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The Quest for Subsidiarity in Eastern European Nation Building


Raymon R. Brucea
a
Horizons for Democracy, School of Urban and Public Affairs, University of Texas at Arlington,
Arlington, Texas, USA

To cite this Article Bruce, Raymon R.(2006) 'The Quest for Subsidiarity in Eastern European Nation Building',
International Journal of Public Administration, 29: 13, 1215 — 1227
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DOI: 10.1080/01900690600928037

The Quest for Subsidiarity in Eastern European


1532-4265
0190-0692
LPAD
Intl Journal of Public Administration,
Administration Vol. 29, No. 13, August 2006: pp. 1–25

Nation Building

Raymon R. Bruce
The Quest for Subsidiarity
Bruce

Horizons for Democracy, and School of Urban and Public Affairs, University
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of Texas at Arlington, Arlington, Texas, USA

Abstract: Globalization, the European Union, and the dissolution of the Soviet Union
have raised the importance of subsidiarity in Eastern Europe. Subsidiarity speaks to the
need for equitable and proportional power sharing among multi-levels of Governance.
Namely, there is a need for devolving decision-making powers from national and
supra-national levels of authority to regional and local level authorities. Regional and
local administrations need to assume a role in political and economic development
reforms. The EU is a model for regional and local authorities to modernize their public
administration and business sector practices to become more successful world traders.

Keywords: community governance, equitable powersharing, local governance, parti-


cipatory democracy, subsidiarity

SUBSIDIARITY: AN INTRODUCTION

Subsidiarity is becoming an increasing challenge for regional and local commu-


nities in Eastern Europe as they strive to establish their place in this new world
order. Subsidiarity addresses the core issue of regional and local authorities
achieving an equitable and proportional sharing of power among the changing
levels of world governance. Major changes that impact subsidiarity include,

1. the establishment and expansion of the European Union (EU),


2. the conversion of the Soviet Union into the Commonwealth of Independent
States (CIS) as well as several independent nations in Eastern Europe, and
3. the increasing importance of the global economy.

The EU’s view of subsidiarity is clearly defined:

Address correspondence to Dr. Raymon R. Bruce, 7620 Vista Cedro CT NE, Albu-
querque, NM, 87109, USA; E-mail: raybruce@comcast.net
1216 Bruce

The subsidiarity principle is intended to ensure that decisions are taken as


closely as possible to the citizen and that constant checks are made as to
whether action at Community level is justified in the light of the possibili-
ties available at national, regional or local levels. It is closely bound up
with the principles of proportionality and necessity, which require that any
action should not go beyond what is necessary to achieve the objectives.

The Edinburgh European Council of December 1992 defined the basic


principles underlying subsidiarity and laid down guidelines for inter-
preting Article 5 (former Article 3b), which enshrines subsidiarity in the
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EU Treaty. Its conclusions were set out in a declaration that still serves
as the cornerstone of the subsidiarity principle.[1]

In general, the principle of subsidiarity looks to assure that citizens have


effective participation in the democratic process of developing their own com-
munities. To this end, regional and local communities need sufficient powers
for making and enforcing local laws and to levy the local taxation that they
need to furnish local services to their respective communities. These local ser-
vices would include hospitals, courts, police and fire, land use control, librar-
ies, and the creation of local ordinances to manage the community’s affairs.
For example, the conversion of the Soviet Union was, in effect, a first step
toward subsidiarity. The Soviet Union’s centralized Command and Control pol-
icy and decision-making structure was devolved down directly to the individual
Commonwealth of Independent States as well as to the several republics had
became independent nations in Eastern Europe. Another key change that high-
lights the increasing importance of subsidiarity is the global economy. National,
regional and local economic developers in Eastern European countries now need
to look not only at neighboring markets, but also at markets around the globe.
Economies are not governmental artifacts. Economies are organic activi-
ties of individual people trading with each other. Therefore, economies are
grounded at the community level where goods and services are provided by
people and readied for the market for other people to obtain. When the strate-
gic decision-making process for economic development is centralized and
conducted only at the national level the regional and local entities lack the
degree of control that they need to develop their communities into becoming
valued trade partners with the nation as well as the EU Community.
Clearly, national government’s role is to take the lead for economic devel-
opment in the national and global context. However, the vitality of regional and
local economies, which is ultimately the vitality of the national economy, is pri-
marily in the realm of the regional and local authorities. Therefore, economic
development needs to be engaged from the bottom up, in addition to the guiding
vision and support from national economic policies. Businesses exist in local
communities and regions. Without regional and local economies, there would be
no economy for the national and state governments to lead and support.
The Quest for Subsidiarity 1217

