The Guest Blog

Guest post by Kai Gehring, University of Zürich and Stephan A. Schneider, Heidelberg University.

While Brexit negotiations are on their way, the remaining EU members issued a declaration outlining perspectives for future cooperation on the European level on the occasion of the 60-year anniversary of the Treaty of Rome. At the same time, the “Pulse of Europe” movement provides an avenue for citizens who are in favour of European cooperation and the many benefits it brings with it. Nevertheless, both the declaration and the movement lack a clear target and concrete proposals for reform. By contrast, the new elected president of France, Emmanuel Macron, announced that he aims at restructuring and reforming not only politics in France but also in the European Union.

This article argues and presents evidence that the nomination process of the EU Commission (and particularly the Commissioners comprising it) is one area that clearly requires such reforms. We provide empirical evidence that Commissioners seem to favour their home country with regard to political and economic decisions (Gehring and Schneider, 2017), and show why the current system sets strong incentives to engage in such behaviour. The last section suggests some policy implications and reform proposals.

In article 17 of the Treaty on European Union, it is stated that “the Commission shall promote the general interest of the Union” and is supposed to do its work “completely independent” and detached “from any Government or other institution, body, office or entity”. This honourable claim strongly contrasts with the effort and intensity with which member states seek attractive portfolios for ‘their’ nominee in the current “one country – one Commissioner” system. It is fair to ask whether the mere prestige gain of holding important Commissioner positions is the only reason for this behaviour or whether countries try to be in a more favourable position to enforce their national interest in Brussels. For the Commissioners themselves, patriotism and career prospects (i.e., getting either re-nominated as Commissioner or obtaining important positions in their home country as a reward) are incentives to promote their home countries’ interest. It is reasonable to assume that Commissioners are able to use their information advantage and agenda setting power to benefit their home countries.

Figure 1: The main actors and structure of decision-making in the European Union (own illustration).

 

One of the most apparent anecdotal examples of Commissioners acting in favour of their country of origin is the former German Commissioner Günter Verheugen, who managed to weaken a proposal by his colleagues to limit carbon dioxide emissions in order to protect the German car industry.[1] Similarly, the current French Commissioner, Pierre Moscovici, who is responsible for the enforcement of the new European fiscal pact, was one of the first to sign a request from the French Socialist Party for communitisation of national government debt on the European level.[2] And the current Czech Commissioner Vera Jourová emphasised that in her eyes the EU Commissioners must be impartial but she also explained: “I would like to focus on coordinating the activities of Czech people in EU institutions to promote Czech national interests – after my working hours, if you will.[3]

Empirical Results

We are able to move from such anecdotal evidence to a systematic quantitative assessment of the role of the Commissioners’ national background. Data on European funds allow us to trace back which country received how much money in a specific year. We focus on the European Agricultural Guidance and Guarantee Fund (EAGGF) which accounts for the largest share of the EU budget and is in the exclusive responsibility of the Commissioner for Agriculture.

Figure 2: Structure of EU Expenditures, percentages of the total. Source: European Commission.

We use data from the European Court of Auditors assembled by Schneider (2013), which contain information for all member states from 1979 to 2006.[4] Our dependent variable is the total EAGGF budget that a member state receives in a given year as a share of the total EU budget. To ensure a causal interpretation of our variable of interest, the Commissioners’ nationality, we control for other relevant factors in the member states such as the importance of the agricultural sector, EU scepticism, unemployment, economic growth, or forthcoming domestic elections and other time-invariant country specific factors, which could also cause an increase of the agricultural funds received by a member state.

Our results show that when a country gets to appoint the Commissioner, its share of the overall EU budget suddenly increases by about one percentage point. With regards to the EU budget in 2006, this corresponds to 850 million Euros per year. The abrupt significant increase for the years when a country provides the Commissioner are clearly visible in Figure 3.

Figure 3: Regression coefficients and confidence intervals for holding the Commissioner for Agriculture (all years in office coded as t). The red squares indicate the coefficients and the grey-shaded area the 95%-confidence interval.

 

 

 

It is important to note that there are no pre-treatment trends, which would signal selection into the treatment. After the Commissioner’s term, the budget shares remain higher in the first years but drop back to the pre-treatment level subsequently. The paper discusses in detail how we further rule out other possible explanations and why potential selection effects would have to be unlikely high to account for the large spike in budget allocation towards the home country. The effect of providing the EU Commissioner remains robust throughout: in a very simplified way one could say that having the Agricultural Commissioner is worth about 850 million Euros per year.

