EU Regional Policy and Greece

A Side-Payment or a Goal-Oriented Activity ?

Dissertation

Michalis PEGLIS

Programme: Public Administration and Public Policy MSCGovernment Department

August 1998,The London School of Economics

And Political Science

Essay on “EU Regional Policy and Greece:A Side-Payment or A Goal-Oriented Activity ?”

August 1998, LSE

Table of Contents

Acknowledgements

I. Introduction

II. Greece and EU Regional Policy: a case studya. Bargaining in the European Councilsb. Regional policy and Greek performancec. Regional Policy and Subnational Government

III. Evaluation of the findings of the case studya. Intergovernmental bargainingb. Trends of the indicatorsc. Decentralisation process

IV. The general debatea. Intergovernmental theoriesb. Neo-functionalist theoriesc. The debate about the effectsd. Different concepts about the EU

V. Concluding remarks

BibliographyAppendix A: Trends of the Greek economyFootnotes

Length of the dissertation: 9,547 words

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Acknowledgements

I would like to thank Mr. Efthimios Christodoulou, Mr. Kostas Hatzidakis, Dr. Dimitris Katsoulis, Mr. Thrasivoulos LazaridIs and Mr. Michael Papakonstantinou for taking the time to provide me with their views during the interviews that we did on the topic of this essay.

I would also like to thank all the Prefects that took part in the survey conducted by completing and returning the questionnaire and the BOTSIS Foundation for assisting me in the search of the newspapers that I needed for my research.

Finally, I would like to express my gratitude to the State Scholarships Foundation (SSF) of Greece for the financial support, without which this dissertation would not be possible.

I. Introduction

With the term ‘regional policy’ we refer to the structural funds and the cohesion

fund of the European Union (EU), which aim the development of the poorer

regions and member states of the EU. This policy has come to be the second

largest item in the budget of the EU accounting at around 35% of its budget.

This essay will discuss the case of Greece as a recipient of the regional policy of

the EU. More specifically it will discuss the application of the two major

approaches to the regional policy: the intergovernmentalist ‘side-payment’ and the

idealist ‘goal-oriented’ approach. The rational for selecting Greece as a case study

for these two approaches is that Greece, as the poorest member of the EU, has

been a prime recipient of the regional policy and therefore, it is of interest to see

how would these two hypotheses apply.

The topic of regional policy in the European Union is, of course, a large and

multidimensional one. Aspects include the decision-making process for its

adoption, the debate about ‘what’ causes convergence of the poorer regions or

member-states, the administrative side of the policy and the role of the

Commission, the emerging of the subnational authorities as actors in their own

respect and other. Most of these topics are dealt in multiple and controversial

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ways in the relevant literature. Many of these topics will be touched in the

following chapters, but this will be done so in a functional manner. The focus of

this essay is the position of Greece during the decision making process for the

adoption of the regional policy, as well as some the consequences that it has had

in Greece.

There are three types of primary material that we have collected for this case

study:

First, we took interviews from five people, who, under some capacity, have dealt

with this issue in Greece:

- Mr. Efthimios CHRISTODOULOU, current member of the European

Parliament, who was minister of national economy during the European Council

of Maastricht and later governor of the Bank of Greece;

- Mr. Michael PAPAKONSTANTINOU, who was minister of foreign affairs

during the European Council of Edinburg;

Both these former ministers were interviewed on the Greek positions and tactics

during the negotiations in both the European Councils of Maastricht and Edinburg

in December ‘91 and ‘92 respectively.

- Mr. Thrasivoulos LAZARIDIS, chairman of the Greek delegation in the

Committee of the Regions of the European Union for the period 1993-97 and

Mayor of Kalamaria;

- Dr. Dimitris KATSOULIS, currently advisor to the dep. minister of Interior;

They were both interviewed on the role of the EU regional policy in the reform of

the subnational government in Greece during recent years.

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- Mr. Kostas HATZIDAKIS, current member of the European Parliament (MEP),

member of the regional policy committee and co-ordinator of the European

People’s Party (EPP) group in that Committee, was interviewed on the current

trends in the European Parliament towards the adoption of the new regulations for

the structural funds and the third round of the Community Support Frameworks

(CSFs) that will run for the years 2000-2006.

Secondly, we collected the views of the Prefects, the elected heads of the second

level of the subnational government in Greece. For this purpose a questionnaire

was conducted and sent to all the 54 Prefects, focusing on the EU regional policy

and the development of the local and regional government in Greece during the

last four years that they have been in office. The results presented are based on the

views of the 25 Prefects that returned the questionnaires.

Thirdly, we have also studied the reports of three major newspapers (TO VIMA,

ELEFTHEROTIPIA, and KATHIMERINI) during the period of major decisions

for the regional policy: the days before and after the European Councils of

Maastricht and Edinburg. The aim of this reference was to get a thorough

understanding of the political scene and debate in Greece inside which the

positions of the Greek government were shaped.

Additionally, we have used official publications of the European Commission and

a series of secondary sources, books and articles on regional policy in the

framework of the EU.

The aim of this material has been twofold: firstly, to analyse and evaluate the

Greek position during the negotiations for the European Councils of Maastricht

and Edinburg, the tactics and the bargaining elements of this position and their

relation to the theories under consideration. Secondly, to evaluate the

consequences of the EU regional policy on the evolution of the subnational

government in Greece.