SUBSIDIARITY IN THE EU CONTEXT

Subsidiarity has become a growing concern for regional and local authorities
among the EU member nations as well. The EU authority structure has added
new layers of authority on top of the current national authorities. These struc-
tures have placed regional and local authorities additional steps away from top
level of policy and decision-making. Therefore, the regional and local author-
ities in the EU member nations are concerned that they too are being left out
of participating meaningfully in important EU economic development plan-
ning and decision-making processes.
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The EU Convention on institutional reform was preparing, through its


Working Group on Subsidiarity, proposals with a view to taking more account
of this principle. This Working Group had been engaged in a dialog with the
EU Council regarding the role of regional and local authorities in the EU’s
futures planning and in the development of their new constitution. In this
regard, the associations representing local and regional authorities in the EU
were concerned that even in this critical dialog about subsidiarity they might
be left unheard.
Therefore, these associations representing local and regional authori-
ties in the EU organized themselves to prepare a formal communication to
the Working Group on Subsidiarity for the Plenary Session of the European
Convention. These associations representing local and regional authorities
in the EU described their concerns and suggested how powers need to be
more widely shared among all levels of public and private sector authori-
ties. This sharing would also need to include Non-Governmental Organi-
zations (NGOs). This EU Association of Regional and Local Authorities
sees local and regional authorities as key stakeholders in the EU decision-
making systems:

Modern governance requires a strong partnership between all levels of


government, as well as with other actors. Some issues with a clear
European priority, such as Trans-European cooperation need to be
dealt with more flexibility, following new methods of governance.
Therefore, the Convention should find the means of reconciling the
involvement of the local and regional authorities, which are the closest
to the citizens.[2]

The Communication Report goes on to point out that local and regional
authorities should be a powerful voice to promote the actions that the European
Convention selects for the future development of Europe.
The EU’s debate concerning the future of Europe among its member
nations has framed this issue of achieving subsidiarity parity for regional and
local entities participation in the European Council’s policy and decision-
making processes:
1218 Bruce

I strongly believe that subsidiarity and proportionality should be placed


first. The riddle of subsidiarity can best be resolved by identifying the
kind of political model the majority of European citizens want, mapping
out as clearly as the task permits, the disbursement of power between the
various decision—making levels at the European, the national and the
sub—national. This is the most urgent task of the current debate and a
majority of member states have already referred to it in their positions.[3]

Clearly, the same debate holds true for regional and local authorities
regarding economic development in Eastern European countries. Therefore,
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these countries need to evaluate this application of the subsidiarity principle as


a potentially useful model for them as well.
Subsidiarity is ultimately the question of centralization verses
decentralization. This debate is one that can never be completely resolved
because democracy and sovereignty applies to governance that can span multiple
levels of government and private sector authorities. For example, Ambassador
Guenter Burghardt, the Head of the European Commission Delegation to the
United States, pointed out in a speech given at Harvard Law School, how this
ongoing political, sometimes warring, and always dynamic dialogue between the
defenders of federalism and the powers the so-called “sovereign” states:

The European Union is based on the federal principle of “subsidiarity,”


providing that decisions should be taken at the most appropriate level.
In the US you have vigorously safeguarded the “reserved powers”
clause of the Tenth Amendment [of the Constitution of the United States
of America] and the “devolution” debate regarding the proper roles of
the federal and state governments continues.[4]

No written constitution can cover all of the changes that will arise very far into
the future. However, the tenth amendment of the Bill of Rights proposes to
settle in favor of subsidiarity any dispute over sovereignty:

“United States Constitution, Amendment X. The powers not delegated


to the United States by the Constitution, nor prohibited by it to the
states, are reserved to the states respectively, or to the people.”[5]

Powers that are not already specified in the constitution are relegated, by
default, to regional and local authorities.

