1. INTRODUCTIVE REMARKS ON THE CONCEPT OF FEDERALISM “A

Federalism fulfils two major functions: a) A vertical separation of power by a division of responsibilities between two levels of government. The component units as well as the federation are usually geographically defined, although “societal federalism ” contemplates non-territorial units as components of a federation. b) The integration of heterogeneous societies, while preserving their cultural and/or political autonomy. Both functions imply that the component units and the federation have autonomous decision powers which they can exercise independently from each other. Thus, sovereignty is shared or divided, rather than exclusively located at one level. By no means do we suggest that the European Union is, or should become, a “federalised ” state. Even, without the legitimate monopoly of coercive force, the European Union has acquired some fundamental federal qualities. The European Union possesses sovereignty rights in a wide variety of policy sectors reaching from exclusive jurisdiction in the area of Economic and Monetary Union to far-reaching regulator