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The aim of this essay is to draw some conclusions on the Greek case of the EU

regional policy and from this to discuss the general debate about whether the

regional policy of the EU is a side-payment or a goal-oriented activity, discussing

the strengths and weaknesses of each approach.

The hypothesis that I will put forward is that the EU regional policy decisions of

Maastricht and Edinburg were not side-payments for Greece, as the evidence will

suggest. Furthermore, I will try to demonstrate that the EU regional policy has

played an important role in generating a process of decentralisation of power in

favour of the subnational structures that consecutive Greek governments had

neglected before. The end of this process is still unknown, but the evidence that

exists suggests that it is a lasting one. These developments will be discussed in the

framework of the two theories on regional policy under consideration.

II. Greece and EU Regional Policy: a case study

a. Bargaining in the European Councils

The European Councils of Maastricht and Edinburg have taken their place in the

history of the EU apart from other reasons, for major redistributive decisions. The

Maastricht Summit for the decision to create the Cohesion fund and the Edinburg

Summit for the decision to substantially extend the budget for the regional policy.

From ECU 18,6bn in 1992 to ECU 30bn in 1999 (1992 prices) out of which ECU

2.6bn will go to the Cohesion Fund, these increases are larger in absolute terms

than the previous doubling in 1988. The total amount will account to 35% of the

EU budget in 1999.

There has been a lot of reference on the bargaining aspect of both these decisions

from the side of the ‘poor-four’ - Greece, Ireland, Portugal and Spain (Pollack,

1995; Hooghe and Keating, 1994; Marks, 1993). These refer to the negotiations

that took place where the decisions concerning regional policy were linked with

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the agreement upon other major issues of the EU, such as the Maastricht Treaty

and the start of the negotiations with the EFTA countries for the enlargement of

the EU.

For this purpose we traced the Greek position in both these negotiations by

interviewing two policy makers of the Greek government back then, as well as by

studying the reports in the press during the days before and after the European

Councils of Maastricht and Edinburg.

The Maastricht Summit

The Greek government went to Maastricht with the following agenda, not

necessarily in priority order:

- to put Greece in the Western European Union (WEE);

- to defend its position on the so called ‘Macedonian question’, which means

the conditions under which independence would be recognised to the ‘former

Yugoslav Republic of Macedonia’, that was coming out of the disintegration

of the former Yugoslavia;

- to support the Spanish demand for the establishment of the new Cohesion

Fund;

- to promote a flexible interpretation of the convergence criteria in order to

secure the fastest possible integration of Greece in the EMU, as well as the

adoption of the Common Foreign and Security Policy, a topic of high priority

for Greece due to its security concerns;

The application of Greece in the WEE together with the issue of the Yugoslav

disintegration were the two dominant items on the Greek agenda that the press

had been extensively reporting in the days that proceeded the Maastricht Summit.

So important was the Greek application in the WEE that the then foreign minister,

Mr. Samaras, few days before the Maastricht Summit repeatedly stated to the

press that Greece would not sign the Maastricht Treaty if it were not allowed to

enter the WEEi. This was already a controversial point due to general debate in the

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EU at that time about its defence institutions and specifically about the role of the

WEE and NATO. The case of Greece was even more complicated due to the

application of Turkey to join the WEE as well. The difficulty of this application is

further demonstrated by the negative vote of the General Assembly of the WEE,

on December the 3rd, 1991, few days before the Maastricht Council. This vote was

not binding the EU Summit, but still outlined the difficulty of the case and raised

the stakes of the application in the Greek political arena.

The end of the Maastricht Summit found Greece with most of its agenda points

accepted. It had been allowed to join the WEE, it got a friendly statement on the

Yugoslav crises, the Spanish demand for the Cohesion fund was met and the

Maastricht criteria were interpreted in a more flexible way.

As far as the last point is concerned, the then minister of national economy, Mr.

Christodoulou, explained to us that there were two ways that this was achieved:

the first one was the inclusion of the term ‘tendency’ in the Maastricht Treaty for

the criteria at stake. The Greek government together with Italy, Spain and Ireland

demanded that this term be included in the definition of the convergence criteria,

against the emphasis of the Dutch Presidency towards a more ‘strict’ interpretation

of the criteria in the Treaty. The second aspect where the Greek government had to

bargain was for the European Council to be the appropriate body to decide which

countries would be the ones to form what was latter called the ‘euro zone’ and

generally to decide which countries are eligible for membership. This may appear

of minor importance, however, according to Mr. Christodoulou it was very

important for Greece because this is a body the decisions of which are influenced

by political parameters and bargaining. This, according to the former minister,

was the case because for Greece the EMU was a very desirable evolution that the

Greek government had to bargain in order to facilitate its earliest possible

integration in this ‘exclusive club’ii.

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The Edinburg Summit

The European Council in Edinburg is even more interesting from this perspective.

