Caramani, Comparative Politics chap23.tex V1 - October 19, 2007 2:26 P.M. Page 573 23 The EU as a new political system Simon Hix Chapter contents Introduction 574 Explanations of European integration 576 Understanding the EU as a political system 580 Vertical dimension: the EU as a ‘regulatory state’ 583 Horizontal dimension: a hyper-consensus system of government 589 Democratic politics: the missing link? 595 Conclusion 598 Reader's guide This chapter analyses the development and operation of the European Union (EU) as a political system. I start by looking at the evolution of the EU and how the process of European integration has traditionally been understood. The chapter then discusses what it means to think of the EU as a political system from the point of view of comparative politics. As in other multi-level polities, there are two basic dimensions of the EU system: (1) the vertical dimension—the allocation of policy-making power between the EU and the member-states; and (2) the horizontal dimension—the design and operation of EU decision-making. These two dimensions are considered separately before we turn to the ‘missing link’ in the EU system: the lack of genuine ‘democratic politics’.
Vertical dimension: the EU as a ‘regulatory state’ 583
Horizontal dimension: a hyper-consensus systemof government 589
Democratic politics: the missing link? 595
Conclusion 598
Reader's guideThis chapter analyses the development and operation of the European Union (EU) asa political system. I start by looking at the evolution of the EU and how the process ofEuropean integration has traditionally been understood. The chapter then discusseswhat it means to think of the EU as a political system from the point of view ofcomparative politics. As in other multi-level polities, there are two basic dimensionsof the EU system: (1) the vertical dimension—the allocation of policy-making powerbetween the EU and the member-states; and (2) the horizontal dimension—thedesign and operation of EU decision-making. These two dimensions are consideredseparately before we turn to the ‘missing link’ in the EU system: the lack of genuine‘democratic politics’.
IntroductionIn the early twentieth century, Europe suffered thetwo most destructive wars in human history, as thepinnacle of centuries of bitter political and economicrivalries between the states of Europe. At the be-ginning of the twenty-first century, in contrast, thestates of Eastern and Western Europe are united in acontinental-scale political system, where certain exec-utive, legislative, and judicial powers are collectivelypooled at the European level, and national govern-ments’ choices are heavily constrained by the rulesand decisions of the EU. There are certainly problemswith the EU. In particular, decision-making amongsttwenty-seven states is difficult, and the democraticfoundations of the EU remain weak. However, the EUis one of the most remarkable political achievementsof modern times. The EU single market guaranteesthe economic prosperity of almost half a billionpeople, and most EU citizens take for granted theinvestment, consumption, educational, travel, andlifestyle opportunities that exist because of the EU.Above all, for the first time in human history, awar between the major states of Europe is almostunimaginable.
How did this happen? When six European statesdecided in the early 1950s to place their coal andsteel industries under collective supra-national con-trol, few would have expected that this would haveled within fifty years to a new continental-scalepolitical system. Box 23.1 lists the key stages inthe development of European integration. A fewstages are worth highlighting. In the 1960s, West-ern Europe became the first region in the worldto establish a customs union, with an internal freetrade area and a common external tariff. Addedto this ‘common market’ was the first genuinelysupranational public expenditure programme: theCommon Agricultural Policy (CAP). European in-tegration then took a major step forward in the1980s. The first, and so far only, continental-scale‘single market’ was created by the early 1990s, withthe removal of internal barriers to the cross-borderflow of goods, services, capital, and labour, a single
European competition policy, and a single Europeancurrency (the euro). In parallel to, and partly as aconsequence of, the single market, in the 1990s theEU developed common social and environmentalpolicies, common policies on the movement of per-sons between the EU states and across the EU’sexternal borders, and began to coordinate nationalmacro-economic, justice and policing, and foreignand security policies.
As the first genuinely supra-national political sys-tem, many aspects of the EU are unique. On theother hand, from the point of view of comparativepolitics, there are many things the EU shares withother multi-level polities. For example, the divisionof powers between the lower (national) and higher(European) levels of government determines howpolicy-making works and the room for manœuvreof the two levels of government. Moreover, at theEuropean level, the design of agenda setting and vetopowers in the decision-making process determineswhich actors are most likely to secure the policies theymost prefer and how easy or difficult it is to changeexisting policies. The field of comparative politics hasdeveloped analytical tools to understand these andother aspects of multi-level political systems whichare increasingly applicable to the EU.
KEY POINTS
❑ In half a century the EU has evolved from an or-ganization governing coal and steel production anda common market to a continental-scale politicalsystem, with extensive executive, legislative, andjudicial powers.
❑ The process of European integration began with sixmember states, the EU now has twenty-sevenmem-bers and may enlarge to thirty or even thirty-five inthe next decade or so.
❑ The EU shares many characteristics of other multi-level political systems, which enables the tools ofcomparative politics to be applied to the EU.
BOX 23.1 Key Dates in the Development of the European Union
18 February 1951 Belgium, France, Germany, Italy, Luxembourg, and the Netherlands sign Treaty ofParis, launching the European Coal and Steel Community (ECSC).
23 July 1952 Treaty of Paris enters into force........................................................................................................................................................
1 January 1958 Treaties of Rome enter into force, establishing the EEC and Euratom........................................................................................................................................................
30 July 1962 Common Agricultural Policy starts........................................................................................................................................................
5 February 1963 Van Gend en Loos ruling of the ECJ, establishes the ‘direct effect’ of EEC law........................................................................................................................................................
15 July 1964 Costa v. ENEL ruling of the ECJ, establishes the ‘supremacy’ of EEC law........................................................................................................................................................
29 January 1966 Luxembourg compromise, which effectively means Council must decideunanimously.
1 July 1967 Merger Treaty, establishing a single set of institutions for the three communities........................................................................................................................................................
1–2 December 1969 Hague Summit, governments agree to push for further economic and politicalintegration.
1 January 1973 Denmark, Ireland, and the United Kingdom join........................................................................................................................................................
27 October 1970 Governments start foreign policy cooperation (European Political Cooperation)........................................................................................................................................................
10 February 1979 Cassis de Dijon ruling of the ECJ, establishes ‘mutual recognition’ in the provision ofgoods and services in the common market.
13 March 1979 European Monetary System begins........................................................................................................................................................
7–10 June 1979 First ‘direct’ elections of the European Parliament........................................................................................................................................................
1 January 1981 Greece joins........................................................................................................................................................
26 June 1984 Margaret Thatcher negotiates the ‘British rebate’ from the annual budget........................................................................................................................................................
1 January 1985 First ‘European Communities’ passports are issued........................................................................................................................................................
1 January 1986 Portugal and Spain join........................................................................................................................................................
19 May 1986 European flag used for the first time........................................................................................................................................................
1 July 1987 Single European Act enters into force, launching the single market programme........................................................................................................................................................
13 February 1988 First multi-annual framework for the EC budget agreed........................................................................................................................................................
9 November 1989 Berlin Wall falls........................................................................................................................................................
1 January 1993 Single European Market starts........................................................................................................................................................
1 November 1993 Maastricht Treaty enters into force, launching the EU and the plan for EMU........................................................................................................................................................
21 July 1994 European Parliament rejects a piece of EU legislation for the first time........................................................................................................................................................
1 January 1995 Austria, Finland, and Sweden join........................................................................................................................................................
1 January 1999 EMU starts........................................................................................................................................................
15 March 1999 Santer Commission resigns before a censure vote is held in the European Parliament........................................................................................................................................................
1 May 1999 Amsterdam Treaty enters into force, starting the ‘area of freedom, security andjustice’.
24 March 2000 European Council agrees the ‘Lisbon strategy’ to promote growth and productivity........................................................................................................................................................
1 January 2002 Euro notes and coins replace national notes and coins for ten member states........................................................................................................................................................
1 February 2003 Nice Treaty enters into force, launching defence cooperation and reforming theinstitutions in preparation for enlargement.
26 October 2004 European Parliament blocks the election of a new Commission........................................................................................................................................................
29 October 2004 Treaty establishing a Constitution for Europe signed........................................................................................................................................................
29 May/1 June 2005 ‘No’ votes in referenda in France and the Netherlands on the Constitutional Treaty........................................................................................................................................................
1 January 2007 Bulgaria and Romania join.
Explanations of European integrationIn the early period of the EU’s development, social sci-entists attempted to explain the process of economicand political integration in Europe. Several scholarsexpected in the 1950s and 1960s that ‘regional integ-ration’ would happen in many parts of the world, asrelations between states changed dramatically in theaftermath of the Second World War and with theonset of the cold war. However, by the mid -960s,the extent of institution-building and the intensity ofpolitical and economic cooperation were far greaterin Western Europe than in any other region. As a res-ult, an explanatory framework developed for the solepurpose of understanding the EU, rather than for thepurpose of explaining a general social or political phe-nomenon. Broadly speaking, and grossly simplifyinga diverse set of research and scholarship, explan-ations of European integration fall into two maincamps: (1) intergovernmental approaches, whichsee the preferences and decisions of the nationalgovernments as primary; and (2) supra-national ap-proaches, which see supra-national political, social,and economic forces beyond the control of the na-tional governments as primary.
