Showing papers in "Journal of Common Market Studies in 2004"

Normative Dynamics and Strategic Interests in the EU's External Identity*

Abstract: Focus on the ideational dimensions of the EU’s in ter na tion al presence has unduly diverted attention away from the persistence of power politics instrumentalism. De spite general recognition that these elements co-exist, analysis of EU external policies can benefi t from a more precise exploration of how strategic cal cu la tion invests a broadly normative agenda with notable characteristics. The article demonstrates this in re la tion to the promotion of human rights. This sheds light on the way in which security concerns and normative values inform each other, and cautions against ne glect of the stra te gic specifi cities to identity-representation dynamics.

New Governance in the European Union: A Theoretical Perspective

Abstract: New modes of governance based on voluntary performance standards, rather than compulsory regulation, have gained salience in the European Union (EU). Can these new modes of governance offer a credible solution to the current challenges faced by EU policy-making? In this article, we assess the potential of new governance in the light of the theory of democratic experimentalism. This theoretical perspective suggests, first, that co-ordination by voluntary performance standards can lead to more effective rules and more opportunities for political participation; second, that the scope of this mode of governance in the EU is not confined to cases which are explicitly flagged as new governance; and third, that one of the main problems is how a voluntary mode of governance can coexist with compulsory regulation.

The Power of the Presidency: Brokerage, Efficiency, and Distribution in EU Negotiations

Abstract: Decision-making in the European Union is subject to the risk of negotiation failure, because of governments' incentives to conceal their true preferences. This article argues that the EU Presidency possesses a set of informational and procedural resources that can help unlock incompatible negotiating positions and secure efficient agreements, while simultaneously allowing the government in office to shape distributional outcomes. Drawing on general bargaining theory and rational choice institutionalism, it presents a theory of the demand for, and supply of, brokerage by the chair. The explanatory power of this theory is demonstrated through two case studies: Germany's chairing of the negotiations, and France's chairing of the IGC 2000 negotiations. (Less)

Legitimately Diverse, yet Comparable: On Synthesizing Social Inclusion Performance in the EU*

Abstract: The open method of co-ordination (OMC) intends to enhance EU Member States’performance on social inclusion. In this context a set of commonly agreed performance indicators plays an important role. While the communicative power of a synthetic indicator has been recognized, several objections have been raised against such a construction. In this article, we argue that a set of separate indicators can in principle be combined into a meaningful synthetic performance index without giving up on the notion of subsidiarity, and without fundamentally impairing the peer pressure incentives that constitute an important rationale for OMC. We complement the presentation of the conceptual framework with a number of empirical applications, thereby indicating how the basic method may be instrumental for policy benchmarking practice.

Indicators and targets for social inclusion in the European Union

Abstract: In December 2001, the Laeken European Council adopted a set of commonly agreed and defined indicators for social inclusion. These should play a central role in monitoring the performance of Member States in making progress towards the key EU objectives in this area set by the Nice European Council in 2000, and represent a major step forward in the development of EU social policy. This article reviews the scientific and political basis on which the indicators were selected, and the implications for the future development of policy-making in Europe. It describes the key features of the indicators and some of the ways in which they can be developed. Finally, it investigates some important issues that need to be addressed when setting quantitative targets in the context of the social inclusion process.

Conditionality and Compliance in the EU's Eastward Enlargement: Regional Policy and the Reform of Sub‐national Government

Abstract: Studies of EU conditionality assume one basic premise: that it exists and works because there is a power asymmetry which enables the Commission to impose the adoption of the acquis on the CEECs as a precondition of their entry to the Union. Thus this literature posits that there are clear causal relationships in the use of conditionality to ensure policy or institutional outcomes. Existing studies of enlargement conditionality analyse its correlation with macro-level democratization and marketization. This article, however, takes a policy-tracking approach to analyse how conditionality was actually put into operation in policy-making and institution-building in the fields of regional policy and regionalization in the CEECs. The research draws on interviews conducted with officials in the Commission and in CEEC delegations in Brussels to illustrate the views of key actors, and to examine the interactions between the Commission and the candidate countries. By studying the policy process, the article demonstrates the fluid nature of conditionality, the inconsistencies in its application by the Commission over time, and the weakness of a clear-cut causal relationship between conditionality and outcome in this policy area. By charting the changes in the Commission’s approach over time, and illustrating the diverse responses of the CEECs, this study confirms the need for a more nuanced approach to the concept of EU conditionality, and argues for a logic of differentiation in the study of its impact on the CEECs.

