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Part I
General
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1 Introduction
1.1 Introduction
The objective of this introductory chapter is to present to the reader the essentials of the book. To that end, I shall describe in subsequent sections the motives for writing the book; the coverage of subjects (delimiting the notions of governance and socio-economic policies); the main focus (consistency and effectiveness); the structure (including the standard sequence of presentation of subjects); and, finally, the format, which has been chosen with the needs of the target readership (mainly students and professionals) in mind.
1.2 The problem and the answer
1.2.1 The problem
Many of the popular media transmit a simple image of the EU governance system; it is pictured as horribly complex, ill-inspired and disastrously ineffective. In this view, EU regulations make ridiculously precise prescriptions regarding consumer goods (such as the format in which beer can be marketed) and add to the administrative costs of enterprises (red tape). The EU budget system is reported to be subject to uncontrolled expansion of expenditure, to mismanagement and to fraud. The EU coordination systems are seen as a pastime for an ever-expanding number of excessively highly paid bureaucrats producing stockpiles of irrelevant documents.
The origins of this image can easily be traced to the complexity of the structure, the technical character of many problems and the bewildering variety of policy mixes. In turn, these can be traced back to the historical development of the European Union. Indeed, in the course of the past 60 years the Union has had to deal on a case-by-case basis with an expanding policy agenda covering ever more subjects and requiring an increased diversity of instruments. It has also had to deal with an increased number of actors – not only Member States but also an extended range of partners (including regional authorities, and non-governmental organizations). These developments have greatly increased the risk of ineffectiveness (unneeded or ill-conceived actions) and of inconsistencies (contradictions between the various policies pursued at the various levels of government involved).
The Union has tried to cope with the double challenge of consistency and effectiveness by adapting its governance. Traditionally, it has mainly used the regulatory method, but the regulatory model is not always well adapted to the problem at hand and to the institutional circumstances. So, alternative methods of governance have been applied. One is the financial method, which implies expenditure via the EU budget. However, the EU budget is fairly limited; it can only exert a significant influence in a few policy areas. The third governance method is coordination, and this is increasingly applied in many policy areas, in particular in areas where the European Union has only recently acquired competences.
The task of European policy makers is, then, to determine for each given policy problem the best (combination of) governance method(s). Moreover, they have to deliver policy results – in other words, show that their actions do solve (or at least alleviate) the problems.
1.2.2 The answer
The European Union issues a good deal of information on what it does, why it does it, how it does it and on the effects of what it has done. However, the information has two disadvantages: it is mostly sector specific and it is not impartial. Academics have provided some help; a large number of studies of EU policy are made every year. However, the early stages of policy making tend to receive most attention (such as negotiation and decision making); only a relatively limited amount of attention is devoted to the implementation (delivery) stage of policy making. Also, the studies in this field carry some disadvantages: they tend to be aspect specific (e.g. on coordination), sector specific (e.g. on employment) or both. This book takes a comprehensive view regarding governance methods and sectors.
I shall follow three approaches and report on each of them in successive parts of this book. The first approach is a systematic analysis of the advantages and disadvantages of each of the three governance methods and of their various instruments. The second approach is an empirical investigation into the consistency of governance between policy areas (and between levels of government). The third approach concentrates on effectiveness: what efforts work to realize the objectives of the major socio-economic policy fields of the European Union.
1.3 Coverage
1.3.1 European governance
The title of the book indicates its main subject. The first key word is European. That word relates not to the geographical notion of Europe but to the institutional notion, in practice the European Union. I shall use the term ‘European Union’ and the abbreviation EU not only for the present legal form but also for the legal predecessors of the Union and other members of the legal family such as the European Community.1
The second key word is governance. Now, this word, as used in the academic and the European policy literature, has a bewildering variety of meanings.2 I have distilled from all these sources the following practical definition:3 governance is the exercise of political and administrative authority (including the allocation of institutional and financial resources) to implement effectively sound policies so as to realize stated objectives.
In its 2001 White Paper the Commission (EC 2001a) postulated six principles that the Union has to take into account in its governance. In this book, I will deal in particular with the following four of these principles:
• Subsidiarity: is the European Union the most fit to act?
• Proportionality: does the Union use the least intrusive instruments to realize its objectives?
• Effectiveness: do policies have the desired effect?
• Consistency: do policies in a specific field contribute to the effect of policies in another policy field?