Intergovernmental approachesThe basic assumption of these approaches is thatmain actors in the EU are the governments of themember-states (e.g. Hoffmann 1966, 1982; Taylor
1982; Moravcsik 1991). National governments havea clear set of preferences about what policies theywould like to see allocated to the European level,and what the content of the policies should be.For example, British governments have traditionallypreferred economic integration to political integra-tion, while German governments have wanted both.Moreover, British governments have wanted the EUto adopt a free-market approach to economic in-tegration, while German governments have lookedfor the EU to adopt a ‘social market’ approach, withharmonized social and labour market regulations.
Another assumption of the intergovernmental ap-proaches is that governments ‘bargain hard’ witheach other on the basis of these preferences, andonly agree to outcomes at the European level if theseoutcomes promote their preferences. This assump-tion is usually matched to a corollary assumption,that governments possess enormous political and in-formational resources (for example, they have largepublic administrations), and so have a good under-standing of the likely consequences of their actions.For example, governments understood that estab-lishing a single market and economic and monetaryunion would inevitable create constraints on a rangeof important domestic economic and social policies.
At face value, one might assume that, ifgovernments are self-interested, have varying pref-erences, and are determined not to lose any ground
when bargaining at the European level, nothing willever be done in the EU. Indeed, this was one of theconclusions of some of the early intergovernmentaltheorists, who assumed that European integrationcould not progress beyond a very minimal level (e.g.Hoffmann 1966). Nevertheless, more recent inter-governmental approaches argue that there are goodcollective reasons for member-state governments tohand over significant powers to the EU institutions,well beyond the expectations of the early theorists(Moravcsik 1993, 1998; Pollack 1997). For example,it is often in all the governments’ interests to havea common policy for the single market (such as acommon standard for car emissions), yet agreementcannot be reached as each government has theirown particular policy preference which they are re-luctant to give up. This ‘coordination problem’ canbe resolved by delegating agenda-setting power tothe European Commission, where the Commissionworks out which is the best policy option for the EUas a whole, which all the governments then agree tosupport. This helps explain why delegating agenda-setting power to the Commission in the creation ofthe single market was both in the self-interest ofthe EU governments and crucial for the process ofEuropean integration.
The intergovernmental approaches explain wellwhy the process of integration stalled in the 1970s,as governments preferred national to European solu-tions to the economic problems in that period. Theseapproaches also explain how a convergence of gov-ernments’ preferences in favour of a continental-scalemarket, and the careful design of a set of new decision-making rules, enabled European integration to berelaunched in the 1980s and 1990s.
Nevertheless, there are several aspects of Europeanintegration that these approaches have not been ableto explain so well. They cannot explain the increasein the powers of the European Parliament (EP) inthe treaty reforms since the mid-1980s. In addition,if the governments are in control of the process ofEuropean integration, and there are no long-termconsequences beyond the collective intentions of thegovernments, it is hard to explain why there is declin-ing support for European integration. Indeed, froman intergovernmental perspective, since the govern-ments run the EU, and the governments are electedby the citizens, then there is no ‘democratic defi-cit’ in the EU (Moravcsik 2002). Finally, although
intergovernmental approaches may be very usefulfor understanding the ‘grand bargains’ in the processof European integration, such as the Single EuropeanAct or the Maastricht Treaty, they seem less use-ful for understanding day-to-day decision-making,where there are multiple actors and interests anda more complex set of preferences and decision-making rules.
To understand how the EU works on a day-to-daybasis, it is more useful to think of the EU as a polit-ical system, and apply tools and approaches fromthe study of comparative politics along the lines ofnational systems on which comparative politics hastraditionally focused.
Supranational approachesThe basic assumption of these approaches is that theprocess of European integration is a deterministicprocess driven by underlying political, economic,and social forces. In the early period of Europeanintegration, Ernst Haas proposed what he called a‘neo-functionalist’ theory of economic and politicalintegration (Haas 1958, 1961; cf. Lindberg 1963). Atthe heart of this theory was the concept of ‘spillover’,whereby ‘a given action, related to a specific goal,creates a situation in which the original goal can beassured only by taking further actions, which in turncreate a further condition and a need for more, andso forth’ (Lindberg 1963: 9). For example, a commonmarket in coal and steel would work much more effi-ciently if there was a common market in other goodsand services used in the production and distributionof coal and steel. Similarly, once the free movementof labour is established as part of the single market,with the effective abolition of controls on the move-ment of people once they are inside the EU, there waspressure on the member-state governments to agreecommon justice and home affairs policies.
One variant of this approach was Bela Belassa’s(1961) theory of economic integration. Belassa ar-gued that, once a customs union had been established,the potential economies of scale from such a unioncould not be met unless all barriers to the freemovement of goods and services had been removed(in other words in a single market). Then, once asingle market had been established, the market wouldfunction more effectively if a single currency couldbe established, which would allow for greater price
transparency and reduced transaction costs of doingbusiness across borders. Then, if a single currencywere established, economic shocks to the currencyunion could no longer be addressed through monet-ary policies, so there would need to be fiscal transfersfrom high growth regions to low growth regions.These fiscal transfers would need to be legitimizedsomehow, which would require the establishment ofgenuine political union, with democratic electionsfor the central institutions. In other words, Belassapredicted a logical teleological development from acustoms union to a political union.
Most scholars within the supra-nationalist ap-proach were not as economically determinist asBelassa, in that they assumed that integration wouldnot proceed without the input of actors or groupsof actors. In other words, economic forces are in-sufficient on their own to force states to take majorintegrationist steps. However, in contrast to the inter-governmental view, which emphasizes the supremacyof states and governmental actors, most scholarswithin the supra-national framework emphasize therole of ‘non-state’ actors, such as economic andsocial interest groups and the supra-national insti-tutions of the EU themselves (e.g. Marks et al. 1996;Pierson 1996; Sandholtz and Stone Sweet 1997; Pol-lack 2003). For example, transnational businesses inthe early 1980s put pressure on the governments tosupport the creation of a genuine single market inEurope (e.g. Sandholtz and Zysman 1989).
Meanwhile, the Commission, led by PresidentJacques Delors, played an important role in shap-ing the single market programme, the reform of theEU budget in the late 1980s, the plan for economicand monetary union (e.g. Pollack 2003). Similarly,
by establishing the doctrines of the ‘direct effect’and ‘supremacy’ of EC law in the early 1960s, theEuropean Court of Justice (ECJ) has fashioned aquasi-federal legal framework for the EU, beyondthe intentions of the signatories of the early treaties(e.g. Weiler 1991). And, the EP has interpreted thedecision-making rules of the EU in a way that hasmaximized its influence under the various legislativeprocedures (e.g. Hix 2002).
Supra-national approaches explain very well theevolution from the coal and steel community to thecustoms union. They also explain the developmentfrom the single market to economic and monetaryunion, and how a market on a continental scale hasspillover effects on governments’ taxing, spending,immigration, and policing policies. Overall, supra-nationalism does well to capture the remarkable,and perhaps teleological, evolution of the EU froma customs union in the 1960s to a full-blown polit-ical system by the end of the twentieth century.Nevertheless, the inherent determinism of the supra-nationalist approaches means that they are less ableto explain why the process of European integrationslowed between the late 1960s and the mid-1980s,or why some member-states decided to join the EUat different times or indeed remain largely outsidethe process of European integration (such as Norwayand Switzerland). These approaches are also less ableto explain why the EU is more able to adopt commonpolicies in some areas, such as environmental policy,than in other areas, such as social policy.
Again, thinking of the EU as a political systemhelps us to understand its internal workings in detail,which in turn has implications for understanding thegeneral process of European integration.
KEY POINTS
❑ For most of its history, the EEC/EU has been mainlyunderstood by social scientists as a unique case ofpolitical and economic ‘integration’ between sover-eign nation-states.
❑ Intergovernmentalism focuses on how the policy pref-erences and actions of the European governments,and particular the three most powerful governments
(Germany, France, and Britain), shape the design ofthe EU at the various stages of integration.
❑ Supra-nationalism focuses on how the underlying eco-nomic, political, and social factors and the behaviourof interest groups and the EU institutions constrainthe choices of governments and so further economicand political integration.
In the late 19th century, the Austro-Hungarian Jew TheodorHerzl founded the Zionist movement that strived for theestablishment of a national Jewish state. By the end ofthe Second World War, some 500,000 Jews immigrated toPalestine, mostly from Russia and Europe following pogromsand outbreaks of anti-semitism. Palestine became a Leagueof Nations mandate administered by Britain in 1920. Inde-pendence was gained in 1948.Constitution No formal constitution. A parliamentary com-mittee has been working on a draft constitution since 2003.
