Wednesday, December 3, 2025

A Reparations Loan or Common Debt: Undercut by State Rights

“State rights” was a common refrain by the eleven U.S. member states who sought to exit in 1861; the underlying fear was that the exclusive competencies, or enumerated powers, of the U.S., combined with the numerous accessions of new states, were already compromising the power of the eleven states to protect their economies from “encroachment.” In 1858, for instance, a tariff disadvantageous to those economies had been passed in spite of the “Southern” objections in the U.S. Senate. Had each member state had a veto, rather than just the ability to filibuster, the eleven states would have been able to protect the viability of their respective economies from encroachment by the Union. To be sure, the state rights claim that the U.S. was still just a bloc, as had been the case from 1781-1789 under the Articles of Confederation, was sheer denial, for the U.S. Constitution instituted a new kind of federalism—partly national, partly international—based on dual sovereignty, wherein both the member states and the Union have a portion of governmental sovereignty. It is this form of federalism, “modern federalism,” that the Europeans adopted in creating the European Union because the E.U. has exclusive competencies. But whereas the shift made by the Americans in the eighteenth century left the state-veto behind at the Union level, the Europeans retained the veto, which at the very least works against the effective operation of modern federalism. The arduous and much delayed task on a reparations loan for Ukraine in spite of the self-interested objection—and thus promised veto—of one state is a case in point. Even the alternative of the E.U. issuing debt faced state-level opposition, as was the case in the U.S. in the 1790s, but in that case, the self-interested states that were relatively clear of debt could not stop the issuance because none of those states could wield a veto at the federal level. This is important because back then, the American states were still widely viewed as countries by their respective inhabitants. “I must fight for my country,” General Lee told Lincoln in 1861, referring to Virginia. A refresher on American history could help Europeans cross the Rubicon to a more internally consistent modern federalism. Whether Euroskepticism or States’ Rights, the ideology, as etched into the E.U.’s Basic Law, is responsible for Van der Leyen’s headaches in getting the E.U. to put Ukraine in a position of strength against the Russian invaders.


The full essay is at "A Reparations Loan or Common Debt."