is no need to gradually chip away the member states’ sovereignty to foster functional cooperation within the Union. The member states know what is best for them, without constant top-down regulation imposed by Brussels. That said, EU policy-makers should regard the Swiss federal model as a metaphor of local autonomy and freedom, rather than a policy prescription.[1]


[1] For further insights on the Swiss federal model, consult the following publication by IBL political theory director Carlo Lottieri: “Un’idea elvetica di libertà. Nella crisi dell’Europa”. Available at:

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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