Forecasting with a Bayesian DSGE Model: An Application to the Euro Area

Abstract: In monetary policy strategies geared towards maintaining price stability, conditional and unconditional forecasts of inflation and output play an important role. In this article we illustrate how modern sticky-price dynamic stochastic general equilibrium (DSGE) models, estimated using Bayesian techniques, can become an additional useful tool in the forecasting kit of central banks. First, we show that the forecasting performance of such models compares well with a-theoretical vector autoregressions. Moreover, we illustrate how the posterior distribution of the model can be used to calculate the complete distribution of the forecast, as well as various inflation risk measures that have been proposed in the literature. Finally, the structural nature of the model allows computing forecasts conditional on a policy path. It also allows examination of the structural sources of the forecast errors and their implications for monetary policy. Using those tools, we analyse macroeconomic developments in the euro area since the start of EMU.

Renationalizing or Regrouping? EU Foreign Policy Since 11 September 2001

Abstract: This article considers whether the most recent phase of European foreign policy-making, since the atrocity of 11 September, has exposed fatal flaws in the EU's Common Foreign and Security Policy (CFSP), or whether it is too soon for dismissive judgements. It asks to what extent Member States have fallen back on their own resources, and to what extent there are signs of regrouping, so as to take the CFSP on to the next stage. It examines the main substantive challenges which have preoccupied Europe since 11 September, some of the key foreign policy issues which predated but then became complicated by it, and finally the more structural issues such as the European Security and Defence Policy (ESDP), the Convention on constitutional reform, and enlargement. It concludes that the current crisis is not rendering European foreign policy redundant, and that there continues to be the will, if not always the capacity, to produce collective action.

The Logic of Access to the European Parliament: Business Lobbying in the Committee on Economic and Monetary Affairs*

Abstract: This article is an attempt to test empirically a theory of access that investigates the logic behind the lobbying behaviour of business interests in the European Parliament. The theoretical framework tries to explain the degree of access of different organizational forms of business interest representation (companies, associations and consultants) to the supranational assembly in terms of a theory of the supply and demand of ‘access goods’. On the basis of 14 exploratory and 27 semi-structured interviews, the hypotheses are checked in the Committee on Economic and Monetary Affairs (ECON) of the European Parliament. Surprisingly, European and national associations enjoy a similar degree of access to the Parliament. Individual companies and consultants have a much lower degree of access than the two collective forms of interest representation. In the conclusion, these results are analysed in the light of the existing literature on party cohesion and coalition formation in the European Parliament.

E Pluribus Unum? Creative Disagreement about Legitimacy in the EU

Abstract: This article considers how a plurality of views on how the EU ought to be legitimated may even contribute to its overall legitimacy and not, as is often assumed, to its contestedness as a polity. It draws lessons for the EU from a recent turn in the literature on legitimacy towards analysing political systems as mechanisms for mediating between several views of legitimacy, rather than articulating any one. It identifies a range of views on how the Union ought to be legitimated. It appraises alternative mechanisms for combining or choosing between those views. It concludes with lessons for the constitutional development of the Union.

Optimum Currency Areas and Key Currencies: Mundell I versus Mundell II

Abstract: The East Asian economies are increasingly integrated in trade and direct investment. More than 50 percent of their foreign trade is with each other. Both the high growth and level of, trade integration is similar to what the Western European economies achieved in the 1960s. So, in the new millennium, the inevitable question arises: is East Asia also an optimum currency area (OCA)? Despite the apparent success of the European Monetary Union, many writers familiar with the East Asian scene think not. Taking the seminal papers of Robert Mundell as the starting point, this paper first analyzes traditional theorizing on the pros and cons of international monetary integration and then suggests new approaches to the problem of international risk sharing in OCAs.