Form of government
Parliamentary democracy.Head of state President elected by Parliament, term of7 years (no term limits).Head of government Prime Minister assigned by the Pres-ident; traditionally the leader of the party that holds most ofthe seats in parliament.
Cabinet Ministers selected by the Prime Minister and ap-proved by Parliament.Administrative subdivisions 6 districts.
Legal system
Mixture of English common law, British Mandate regula-tions, and Jewish, Christian, and Muslim legal systems.
Legislature
Unicameral parliament (Knesset): 120 seats, term of 4 years.
Electoral system (lower house)
Proportional representation.Formula D’Hondt.Constituencies 1 multi-member constituency for 120 seats.Barrier clause 2% nation-wide.Suffrage Universal, 18 years.
Direct democracy
None.
Party system Results of the 2006 legislative elections:
Our Home Israel 281, 880 9.0 11..............................................................................................................................
National Union-National Religious Party 224, 083 7.1 9..............................................................................................................................
Age-Pensioners of Israel to the Knesset 185, 759 5.9 7..............................................................................................................................
United Torah Judaism 147, 091 4.7 6..............................................................................................................................
United Arab Lists-Arab Renewal Movement 94, 786 3.0 4..............................................................................................................................
Hadash (United Front for Peace and Equality) 86, 092 2.7 3..............................................................................................................................
A political system but not a stateA key insight of modern social science, as it began toemerge as a discipline at the start of the twentieth cen-tury, was that democratic and effective governmentcan only work within a state.: which Max Weberand others understood as a hierarchical organiza-tion, where power is concentrated at the centre, andwhere the central authorities can use the ‘forces ofviolence’ (the police and the army) to enforce thelaw and maintain political stability (see Chapter 4).However, this ideal type of political organizationonly really existed in a relatively small number ofcountries (such as France, Britain, and Sweden) andin a rather short period of human history (from theseventeeth to the mid-twentieth centuries). For manysocieties in Europe and throughout the world, andfor most of human history, power and authority wassplit between multiple different actors and levels ofgovernment. And, with the widespread decentraliza-tion of authority to local and regional governmentsand non-state organizations, and with the delegationof authority to supra-national bodies such as the EUand the World Trade Organization (WTO), polit-ical power is now dispersed or ‘shared’ in multiplesettings (see Chapter 24). This does not mean thatthe ‘state’ as traditionally understood does not exist.However, it does mean that politics, government,and policy-making now exist in many contexts eitheroutside or beyond the classic Weberian state (Badieand Birnbaum 1983).
This is precisely the situation with Europe, wherethe gradual process of economic and political integra-tion has produced a complex allocation of executive,legislative, and judicial policy-making powers at mul-tiple levels of government, including the Europeanlevel. For sure, the EU is the first genuine ‘supra-national polity’ to exist in human history, and assuch is certainly unique. However, all political sys-tems are to some extent unique. The US has a uniquemodel of the separation of executive and legislativepower, France has a unique semi-presidential modelof government, Germany has a unique model ofinterlocking federalism, and so on. What is moreimportant from the point of view of comparativepolitical analysis is that all political systems face a
common set of issues, such as what powers are alloc-ated to the central institutions relative to the lowerinstitutions, and how decision-making should workin the central institutions.
This was one of the insights of comparative polit-ical scientists in the 1950s, who tried to developa common framework for defining and analysingthe complex array of political systems that existedthroughout the world (e.g. Almond 1956; Easton1957; see also the Introduction). There are fouressential characteristics of all democratic politicalsystems:
1. There is a clearly defined set of institutions for col-lective decision-making and set of rules governingrelations between and within these institutions.
2. Citizens seek to achieve their political desiresthrough the political system, either directly orthrough intermediary organizations like interestgroups and political parties.
3. Collective decisions in the political system have animpact on the distribution of economic resourcesand the allocation of social and political valuesacross the whole system.
4. There is a continuous interaction between thesepolitical outputs, new demands on the system,new decisions, and so on.
The EU possesses all these characteristics. First, thelevel of institutional development and complexity inthe EU is far greater than in any other internationalor regional integration organization. One might evensay that the EU possesses the most formalized andcomplex set of decision-making rules of any polit-ical system in the world. Second, a large numberof public and private groups, from multinationalcorporations and global environmental groups toindividual citizens, are involved on a daily basis intrying to influence the EU policy process. Third, EUpolicy outcomes are highly significant and are feltthroughout the EU. The direct redistributive capa-city of the EU is indeed small, since the EU budgetis only about 1 per cent of the total GDP of the EU.However, the single market, European social and en-vironmental regulations, the single currency, justiceand interior affairs policies, and the myriad of other
policy outputs of the EU system have an enormousindirect impact on the allocation of resources andsocial relationships in European society. Fourth, theEU political system is a permanent feature of politicallife in Europe. The quarterly meetings of the headsof government of the member states in the EuropeanCouncil may be the only feature that many citizensand media outlets notice. Nevertheless, EU politics isa continuous process, within and between the EU in-stitutions in Brussels, between national governmentsand Brussels, within national public administrations,between private interests and governmental officialsin Brussels and at the national level, and betweenprivate groups involved in EU affairs at the nationaland European levels.
Conceptualizing the EU as a political system ratherthan a unique example of regional integration en-abled social scientists in the late 1980s and early1990s to start to apply tools and methods fromthe comparative study of political systems to theEU (e.g. Scharpf 1988; Streeck and Schmitter 1991;Sbragia 1992; Tsebelis 1994; van der Eijk and Frank-lin 1996; Majone 1996; McKay 1996). These toolshelped provide answers to a new set of generalizablequestions, such as which actors are most influen-tial in the EU legislative process, how independentfrom political control is the ECJ, why do some cit-izens support the EU while others oppose it, whydoes the EU produce some policy outcomes but notothers? As a result, conceptualizing the EU as a polit-ical system enabled social scientists to answer newquestions, discover new facts, draw new analyticalinferences, and bring together scholarship on the EUwith the general field of comparative politics (Hix2005).
The constitutional architectureof the EUThe Treaty establishing a Constitution for Europe,which was signed by the member states in Octo-ber 2004 and renegotiated in June 2007, is an effortto simplify and codify the existing rules govern-ing the allocation of competences between the EUand the member-states and the operation of the EUinstitutions. Even before this treaty, however, theEU already had a basic ‘constitutional architecture’
because there is an established division of policycompetences and institutional powers which resultsfrom the existing treaties and how these treaties havebeen interpreted over the years. Indeed, one of theremarkable things about the new treaty is how little ofthe established policy and institutional architectureof the EU it would in fact change if it ever enteredinto force.
Box 23.2 describes the basic policy architecture ofthe EU. This ‘catalogue of competences’ is not setout in any one article of the existing treaties, but is awidely accepted interpretation by legal and politicalscientists of the design of the basic policy frameworkin the EU. The EU level has exclusive responsibilityfor the creation and regulation of the single market,and for managing the competition and external cus-toms and trade policies that are inherently derivedfrom this task. The EU level is also responsible forthe monetary policies of the member-states whosecurrency is the euro, for the common agriculturalpolicy, and the common fisheries policy. In theseareas, the EU governments no longer have any powerto make policy at the national level.
A wide array of policy competences are ‘shared’between the EU and the member-states. In theseareas, policies are made at both the national andEuropean levels and the European-level policies usu-ally aim to supplement existing or ongoing policies atthe national level. This is the case, for example, in theareas of labour market regulation, regional spend-ing, and immigration and asylum. The third area ofpolicies can be described as ‘coordinated compet-ences’, in that these are policies where action remainsprimarily at the member-state level, but the govern-ments have accepted that they need to coordinatetheir domestic policies collectively at the Europeanlevel because there are inevitable effects on each otherfrom keeping these policies at the national level. Forexample, for the states with a single currency there isa need to coordinate their macro-economic policies,and with the freedom of movement of persons insidethe EU there is a need to coordinate some policing andcriminal justice policies. Finally, all the major areasof taxation and public spending, such as education,health care, transport, housing, welfare provision,and pensions, remain the exclusive preserve of themember-states, with very little EU interference inhow these policies are managed.
Regulation of the single market, including removing bar-riers and competition policy.Customs union and external trade policies.Monetary policy for the member states whose currencyis the euro.Price setting and subsidy of production under the Com-mon Agricultural Policy.Common fisheries policy.
Shared competences (where action is taken at boththe national and European levels)
Social regulation, such as health and safety at work,gender equality, and non-discrimination.Environmental regulation.Consumer protection and common public health con-cerns, such as food safety.Economic, social and territorial cohesion.
Free movement of persons, including policies towardsthird-country nationals.Transport.Energy.
Coordinated competences (where national actions arecoordinated at the EU level)
Macro-economic policies.Foreign and defence policies.Policing and criminal justice policies.Health, cultural, education, tourism, youth, sport, andvocational training policies.
Exclusive member state competences
All other policies, for example, most areas of taxationand public spending.