According to the then foreign minister, Mr. Papakonstantinou, and the extensive

reports of the press the Greek government went to Edinburg with two main issues

on its agenda:

- the first one was to make sure that the statement of the European Council of

Lisbon on the Macedonian question, the number one foreign policy issue of

Greece at that time, would not change;

- the second one was to support the Spanish effort for the doubling of the

structural funds, something of obvious importance for Greece;

The first item of the Greek agenda faced a negative mood in the Council of

foreign ministers that proceeded the European Council, as well as in the Summit

itself. The extensive reports in the Greek press and the interview of the then

foreign minister revealed that the Greek government threatened to veto the

agreement on the budget of the regional policy unless it got a statement that would

reaffirm the Lisbon statement on the Macedonian question. Just to indicate how

important this issue was for the Greek government, the newspaper ‘The Guardian’

was reporting: “from the 12 European leaders, in Edinburg, only Constantine

Mitsotakis is in danger to lose his job after Sunday if the result of the Summit

meeting is against him”iii, referring though to the Macedonian question and not to

the budget for the structural funds.

The four main points of the final outcome of the Summit were: the

accommodation of the Danish reservations on the Maastricht Treaty in order to

overcome the negative result of its first referendum on the Treaty; the budget

agreement on the 1,27% of the Community GNP and the doubling of the funds for

the regional policy; the agreement to start the negotiations with the EFTA

countries on 1/1/1994 and; a general statement on the Macedonian question that

could be interpreted in different ways by different people. The Greek Prime

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Minister did not veto the Summit outcome and coming back to Greece he tried to

defend that it was a successful outcome. With the exception of the small

communist party, the other two parties of the Greek parliament (PASOK and SIN)

with public statements stated that he should have vetoed this outcome and

therefore the successful result for Greece of the budget negotiation for the

regional policy.

More bargaining…

In his interview, the former minister of foreign affairs also talked about the

negotiations for the level of funding that Greece would get from the structural

funds. He emphasised that although in the European Council the ‘poor four’ were

standing together to get a higher overall amount for the regional policy against the

wealthier countries who would ‘pay the bill’, when it came to define how much

each one would get, then they were competing against each other. In these

negotiations the role of the President of the Commission, Mr. Delors at that time,

was very influential, being the drafter of the budget. This role according to the

Greek minister was becoming more important due to the personality of Mr.

Delors, a person with a high prestige in Europe. The President of the Commission

met separately with each foreign minister and bargained for the amount that the

relevant country would get. In these negotiations the prime arguments of the

Greek side were the needs of Greece for big infrastructure projects. Mr.

Papakonstantinou reported that Mr. Delors even asked for support on other topics

of interest to the Commission in return to a ‘good deal’ agreed on the funding

levels for Greece. One such topic reported was the financial support of the

Länders of the former Eastern Germany.

Furthermore, since these agreements went to the Council of Ministers for final

approval there was a lot of bilateral and multilateral bargains of each recipient

country with counterparts from other countries for support on their level of

funding in exchange of support to other topics. The involvement of private firms

from wealthy countries to big, usually construction, projects (such as the metro of

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Athens) funded by the EU in a cohesion country was always a good reason for the

wealthy country to support a budget proposal for this poor country. Concerning

the use of veto in Edinburg the Greek former minister explained to us that “I tried

to avoid it of course… it would harm our relations with the Spanish Government

that had supported Greece on numerous occasions… it would isolate us”.

b. Regional policy and Greek performance

A selection of indicators are presented in Appendix A. Greece’s membership in

the EU has proved very positive financially. This has been the result of been a

beneficiary in both the Common Agricultural Policy (CAP) and the regional

policy. As table 1 shows, Greece has had an overall net income from the EU

accounting to 4.62% of its GDP in 1994. Only from the regional policy Greece

has been receiving annual amounts representing over 3% of its GDP

(Commission, 1996).

However, the performance of the Greek economy during recent years even with

the substantial transfers from the EU has been poor and middling. During the

period 1986-93, most of it covered by the first Community Support Framework,

Greece has had an annual average of 1.5% increase of its GDP. This has been

below the Community average and far below the average increase of the GDP of

the four cohesion countries (table 2). Furthermore, the evolution of the Gross

Domestic Product (GDP) per head of the 13 Greek regions until 1991 is

disappointing (table 3). Ten years after the accession of Greece in the EU, all the

13 regions of Greece experience decreases of the GDP per head.

When we take a look in the evolution of the GDP per head in Purchasing Power

Standards (PPS) from 1980 when Greece became member of the EC till 1995

when the second Community Support Framework had already been launched, the

results are more encouraging, with some increases of the GDP per head in PPS in

most of the regions (table 4).

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c. Regional Policy and Subnational Government

The impact of the EU regional policy on the Greek subnational structures can be

traced back to the Integrated Mediterranean Programmesiv (IMPs) in 1985. Before

the introduction of the IMPs the Greek local government consisted of:

54 prefectures headed by an appointed Prefect;

304 municipalities headed by an elected Mayor;

5,695 communities with less than 1,000 inhabitants headed by an elected

President, out of which 3,284 represented less than 500 inhabitants (Verney

and Papageorgiou, 1993, p.110).

For the needs of the IMPs the Greek government proceeded with a new Law

(1622/86) that created 13 administrative Regions each one headed by an

appointed Regional Secretary. These units were not exactly regional authorities, as

they were an extension of the national administration. Their prime responsibility

was to function as monitoring units for the implementation of the IMPs. The IMPs

ran into various troubles in Greece that “resulted from the Greek administration’s

attempt to run regional programmes without devolving any subnational powers to

the regional level” (ibid. p.159).

