In search of market liberals

For a long time, Europe's left was reluctant to support European integration. In its 1952 party program, the German social democratic party castigated supranational Europe as “a conservative and capitalist federation of the miniature Europe” (Haas 1958: 137). It is true that socialist parties in all six founding states helped to ratify the Treaty of Rome, but their support was often qualified – concerned as they were that European economic integration would make it more difficult to pursue socialist policies. Ambivalence or opposition also initially characterized left parties in Britain, Ireland, and Denmark in the 1970s, Greece in the early 1980s, and Sweden in the 1990s. The least one can say is that the left has not been in the vanguard of European integration. The uniting of Europe was crafted by parties of the center and the right (Featherstone 1988: 2).

The left's suspicion was understandable. Until the 1999 Treaty of Amsterdam, there was a powerful institutional bias in EU Treaties and legislation in favor of market-creating (i.e., negative) integration and against market-correcting (i.e., positive) regulation (Dehousse 1992; Majone 1992, 1994a, 1996; Pinder 1968; Scharpf 1996; Streeck 1991, 1996; Streeck and Schmitter 1991). A close examination of the Treaties leads Mark Pollack to conclude that, “from Rome to Maastricht, the fundamental thrust of the treaties has been neo-liberal, in the sense that each of the Community's constitutive treaties facilitated the creation of a unified European market, while setting considerable institutional barriers to the regulation of that same market” (Pollack 1999: 268).

It is a sticky, hot July afternoon in Brussels. My interview with the Commission director was scheduled for four o'clock, but it is now well past five. At last, the door swings open and four people leave, talking animatedly. I am waved into the room, and I switch on the tape recorder. Towards the end of the interview, I accidentally find out what kept me waiting for so long. When I ask my interviewee to define the European Union's greatest challenges, he recounts the following story:

The study of the European Union (EU) has vacillated between being a vanguard for theoretical innovation and a feast for area specialists. The turn of the century has been a time of connecting these two worlds.

This book on preferences in the European Commission is written for both generalists and EU area specialists. For EU students, I explore the beliefs of decision makers at the heart of Europe about who should govern, how, and over whom. These questions have structured political competition in Europe's national states over the past century and a half. They now shape EU politics. Scholars have begun to map contestation among public, parties, and private interests. But how do office holders in the European Union's central executive and administrative body, the European Commission, conceive of European integration? What kind of European Union do top Commission officials want? Should the European Union be supranational or intergovernmental? Should it promote market liberalism or regulated capitalism? Should the Commission be an executive principal or an administrative/managerial agent? Should it be a consociational or a Weberian organization?

Between 1995 and 1997, I set up camp in Brussels in order to ask these people what they think of the integration of Europe. These 137 interviews constitute the empirical bedrock of this book. The leadership of the Commission holds diverse, not unitary views. Contrary to conventional wisdom, I find that top officials are divided as sharply as national parties, governments, and national publics.

The conventional notion that the Commission is a unitary actor is misleading. In reality, the Commission is culturally diverse and politically divided. Visitors are struck by the linguistic and cultural variety within and among directorates-general (DGs). As one moves down the corridor of a typical DG, or takes the stairs to the next floor, one is beamed from a French-speaking into a predominantly English- or Spanish-speaking environment – dotted with one-to-one conversations in Danish, Greek, or Dutch. Administrative and social styles vary markedly. Some units swear by an egalitarian consultative style; others are run in a hierarchical and directive fashion. Here are a few cues for distinguishing one from the other: whether doors are open or closed; whether several small informal meetings of co-workers are going on, or one director-led assembly; whether secretaries are facilitators or gatekeepers; whether it takes a simple phone call (or email), fax or letter, or a formal application to the hierarchy to meet an official; whether circulaires (the famous trail of bureaucratic paperwork) are treated on a first-in first-out basis, or reach to the ceiling in the director's office.

Political preferences differ from office to office. Euro-federalists work with defenders of state power and politically agnostic policy wonks. Market liberals negotiate with social democrats and with independents. Officials concerned about the Commission's managerial deficit argue with colleagues opposed to trading the Commission's executive power for administration and management.

Senior civil servants work in two worlds simultaneously: they make and take orders for routine actions in the hierarchical world of public administration, on the basis of formal rules, cost–benefit analysis, and expertise; and they mobilize support for contentious decisions in the non-hierarchical world of politics, through networking and arm-twisting. Combining politics with expertise is indispensable in modern governance. Yet the relationship between these two worlds is delicate and contested, and senior civil servants, who are the interface between them, are directly affected.