Turning to the institutions, put simply, executivepowers at the European level are shared betweenthe Council and the Commission (see Box: Thebasic institutional architecture of the EU, in the On-line Resource Centre). Whereas the Council sets themedium-term and long-term policy agenda (partic-ularly via the heads of state and government in theEuropean Council), the Commission has a formalmonopoly on legislative initiative. The Commissionand the member states are also jointly responsiblefor the implementation of EU policies. Legislativepower is also shared between two institutions: the
legislative meetings of the Council and the EP. TheEP has equal power with the Council under themain legislative procedure, the so-called co-decisionprocedure. However, some highly sensitive areas ofpolicy, such as tax harmonization, are passed un-der the consultation procedure, under which theCouncil is only required to consult the EP beforepassing legislation. Finally, judicial power in the EUis shared between the ECJ and national courts, whichare primarily responsible for enforcing EU law (aspart of domestic law) and refer cases to the ECJ if adomestic case raises a significant point of EU law.
KEY POINTS
❑ The EU is not a state, in the traditional meaning ofthis word, in that powers are shared between the EUand the member-states, the EU is based on voluntarycooperation between the member-states, there is nodirect EU taxation, the EU budget is small relative toits GDP, and the EU relies on the forces of coercionof its member-states to enforce its decisions (there isno ‘Euro FBI’ or ‘Euro army’).
❑ The EU can be understood, nevertheless, as a polit-ical system, in that it possesses a basic constitutional
architecture which determines the balance of powersbetween the EU and the member-states and betweenthe institutions at the European level, and the policiesof the EU have significant direct and indirect implica-tions on the economy and society in Europe.
❑ Conceptualizing the EU as political system allows toolsand methods from the comparative study of politicalsystems to be applied to the EU.
Vertical dimension: the EU as a ‘regulatory state’The dominant policy goal of the EU is the creationand regulation of a market on a continental scale.EU environmental and social policies, the singlecurrency, budgetary policies, and even justice and in-ternal affairs policies are in many respects ‘flanking’policies of this dominant policy goal. These policiesmake Europe’s continental-scale market work moreeffectively (the single currency), or correct potentialmarket-failures (environmental and social policies),or compensate potential losers from market integra-tion (budgetary policies), or address potential socialand security externalities from market integration(justice and interior policies). Given the primacy ofthe single market and the centrality of EU marketregulation policies, the EU is often described as a‘regulatory state’ (Majone 1996). This conceptionnicely captures the contrast between the EU andthe ‘welfare states’ at the national level in Europe,where the main policy instruments of governmentare taxation and public spending rather than marketregulation. Whereas a welfare state deliberately aimsto redistribute resources from one group of citizensin society to another, the aim of a regulatory state isto benefit all citizens more or less equally.
Creation and regulationof the single marketThe single market notionally started on 1 January1993, after the passage of almost 300 pieces of legisla-tion to enable the basic elements of the single marketto be established. However, in practice the singlemarket is an ongoing project, as major areas of theeconomy (such as the provision of services and theprofessions) still operate in separate national marketsrather than in a single European-wide market.
The creation of the single market has both dereg-ulatory and reregulatory elements. On the deregu-latory side, creating the single market involves theremoval of barriers to the free movement of goods,services, capital, and labour between the EU memberstates. Three types of barriers had to be removed toenable this free movement to take place.
1. The single market required the removal of certainfiscal barriers, such as the harmonization of value
added tax and excise duties (on goods like alcoholand tobacco).
2. The single market required the removal of phys-ical barriers on the movement of goods and per-sons, such as the abolition of customs formalities,paperwork, and inspections at borders betweenthe member -tates. Removing border controls onthe movement of persons was also an original aimof the single market programme, however severalmember-states (including Britain, Ireland, andDenmark) refused to accept that it was necessaryto remove border controls in order for the freemovement of persons to function effectively—allthat was needed, they contended, was the rightto move, reside, and work anywhere in the EU.In response, the other member-states agreed toremove their border controls as part of the Schen-gen Accord, which was initially outside the formalframework of the EU but was brought into theEU framework by the Maastricht and Amsterdamtreaties.
3. The single market required the removal of tech-nical barriers to the free movement of goods andservices, such as separate national product stand-ards that could be used as ‘non-tariff barriers’.The EU had tried to establish common standardsvia harmonized rules throughout the EU. How-ever, in the landmark Cassis de Dijon judgment in1979, the ECJ established the principle of ‘mutualrecognition’, whereby any product meeting thestandards of one member-state can be legally soldin all other member-states. This principle becamethe basis of a ‘new approach’ to the creation of thesingle market, whereby harmonization was lim-ited to minimum technical and health and safetystandards. Another key area of removal of tech-nical barriers was in public procurement, whererules were established which prevent governmentsfrom favouring home companies in public con-tracts. A host of directives have also been passedto liberalize air, water, and road transport, andto open up national energy, telecoms, and televi-sion markets. Regarding the movement of capital,controls on the free flow of capital between themember states were abolished, and the European
Company Statute was adopted in 2001, whichenables multi-national companies to be registeredas a single European-wide entity.
On the reregulatory side, as part of the singlemarket programme, the EU replaced existing na-tional regulations with new European-wide regula-tions. The three clearest examples of this are EUcompetition policies, environmental policies, andsocial policies. On competition policies, the EUhas anti-trust regulations (which outlaw a varietyof agreements between companies that would re-strict competition, such as price-fixing or predatorypricing), prohibits government subsidies to industrythat threaten competition and trade between themember states, and the Commission is required toreview and vet mergers between companies with acombined worldwide and EU-wide turnover of acertain size. On environmental policy, common EUregulations cover, among other things, air and noisepollution, waste disposal, water pollution, chemic-als, biodiversity, environmental impact assessments,eco-labelling and eco-audits, and natural and tech-nological hazards. Also, the European EnvironmentAgency was set up in 1994 in Copenhagen to collectenvironmental data and develop environmental fore-casts. On social policy, EU legislation covers rights ofworkers to free movement, health and safety at work,working conditions, worker consultation, equalitybetween men and women, general provisions ofanti-discrimination (which cover race, ethnic ori-gin, religion, disability, age, and sexual orientation),and labour markets (such as rights of part-time andtemporary workers).
The single market more or less benefits all EU cit-izens. The deregulatory side of the ‘project’ enablesthe economy to function more efficiently, which be-nefits businesses and consumers, creates jobs, andproduces higher growth rates. Some uncompetitivefirms are put out of business by the new competitiverigours of the single market. However, theses lossesare far outweighed by the new firms, new opportun-ities, and new jobs that are created by the world’slargest market.
The EU’s reregulatory policies are also usually re-garded as aimed to benefit all EU citizens ratherthan any particular group of citizens. EU regulat-ory policies do this by correcting certain ‘marketfailures’ that might arise in a continental-scale
market. For example, harmonized consumer protec-tion standards enable consumers to gain informationabout the quality of products that would other-wise not be publicly available. Health and safetystandards and environmental standards reduce theadverse effects (‘negative externalities’) of markettransactions on individuals not participating in thetransactions. Competition policies prevent mono-polistic markets from emerging, market distortions,and anti-competitive practices. And industry regu-lators, through such instruments as price controls,ensure that ‘natural monopolies’ operate accordingto market practices. Put this way, EU ‘social regula-tions’ are very different to national ‘social policies’,in that while the latter are usually geared towardsproviding benefits to particular social groups, theformer aim to allow the labour market to functionmore efficiently (Majone 1993).
Nevertheless, there are significant indirect redis-tributive consequences of a market on a continentalscale and the growing network of European-levelsocial policies (Leibfried and Pierson 1995; Streeck1996; Scharpf 1997a; Kleinman 2002). The EU doesnot have the direct redistributive capacity of nationalwelfare states, but the emerging EU regulatory re-gime reflects a particular ‘welfare compromise’ atthe European level that constrains existing welfarecompromises and choices at the domestic level. Forexample, the single market places downward pressureon states with higher labour market standards (suchas Germany and Scandinavia), and upward pressureon states with lower labour market standards (suchas Britain and southern Europe). In addition, theredistributive capacities of the national welfare statesare further constrained by the restrictions on nationalfiscal policies as a result of economic and monetaryunion.
Economic and Monetary Unionand the European Central Bank
The Maastricht Treaty established in 1993 a three-point plan for Economic and Monetary Union(EMU):
1. This plan involved a timetable, with the launch ofEMU on 1 January 1999 and the introduction ofeuro notes and coins on 1 January 2002.
2. It established four ‘convergence criteria’, whichmember states have to meet to be able to join thesingle currency: (1) a stable currency, (2) a con-vergent economic cycle with the EU average cycle,(3) an annual government deficit of less than 3per cent of GDP, and (4) a gross public debt ofless than 60 per cent of GDP.