The first doubling of the structural funds in 1988 extended substantially the level

of funding from the Community for the development of the Greek regions.

Furthermore, with the new regulations of the funds the Commission gained a

decisive role, as a ‘hands-on’ financial managerv. Specifically, the principles of

‘programming’ and ‘partnership’ of the new regulations demanded from the weak

subnational structures of Greece new roles in the implementation of the structural

funds. The experience of the IMPs constituted an established bad record for the

capacity of the local government to meet the needs of the development projects, in

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the absence of adequate delegation of power, responsibilities and resources from

the central administration.

In his interview, Dr. Katsoulis identified a series of problems that the weak

subnational structures were facing in the implementation of the first Community

Support Framework for Greece. Being small and fragmented the few thousand

communities were totally unable to present serious proposals for development

projects and therefore to take advantage of the EU funding. They lacked the

resources, the expertise and the bargaining power. They were unable to effectively

monitor the implementation of the various development projects and to co-

ordinate with other communities for projects that involved wider areas and,

therefore, they could only deal with very small-scale projects in their territory,

uncoordinated and unimportant for the general development of the country side.

This reality has been a long standing problem for Greece and has played a serious

role in the low growth rates that Greece has had during recent years, regardless of

the increasing amounts of monies coming from the EU after 1985.

The socialist government (PASOK) was planning to proceed with the introduction

of elections for the Prefects. This was agreed at that time even by the conservative

party (ND) during a coalition government that took place for a few months

(November ‘89-April ’90). These elections were planned for the autumn of 1990.

However, the change in government in April 1990 and the coming of the

autonomous government of ND postponed the whole process until PASOK came

back in 1993. Since 1993 there has been a series of reforms introduced promoting

decentralisation of power towards the local and regional authorities. These

include:

In 1994 a new law introduced elections for the Prefect and the first elections

took place in October 1994.

In 1997 a new law (‘Kapodistrias’) altered the local administration map of

Greece. From now on the situation is as follows:

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- 890 municipalities, 55% of which have over 5,000 inhabitants. Out of these

890 municipalities 757 are new and were created by merging former

communities and the remaining 133 are municipalities that remained

unaltered.

- 133 communities (103 of the old ones and 30 new that were established by

the merging of small communities of the previous status quo).

In 1997 another new law introduced the Regions (‘perifereies’) as the third

level of subnational administration, headed by a General Secretary, appointed

by the Minister of Interior. These were the units established in 1986 for the

needs of the IMPs but this time they became part of the subnational

government, with additional responsibilities being given to them, although

still lacking popular mandate.

According to Dr. Katsoulis, the problem nowadays is not the delegation of further

responsibilities to the Prefects and the Mayors, but the effective execution of the

existing ones. This has been enhanced with the introduction of the elected Prefect

and the restructuring of the local administration map of Greece. Dr. Katsoulis

believes that during the recent years there is a clear political will from the

government and the major political parties to decentralise. The problems

according to him arise in the process of decentralisation, as there is substantial

opposition primarily from the senior public servants, who view this process

negatively, because it signalises the end for certain powers that they used to have.

The impact of the EU regional policy on the subnational government was further

discussed with the former chairman of the Greek delegation in the Committee of

the Regions. In his interview Mr Lazaridis emphasised the role that the European

Union has played in the process of the administrative decentralisation in Greece.

When the Committee of the Regions was founded by the Maastricht Treaty the

only elected subnational government representatives were the heads of the

municipalities (Mayors) and the communities (Presidents). As a result, the original

composition of the Greek delegation in the Committee of the Regions that the

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conservative government appointed included 8 Mayors and 4 Regional Secretaries

of the 13 Regions that Greece was divided into since 1986, as an extension of the

national administration. There were serious doubts about whether such a

delegation would be approved by the Council of Ministers, as there was a vague

interpretation of the article 198a of the Maastricht Treaty that describes the

composition of the Committee of the Regions consisting of “representatives of

regional and local authorities”. Before this came to be proved there was a change

of the Greek government in the autumn of ‘93 and the new socialist government

proceeded with appointing 12 Mayors in the Committee. Later on, after the

election of the 54 Prefects in October ’94, the composition of the Greek

delegation was changed with the appointment of 6 mayors and 6 of the newly

elected Prefects.

Mr. Lazaridis emphasised the role that the EU has played in the process of

decentralisation of the Greek state as both a catalyst and a model. As far as the

Committee of the Regions, Mr. Lazaridis explained that although as an institution

it only has an advisory role, it has been very important for Greece. It brought the

local government in direct contact with the European Union, as well as with its

counterparts in the different member states. This facilitated the transfer of

experiences of how things are done in other countries, promoted bilateral contacts

with other subnational authorities and, generally, generated a process of

‘Europeanisation’ of the local authorities. He is very optimistic for the future

development of the devolution of power in the Greek state and he foresees the

introduction of the elected third level of local administration in the middle term

future. ‘The need for strong subnational institutions has been very well

appreciated in Greece during the recent years due to the EU’… ‘Good access to

the EU funding requires strong subnational authorities’, Mr. Lazaridis

emphasised.