THE EU AS A MODEL FOR SUBSIDIARITY IN EASTERN EUROPE

The expansion of the EU as a political entity and as an expanded market has


become a model for political and economic reform in these independent states
The Quest for Subsidiarity 1219

and nations of the former Soviet Union. Already several Eastern European
countries have reformed their public administration governance and econo-
mies to be accepted as members in the EU community this year. The rest are
working toward possible future acceptance into the EU or at least to become
trusted trading partners with the EU. The changes that must be entertained to
this end have significant impact on regional and local levels of authorities in
many European nations and their relations with the EU.
There are several reasons why regional and local communities of Eastern
Europe can benefit from researching, analyzing, and evaluating the EU situa-
tion. First, the EU represents a major world market. EU is comprised of a wide
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variety of national markets. The EU is one of the closest and by far the largest
Western trading partner to Eastern Europe. Many Eastern European countries
look upon the EU as a major under-tapped open market. For example,
Ukraine’s trade with EU members accounts for about 20% of Ukraine’s for-
eign trade. Most of that trade is import trade rather than export trade, resulting
in a net negative trade balance for Ukraine. The EU markets present a large
potential for growth in Ukraine and its standard of living in the future.[6]
Secondly, the EU along with the Organization for Economic Cooperative
Development (OECD) and its other associate organizations has already done
extensive research and analysis about the market cultures and requirements of its
present and most likely future members. The EU has also done extensive research
and analysis of many its associate trading partners. Most importantly, the EU
shares the results and guidance of their research and analysis freely with Eastern
European countries. Therefore, the EU provides a model as well as valuable, use-
ful, and ready source of knowledge for regional and local economic development
authorities in Eastern European countries to use in order to calibrate needed
changes in their own public administration and economic development programs.
However, there is a certain impasse for regional and local economic
development authorities in Eastern European countries and help from the EU.
Normally, the EU and its associate organizations such as the OECD work
directly with countries primarily at the national level. This is mainly a national
sovereignty issue, but this limitation does work against subsidiarity. Neverthe-
less, these development organizations do readily share information and
research results with regional and local authorities.

EU GUIDELINES FOR PUBLIC AND PRIVATE


SECTOR GOVERNANCE

Fortunately, the EU and its associate organizations have been developing and
publishing guidelines on the reforms they find most important for members
and associate trading partners. Their guidelines show that subsidiarity not
only requires devolution of appropriate powers to regional and local economic
market authorities in the private sector, but the guidelines also require that
1220 Bruce

devolution of certain public sector governance powers should occur as well.


The guidelines for the private sector reforms are described in the OECD’s
Guidelines for Multinational Enterprises.[7] The guidelines for public admin-
istration reform are discussed in an OECD staff paper, New Public Manage-
ment: What to Take and What to Leave.[8]
These EU private and public sector guidelines are complementary. Exam-
ples of these complementary features between the private and public sector
guidelines include,

1. a private sector guideline encourages local capacity building which is


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matched in the public sector gridlines directing the devolution of authority


and providing flexibility,
2. both sets of guidelines encourage their respective sectors to support and
uphold good governance principles and practices,
3. The private sector is guided to apply high quality standards for disclosure,
accounting and audits, while the public sector is guided to ensure perfor-
mance, control, and accountability through transparent fiscal systems,
4. the private sector is required to continue combating bribery, while the pub-
lic sector is advised to promote ethics and eliminate bribery and corruption
in the delivery of public services,
5. The private sector is extolled to keep customer interests and not to engage
in any practices that are deceptive, misleading, fraudulent, or unfair.

The public is required to provide responsive and focused service to customers


and citizens.
These five examples taken from EU private and public sector guidelines
show that developing subsidiarity parity to meet the EU’s private sector
guidelines needs to have complimentary subsidiarity parity development in
the public administration sector. By the same token, developing subsidiarity
parity to meet guidelines in the public administration sector normally requires
a complimentary development in the private sector.
In general, EU guidelines indicate that in order to achieve subsidiarity parity
at regional and local levels of authority, private business and the public sector
activities should be conducted in an open and fair manner. Economic transactions
should convey values that are equitable to both parties of trading transactions.
The reason for this open and fair approach is that a market economy needs to
develop trust among both Eastern and Western European trading partners. Pro-
fessional business and governance processes, guidelines, ethics, agreement
enforcement, quality standards, transparent accounting and auditing systems, fair
legal systems, enforceable contracts, ecology stewardship, and health regulations
that really work all go to support this market openness and fairness required by
the EU guidelines for member nations and associate trading partners.
The EU guidelines reflect its current international trading framework for
local and regional strategic planning for economic and public administration
The Quest for Subsidiarity 1221

