Defending Basque Taxation Devolution in the European Union: the Price of European Integration

This article examines the impact of European integration on Basque politics by analysing the causes, development and implications of a dispute between European Union (EU) and Basque authorities over the permissible scope of Basque taxation prerogatives. It examines three dimensions of the EU's impact on Basque politics: the impact of European integration on Basque legal-constitutional powers; its impact on new opportunities for Basque authorities to form influential strategic alliances with EU authorities; and the effect of the EU on territorial relations within Spain. It concludes by arguing that, in this episode, European integration has not been kind to the Basque Country. The EU's market competition imperative provided a justification for the emasculation of historically and politically significant Basque taxation competencies and there were more obstacles than opportunities for forming influential strategic alliances with EU authorities. Indeed, the main lesson drawn from the case is that despite significant political tensions there are much stronger foundations for strategic cooperation between Basque and Spanish authorities.