We traced the attitudes of the subnational government in Greece towards these

developments by conducting a questionnaire that we distributed to all the 54

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firstly elected Prefects that are ending their mandate this autumn. The full results

from this questionnaire are presented in Appendix B. The overall message that this

questionnaire gives is a positive and optimistic view for the future of the

subnational government in Greece. The main points that came out of this survey is

a positive view on the role of the EU regional policy in the prefectures and a

positive view on the involvement of the Commission in the projects funded by the

EU. Almost unanimously, they believe that the role that the EU is dedicating to

the regions can contribute to the further administrative decentralisation of Greece.

They want more responsibilities to be given to them from the central

administration, while they think that the support they receive (financial etc.) is not

adequate. They are critical towards the central government, administration and the

political parties for the lack of further decentralisation and they blame them for

centralisation, bad culture, bureaucracy, lack of expertise etc. Finally, they have a

positive view on the consequences of the single currency on their regions.

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III. Evaluation of the findings of the case study

a. Intergovernmental bargaining

Out of the analysis of the Greek positions in the two European Councils we can

assume that each member state of the EU entered the negotiations of Maastricht

with an agenda of its own, with various points, some of them common with other

members and some of more national character.

Using the intergovernmental approach we can claim that the threat of the Greek

foreign minister to veto the Maastricht Treaty should not Greece be allowed to

enter the WEE is a clear example of tactical bargaining, since there is no

functional linkage between the two issues. The acceptance of the Greek

application to join the WEE and the friendly statement it got on the Macedonian

question was what Greece demanded in exchange for its support to the other

topics of the Summit. These can be viewed as the side-payments for Greece for

not vetoing the Maastricht Treaty.

The same is claimed for the Edinburg Summit where Greece considered vetoing

the whole outcome and therefore the successful result on the structural funds’

budget, unless it got a friendly statement on the Macedonian question, which had

turned out to be so important for the domestic politics of Greece. The final general

statement on this issue, using the intergovernmental approach, was the side-

payment for the Greek government that came out of its bargains in Edinburg for

not vetoing the whole or part of its outcome.

In both cases we evidence strong bargaining, tactical linkages, threat to veto and,

finally, some sort of accommodation of the national agenda points and the

subsequent approval of the other decisions of the Summits. But if that means that

the side-payment of Greece to sign the Maastricht Treaty was the acceptance of its

application towards the WEE then what was the cohesion fund for Greece?

Similarly, in Edinburg, if the side-payment for Greece was the statement on the

17

Macedonian question then what was the decision for the doubling of the structural

funds?

Using the intergovernmental approach, from the above analysis of both these

European Councils we conclude that the positive decisions taken for the regional

policy can not fulfil the definition of side-payments for the position of the Greek

government. They may well be defined as side-payments for the case of the

Spanish government, which undertook the protagonistic role in this bargaining,

but not for Greece. The Greek agenda during both these meetings was so

dominated by other issues of national interest that the Greek government

considered to veto the agreements on the regional policy if these other points of its

agenda were not accommodated.

Of course one could question the chances of the Greek government actually

vetoing the Edinburg Summit because of a ‘statement’ on the Macedonian

question. Significant reference is given about the political consequences of a veto

at a European Council. However, the rules of the European Council give each

member state such a possibility. This is well known to everyone around the table

and is what facilitates extensive bargaining and some sort of accommodation at

the end.

b. Trends of the indicators

The indicators presented on the trends of the Greek economy can not be used for a

thorough evaluation of the regional policy, as such a task would require a much

more detailed analysis of different macro and micro indicators, related with other

domestic and international trends that could reveal the whole picture. For

example, between the flow of the EU transfers and the effects that they have on

basic indicators, such as those presented, there is obviously a time gap, that is

difficult to estimate, as these policies aim to have a structural impact on the

different sectors of the economy, that requires a longer period of time in order to

18

be able to draw conclusions upon the extent of their effectiveness. Furthermore, a

thorough evaluation of the impact of the Greek integration in the EU would have

to consider the series of policies pursued at the national level, starting from the

economy and going to other sectors that affect the development process of a

country.

We can not therefore conclude whether the middling performance of the Greek

economy is due to the negative effects of its integration in the Community market,

or whether this middling performance is regardless of the positive effects out of its

integration in the Community market. This of course has generally proved a

difficult task for most of the EU member states especially those in its periphery.

This difficulty in evaluating the effects of market integration has played an

important role in generating a big debate among economists about the effects of

the market integration of the EU for the poorer member states and therefore about

the necessity of policies such as the regional policy. With the advent of the EMU

this debate has been extended.

The message, however, of our data is that although there is an overall

improvement of the Greek economy 15 years after its accession in the Community

this is not adequate, given the length of the period and the level of the Community

funding, especially after 1988 and the first doubling of the structural funds.

c. Decentralisation process

For the case of Greece, Pollack argues that “the regions have generally been

unable to muster the capabilities and competencies to participate actively in EC

regional policy; and the result has been, instead, to strengthen the central

government vis-à-vis the regions” (Pollack, 1995, p.377). This is true, but it is one

interpretation of what has happened. On the other side, we do evidence a change

of preferences in the Greek political scene, against a long tradition of centralised

power of the national administration.