3. The plan established an institutional design ofEMU.
In this design, the European Central Bank (ECB) hasthe sole responsibility of defining and implementingmonetary policy (including setting interest rates) forthe member states whose currency is the euro, withthe sole aim of maintaining price stability. The ECBcomprises a six-member Executive Board, appointedby the European Council, and a Governing Council,of the Executive Board members and the governorsof the national central banks of the EMU member-states. Meanwhile, the governments, meeting in theCouncil of Economic and Finance Ministers, havethe final say over interventions in foreign exchangemarkets, adopt common economic policy guidelinesfor the EU as a whole, and monitor the nationaleconomic policies of the EU member-states.
Not all EU member-states are members of EMU.Eleven states launched EMU in 1999—Austria,Belgium, Finland, France, Germany, Ireland, Italy,Luxembourg, Netherlands, Portugal, Spain. Greecebecame the twelfth EMU member in 2001. Of the‘old fifteen’ states, the United Kingdom, Denmark,and Sweden chose to stay outside EMU, and none ofthe ‘new ten’ were allowed to join EMU when theybecame members of the EU in 2004, although severalof the new member states pegged their currencies tothe euro.
A key element of the EMU framework, which wasadded after the Maastricht Treaty, is the Stabilityand Growth Pact. The German government, in par-ticular, was concerned that once states had met theinitial convergence criteria and entered EMU theymight then be tempted to run large public deficits,which would undermine the stability of the euro,and so negatively affect the more fiscally respons-ible states. The SGP was hence agreed in 1997 as away to limit this problem, by requiring that mem-ber states must maintain an annual budget deficitof less than 3 per cent of GDP, or otherwise face afine (established as a percentage of national GDP).
However, one problem with the pact was that afine could only be imposed by collective agreementsamongst the governments. When France and Ger-many, the two largest economies in EMU, were thefirst major breakers of the SGP rules, no fine wasimposed, which brought its credibility into ques-tion.
The main theoretical framework for understandingeconomic and monetary integration both generallyand in the specific context of the EU is the ‘optimalcurrency area’ (OCA) theory, developed by RobertMundell (1961). According to this theory, independ-ent states will form a monetary union if the benefits ofjoining exceed the costs. The main cost of a monetaryunion is the loss of an independent exchange rate.With a ‘one-size-fits-all’ monetary policy, differentialeconomic cycles between states have to be tackled byother policies, such as labour mobility (from statesin recession to states growing more quickly), wageflexibility (where workers in the state where there islow demand reduce their wages), or fiscal transfers(from high growth to low growth states). If labourmobility is low, if there is limited wage flexibility, andif fiscal transfers are small, then a group of states donot form an OCA. Put this way, the EU is clearly notan OCA!
However, for some states, the economic benefits ofEMU might outweigh some of these potential costs.A single currency lowers transactions costs in theeconomy (by removing the need to change money),produces a more efficient market, leads to greatereconomic certainty, and in general creates lower in-terest rates and higher growth rates. When decidingwhether to join EMU a state will weigh the extent ofthese benefits against the probability that it will finditself in a recession while the other EMU states arebooming, and so will be forced either to lower wagesor suffer the consequences of low labour mobilityand small fiscal transfers. The convergence criteriacan consequently be seen as an attempt to create adegree of economic convergence, which would limitthe need for wage flexibility, labour mobility, orfiscal transfers. In general, for states with high levelsof trade integration with the Eurozone, the benefitsof joining EMU outweigh the costs, since higher tradeintegration means higher economic convergence andgreater transaction costs benefits of a single cur-rency (e.g. Krugman 1990). In contrast, for stateswith lower trade integration and less convergent
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Fig. 23.1 Net contributions to the EU budget, 1995 and 2005
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economic cycles, the costs of joining EMU are likelyto outweigh the benefits—which is broadly speakingthe situation of the United Kingdom, although thismight change.
EU expenditure policiesIn contrast to the powerful direct and indirect ef-fects of the single market and EMU on EU citizens’lives, and in contrast to the huge public spendingprogrammes of the national governments, the directspending power of the EU is small, since the EUbudget represents only about 1 per cent of the totalGDP of the EU member-states. Spread across all EUcitizens, the costs of the EU budget are absolutely tiny.However, for those who receive money out of the EUbudget—namely poorer states, farmers, backwardeconomic regions, and research scientists—the sumscan be staggeringly huge.
The EU adopts multi-annual budgets: see theTable: Size and main expenditure categories of theEU budget, 2007–13, in the Online Resource Centre,for the plan for 2007–13. The budget categories are alittle misleading. The main EU spending policy is theCAP, which is a system of price support for a widerange of agricultural products and other subsidies tofarmers. The CAP consumes more than 30 per centof total EU spending. The second main area of EU
spending is on regional policy, covered under theheading ‘economic and social cohesion’. Spendingin this area is targeted in economically backward re-gions, regions with high levels of unemployment, andregions undergoing major industrial restructuring.EU regional funds are mainly spent on infrastruc-ture projects in these regions, such as building roads,schools, airports, and telecommunications systems,and together consume about the same proportion ofthe EU budget as the CAP. The third main area ofEU spending is on scientific research. Most of theEU’s research and development funds are distrib-uted to networks of researchers working on someof the leading areas in the natural sciences, such asbiotechnology and telecommunications.
Figure 23.1 shows ‘who got what’ under the EUbudget in 1995 and 2005 as a proportion of eachmember-state’s gross national income. In general,there are six main net contributor states: Austria,Germany, Luxembourg, the Netherlands, Sweden,and the United Kingdom. Prior to the 2004 enlarge-ment there were four main net beneficiary states:Greece, Ireland, Portugal, and Spain. These stateswere the main recipients of EU regional funds, andfor Greece and Ireland in particular the proportion oftheir national income received from the EU budgetis large: about 4 per cent of total gross nationalincome for these two states. Nevertheless, after the
2004 enlargement, the benefits to Greece, Ireland,Portugal, and Spain fell considerably, as the regionalfunds began to be targeted towards the poorer re-gions in many of the new member-states. Also, afterenlargement, the Netherlands replaced Germany asthe largest net contributor to the EU budget as apercentage of its GNI and as a percentage of theDutch population, which played a significant role inthe anti-Europe campaign in the 2005 referendum inthe Netherlands on the EU Constitution.
In general, the best way to understand EU spendingpolicies is to see them as a combination of ‘solidarity’and ‘side payments’. On the solidarity side, transfersthrough the EU budget have generally passed fromthe richer states to the poorer states, on the groundsthat the EU is more than simply an economic union,and so there should be some mechanism for redis-tributing wealth from the richer parts of Europe tothe poorer parts. On the side-payments side, how-ever, most EU spending policies are the result ofspecific intergovernmental bargains, where memberstates who expect to lose (or who do not expect to winas much as other states) from major policy changesin the EU demand some compensation out of theEU budget. For example, in the Treaty of Romenegotiations, France proposed the CAP, as a sub-sidy regime mainly for French farmers, because thecommon market was expected to benefit Germany’smanufacturing-based economy more than France.Similarly, in return for agreeing to the single marketprogramme, which was expected to benefit the mainexporting economies of central and northern Europe,Spain, Italy, Portugal, Ireland, and Greece requesteda doubling of EU spending under the regional funds,to enable them to compete on a level playing field.
In addition, once spending policies have been setup they are very difficult to change, even if theoriginal policy aims are no longer justified. This isbecause any change to the EU budget requires un-animous agreement amongst the governments. Theclearest example of this is the CAP, which encouragesoverproduction and overintensive land-use, benefitslarger farmers more than smaller farmers, createsnumerous trade disputes with the EU’s partners, anddepresses world agricultural prices by subsidizing theexport of EU agricultural products, and so devastateslarge parts of the developing world. As long as un-animity is maintained for budgetary agreements, the
French government will not agree to any changes tothe CAP unless it receives something else in return.
Interior policies and externalrelationsFinally, there are two main areas of EU policy-makingthat are not strictly related to the EU’s main economicpolicies:
• the array of justice and interior affairs policies,which includes immigration, asylum and otherpolicies on the free movement of persons, as wellas police and judicial cooperation;
• the EU’s external relations policies, which includetrade policies, development and humanitarian aid,the Common Foreign and Security Policy (CFSP),and European Security and Defence Cooperation(ESDP).
While in economic terms the EU is more a ‘reg-ulatory state’ than a ‘welfare state’, where the EU’sinterior and external relations policies are concerned,the EU is developing some elements of a ‘secur-ity state’, in that these policies influence how theEU member-states manage the internal and externalpolitical rights, responsibilities, and security of theircitizens.
Internal sideOn the internal side, the Maastricht Treaty estab-lished the Justice and Home Affairs pillar of theEU, which brought into the legal framework of theEU a number of existing intergovernmental cooper-ation arrangements between the interior ministriesof the EU member-states. These provisions coveredthe removal of border controls between the member-states, immigration and asylum policies and commonpolicies towards other ‘third-country nationals’, andpolice and judicial cooperation to combat drug-trafficking, terrorist activities, cross-border crime,and illegal immigration. Initially EU policies in theseareas were made by ‘intergovernmental’ decision-making procedures: the governments in the Councilhad to agree unanimously, the Commission sharedthe right of legislative initiative with the member-states, the EP had very little say, and there was almostno judicial review by the ECJ.