Do EMU Members Share the Same Business Cycle

Abstract: The article analyses alternative approaches for dating the business cycles of a set of European monetary union (EMU) member states. First, the framework for analysing cyclical behaviour in economic activity is presented. Second, the dating algorithm is applied to both the classical cycle and the growth cycle in order to recover stylized facts of the business cycle in Europe. Third, the article utilizes different econometric techniques to evaluate the synchronicity of national cycles and the euro area aggregate cycle, and compare the results with that of the USA. A convergence analysis is also employed. Finally, a multivariate extension of the Hamilton-Markov switching model is constructed to analyse the euro area business cycle. The results suggest that, although during the main recessionary periods the euro area economies shared a similar output dynamic, some differences still remain in the size and timing of the business cycle features. The results also suggest that adhesion to the new currency area is likely to lead to stronger synchronization of EMU members’ business cycles.

The European Union: Democratic Legitimacy in a Regional State?

Abstract: Democratic legitimacy for the EU is problematic if it is seen as a future nation-state. If instead the EU were seen as a regional state—with shared sovereignty, variable boundaries, composite identity, compound governance, and a fragmented democracy in which the EU level assures governance for and with the people through effective governing and interest consultation, leaving to the national level government by and of the people through political participation and citizen representation—the problems of the democratic deficit diminish for the EU level. But they become even greater for the national level, where the changes to national democratic practices demand better ideas and discourses of legitimization. A further complicating factor results from problems of “institutional fit,” because the EU has had a more disruptive impact on “simple” polities, where governing activity has traditionally been channeled through a single authority, than on more “compound” polities, where it has been more dispersed through multiple authorities.

The Great Non-Communicator? The Mass Communication Deficit of the European Parliament and its Press Directorate*

Abstract: This article was prompted by the poor turnout for the 1999 European Parliament elections and the failure of MEPs since to address effectively key causes of electoral apathy. It focuses on the extent to which the Parliament's press and information directorate, DG-III, and to a lesser extent, MEPs, are successful in handling their relationships with the mass media, given that the latter is a crucial means of communicating images of the Parliament to the electorate. Having unearthed serious inadequacies in the communication performance of the Parliament, the article investigates the causes of these and the likelihood of their being addressed. The article largely reflects the situation with regard to press and information policy as far as it could be discerned up and until March 2002 (with the exception of the website and external office updates which were undertaken during 2003). Among other things, it paves the way for further studies of the relationship between the European Parliament and the media which will focus on the recent 2004 elections.

Europeanization, Conditionality and Domestic Change: The Twinning Exercise and Administrative Reform in Romania

Abstract: A key requirement of the countries of central and eastern Europe (CEECs) that wish to join the EU is that they develop the administrative capacity to implement effectively the acquis communautaire. The ‘twinning’ programme is designed to assist in this process. Drawing on experiences in Romania, and linking these to debates on Europeanization, this article argues that the success of twinning to date is related to the design of the programme, institutional fluidity and politicization within central administration, the individual agency and the reform commitment of those hosting twinning projects.

European identities and the EU - The ties that bind the peoples of Europe

Abstract: This article addresses a crucial issue underlying enlargement and constitutional reform: the ways in which the EU has come to relate to a common European identity. The discussion problematizes the concept of identity in order to distinguish between different types of identities. It proposes that, while a meaningful common European historical identification barely exists, European identities have come to be expressed first and foremost through EU institutions and EU law. The best way for EU institutions, and the Treaty establishing a Constitution for Europe, to respond to and promote such identifications are through enhancing distinctive common citizenship rights and strengthening Europe's supranational institutions.

A Bridge Too Phare? EU Pre-Accession Aid and Capacity-Building in the Candidate Countries

Abstract: The imminent large-scale EU enlargement raises important questions regarding the success of Phare as one of the Pre-Accession Funds in preparing candidate countries' institutions for Structural Funding, the need to reform EU regional policy itself, and to what extent the Commission is using Phare to build regional-level institutions and shift an enlarged EU towards multi-level governance. Despite some successes, Phare will not be able to deliver everything it was set up for, and a coherent set of post-accession transition policies will need to be set up as part of the next reform of the Structural Funds to ensure that the process of learning and adjustment leading to the adoption of the acquis does not stall with the new membership.