Several institutional characteristics of the European Union exacerbate the tension between political agenda-setting and bureaucratic service (Hooghe 1997; Page 1997). In conjunction with the College of Commissioners, the officials of the European Commission have a constitutional obligation to set the legislative agenda because they have exclusive formal competence to draft EU legislation (except in foreign policy and some asylum and immigration issues). This competence sets senior Commission officials apart from their counterparts in national administrations. So they promote the policies of their directorate to private interests, politicians, public, and, last but not least, reluctant Commission colleagues. They direct negotiations between the Commission, on the one hand, and the Council of Ministers' working groups, the European Parliament, and interest groups, on the other. They broker legislative negotiations between the Council of Ministers and the European Parliament. Yet, as career civil servants, they also execute and administer political decisions taken by elected leaders. In that capacity, they provide administrative and managerial leadership to over 4,000 Commission administrators.

Commission Socialization

Years in Commission service. Source: Biographical data from The European Companion (London: DPR Publishing, 1992, 1994); Euro's Who's Who (Brussels: Editions Delta, 1991); and from interviews by the author.

ERC-Soc

I calculate how many years each official spent in DGs dealing with European regulated capitalism. I use a restrictive definition of services for European regulated capitalism: social regulation (social policy, culture, environment, vocational training and education, consumer services: DGs V, X, XI, XXII, XXIV) and redistribution (agriculture, third world development, fisheries, regional policy: DGs VI, VIII, XIV, XVI). Source: biographical data and interviews.

Cabinet Experience

A dummy, with a value of 1 for those who served in a Commission cabinet. Source: biographical data and interviews.

National Administration

Years in national service. These concern positions in the executive branch of the state and hierarchically subordinate to central government: civil servants in line ministries, diplomats (excluding EU postings), and government ministers (but not national parliamentarians). For public officials with some autonomy from central authorities (courts, central bank, parliament, public companies, local government) or in positions with a strong European component (European desks in foreign affairs or near the head of government), I divide the number of years by two. Source: Biographical data and interview data.

Type of National Administration: Strong/Medium/Weak Weberian

Three dummies that tap strong/medium/weak Weberian bureaucratic tradition. I compare bureaucracies along four dimensions developed by Edward Page, and use these comparisons to categorize bureaucratic traditions along a consociational–Weberian dimension.

Crisis in spring: Commission resigns en masse

These words prefaced The Economist's biographical sketch of Mr. Erkki Liikanen, at the time the commissioner for budget, administration and personnel matters (The Economist, December 19, 1998, p. 66). Mr. Liikanen received praise in this article for his efforts to improve sound and efficient financial management. Yet, on March 15, 1999, he resigned with the entire Santer Commission after the publication of an independent expert report exposing six cases of fraud or mismanagement and several instances of nepotism in the Commission.

The unprecedented en masse resignation of the Commission was the climax of a six-month tug of war between Europe's executive and the European Parliament. It began, in the fall of 1998, with parliamentary inquiries into the Commission's financial management. Leaks from a disgruntled Commission official to the Green party fraction had triggered these. A parliamentary resolution of January 14, 1999, called for an official investigation by independent experts into alleged cases of fraud and mismanagement of Commission funds.

European integration studies have found it difficult to produce cumulative research. Some may argue that cumulative knowledge is always hard to come by in area studies. Yet Europe has traditionally been a rewarding laboratory for scholars in search of answers to basic questions. Various subfields in political science – political parties, mass public opinion, welfare regimes, systems of industrial relations, public administration, public policy, social movements, or value change – draw empirically primarily from the “area of Europe”.

Cumulative research in European integration studies has been an uphill struggle for several reasons. One is that European integration has often been perceived as a unique case. Despite Giovanni Sartori's warning that “he who knows only one country knows none” (Sartori 1991), many EU scholars have been reluctant to consider the European Union as one case within an n larger than one. Ironically, the study of regional integration in Europe began as a distinctly comparative-historical enterprise. European integration occupied a secondary place to international integration in David Mitrany's functionalist theory (Mitrany 1966). Ernie Haas (1958, 1960, 1964) wrote about various forms of regional integration that were emerging in postwar Europe, including the Nordic Council, the Council of Europe, the North Atlantic Treaty Organisation (NATO), the Western European Union, and the predecessors of the European Community (EC), such as the European Coal and Steel Community. He also analyzed global forms of integration, such as the International Labour Organization, a study that had a strong influence on his formulation of neofunctionalism (Haas 1964).