We will also touch upon the putting into effect of the principle of participation. Indeed, the notion of governance involves not only governments but also quasior semi-governmental as well as non-governmental actors. Consequently, I will mention where relevant also the complementary roles played by important actors outside the EU administration and Member States’ governments, such as international organizations, constituting regions and (networks of) agencies and NGOs.4
The principle of accountability finds its application in the last part of the governance cycle, which starts with the initiation of the measures, continues with the allocation of resources followed by the management of the programmes and finishes with the reporting on the achievements. I shall not go in detail on the way in which this last stage is carried, but I will examine the basic material for improving accountability in explicating objectives and results.5
Governance in my definition is essentially about the use of instruments to give effect to agreed policies. I shall describe in the book the intricacies of the various governance methods deployed by the European Union, such as regulation, financial support and coordination. I shall detail the reasons why, and the ways in which, each of these methods and each of their respective instruments are used in various policy areas and their effects.
The European Union itself does not have much capacity for implementation. It is Member States that are primarily responsible for implementation. So, the effective delivery of EU policies depends on the quality of the national administrative and institutional structures.6
1.3.2 Socio-economic policies
The European Union is responsible for a wide array of socio-economic policies and increasingly also for policies in other domains, such as security. It is impossible to cover all these policies in one book, so I have made a selection based on two criteria. First, I have limited the scope to the socio-economic policy areas for which the EU treaty has bestowed competences on the European Union.7 Second, I have selected policies that pursue the main EU objectives for the future. In the document ‘Europe 2020’ these are specified under three headings:
• smart growth, with the objective of developing an economy based on knowledge and innovation;
• sustainable growth – promoting a more resource-efficient, greener and more competitive economy;
• inclusive growth – fostering a high-employment economy delivering economic, social and territorial cohesion.
These priority objectives need to be complemented by a macroeconomic and monetary stability and by an external policy; it has become clear in the recent past that both are of outstanding importance for the Union.
These objectives largely overlap with the definition of the traditional functions of the public sector in the economy. One can cite here allocation, stabilization and redistribution. For our purposes, I have chosen the following order. First we deal with allocation; this is all about the subjects of competitiveness and the internal market, and covers the subject of smart growth. Next we deal with stabilization; this covers the elements of the Economic and Monetary Union and the Stability and Growth Pact. Third, I shall deal with redistribution; this covers EU cohesion policy and refers also to the second part of inclusive growth. Fourth, I shall deal with the environment, including the element of sustainable growth from the ‘Europe 2020’ list. Fifth, we shall examine the element of inclusive growth with an accent on employment and social protection (and the combating of poverty). Finally, I will deal with the external aspects. Here I have to be selective, as it is not possible to deal with the external dimensions of all subjects covered. So, I shall limit myself to two subjects: stability (financial system) and redistribution (development aid).
1.4 Focus
1.4.1 The challenge of consistency
Over the decades, EU policy making has become increasingly subject to the risk of inconsistency, for three reasons.
The first is the multi-sector nature of EU policy making. The European Union has in the past been confronted with a diversity of challenges. Globalization obliged it to strengthen competitiveness; environmental problems forced it to come to grips with sustainability; increased turbulence on international financial markets pushed it towards finding new solutions to monetary and economic governance (mainly the Economic and Monetary Union); and enlargements brought the inclusion of Member States with low incomes and structural problems, forcing the Union to adopt and strengthen its cohesion policy. This step-by-step integration has tended to slice policies by sector, with different objectives and different tools. In practice, each sector has developed into a pillar that has very little connection with other pillars.
This creates a serious problem of inconsistency; for instance, policies intended to stimulate economic growth tend to increase the pressure on the environment; polices for efficient markets may put jobs at risk; and so on. So, there is an increasing need for horizontal (intersectoral) consistency of policies.
The second factor giving rise to inconsistency is the multilevel nature of policy making. The European Union is a multilevel, multi-actor system of governance. Over the decades, this system has become more complicated:
• The number of actors has increased as the successive enlargements have integrated new Member States. This has also increased diversity of interest. Moreover, some of them have relatively weak domestic administrative capacities, which makes the implementation of policy (governance) more difficult.
• The number of levels has increased as both the European Union and national governments need to take the views of their constituent regions increasingly into account. Another complicating factor is the increased involvement of non-public stakeholders.
• The roles of the various actors have become less clearly circumscribed. Indeed, in many policy areas the European Union, the national states and their constituencies have complementary competences.
The actors at the various levels tend to have different preferences as to the solution of societal problems and the delivery of public goods. Now, actions that pursue a priority on one level (e.g. national actions for enhancing economic growth in low-income countries by state subsidies) may seriously jeopardize the realization of similar objectives on another level (e.g. fair competition on the internal market). So, there is an increasing need for vertical consistency – that is, consistency between the policies at the Union and policies at the Member State level.
1.4.2 The EU response
The multi-sector, multilevel framework described in the previous subs...