This model was then reformed in the AmsterdamTreaty, which separated the policies covering themovement of persons (immigration, asylum, internaland external borders, etc.) from the police and judi-cial cooperation policies. The free-movement policieswere set up in the main body of the EU treaty in theframework of a new ‘area of freedom, security andjustice’, where the Commission now had a monopolyon legislative initiative, some policies were adoptedin the Council by qualified majority voting, the EPhad some legislative power, and the ECJ exercisedjudicial review. Since the Amsterdam Treaty, the EUhas adopted a large number of legislative acts in thisarea covering, among other things, common rulesfor non-EU nationals working in the EU, the rightof third-country nationals to family reunification,an EU long-term residence status for third-countrynationals who have resided in a member state for fiveyears, and the admission of third-country nationalsas students, vocational trainees, or volunteers.
External sideOn the external side, since the establishment of acommon market, the EU has had a single externaltrade policy, where the Commission represents theEU in the World Trade Organization (WTO) andin bilateral and multilateral trade negotiations. TheEU has also developed an array of external eco-nomic policy instruments that it uses to project ‘softpower’ on the world stage (see Chapter 25). Theseinclude direct humanitarian and economic assistanceas well as various preferential-trade agreements, suchas the European Economic Area (EEA), association
agreements, free trade agreements, partnership agree-ments (for example, with the EU member-states’former colonies in Africa, the Caribbean, and thePacific), inter-regional association agreements withother regional trade blocs, and mutual recognitionagreements (mainly with the US).
External security and defence policies developedmore slowly. Defence cooperation was mainly man-aged through NATO rather than the EU. However,foreign policy cooperation between the EC mem-ber states began in the 1970s, and the MaastrichtTreaty formally established the CFSP pillar of theEU, to which the Nice Treaty added the ESDP—asthe ‘European pillar’ of the NATO transatlantic de-fence alliance. Under CFSP, the EU member-statesadopt ‘common strategies’ and ‘common positions’by unanimity, which set out the EU’s position ona key foreign policy issue. Then, the EU member-states only require a qualified majority vote to adopta ‘joint action’ implementing a common position.This combination has allowed the EU to act in awide variety of areas. For example, the EU adopteda common strategy towards Russia in 1999 and theMediterranean in 2000, the EU took an active collect-ive role in the conflict in the former Yugoslavia, andin 2003 the EU adopted a common European Secur-ity Strategy, which sets out how and why EU securitypolicies differ from the US administration’s ‘pre-emptive strike’ doctrine. Nevertheless, a genuinely‘common’ EU foreign policy is inevitably hamperedby the conflicting security and foreign policy prefer-ences of the key EU member-states, as was so clearlydemonstrated in the internal rift in the EU overwhether to support the US in the second Iraq war.
KEY POINTS
❑ Regulation of the free movement of goods, services,capital, and labour is the main policy instrument, aspart of the creation and organization of the singlemarket.
❑ Economic and monetary union is a complement tothe single market, in that a single market functionsmore effectively with a single currency, and a singlecurrency governing by an interdependent centralbank ensures economic stability.
❑ EU expenditure policies, in contrast, are a secondarypolicy instrument of the EU, and have mainly been
used to enablemajor steps in the process of economicintegration by consensus.
❑ The EU has begun to expand beyond economicpolicies, into justice and interior affairs policies andforeign and security policies, but policy-making inthese areas has developed much more slowly.
❑ The basic policy architecture of the EU, where acontinental-scale market is created and regulatedat the European level while spending and securitypolicies remain largely at the national level, meansthat the EU is more a ‘regulatory state’ than a welfarestate or security state.
Horizontal dimension: a hyper-consensus systemof governmentThe main determinant of how policies are made bythe central institutions in a political system is howfar the power to set the agenda and the power to vetodecisions from being taken are centralized in a singleactor or dispersed between multiple actors. At oneextreme, a political system can have a single ‘agenda-setter’ and ‘veto-player’, for example where there issingle-party government and executive dominanceof the legislature. At the other extreme, multipleactors could potential veto any change to existingpolicies, for example where there is coalition govern-ment between several political parties or where thereis a separation of powers between the executive (thepresident) and the legislature (e.g. Tsebelis 2002).In the EU, agenda-setting powers are split betweentwo institutions and multiple actors have the abilityto block policy changes in the EU’s legislative pro-cess. As a result, the EU has an extremely consensualmodel of government.
Executive politics: competingagenda settersFirst of all, agenda-setting power—in terms of whosets the overall policy agenda of the EU—is splitbetween the heads of government in the EuropeanCouncil and the Commission. The heads of gov-ernment, meeting in the European Council, decideon treaty reforms, which determine the allocationof powers between the EU institutions, and set themedium-term policy agenda, by inviting the Com-mission to initiate legislation in a particular policyarea. The European Commission, meanwhile, hasa formal monopoly on the initiative of most EUlegislation.
In the European Council, political leadership, inthe form of the presidency of the Council, rotatesevery six months between the member-states (Hayes-Renshaw and Wallace 2006; Tallberg 2006). Somemember-states are clearly better at running the pres-idency of the Council than others. For example,larger member-states generally have larger adminis-trative capacity to manage the business of the EU.However, the largest member-states tend also to try
to place their domestic political issues on the EUagenda, and are less concerned about coordinatingthe overall policy agenda with the Commission andthe other member-states. Furthermore, the powersof the Council presidency are actually quite limited.This is because the presidency cannot initiate legisla-tion, and must deal with legislation that has alreadybeen initiated by the Commission and may alreadyhave been through several stages of negotiations.Nevertheless, every member-state tries to make pro-gress on several key policy issues during its period inthe presidency, and so tries to coordinate its policyideas with the Commission well before taking overthe leadership reins in the Council.
The Commission, on the other hand, has tra-ditionally been regarded as being politically andinstitutionally committed to the process of Europeanintegration, and so is often assumed to have policypreferences that are more ‘integrationist’ than mostmember-states. For example, in the process of cre-ating the single market, the Commission generallywanted legislation that promoted further marketintegration or a high level of EU-wide regulation.Nevertheless, this view of the Commission as an‘integrationist preference outlier’ may be unfoun-ded. The commissioners are appointed by nationalgovernments and most commissioners have strongties to the political parties who chose them and seekto return to domestic politics after their careers inthe Commission. Hence, commissioners are unlikelyto be very much more pro-integrationist than thegovernments that appoint them. Also, below the levelof the commissioners, research has shown that thesenior officials in the Commission bureaucracy havepolicy preferences that are typical of politicians fromthe member-states from which they come and fromthe national political parties to which they support(Hooghe 2001).
In addition, since the college of commissionersformally decides by a majority vote, the Commis-sion generally initiates policies that are close to thepolicy preferences of the median member of theCommission (Crombez 1997; Hug 2003). Neverthe-less, whereas the average member of the Commission
is probably not a policy outlier on the question ofthe speed and extent of European integration, theleft–right policy location of the Commission haschanged dramatically in recent years. The Table:Make-up of the Prodi and Barroso Commissions,in the Online Resource Centre, shows that whereasthe Prodi Commission was relatively evenly bal-anced between left and right, a clear majority of themembers of the Barroso Commission were on thecentre-right. This change is partly explained by theshifting make-up of the governments (who appointthe commissioners): from a centre-left majority inthe late 1990s to a centre-right majority in the early2000s. However, the shift is also explained by a changeintroduced by the Nice Treaty, whereby the largermember-states no longer have two commissionerseach. It was common practice for the larger member-states to appoint one commissioner from each sideof the political divide, which inevitably led to a bal-anced Commission. Now that each member state hasonly commissioner, the make-up of the Commissionmirrors the political make-up of the Council at thetime that the commissioners are appointed.
Bicameral legislative politics:rising power of the EuropeanParliamentThe most significant change over the last twentyyears in the way the EU institutions work has beenthe steady increase in the powers of the EP. Origin-ally, the governments in the Council dominated thelegislative process, and the EP had a limited right to beconsulted. However, with the programme to estab-lish the single market, which required the adoption ofover 300 pieces of legislation, the EP was granted tworeadings of most major pieces of legislation and, as aresult, was able to have a significant impact on howthe single market was designed (Tsebelis 1994). TheMaastricht Treaty then established the co-decisionprocedure, which was extended and reformed by theAmsterdam Treaty. As a result, today the EP and theCouncil have equal power in the adoption of mostpieces of EU legislation.