19

In order to attempt an evaluation of the process of decentralisation in Greece, we

will put forward a couple of questions: why did the Greek government decide to

end a tradition of centralised state and weak subnational structures that had been

predominant for decades only in the middle of the 1980s? What changed at that

time that made them shift their preferences towards the reform of the state, since

there is no conventional obligation of Greece to the EU to decentralise?

Our suggestion is that the EU regional policy has played a role in this process,

especially after the first experience of the IMPs and the subsequent incapacity of

Greece to adequately take advantage of these funds. Generally, and apart or

because of all the problems that took place in the implementation of the IMPs they

still “had stimulated the introduction of regional structures and promoted the idea

of regional programmes as a feature of Greek national development planning”

(Verney and Papageorgiou, 1993, p.160).

The 1988 regulations of the structural funds and especially the principles of

‘programming’ and ‘partnership’ have been strong catalysts for these

developments. As the evidence from the questionnaire implies, the prefectures

have acquired a sense of regional identity, being critical to the central state in

Athens, positive and optimistic about the role of the EU towards further

decentralisation that they consider as an important element for the development of

the country. This will of course play a role in the future developments, especially

in the light of further interaction with the EU policies. As Leonardi has put it: “the

experience of the last twenty years shows that the process of European integration

has had an impact on the direction and content of sub-national governmental

reform” (Leonardi, 1993, p.7, italics in original).

Another question though would be why did the regional policy facilitate a process

of decentralisation in Greece and not in Ireland, that has also been a prime

recipient of the regional policy? Ireland has not altered its centralised structures,

20

but has successfully been using the regional policy funds, experiencing the highest

rates of economic growth in the EU for several years. The answer to this question

lies in the domestic politics in each member state. “Europe and European

structural policy are able to act as catalysts for national developments, but have

been unable to impose their own logic” (Hooghe and Keeting, 1994, p.388). This

statement seems real for the case of Ireland but not for the case of Greece.

In order to understand how the preferences of the Greek government changed in

favour of a process of decentralisation one must examine the domestic political

arena. The administrative reform in Greece that led to the introduction of the

elected second level of local administration in 1994 and, later on in 1997, to the

restructuring of the boundaries of the local municipalities and communities may

of course be analysed from different perspectives.

From a rational or public choice approach the institutional reform with the

introduction of the elected Prefects in 1994 can be conceived as an intention of the

central state managers to bureau-shape (Dunleavy, 1991, ch. 7-8). Additionally,

the governing party could extend its popular support by claiming the credit for

giving the citizens the opportunity to select their representatives on the second

level of the subnational government. Furthermore, local government has

traditionally been a winning field for left-wing parties. The result of the first

elections for this new institution may justify this claim, as the governing party

(PASOK) elected 38 out of the 54 Prefects, a result that is much higher than its

result at the national elections 11 months earlier (46% for PASOK and 39% for

ND). The law of 1997 on the restructuring of the local communities and

municipalities fits well in a rational ‘preference-shaping’ attempt (Dunleavy,

1991: ch.5). It can be seen as a well designed effort of the governing party,

PASOK, to gerrymander the electoral map of Greece on the local administration

level in order to maximise the number of the mayors it can elect at the upcoming

elections this autumn, by making the right ‘tailoring’ of local populations. This

21

has been the main argument of the conservative opposition against the ‘method’

used by the socialist government to decide how the communities would merge.

Both these evolutions though may well be analysed from an idealist approach. The

introduction of elections for the Prefects can be seen as a necessity for Greece, a

common thing in most EU countries, that would create stronger subnational

institutions, with a popular mandate, more accountable to their citizens and

therefore more able to respond to the needs of the districts they administer for

growth and development. Furthermore, they can be seen as a better way to

accelerate the capacity of the regions to take advantage of the EU regional policy

funds. The recent mergers of the communities and municipalities in Greece can be

perceived as a response to a long standing necessity to end the fragmentation of

the local government; as a way to promote better co-ordination among them and

towards the central administration in Athens and the EU institutions dealing with

regional policy; and all this to enhance the development of the country by creating

stronger subnational institutions, that Greece had been lacking.

What ever the exact combination of reasons has been that originated this process

of decentralisation of power in Greece, the outcome is a steady and lasting one

that should not be neglected or underestimated for its importance. In this

perspective we consider that the European Union in general and the regional

policy in particular have had a strong impact in these reforms, as a catalyst for the

change of preferences in the Greek political arena.

IV. The general debate

a. Intergovernmental theories

The conventional side-payment hypothesis argues that at the negotiations for the

Maastricht Treaty the ‘big’ countries came up with the ‘big’ project called

Economic and Monetary Union (EMU). The theory proclaims that these countries

had more intense preferences for such a project, as they expected themselves to be

22

the prime beneficiaries. “In general terms, the wealthier member states, such as,

Britain, France and Germany, have more intense preferences for major programs

such as market integration, monetary cooperation, and enlargement; these intense

preferences can then be exploited by poorer member states, which demand side-

payments in other areas as a condition of agreement” (Pollack, 1995, p.365). The

poorer member states are perceived to have less intense preferences for the EMU.