The Future of Sovereignty in Multilevel Governance Europe - A Constructivist Reading*

Abstract: Multilevel governance presents a depiction of contemporary structures in EU Europe as consisting of overlapping authorities and competing competencies. By focusing on emerging non-anarchical structures in the international system, hence moving beyond the conventional hierarchy/anarchy dichotomy to distinguish domestic and international arenas, this seems a radical transformation of the familiar Westphalian system and to undermine state sovereignty. Paradoxically, however, the principle of sovereignty proves to be resilient despite its alleged empirical decline. This article argues that social constructivism can explain the paradox, by considering sovereign statehood as a process-dependent institutional fact, and by showing that multilevel governance can feed into this process.

The transparency and credibility of the European Central Bank

Abstract: The European Central Bank (ECB) ranks highly on our proposed central bank disclosure indicator, measuring activities of central banks to enhance the public's understanding of their policies. Nevertheless, our survey evidence suggests that private-sector economists do not consider the ECB transparent. We argue that this may be caused by the quality of the information provided by the ECB. In addition, the way intermediaries report on the ECB may influence the public's perceptions. The ECB also does not rank highly in terms of credibility; still, most ECB policy decisions were in line with financial markets' expectations.

A Two‐Tier or Multi‐Tier Europe? Assessing the Innovation Capacities of Central and East European Countries in the Enlarged EU

Abstract: This article assesses the innovation capacities of the candidate central and east European countries (CEECs) and the countries of the EU by using a new framework for measuring national innovation capacity (NIC), based on 25 indicators. Based on regression and cluster analysis the article shows that NIC in the enlarged EU does not follow a simple east–west divide. The wider Europe is structured into three groups of countries, and CEECs fall into two, the less-developed and medium-developed EU groups. NICs in the enlarged EU are assessed across four dimensions of capacity: absorptive, R&D, diffusion and demand. In each of these dimensions a two- to three-tiering of countries is observed, which goes beyond a simple east–west pattern. The results of this assessment have important implications for new Member States and candidate countries, as well as for the EU policy towards structural assistance.

Fiscal Discretion and Elections in the Early Years of EMU

Abstract: An early criticism of the Stability and Growth Pact (SGP) has pointed to its asymmetric nature and the weak mechanisms to prevent politically-motivated fiscal policies: its constraints would bite in downswings but not in upswings, especially if, in the latter, the electoral cycle increases the temptation to run expansionary policies. We find that the experience of the initial years of EMU lends support to this criticism. Overall, unlike the experience in the run-up to EMU, fiscal policies had an expansionary bias, and a ‘genuine’ discretionary boost took place in correspondence to political elections. Both sign and composition of such discretionary changes are in line with the predictions of the recent literature on electoral budget cycles. Closer fiscal surveillance may help detect such behaviour early on, but it is unlikely to curb the incentives to run politically-motivated fiscal policies when elections approach.

Europeanization of Central Government Administration in the Nordic States

Abstract: This article examines the Europeanization of public administration in the Nordic countries, and explores the changes in central administration due to EU and European Economic Area (EEA)membership. The focus is on Sweden and Finland, which have recently joined the European Union, and Norway and Iceland, whose participation in European in te gra tion is based on the EEA agreement. The database is a survey conducted in all min is te ri al departments and directorates in the Nordic countries. There are signifi cant differences in the adaptation patterns between EU members and EEA members, but also important differences between countries with the same form of affi liation to the EU. The adaptation pattern of the EEA mem ber ship of Norway and Iceland seems to follow a somewhat different path. To understand this, we have to add structural factors such as the size of the public administration. The institutional context of the domestic administrative tra di tion and strategy also has to be taken into account.