development. A regional or local economic development effort need not be part


of an EU member nation to make valuable use of these guidelines. If regional
and local authorities in non-EU Eastern European countries can implement
these guidelines in practice, they can expect to become successful trading part-
ners not only with the EU member nations, but in the global economy at large.
Therefore, subsidiarity engages most of the EU guidelines for the private
and public administration sectors. But in particular, the subsidiarity principle
involves those EU guidelines that require the following reforms that,

1. Devolve of power among the various levels of governance authority,


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2. promote good management practices,


3. develolp transparent accounting of private business and government
actions,
4. promote ethics and eliminate corruption in the delivery of public and pri-
vate sector services and
5. take a customer and citizen focus in deciding the development of business
and governmental services.

Clearly these five subsidiarity guidelines easily can become counterproduc-


tive to each other, and often do. As we have shown in an earlier section, there
has been lively debate about the proper proportionality among stronger and
smaller member nations.
This power struggle among multiple levels of authorities is a main source
of the ongoing dynamics of subsidiarity. This conflict is healthy, but it needs
to be kept in a productive and dynamic balance. How is this to be balance
kept? When one level assumes too much power, the other levels must be
vigilant to reassert their rights according what is equitable and proportional
power sharing according to the subsidiarity principle. Because the situation is
always fluid, the equity and proportionality may change as well. It is up to
each level of governance authority and community to monitor and advocate
the proper re-balancing of the power sharing.

THE QUEST FOR SUBSIDIARITY IN EASTERN EUROPE

Achieving subsidiarity parity as framed by the EU private/public sector


guidelines helps place the role of subsidiarity more clearly in the Eastern
European-EU context. Three key questions arise about how regional and local
authorities should respond to achieve the subsidiarity principle in this new
Eastern European-EU context.
Question One: What Can Regional and Local Authorities Do to Achieve
Equitable and Proportional Subsidiarity?
This question deals with a bottom-up effort on the part of regional and
local authorities promoting reform of market and public administration
1222 Bruce

practices. Fore example, the devolution of power is a two-way street. Power


must be devolved, but also, power must be sought and accepted when it is
devolved. Simply devolving power without a commensurate education for
regional and local communities in the use of new powers in a democratic and
open market milieu cannot be expected to be a very successful devolution of
powers. Therefore, training and education of the communities involved in the
quest for subsidiarity is needed in order for them to exercise the new powers
in ways that meet the changing needs of their community.
Another important effort regional and local authorities can initiate is
reducing regional and local corruption, especially as it relates to business with
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trading partners and public administration. There are long-standing cultural


norms in many Eastern European countries for using informal economic trans-
action as a traditional way of doing business. However, Western European
countries tend to view these kinds of informal payment practices as bribery,
kickbacks and extortion. In reality, the difference is often in the cultural norms
and accounting practices.
This disconnect between Eastern and Western European trade norms is
because many these so-called corrupt practices in Eastern European countries
are also practiced in Western European countries. However, Western European
countries have changed the use of the unrecorded transactions into more trans-
parent actions. For example, bribes and kickbacks have been formalized into
transparent business accounting transactions in the form of sales commissions,
bonuses and profit sharing. Payments for traffic violations have been formal-
ized by Western European tax systems to provide adequate pay levels for
police and organizing courts to adjudicate violations. Bribes students have to
pay for getting into school and for their grades have been formalized into
proper tuition systems that can pay professors a proper salary.
The current remedy to corruption is to pass laws that make such
unrecorded transactions illegal. Often that strategy is not very productive
because without a change in the processes of business and public adminis-
tration, people must still abide by the customary ways or do without. There-
fore, this approach to dealing with corruption of simply making the informal
transaction practices illegal has the effect of changing everyone into instant
criminals.
A non-criminalizing approach would be to have regional and local busi-
ness and public administration authorities work with EU member nations to
develop ways to formalize these unrecorded transactions and to fund wages
and salaries to make the informal payments unnecessary. These changes
would need to include legal procedures such as laws, business processes, reg-
ulations to enforce business contracts, and ability to protect the environment.
Indeed, there are many resources in Europe that are dedicated in helping
regional and local authorities in managing to reduce such unfavorable busi-
ness practices. In any case, regional and local authorities can respond by sup-
porting any national efforts in this regard.[9]
The Quest for Subsidiarity 1223