That is why they used this opportunity to threaten the wealthier countries that they

could only get such a proposal pass the European Council if they got a good side-

payment. This side-payment is supposed to be the adoption of the new cohesion

fund in the new Treaty of the European Union. Furthermore, the content of the

side-payment does not have to be functional with the ‘big-project’ at stake. In the

case of the adoption of the cohesion fund, according to this argument, this was

accepted not because it was functionally linked with the EMU and the

convergence criteria. This is the case because “the linkages between issues are

tactical and not functional” (ibid. p. 366) and “there is little or no need for the

recipient member states to demonstrate losses from market integration or EMU.

The important element in each bargain is not the functional effect of integration

on poorer regions but the ability of member governments to veto projects of

interest to other, wealthier member governments (ibid.).

Preference formation

The first point that we would like to put up for discussion is the content of the

preferences of the member states. According to Pollack these preferences are “in

general terms” fixed. His argument treats member states as ‘black boxes’ with a

priori set preferences for wealth, security, power etc. in line with the realist

account. A member of the ‘poor-four’ at the Maastricht and the Edinburg Summits

is expected to act more or less as Spain did, linking the adoption of the ‘big’

projects with the decisions for the redistribution. This may well be true for Spain

and the two European Councils under discussion, but it should be used to put all

the other countries in the same ‘basket’. The agenda of a member state is a much

more dynamic synthesis that derives primarily from the domestic politics.

23

The analysis of the Greek case at the negotiations in Maastricht and Edinburg

confirms this point. The Greek government not only did not have an intense

preference for the decisions to adopt the cohesion fund and to double the

structural funds but it even considered to veto both these decisions in order to

promote its higher agenda points, deriving from the domestic political arena. This

does not mean that Greece was against the redistributive decisions. As we

explained in the presentation of the Greek case, the Greek government was in

favour of the Spanish demands, but it had some other topics on higher priority.

Under different circumstances the Spanish demands would have been Greece’s

highest priorities, but at those meetings this was not the case. For example it had

been Greece that few years back in 1984 undertook a bargaining for compensation

to the accession of Spain and Portugal in the EU, because of similarities in the

agricultural products. That bargaining (supported by Italy and France) had then

led to the creation of the IMPs.

Preference intensity

This brings us to the second point that the argument of Pollack raises. Under his

analysis of the preferences of the member states, a less wealthy country is

expected to have less intense preferences for, say, the EMU. Our analysis shows

that this can not be conceived a priori for any member state. In order to conclude

on the intensity of preferences of a member state for the EMU, one must take a

closer look in the domestic political arena. Although the case of Greece is not

revealing from this aspect, the formation of the national interests implies that it is

not necessarily true that a country like Greece must have a preference for EMU

less intense than that of Germany, for example. Such a case has been Britain, that,

although a member of ‘big-three’, it has had less intense preferences for the EMU

than any of the countries of the ‘poor-four’ due to its domestic political agenda.

This agenda is of course subject to change. That is why an analysis that fits well in

explaining the behaviour of a member state in one occasion may prove irrelevant

in explaining its behaviour on a future occasion. For Greece, for example, the

24

EMU has been received very positively as a firm step towards further integration

that is very welcome due to the security concerns that have a high place in the

domestic agenda.

These remarks about the formation and the intensity of the national preferences

are not meant to underestimate the process of the bargaining in the European

Councils, the linkages pursued by the member states and the ‘deals’ that are

reached. They are only meant to demonstrate that such an intergovernmental

analysis of the European Councils must start with a thorough understanding of the

different national preferences for both the content and the intensity, that will

interact in the proceedings of the Summit. This analysis of the national

preferences may prove a difficult task, as it requires an understanding of the

domestic parameters in each member state that shape its national preferences.

Only that way can for example the Greek position be understood, considering to

veto what would be expected to be its goal at the two meetings that we

approached. The level of understanding of the domestic politics of the member

states that shape their national preferences in the European Councils will

determine the level of understanding of the outcomes of the European Councils.

As Moravcsik puts it: “national interests are, therefore, neither invariant not

unimportant, but emerge through domestic political conflict as societal groups

compete for political influence (…). An understanding of domestic politics is a

precondition for, not a supplement to, the analysis of the strategic interaction

among states” (1993, p. 481).

Limits of the side-payment hypothesis

But is the intergovernmental approach, with the remarks just presented, capable to

fully capture the politics and the policies of the EU? How does the

intergovernmental approach explain the historical development of the regional

policy? Furthermore, in the evaluation of the Greek case we suggested that the EU

regional policy has been a catalyst for a change in the national preferences that led

to the introduction of a process of decentralisation of power towards local and

25

regional government. How does this finding fit with the intergovernmental

approach?

From a small interstate transfer in the ‘70s to the second largest receipt on the

budget of the EU today accounting for approximately 35% of the budget with an

active role dedicated to the Commission and the subnational governments

obviously a lot of things have changed. The role of the Commission has become a

big part in this debate, with some interpreting its role as of minor importance to

the central elements of the policy that are decided by the member states, as the

gate-keepers and those who believe in the existence of spill-over effects from

which the Commission has gained a lot.

The explanations provided by the side-payment hypothesis would advocate that

this 35% of the EU budget is the product of tactical linkages of the poorer

member statesvi to the wealthier ones in exchange for support to big market

integration projects in consecutive European Councils over the years. Although a

static analysis of a European Council may confirm this bargaining approach, we

consider it to be inadequate to provide a convincing explanation for its historical

development from a transfer to a policy. Such an explanation would, for start,

have to deal with the first doubling of the structural funds in 1988 and the

administrative aspect of these funds with the regulations that the Commission

proposed and the member states accepted.

