This chapter examines the multifaceted and increasingly complex relationship between the Union and the member states. It begins with the transfer of sovereign powers and democratic legitimacy of the Union, and the establishment of constitutionalism within the Union. The second section considers the division and control of competences between the Union and the member states and also, in this context, the principles of subsidiarity and proportionality, which are the political solutions to the very emotive questions about how power is shared between the Union and the member states.