Introduction

This chapter considers how the European Union (EU) has discharged its obligations to develop and implement public health policy, obligations that arise primarily from its competences granted by Article 152 EC and Article 95 EC on the creation of the EU's internal market.

In doing so, the EU confronts four important tensions. The first concerns the relationship between those matters that are national and those that are international. Throughout history, threats to public health have transcended national borders, initially in the form of infectious diseases and more recently in the form of trade in dangerous goods, such as tobacco. Yet, reflecting the absence of an appropriate international architecture, responses have largely been developed and implemented at a national level. This only began to change in the latter part of the nineteenth century, when a series of international sanitary conferences began a process that would, in time, lead to the creation of the World Health Organization. However, even now, international public health remains a state-based model, involving interactions among state-defined actors, albeit through institutions established in international law.

The nub of this tension is that the EU is neither an international public health organization nor a state. The EU lacks the public health expertise, resources and experience of international bodies such as the World Health Organization, the World Bank or UNICEF. It also lacks the capacity – in particular, the financial and human resources – of a state, which would enable it to deliver public health policies.

Introduction

The European single market in health care is developing despite the existence of many different health care systems. With cross-border activities in health care increasing, patients tend to be treated in other Member States more often than in the past, especially since there are waiting lists in some countries. Moreover, doctors ask for more and varied telematic information from their colleagues than previously, and health care professionals, hospitals and laboratories use more and more information and communication technology (ICT) applications to communicate health data for treatment and other purposes. Many health care players (like sickness funds, hospitals, laboratories, etc.) are European health care actors and feel the need to communicate health data between Member States for treatment and other purposes. Consumers, on the other hand, use the Internet to search for medical information or to order medicinal products from pharmacies that are located in other countries. Many of these developments are related to e-health. E-health describes the application of information and communication technologies across the whole range of functions that affect the health care sector. According to the European Commission, e-health comprises the following four interrelated categories of applications: (a) clinical information systems; (b) telemedicine and home care, personalized health systems and services for remote patient monitoring, teleconsultation, telecare, telemedicine and teleradiology; (c) integrated regional/ national health information networks, distributed electronic health record systems and associated services such as e-prescriptions or e-referrals; and (d) secondary usage of non-clinical systems (such as specialized systems for researchers, or support systems such as billing systems).

Introduction

The treatment of health care by European competition law encapsulates more clearly than almost any other public service a key dilemma: to what extent are public services subject to the norms of competition law and the internal market, or are they characterized by quite different principles of solidarity and citizenship, which make the application of market and competition principles inappropriate? As we shall see, neither the European courts nor the Commission has so far provided a completely clear set of answers to these questions, although important guidance recently has been apparent in case-law and Commission policy statements. In this chapter, I shall concentrate on the applicability of competition law to public services, and the extent to which they can be made subject to partial exemption from its rules because of their distinctive role. I shall only refer in passing to the law relating to state aids and public procurement; these are of crucial importance and are inextricably related to competition law, but are the subject of a separate chapter.

Markets and social solidarity

Of course, an important theme of European Union policy has been to create a single internal market characterized by open competition, and a major element in this has been the development of a system of competition law. The most important Treaty articles for this purpose are Articles 81 and 82 (there are also complex provisions dealing with mergers, but so far these have had limited importance in the health care field and so will not be covered in this chapter).

Introduction

The challenges involved in the governance of the European Union's (EU) internal market, as well as the need for closer collaboration between Member States, have seen EU policy-makers increasingly turn to executive or regulatory agencies outside the Commission structure. These agencies are entrusted to execute a wide range of tasks from simple information collection and dissemination, to the adoption of decisions that are binding on all Member States. Seen within the context of the need for reform of the Commission and the general striving of the Community institutions for better lawmaking based on principles of good governance, it is not surprising that, in the new millennium, the resort to European-level agencies is more popular than ever. Moreover, as the EU's competences in social affairs continue to develop, the Commission's use of agencies has further spread into health-related areas. We have thus witnessed a mushrooming of agencies such as the European Medicines Agency, the European Agency for Safety and Health at Work, the European Monitoring Centre for Drugs and Drug Addiction, the European Food Safety Authority, the European Aviation Safety Agency, the European Maritime Agency, the European Centre for Disease Prevention and Control and, most recently, the European Chemicals Agency. These agencies do not work to similar remits and do not exercise the same degrees of authority. But many have an impact on the way the Community protects the health of its citizens, and they shift the coordination of specialized, technical and scientific expertise to the European level.

