| Summary: | Since the late 1980s, the European Communities have seen rapid developments towards economic and political integration. This thesis argues that the institutions and decision-making structures of the European Communities resemble those of a union of states at an early stage of federal integration. However, as an entity with more than one level of government, the Communities are subject to the main objective of federalism: how to simultaneously achieve the contradictory aims of unity and diversity. At the heart of this conflict lies the issue of regional disparities and to what extent within a federal framework such disparities should be reduced. To answer this question, the thesis undertakes a comparison of the European Communities with a federal entity of similar character, yet one at the opposite end of the process of integration: the Federal Republic of Germany. As a highly integrated federation within which the centre and the constituent units co-operate strongly with one another, the Federal Republic of Germany provides a good example of how authority may be shared and divided between the Community level and the Member States in future. The degree to which a federal union is politically integrated has a direct effect on the quality of its redistributive policies, and on who will be responsible for those policies. If the European Union is indeed heading towards more integration, it may one day decide to compensate for more general political unity by shifting responsibility for regional redistribution back to its constituent units. This would mean the adoption of a horizontal financial equalisation scheme amongst the Member States instead of a centrally organised cohesion policy. However, the main lesson from Germany is that financial equalisation does not reduce regional disparities, and that the EU has already found, in the form of the Cohesion Fund, a preferable approach.
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