In search of supranationalists

Interviewing in the Commission's most powerful directorates-general is carefully regulated, perhaps because the prey is much in demand, highly prized, and occasionally somewhat threatening to the hunter. Visitors to the directorate-general (DG) for competition policy are chaperoned from the security guards' reception desk to the interviewee's office and back, to prevent them from roaming through secret competition files. Security guards also man access to the DG for agriculture – as they do for virtually all Commission buildings. They collect passports and information on profession and address, and they phone the contact person. The guards in the DG for agriculture allow one to make the journey up to floor five, seven or eight all by oneself. Yet the headquarters of this DG are intimidating: the floor plan is labyrinthine, the silent windowless corridors with closed doors are endless, and the building's lopsided structure with multiple exits is confusing as it plunges from the hilltop on Wetstraat onto Joseph Ⅱ Straat approximately 70 feet lower. Maybe because of this architecture – incomprehensible to the outsider – the ethos of discipline, power, and confidence is all the more palpable.

A visitor may be forgiven for perceiving these fortress-like features as telling symbols of the Commission's preference for supranationalism. Reality is more complicated. Top officials in these strongholds vary appreciably in the degree to which they support a supranational or an intergovernmental Union.

Part III of this book has shown that Europeanization has exerted similar pressures for adaptation on Spanish territorial institutions as it has in Germany. Due to the differences between the Spanish State of Autonomies and the German Federal State, Europeanization has resulted in partly different forms of institutional misfit, which have, however, caused a comparable degree of adaptational pressure due to an uneven distribution of “say and pay”. On the “say” side, European institutions have allowed the Spanish and the German central states to access exclusive competencies of the regions. In this respect, the CCAA were more affected than the Länder because of their larger sphere of autonomous competencies. At the same time, the CCAA did not have any co-determination powers in central-state decision-making to lose, whereas the Länder did, and have consequently suffered most in this area. The CCAA faced the centralization of their implementation competencies, both legislative and administrative. On the “pay” side, CCAA and Länder alike are the main implementers of Community Law and, thus, have to carry the burden of implementing policies, in whose formulation and decision-making they did not participate (“pay without say”). In both countries, this uneven distribution of “say and pay” has caused a redistribution of resources, which has changed the territorial balance of power in favor of the central state.

Unlike German cooperative federalism, however, the informal institutions of Spanish competitive regionalism have prohibited rather than facilitated the adaptation of formal institutions to this shift of power.

Rational choice and sociological institutionalism both understand the effect of Europeanization on the member states as a process of institutional change. The conceptions of the domestic impact of Europe as a resource-dependent process and a process of institutional adaptation, respectively, generate different propositions on the conditions, the process, the degree, and the outcome of domestic change. But neither resource dependency nor institutional adaptation provide a sufficient explanation for variation at the domestic level. Why do domestic actors respond differently to the opportunities and constraints provided by Europeanization, be they material or ideational? Why do some member-state institutions undergo more profound institutional change than others do, even if they face similar degrees of institutional misfit?

In order to address these questions, I combine assumptions (1) of rational choice and socio-logical institutionalism, (2) of resource dependency and institutional adaptation, and (3) of agency and structure within a historical institutionalist framework. This framework emphasizes the role of institutions in mediating the domestic impact of Europe (institution dependency).

Institution dependency denotes, first, that institutional adaptation to environmental changes is influenced by the strategies that actors choose in response and, second, that the choice of adaptational strategies depends on the institutions in which actors are embedded. This definition of institution dependency entails an understanding of actors' behavior and its relationship to institutions which is informed by historical institutionalism (Steinmo et al. 1992; Hall and Taylor 1996).

Part II of this book has shown that Europeanization has exerted significant pressure for adaptation on German territorial institutions. European institutions which concentrate decision-making powers in the hands of member-state executives while shifting the implementation costs of European policies to subordinate levels (national, regional, and local) do not match the structure of the formal institutions of German federalism. The latter provide for a sharing of both decision-making powers and implementation costs between central state and regions. As a result of this institutional misfit, Europeanization has caused an uneven distribution of “say and pay” to the detriment of the German Länder. On the one hand, the transfer of policy competencies to the European level has not only given the Bund access to exclusive Länder competencies (which the German Constitution had blocked), but the co-decision powers of the Länder in federal policy-making (formulation, decision, and implementation) have also been reduced to the implementation of European policies. On the other hand, the Länder have had to implement policies in whose formulation and decision-making they did not formally participate, and this precluded a sharing of implementation costs. The uneven distribution of “say and pay” in European policy-making has led to a redistribution of resources between Bund and Länder that has changed the territorial balance of power in favor of the central state.

I have argued that the informal institutions of cooperative federalism have facilitated the adaptation of its formal institutions to this Europe-induced shift of power.