More recently, agencies have been seen as a constitutive element within the so-called ‘new modes of governance’ (NMG) approach to the making and enforcing of rules at EU level.

Introduction

In November 2005, a young French woman received the world's first ever face transplant. The operation was carried out in Amiens, France, by a team that was mainly French but contained one Belgian. This case exemplified very visibly the benefits that free movement of health professionals can bring to the delivery of the increasingly complex health care being provided in Europe. The benefits of professional mobility extend far beyond the very specialized care involved in that exceptional case. Within Europe, there are both surpluses and shortages of health professionals. The opening of borders offers a means to ensure that appropriate health professionals and potential patients are brought together, whether through movement of patients or, as is discussed in this chapter, movement of professionals. In addition, there are particular issues that arise in border areas, where patients may live closer to a hospital across the border than to one in their home state. Especially where these areas are sparsely populated, it is simply good management of resources to ensure that health professionals can also move across borders, working in the most appropriate facilities, wherever they are situated.

Yet there are also dangers. The large economic differences between Member States, which have grown substantially with the two most recent enlargements to the European Union, pose a challenge for the poorer countries. A plentiful supply of health professionals, coupled with formidable physical barriers to migration, meant that, during the communist era, wages were very low in comparison with other occupations.

Presenting neofunctionalism

For many years neofunctionalism was the leading explanatory approach to European integration (Haas 1964; Lindberg and Scheingold 1970, 1971). Based on the ‘liberal’ or ‘idealist’ or ‘world order’ international relations theory that sought to explain regional integration after the Second World War, it became discredited when it was unable to account for the apparent setbacks in the process, i.e. the fact that its automatic mechanisms were evidently unable to account for integration reversals or stagnation.

Intergovernmentalism was the first theory to criticise the functionalist approach (Hoffmann 1966), but even Haas himself eventually agreed it had limitations (Haas 1975, 1976). The previously claimed automaticity of spillover principles could not be observed. However, during the 1990s a considerable number of scholars incorporated parts of the neofunctionalist principles into their theoretical approaches (Corbey 1995; Mutimer 1989; Tranholm-Mikkelsen 1991). The idea that integration in one area of policy-making could necessitate further decisions regained some of its attractiveness (cf. Börzel 2005; Niemann and Schmitter 2009; Risse 2005; Rosamond 2005; Schmitter 2004, 2005, 2009; Stone Sweet and Sandholtz 1998). Adherents to the approach were no longer concerned with the fact that the integrative principles could not always be observed and argued instead that the mechanisms they studied worked over longer periods of time, regardless of possible intermediate setbacks in the process of integration.

According to the neofunctionalist approaches, the players that matter most are supranational actors, supranational institutions and transnational elites (Deutsch et al. 1957, 1967; Stone Sweet and Sandholtz 1998).

On 25 November 2003, the Economics and Financial Affairs Council (ECOFIN) effectively decided to suspend the Stability and Growth Pact (SGP). What had seemed a set of ‘boring’, or at least technical, European Union (EU) regulations on budgetary policy coordination and surveillance, suddenly made headline news. It did not grab the attention of the world because of ‘successful’ European integration, but rather, in the eyes of the press, it marked the end of an era of rapid progress in European economic and monetary integration. France and Germany, the two countries that had been the founders of the SGP, were now the ones seen to dismantle it when confronted with procedural steps that – eventually – could have led to sanctions for their persistent failure to respect the deficit limit. Concerned with that prospect, they lobbied enough Member States so that the required qualified majority, needed to adopt the Commission recommendation to take the procedure one step further, could not be reached. According to many commentators, this decision was by no means in line with the spirit of the Pact and it flew in the face of all those who had been led to believe that the underlying intention of the framework was to enshrine budgetary discipline by automatically imposing fines on delinquents.

Some observers, however, were pleased to see the arrangement abandoned. They argued that Europe's single currency would be fine without it.

Introduction

The review of the SGP in 2005 was followed by a period of unexpectedly strong economic growth. So much so that most observers were adamant that it was not possible to assess the usefulness of the reformed SGP, given the ‘good times’ and the absence of a ‘bad-weather test’. The situation changed dramatically in the fourth quarter of 2008 when the financial fall-out of the subprime crisis hit home. In less than a few weeks the economic outlook changed from favourable to dire. In other words, as far as the SGP was concerned, the economic circumstances were to move onto uncharted terrain, putting the revised SGP to the test.