Also, like their counterparts in EU member nations, regions and local


communities can form associations and use those associations to establish
commerce and governance standards to meet the EU guidelines. These
regional and local associations can act as organized interest groups to lobby
national authorities and governing bodies to grant regional and local authori-
ties the equitable and proportional powers that are needed.
Question Two: What Private Sector and Public Sector Restructuring Will
Be Necessary for Economic Planning and Local Administration to Achieve the
Appropriate Equitable and Proportional Subsidiarity?
This question speaks to the various public reforms in public administra-
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tion and business practices that would be required to meet the EU guidelines.
The rationale here is the need for regional and local communities to take on
the major responsibility for funding and managing community services such
as health care, public safety, and education of its citizens. This responsibility
requires that regional and local authorities have a sufficient power to tax their
citizens to pay for these community services that decide that they need. If all
the funding comes from the national government, then the national govern-
ment is the de facto provider, and therefore, the national authority retains strict
control over the regional and local development.
Clearly, a equitable subsidiarity needs to include that certain taxing
authorities be devolved to regional and local authorities. For example, they
need to have exclusive taxing authority on property in order to furnish the ser-
vices that their respective communities need and to take the responsibility to
implement fair, transparent business and government service practices.
As described in the previous question, regional and local authorities need to
be able to take the major responsibility to reduce local corruption and put its
own house in order. It is all too clear what happens when the equitable and pro-
portional powers are never devolved to regional and local authorities by law and
rule. If the regional and local communities lack the powers to police themselves,
a local person or group of people can choose to usurp these undevolved powers,
apply their own self-interest rules to the community, and recruit their own peo-
ple to enforce these arbitrary rules in the form of street justice. The usurpers
then tax the community citizens through extortion and other criminal means.
These informal and enforced taxes do not go to meet the needs of the commu-
nity; of course, they go to meet the desires of the self-appointed persons of
power. Therefore, regional and local authorities need certain civil and tax laws
to empower them to support civil order and to develop their communities in a
fashion most agreeable to their citizens and culture.
Subsidiarity protects against the national and supra-national authorities’
one-size-fits-all solutions that may seem appropriate and convenient to that
higher level of authority, but counterproductive in particular regional and local
communities. Subsidiarity provides for the national and higher level authority
development interests to be served, but not always at the expense of valued cul-
tural features and institutions of the nation’s individual communities.
1224 Bruce

The power and decision-making processes that were devolved from the
Soviet Union’s central planning and control structure to that of the Eastern
European countries has stalled at the national government level. Clearly, this
stalled devolution is a critical, difficult, and very political issue that is beyond
the scope of this article. It requires a national strategy that includes an equita-
ble privatizing of land, state-owned enterprises and property, as well as a
reformed tax code and administration. For example, there is a need to include
devolution of taxing authority, privatizing much of state property, and devel-
oping complete property ownership record keeping powers to regional and
local authorities. Clearly, these are not trivial tasks.[10]
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Another important restructuring area in regional and local communities


that is required to meet the EU guidelines is the education and development of
the practice of democracy, public administration, and fair business practices.
In line with the EU guidelines this education effort is from the bottom up.
The effort needs to include both the public administration and the private
business management sectors of the respective economies. This development
effort naturally brings the academic sector into the picture. The regional and
local institutions of higher education have an important role to help educate
the citizens in grass roots democracy, modern economics, modern manage-
ment methods, public administration, and ethics. In addition, the universities
and other institutions of higher learning need to train professional experts to
work in the community in public administration, economic research, and
development programs. Also, these institutions of higher learning can form
expert research centers to engage the latest and most intractable governance
and economic development issues for their communities.
Question Three: What Are Appropriate Public Policies and Economic
Development Strategies That Should Be Adopted at the Various Levels Of
Governance and Economies?
In the spirit of subsidiarity, the answer to this question needs to come, of
course, from the citizens of the regions, localities, and the nations involved.
Regional and local government authorities, as well as their citizens and cus-
tomers should be directly involved in taking responsibility for helping deter-
mine the future development of their respective communities:

Good urban governance is enhanced when the subsidiarity is adopted as


a guiding principle, decentralizing resources and responsibilities to the
lowest effective level . . . for effective decision making and manage-
ment. One of the most direct elements of good urban governance, the
manner in which decisions are taken is central to the building of consen-
sus, and the demonstration of accountability. Effective participation in
formal decision-making structures by all stakeholders can help build
consensus on development priorities, improve the equity and efficiency
of resource allocation, and ensure the transparency and accountability of
local authorities and the sustainability of interventions. However, open
The Quest for Subsidiarity 1225

and democratic decision-making needs to be underwritten by the mana-


gerial capacity and systems to ensure implementation. To ensure mean-
ingful participation, a city development strategy should build the
capacity of both local governments and their civil society partners.[11]

Funding in the form of outside investment and loans can play an impor-
tant role in helping regional and local authorities in reforming their gover-
nance and economic structures. Investors and bankers know that economic
and natural resource development needs to occur first in local urban and rural
communities. However, these investors and bankers have a paramount con-
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cern to see that the resources that they supply under special agreements,
grants, or loans are used for the agreed upon projects and outcomes intended.
Investment and special loan organizations are interested in participating in
regional and local economic development. Therefore, subsidiarity is an issue
for them as well. They now assume that if communities do not have the power
in some degree over decision making and planning processes, the support
organizations rightly fear that the higher national powers may reallocate the
loaned resources to other ‘national’ needs.
For example, United Nations Capital Development Fund’s recent corpo-
rate policy paper, “Taking Risks, [Item] 3 New Directions: Using Local
Development Programs to Reduce Poverty and Improve Local Governance,”
describes how they will now apply the subsidiarity principle to awarding
future projects:

Applying the subsidiarity principle.

Project design will be guided by the subsidiarity principle, particularly


when it comes to assigning planning and provision responsibilities and
allocating funds. . . . One key element in developing bottom-up plan-
ning procedures is designating the appropriate “approval level” for
different services and investments. Approval authority should be
entrusted to an institution coinciding as closely as possible to the com-
munity concerned.[12]

To have effective economic development policies the regional and local


communities involved outside investors and loan institutions have recognized
the importance of subsidiarity in assuring the projects are implemented
according to the original intents.

CONCLUSIONS

Eastern European countries can invoke the subsidiarity principle to be


included in the policy-making and decision-making processes of higher
1226 Bruce

national and supra—national levels of authorities. In addition, subsidiar-


ity requires that regional and local authorities be actively involved in
assuring that they attain and retain equitable and proportional powers
needed in order to manage their respective communities. The Working
Group on “Subsidiarity” for the EU Convention on institutional reform
reported that:

It is suggesting the setting up of a political monitoring system (via an


early warning system for national parliaments allowing them to deliver
a reasoned opinion on a Commission proposal) or a judicial control sys-
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tem (creation of a subsidiarity chamber within the Court of Justice in


order to strengthen ex post monitoring).[13]

Regional and local authorities are partners in development strategies at the


national and more global level authorities. If regional and local authorities are
not participating in the higher levels of planning, it will always be more diffi-
cult to get their participation in implementing any plan that does not properly
reflect the regional and local economic needs. Therefore, regional and local
authorities need to take the initiative to become involved in such planning.[14]
The major value of the principle of subsidiarity for Eastern European coun-
tries is that it can act as a beacon that can guide them into becoming more suc-
cessful members of the new world order.

REFERENCES

1. Europa — The European Union On-Line, EU — Documents, Glossary


Glossary, Subsidiarity, http://europa.eu.int/scadplus/leg/en/cig/g4000s.
htm#s10 (accessed October 25, 2003).
2. Klipp, K., Secretary General, AER; Gabbe, J., Secretary General, AEBR;
Smith, J., Secretary General, CEMR; Gizard, X., Secretary General,
CPMR; and Parmentier, C., Secretary General, EuroCities. Communica-
tion From the European Associations Representing Local and Regional
Authorities to the Members of the European Convention; Subsidiarity —
Proposals For Treaty Provisions, submitted on behalf of AER, AERB,
CEMR, & Eurocities; www.cor.eu.int/pdf/convention/0302_c_en.pdf, 1–4
(accessed October 25, 2003).
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