Figure 23.2 describes the main stages in the co-decision procedure. The Commission is responsiblefor proposing legislation to the Parliament and Coun-cil. The Parliament then adopts an ‘opinion’ on the
legislation, in the form of a series of amendments.These amendments are prepared in one of the Par-liament’s committees, where one of the members ofthe EP, an MEP (the ‘rapporteur’), is responsiblefor writing the Parliament’s report on the bill andshepherding the legislation through the committeeand the full plenary. Once the plenary of the Par-liament has adopted the report the Council thentakes a ‘common position’ on the bill. If the textsadopted by the Council and Parliament are identicalafter the first readings, the legislation is adopted andbecomes law. If the texts are not identical, the le-gislation passes back to the Parliament for a secondreading and back to the Council for a second reading.If the two institutions still cannot agree a Concili-ation Committee is convened, which is composedof twenty-seven MEPs and one representative fromeach of the twenty-seven EU governments. If theConciliation Committee reaches an agreement on a‘joint text’, this is then put to the Parliament and theCouncil for a final, third, reading. This may soundcomplicated. However, the procedure is remarkablyefficient, in that the EU adopts approximately 100pieces of legislation a year, about fifty of which passthrough the co-decision procedure. Also, about halfof the bills through the co-decision procedure are ad-opted after just the first reading. Because the majorityin the EP is independent from both the Commissionand the Council, the EP is an extremely powerfullegislative actor.
When voting on legislation the Council usuallyacts by a system of weighted voting known as qual-ified majority voting (QMV). Unanimous voting iskept for some highly sensitive policy issues, such astax harmonization. Table: Qualified-Majority Vot-ing (QMV) in the Council, in the Online ResourceCentre, shows how the QMV system works. In gen-eral, larger states have more votes than smaller states,which translates into a greater chance of being onthe winning side in a vote—as represented by the‘power’ column. The system was reformed by theNice Treaty, where the larger member-states gaveup one of their two commissioners in return formore influence under QMV in the Council. Thedecision-making threshold was also raised slightly,making it more difficult. Voting rarely takes placein the Council, as there are strong incentives forthe governments to decide by ‘consensus’ (Hayes-Renshaw and Wallace 2006). However, when votes
do take place, divisions in the Council split the gov-ernments along geo-political, economic, as well asideological lines: for example, north vs. south, eastvs. west, net contributors vs. net beneficiaries, andleft governments vs. right governments (e.g. Mattila2004).
Table 23.1 shows the number of seats per member-state in the EP. The size of the Parliament hasincreased tenfold since it was first established inthe early 1950s, and has almost doubled in size sinceit was first elected in June 1979. The number ofseats per member-state has also been changed withsuccessive enlargements.
However, these numbers are misleading, in thatthe MEPs do not sit or vote along national lines. Ever
since the first session of the Parliament in September1952, the MEPs have formed transnational politicalgroups, and sat in the Parliament along left–rightlines. As Figure 23.3 shows, the European People’sParty-European Democrats (which brings togetherall the main Christian Democratic and conservat-ive parties) was the largest group in the 1999–2004and 2004–9 Parliaments, with the Party of EuropeanSocialists (PES) (which brings together all the so-cialist, social democratic, and labour parties) thesecond largest. Between these two groups is a coali-tion of centrist and liberal parties: the Alliance ofLiberals and Democrats for Europe. There are twosmaller parties who sit to the left of the (PES): acoalition of green and left-regionalist parties (the
Fig. 23.3 Party make-up of the European Parliament, 1999 and 2004
Greens/European Free Alliance), and a group of left-socialist and ex-communist parties (the EuropeanUnited Left/Nordic Green Left). A coalition ofnational-conservative parties (the Union for a Europeof the Nations) sits just to the right of the EPP, anda group of anti-European parties (Independence-Democracy) sits even further to the right. Finally,almost thirty ‘non-attached’ MEPs sit on the fur-thest right, since most of these members come fromextreme right parties.
Judicial politics: a powerfuland independent courtThe ECJ, together with national courts, provides apowerful check on the EU’s executive and legislativeinstitutions. The ECJ played a significant role in thedevelopment of the legal basis of the EU politicalsystem, in particular by developing the doctrines ofthe direct-effect and supremacy of EU law. The ECJ
is independent from the governments in the Council,and national courts often support the ECJ againsttheir own governments. For example, on several oc-casions the ECJ has struck down legislation adoptedby the Council and Parliament on the grounds thatthe treaties did not give the EU the right to adoptlegislation in a particular area. Nevertheless, like allsupreme courts, the ECJ is not completely isolatedfrom external pressures, since it knows that if it straystoo far from the meaning of the treaties, the govern-ments can act collectively to rein in its powers. TheECJ is also aware that national courts, particularlythe German Constitutional Court, are protective oftheir right to interpret whether EU law is in breachof fundamental human rights as set out in nationalconstitutions (see Chapter 9). The EU’s Charter ofFundamental Rights is an attempt to provide a set ofbasic rights for the ECJ to apply, although until theEU Constitution is implemented the Charter is notbinding.
KEY POINTS
❑ With multiple actors and checks and balances, the EUhas a hyper-consensus system of government.
❑ On the positive side, the checks and balances meanthat legislation cannot be adopted without over-whelming support in the Commission, amongst thegovernments in the Council, the parties in the EP, andwith the approval of the ECJ.
❑ On the negative side, the checks and balances meanthat the EU is prone to ‘gridlock’ and lowest-common-denominator policy outcomes, and these problemsare likely to increase with the enlargement of the EUfrom fifteen to twenty-seven or more states.
Democratic politics: the missing link?Procedurally, the EU is ‘democratic’, in that the gov-ernments in the Council and the MEPs are electedby EU citizens, the EU’s decision-making proceduresare fair and transparent, and the checks and bal-ances in the EU system ensure that policy outcomesfrom the EU are inevitably close to some notionalEU-wide median voter (Moravcsik 2002). In a sub-stantive sense, however, the EU does not have real‘democratic politics’, meaning that there is a compet-ition between political elites for political office andin the policy process, there are identifiable winnersand losers of this competition, and there is particip-ation and identification of the public with one sideor another in the political process (Føllesdal and Hix2006).
Low public support for the EUOne of the key problems facing the EU is the re-latively low and declining support for the project.Since the early 1970s, Eurobarometer polls of publicattitudes towards the EU have been conducted everysix months in every member-state. Figure 23.4 showsthe percentage of respondents who said that they
felt that their country’s membership of the EU is a‘good thing’. Public support for the EU rose in thelate 1980s with the widespread enthusiasm for thesingle market project, but then declined rapidly untilthe mid-1990s, and has remained at a relatively lowlevel ever since. These days, only about one in twoEU citizens think that their country’s membershipof the EU is a good thing. There is a widespreadbelief that the EU is an elitist project and Europeancitizens no longer trust their political leaders to ‘gooff to Brussels’ and negotiate on their behalf, as wasstarkly shown in the French and Dutch referendumrejections of the EU Constitution.
Part of the pattern in support for the EU can beexplained by economics: the EU is popular when theEuropean economy is booming and is blamed whenthe economy is performing badly. However, as thedotted line in Figure 23.4 shows, public support forthe EU and the annual growth rate of the EU economyhave followed different trends since the late 1980s.Clearly the economy does not tell the whole story.At an individual level, research has shown that thosewith higher incomes and higher levels of education(who benefit most from the single market) are more
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Source: Calculated from Eurobarometer surveys and Eurostat data.
likely to support the EU than those on lower in-comes and with lower levels of education (Gabel1998). Also, political extremists tend to be more anti-EU than political centrists. However, political partiesand domestic institutions can influence which peoplelike the EU. For example, the political party a personsupports, and the position that party takes towardsthe EU, has a strong influence on whether that personis ‘pro’ or ‘anti’ EU (Anderson 1998). Concerns abouta ‘democratic deficit’ in the EU also have a significantimpact on attitudes towards the EU in countries thathave strong domestic democratic institutions (Rohr-schneider 2002). Nevertheless, public support for theEU has declined in all EU member-states and acrossall groups in society since its peak in the early 1990s.
A competitive party system in theEuropean ParliamentDemocratic politics has begun to emerge inside theEU institutions. As discussed, the policy direction ofthe Commission is influenced by whether it is domin-ated by left-wing or right-wing politics. Also, votes inthe Council split along ideological as well as national-interest lines. However, it is in the EP that a genuine‘party system’ has emerged. As discussed above, theMEPs have always sat in transnational political, rathernational, groups. Over the last twenty years, thesegroups have gradually become more powerful andmore competitive. For example, votes in the Parlia-ment increasingly split along left–right lines, and thetwo largest groups now vote against each other asoften as they vote together, which places the Liberalsin the centre of the Parliament in a powerful posi-tions, since they determine whether a centre-left ora centre-right majority wins in a particular vote (e.g.Hix et al. 2007).
The party groups in the Parliament have also be-come highly ‘cohesive’. Figure: Voting cohesion ofthe main political groups in the European Parlia-ment, in the Online Resource Centre, shows howcohesive the main political groups were in recorded(‘roll-call’) votes in the first five directly elected EPs,where a score of 1 means that all the MEPs in a par-ticular group voted the same way in every single votein a parliament and a score of 0 means that the MEPsin a particular group were split down the middle inevery vote in a parliament. Voting along party lines
was already relatively high in the first directly electedparliament, but rose dramatically between the thirdand fifth Parliaments. As a comparison, the mainpolitical groups in the EP are now more cohesive invotes than the Democrats and Republicans in the USCongress, and are almost as cohesive as party factionsin national parliaments in Europe.