This chapter offers an overview and an analysis of the period following the review of the SGP up to the financial and economic crisis that came to the fore in the last quarter of 2008. The chapter also offers tentative reflections on possible scenarios for the ongoing developments in 2009. It is structured as follows. The next section contains a concise narrative of the SGP's implementation in the period from 2005 to 2007. The third section summarises the main events of the financial and economic crisis in 2007 and 2008. The fourth section presents an overview of the initial, political response by EU leaders and the Commission by the end of 2008 as well as possible implications for fiscal policy in the EU and thereby for the SGP. It also offers an analysis of these developments, as far as they were known at the time of writing in early 2009, by examining the events through the various theoretical lenses adopted throughout this book, leading to a tentative outlook about what the financial and economic crisis might mean for the future of the SGP.

This study of the Stability and Growth Pact has sought to provide an in-depth analysis of the SGP case while at the same time it aimed to use integration theories to make sense of the empirical findings. Many EU studies are either empirically well informed but fall short of exploiting the theoretical insights that could be obtained, or, alternatively, are strictly interested in improving the theory while resting on thin empirics. This chapter seeks to bring together the insights from more than a dozen years of SGP history with our take on how better to use theories of European integration for understanding integration phenomena.

The SGP has already attracted more attention than its founders ever thought it would during its entire existence. It has proven to be a Pact caught up in politics, both domestic and international, and firmly embedded in the functional framework of the EU with a large role played by experts and the existing paradigm on economic policy-making.

This study sought to trace the origins of the Stability and Growth Pact, its implementation, its institutional crisis and reform and its implementation in the midst of a global economic crisis – all with a view to understanding what factors determine the outcomes we observe. Reflecting briefly on the financial crisis we speculated on what it might mean for the SGP. In this book we adopted an innovative approach by having parts of the Pact's genesis be analysed by different theoretical approaches, which we argue are complementary in their power to explain the outcome.

Introducing an expertocratic approach

European integration theories have been strongly influenced by the emergence of ideas-focused or knowledge-based approaches (Richardson 2001; Risse 2004; Waever 2004). Various scholars stressed the role of experts and the prominence of certain ideas in the formation of policies and integration more generally (Jacobsen 1995; Lequesne and Rivaud 2003; Parsons 2002; Radaelli 1999). The debates sometimes centred on the dichotomy between rationalist and constructivist approaches (Checkel 1998, 2001; Pollack 2001). The former would encompass all IR approaches that assume that states can identify their interests. A constructivist approach would seek to ‘scratch the surface’ and see what interests consist of and how they are formulated (Christiansen et al. 1999). Incorporating the importance of norms, rules and paradigms is at the core of this approach.

In order to enhance our understanding of European integration we propose to organise this multitude of ‘approaches’ in a systematic manner. We adopt from these approaches the importance of experts, expertise, policy learning, socialisation, expert communities, ideas and paradigms. We label this composite perspective that focuses on individuals at the ‘working level’ of policy-making an ‘expertocratic approach’. ‘Expertocracy’ literally means the ‘rule of experts’ and, interestingly, the word ‘expert’ derives from the Latin term for ‘trying out’. Thus this term captures nicely what we want to look at: those who ‘rule’ backstage are the ones who are testing out various ideas and who can bring their professional experience to a policy problem.

Presenting the domestic politics approach

Some European integration scholars found intergovernmentalism and its focus on nation state interests on its own insufficient to explain the process of European integration (Bulmer 1983; Webb 1983). Intergovernmentalism was criticised for looking at the state as a ‘black box’. Based on comparative politics and political economy approaches, domestic politics scholars stressed that, in order to understand state preferences, one would want to analyse internal dynamics of the state and appreciate the importance of the domestic political context (Huelshoff 1994). National elections, domestic structures, constituencies and sensitivities, later also called ‘national identities’, were seen to have a crucial impact on the way the EU is perceived by the national government as being an instrument to obtain domestically important objectives. Likewise, the domestic scene may impose a constraint on the national government which then would affect the way it operates at the European level, for example to secure its national interests in negotiations.

Scholars who emphasise the importance of domestic politics argue that there are certain domestic actors that are significant in understanding the outcomes of the European integration process. These actors are: the national government, party leaders, the opposition, the general public, interest groups, corporations, the media and so on.

Not only are the actual actors important, but the domestic institutional setting and the institutional structures in which they operate also play a role.