Commissioners certainly also take common European targets into account, but our findings provide clear evidence that national background continues to matter. As a consequence, the current “one country – one commissioner” system has to be reconsidered. It implicitly institutionalises a system of promoting national interests by connecting the selection of the Commissioners to their national background. The fact that they rely on their home governments for being reappointed gives these national governments obvious leeway over the Commissioners. In addition to that, the number of Commissioners increased with the number of member states which led to multiple overlapping or simply unnecessary portfolios.[5] Moreover, the candidates for these positions are selected by their country of origin’s governments before even knowing which portfolio the candidate will be appointed to.

Policy Implications

Future reforms should aspire to design mechanisms that minimise common pool problems and the ability of countries to over-proportionally exert their influence. The number of Commissioners should be based on efficiency concerns and selection should be decoupled from the national origins and, instead, be based on the quality of the candidates. A certain degree of national representation of interests exists in any political system, as studies on the national level in European countries or in the U.S. show. To some extent, this is a feature of democratic systems, e.g., when it comes to directly elected candidates who shall represent their constituencies. However, this holds for legislative organs, and should not guide the executive. It is tempting to postpone these institutional reforms due to the political costs associated with the adaptation process, which would involve changes in the European treaties. Still, we need to realise that keeping the status quo means accumulating the political and economic costs resulting from the imperfect institutional setup.

To regain lost confidence, the EU should also further increase transparency about voting patterns and internal decisions of the Commission, so that citizens, media, and science are able to provide the checks and balances necessary in a democratic system. It is naive to assume that it would be easy to modify the current system against the vested interests of the involved parties. But if the Commission was about to receive further competencies in the future, it would be an absolute necessity. As long as member states and not the EU Parliament decide on the re-appointment of the Commissioners, it seems inevitable that they cater the interests of their home countries.

The current post-Brexit-debate could have a positive impact on the union as a whole if we understand it as the starting point to discuss mutually beneficial reforms, instead of focusing solely on national concerns. In the long-run, the EU can only be successful and regain a good reputation among its citizens if it generates welfare benefits to its members, and not if it is perceived as a battleground for competences and power between national and EU level actors. Thus, we need a sincere discussion which policies should be centralised based on externalities and benefits from economies of scale (see also the discussion in Spolaore, 2015). The EU should genuinely re-establish the subsidiarity principle and aim towards local decision-making close to the voters in case of large heterogeneities in voter preferences or information asymmetries between central and local decision-makers (see for example, Dreher et al. 2015 or arguments by Spolaore, 2015). That is, achieving a balance between national ideas and Pan-European idealism, with room for regional diversity as well as joint cooperative projects.

 


References

Dreher, Axel, Kai Gehring, Christos Kotsogiannis, and Silvia Marchesi. “Information Transmission within Federal Fiscal Architectures: Theory and Evidence”, CEPR Discussion Paper 11344 (2015). Available at http://kai-gehring.net/files/CEPR-DP11344.pdf.

Gehring, Kai and Stephan A. Schneider. “Towards the Greater Good? EU Commissioners’ Nationality and Budget Allocation in the European Union”, American Economic Journal: Economic Policy, forthcoming. Working paper version available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2742607.

Schneider, Christina J. “Globalizing Electoral Politics: Political Competence and Distributional Bargaining in the European Union”, World Politics, 65(3), 452–490 (2013).

Spolaore, Enrico. “Monnet’s Chain Reaction and the Future of Europe” (July 2015). Available at http://www.voxeu.org/article/monnet-s-chain-reaction-and-future-europe.

Notes

[1] See Deutschlandfunk (last accessed on March 2, 2016) and EU Observer (last accessed on March 2, 2016).

[2] See Der Spiegel Magazin (last accessed on March 2, 2016).

[3] For the direct quotation see Radio Praha (last accessed on March 2, 2016), written July 21, 2014.

[4] The EAGGF was replaced by two follow-up funds in 2007 (last accessed on April 16, 2015). This is the main reason that our sample ends in 2007. As one of these funds, the European Agricultural Fund for Rural Development (EAFRD) co-finances economic rural development programs of the member states, it is more difficult to directly trace its changes back to the actions of the Commissioner for Agriculture.

[5] Among the 27 positions there are, e.g., portfolios for “Digital Single Market“, “Digital Economy and Society“ as well as “Internal Market, Industry, Entrepreneurship and SMEs“.

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