The E.U.’s European Council,
which represents the union’s state governments, agreed at the end of June in
2012 to make the federal bailout fund directly available to banks. Spanish
banks had been seeking 100 billion euros. Counting the bailout funds as debt of
the state rather than as bank debt would have further increased Spain’s
relatively high borrowing costs. Counting the bailout funds as bank rather than
state debt can be viewed as an instance of the E.U.’s “direct effect,” wherein the
federal level can directly affect E.U. citizens and their private
associations. This distinguishes the
E.U., by the way, as an instance of modern federalism, from the old foedus (i.e., treaty), or confederal (“alliance”) type of
federalism as evinced by the American Articles of Confederation.
The
complete essay is at Essays on Two Federal Empires.