Accounting, Auditing and Corporate Governance of European Listed Countries: EU Policy Developments Before and After Enron

Abstract: This article provides an overview of EU policy developments in accounting, auditing and corporate governance before and after the collapse of Enron. For EU policy-makers the article identifies areas for both encouragement and concern. It concludes that considerable progress has been made towards the harmonization of accounting, auditing and corporate governance within the context of the Financial Services Action Plan. However, it can be argued that, to achieve this, the EU has given too much ground to US hegemony, whether by embracing US practice masquerading as international ‘best practice’, or being forced to accept US practice where the US chooses to act unilaterally.

The Incidental Fortress: The Single European Market and World Trade

Abstract: The European Union’s role in international trade contains two signifi cant con tra dic tions: fi rst, although its trade policy, with some notable exceptions, is generally fair ly liberal, it has been the respondent in a number of high-profi le trade disputes; second, al though a champion of multilateralism, the EU has had problems com ply ing with World Trade Organization (WTO) judgments. I argue that these contradictions in the EU’s trading persona are due to the internal dy nam ics of European policy-mak ing, which create ‘regulatory peaks’ where the member governments’ rules diverge, and render the resulting rules dif fi cult to alter.

A Single EU Seat in the IMF

Abstract: This article examines the rationale for consolidating EU Member States’ position in the International Monetary Fund (IMF). Although a substantial amount of co-or di na tion already takes place, par tic u larly on issues related to the euro area and the single monetary and exchange rate policy, co-operation between EU countries in the IMF remains a relatively new phe nom e non and divergences still prevail. The current in sti tu tion al set-up, whereby the 15 EU countries are spread in nine con stit u en cies, un der mines effectiveness. Al though there is scope for further im prov ing co-operation, there are natural limits to what can be achieved within the existing co-operation frame work. A single EU con stit u en cy would enable EU Member States to have a strong impact on IMF policies, potentially as strong as that of the US. However, this may not be an objective for all EU coun tries in the current conjuncture.

The CAP and EU Enlargement: Prospects for an Alternative Strategy to Avoid the Lock‐in of CAP Support

Abstract: The integration of the central and east European countries (CEECs) into the Common Agricultural Policy (CAP) could become a major problem. At the Copenhagen European summit in December 2002, the EU agreed a transitional period with a gradual phasing in of direct payments. However, this strategy will not solve the problems of the CAP: budgetary limits remain problematic, the policy ignores possible developments in the World Trade Organization (WTO), and the extension of direct payments to the CEECs will further capitalize, and hence lock-in, agricultural support. The latter makes future reform even more difficult and, to overcome these problems, we suggest an alternative strategy to integrate the CEECs into the CAP. The EU should phase out direct payments by applying a bond scheme. Finally, we consider whether this option is politically viable.

Issues in Money Demand: The Case of Europe

Abstract: This article establishes a co-integration analysis for the euro area (sample period: 1983–2000), identifying three co-integrating vectors: one which can be labelled money demand (in which real M3 money balances are related to output, with unit elasticity, and the long rate of interest); another pertaining to the spread between the short and long rate of interest; and a third which is an output (IS) relationship in which output is related to the real rate of interest. Currency substitution terms affect the adjustment of real money balances though they do not enter the co-integration space. We use the aggregation procedure for historical Euroland data advocated by Beyer, Doornik and Hendry for application to aggregation of money, GDP and prices when exchange rates were varying. We make use of the German short- and long-term interest rates as benchmarks for own rate and opportunity cost variables.

Negotiating transparency: The role of institutions

Abstract: On 30 May 2001, a new regulation on public access to EU documents was presented and was heralded in the European press as a breakthrough for transparency. We argue that a focus on institutions can cast light on the negotiation processes that led to this decision, and explain the final - for realist negotiation theory puzzling - outcome. We demonstrate the importance of institutions in EU negotiations by detailing actor interests and strategies in the transparency case, and by tracing and analysing the negotiation process that resulted in the regulation. The institutions that receive particular attention are: agenda-shaping rules, decision-making procedures and voting rules, informal norms, timetables and deadlines, and intervention by institutional actors. (Less)