The ‘failure’ of EuropeanParliament electionsDespite the growing levels of party competition andcohesion in the EP, elections do not provide a veryeffective link between the citizens and the behaviourof the MEPs and the transnational political parties.This is because EP elections are less important thannational parliamentary elections and so are gener-ally regarded by political parties, the media, and thevoters as ‘second-order’ contests (esp. van der Eijkand Franklin 1996). Because they are second-ordernational contests, like regional or local elections, EPelections are fought by national parties and on theperformance of national party leaders and nationalgovernments, rather than by European parties andon the performance of the European Commission orthe political groups in the EP.
This has two significant implications:
1. Turnout in EP elections is approximately 20 percent lower than in national parliament elections,and turnout in EP elections has fallen steadily, toabout 45 per cent of EU citizens in the June 2004elections.
2. Voters use EP elections to express their views onnational rather than European political issues, andso vote to punish unpopular governments or voteto express their views on particular issues, and sovote for smaller single-issue parties.
As a result, throughout the EU, governing partiestend to lose votes in EP elections, while opposi-tion parties tend to gain votes (see Table: Governingparty performance in European Parliament elections,1979–2004, in the Online Resource Centre). Forexample, in the 2004 elections, the British Labourgovernment received 19 per cent fewer votes in theEP elections in that year than it received in the 2001British general election. Moreover, despite the dra-matic increase in the powers of the EP over the past
twenty years, the evidence suggests that EP electionshave become increasingly rather than decreasinglysecond-order (in terms of the proportion of voteslost by governing parties across the EU in each set ofEuropean elections).
Interest groups in Brussels: an EUcivil societyOne aspect of democratic politics which is highlydeveloped in the EU is interest group organizationand mobilization. In terms of the number of interestgroups trying to influence government and policy-making, Brussels is more like Washington, DC, thanany national capital in Europe (see Chapter 14). Thisis partly because many groups in society have stakesin how the single market is regulated, and so have anincentive to try to shape EU legislation in their pre-ferred direction. It is also because there are multiplepoints of access in EU decision-making for interest
groups, whereas at the national level in Europe,policy-making tends to be dominated by govern-mental and party-political elites, with only limitedaccess for particular interest groups.
Table 23.2 shows the type and number of interestgroups registered in Brussels. Together these groupsemploy over 10,000 people. In other words, there areas many people on the outside in Brussels trying toinfluence the EU institutions as there are on the in-side involved in drafting and negotiating EU policies.These numbers might suggest that business interestsdominate Brussels. However, this is misleading, asmany groups representing ‘public interests’, suchas the environmental lobby, the consumer lobby,and the trade unions, are part-funded directly fromthe EU budget and also have direct access to manygovernments and the party groups in the EP. As aresult, the EU has a very vibrant civil society, withmore or less equal access for every major group insociety.
Table 23.2 Type and number of interest groups in Brussels, c. 2001
Type N
Formal European level interest groups addressed to the EU, representing...................................................................................................................................................................
business 950...................................................................................................................................................................
public interests (e.g. NGOs) 285...................................................................................................................................................................
public sector 14...................................................................................................................................................................
Individual companies in Brussels (with public affairs offices geared towards the EU) 250...................................................................................................................................................................
Offices of member states’ regions in Brussels 171...................................................................................................................................................................
National interest groups in Brussels 170...................................................................................................................................................................
Commercial public affairs consultancies in Brussels 143...................................................................................................................................................................
EU law firms in Brussels 125...................................................................................................................................................................
❑ There are growing concerns about a ‘democratic de-ficit’ in the EU, in that many citizens feel that theyhave little influence over the direction of EU policies.
❑ Public support for the EU has declined since wide-spread enthusiasm for the single market programmein the late 1980s, and the EU is widely perceived asan elitist project which benefits highly educated andhighly skilled citizens.
❑ Although EP elections do not provide an effect linkbetween EU citizens and EU policy-making, there isgrowing political contestation inside the EU institu-tions, particularly in the EP, where the political groupscompete and coalesce along left–right lines.
❑ There is a vibrant and representative civil society inBrussels, in terms of the number and extent of interestgroups involved in the EU policy process.
ConclusionThe EU was established by sovereign nation-statesprimarily to create and govern a Europe-wide mar-ket and to tackle the policy questions that arise atboth the European and national levels from the freemovement of goods, services, capital, and persons ona continental scale. As such, the EU is a remarkableand unique achievement: the only genuinely supra-national polity that is the result of voluntary choicesof citizens and democratic governments. However,the EU possesses many of the features and processes ofother democratic political systems. As in other multi-level polities, policy powers are divided between theEuropean and national levels. Also, how policies are
made by the EU institutions is similar to other polit-ical systems that have a separation of powers betweenthe executive and the legislature and where large co-alitions are required for legislation to pass. Multiplechecks and balances guarantee broad consensus, butalso make it difficult for policies to be changed. Non-etheless, in comparison to other democratic politicalsystems, the connection between citizens’ policy pref-erences and policy outcomes from the EU is extremelyindirect. Citizens elect national governments and theEP, but in no sense do citizens have a choice aboutwho governs them at the European level and thedirection of the EU policy agenda.
? Questions
1. Is the EU a political system?
2. Why is regulation the main policy instrument of the EU?
3. Who are the winners and losers from the EU budget, and why?
4. Who is the main agenda-setter in the EU: the Council or the Commission?
5. How powerful is the European Parliament?
6. Is the European Court of Justice beyond political influence?
7. Why has public support for the EU declined since the early 1990s?
8. Why do European parties vote cohesively in the European Parliament?
9. Why are European elections ‘second-order national elections’?
10. Which interest groups are most influential in the EU, and why?
Haas, Ernst B. (1958) The Uniting of Europe: Political, Social, and Economic Forces, 1950–1957 (South Bend,Ind.: University of Notre Dame Press; 2004 edn.).
Majone, Giandomenico (1996) Regulating Europe (London: Routledge).
Milward, Alan S. (2000) European Rescue of the Nation-State (London: Routledge, 2nd edn.).
Moravcsik, Andrew (1998) The Choice for Europe: Social Purpose and State Power from Messina to Maastricht(Ithaca, NY: Cornell University Press).
Pollack, Mark A. (2003) The Engines of European Integration: Delegation, Agency, and Agenda Setting in the EU(Oxford: Oxford University Press).
Weiler, Joseph H. H. (1999) The Constitution of Europe: ‘Do the New Clothes have an Emperor?’ and OtherEssays on European Integration (Cambridge: Cambridge University Press).
General reference books
De Grauwe, Paul (2005), Economics of Monetary Union (Oxford: Oxford University Press, 6th edn.).
Corbett, Richard, Francis Jacobs, and Michael Shackleton (2005) The European Parliament (London: JohnHarper Publishing, 6th edn.).
Dinan, Desmond (2004) Europe Recast: A History of European Union (Basingstoke: Palgrave).
Hix, Simon (2005) The Political System of the European Union (Basingstoke: Palgrave, 2nd edn.).
Rosamond, Ben (2000) Theories of European Integration (Basingstoke: Palgrave).
Wallace, Helen, William Wallace, and Mark A. Pollack (eds.) (2005) Policy-Making in the European Union(Oxford: Oxford University Press, 5th edn.).
Books on specific aspects of the EU system
Alter, Karen J. (2001) Establishing the Supremacy of EU Law: Making of an International Rule of Law in Europe(Oxford: Oxford University Press).
Eijk, Cees van der, and Mark Franklin (eds.) (1996) Choosing Europe? The European Electorate and NationalPolitics in the Face of Union (Ann Arbor, Mich.: University of Michigan Press).
Franchino, Fabio (2007) The Powers of the Union: Delegation in the EU (Cambridge: Cambridge UniversityPress).
Gabel, Mathew J. (1998) Interests and Integration: Market Liberalization, Public Opinion, and European Union(Ann Arbor, Mich.: University of Michigan Press).
Greenwood, Justin (2003) Interest Representation in the European Union (Basingstoke: Palgrave).
Hayes-Renshaw, Fiona, and Helen Wallace (2006) The Council of Ministers (Basingstoke: Palgrave, 2nd edn.).
Hix, Simon, Abdul Noury, and Gerard Roland (2007) Democratic Politics in the European Parliament(Cambridge: Cambridge University Press).
Hooghe, Liesbet (2001) The European Commission and the Integration of Europe (Cambridge: CambridgeUniversity Press).
Hug, Simon (2002) Voices of Europe: Citizens, Referendums, and European Integration (Atlanta, Ga.: Rowman &Littlefield).
Thomson, Robert, Frans N. Stockman, Christopher H. Achen, and Thomas Konig (eds.) (2006) The EuropeanUnion Decides (Cambridge: Cambridge University Press).