Pollack argues that the 1988 reforms of the regulations for the structural funds

provide further support to the intergovernmental thesis of member-states as the

gate-keepers and interprets them as a result of the interest of those ‘who pay’ to

avoid misusing of the funds. Even if this is true, the concern of these member

states was for the money to be spent for the purposes that they had been assigned.

This does not imply a particular model of administration of the funds. This

particular model, that the Commission proposed and the Council accepted, with

the principles of ‘programming’ and ‘partnership’ has had a substantial effect in

26

the content of the regional policy and after all in its consequences on member

states, transforming the funding to a policyvii. To put it similarly: “[b]eyond and

beneath the highly visible politics of member state bargaining lies a dimly lit

process of institutional formation, and here the Commission has played a vital

role” (Marks, 1993, p.392).

It is precisely the shape of these new regulations that granted the Commission a

decisive role, and this has had an impact on the uprising of the subnational

governments, as actors in their own respect, changing the substance of the

regional policy and for some the substance of the European politics. These

developments are not adequately captured by the side-payment hypothesis, the

analysis of which ends by explaining ‘why’ those who pay had an increasing

interest in the proper use of their money and accepted a much more active role of

the Commission in order to monitor that. Without these additional remarks

though, the bargaining and the tactical linkages of the poorer member states that

extended the budget of the regional policy can not capture the consequences that

this has created, such as the effects of the regional policy on the decentralisation

of power in Greece.

This has proceeded even after the amended regulations of 1993, when the

Commission, following the irritation of some countries, returned certain powers

back to the member states over the implementation of the funds. The new

regulations continued the thrust of the 1988 reforms, while, certain changes were

necessary anyway to improve their effectiveness, using the experience acquired.viii

The doubling of the structural funds that took place a year before, out of the

bargaining in Edinburg consolidated furthermore the regional policy. As Tsoukalis

has put it “[u]ndoubtedly, the EU had travelled a very long way since the 1970s

when member governments were involved in interminable negotiations about very

small sums of money” (Tsoukalis, 1997, p.202).

27

b. Neo-functionalist theories

Neo-functionalist theories argue for the unintended consequences that this policy

has created, the additional competencies acquired by the Commission and the

mobilisation of the regional authorities within the member states. The Community

Initiatives have been sited as a prime example of how this was facilitated with

certain examples (i.e. RECHAR) demonstrating the capacity of the regions to

‘outflank’ the national governments. As Marks puts it: “[s]ubnational governments

have developed vertical linkages with the Commission that bypass member states

and challenge their traditional role as sole intermediary between the subnational

and supranational levels of government” (Marks, 1993, p.402) and furthermore:

“we are seeing the emergence of multilevel governance, a system of continuous

negotiation among nested governments at several territorial tiers – supranational,

national, regional, and local- as a result of a broad process of institutional creation

and decisional reallocation that has pulled some previously centralised functions

of the state up to the supranational level and some down to the local/regional

level” (ibid. p.392, italics in original).

The intergovernmentalists respond by arguing the de jure supremacy of the

member states in the Treaties of the EU. As far as the regions are concerned, they

argue that the regional mobilisation is a middling or marginal phenomenon against

the predominance of the national government and that “regions are indeed

independent actors, but in a play – or institutional structure – laid down by the

member states” (Pollack, 1995, p.377).

Both arguments debate on how the power is distributed between the supranational

and the national authorities in the EU. The neo-functionalists claim that out of the

experience of the regional policy the Commission and the regional authorities

have been ‘winners’, while the member governments have been ‘losers’. On the

contrary the intergovernmentalists argue that member governments are still the

‘gate-keepers’.

28

c. The debate about the effects

There has been an active debate about whether the process of market integration

produces convergence or divergence of the poorer regions and member states with

the wealthier ones. Furthermore, it is debated whether convergence requires an

active policy of the EU, rather than the free interaction of the market forces. An

alternative path would be a free-market model, where, after a period of adaptation,

everybody becomes better off in the market equilibrium. In this debate the

advocates of the active policy seem to have won the day. As Tsoukalis puts is:

“[t]he main message from regional economic theories is that there are no strong

reasons to expect the elimination of regional problems through the free interplay

of market forces” (1997, p.189).

The regional policy has had different effects in different cases of regions and

member states. This diversity of results is responsible to a large extent for the

debate about its necessity in the EU. Ireland and Greece are two contrast examples

in this debate that can be used to support the opposite conclusion. For the EMU

project, extensive reference has been given to the so-called ‘double’ pressures that

the poorer member states were faced with. One the one hand they had to meet the

convergence criteria by constraining public expenditure and on the other they had

to prepare themselves for higher levels of competition from which they may pay a

price for not being ready. This argument brings in the point about the linkages of

the issues, suggesting a functional linkage between the preparation for the EMU

and decisions such as the creation of the cohesion fund and the doubling of the

structural funds, in ’91 and ’92 respectively. As Tsoukalis has put it: “the link

between the internal market and EMU on the one hand and redistribution on the

other had become firmly established” (1997, p.202).

This discussion becomes even more interesting nowadays with the advent of the

single currency, where another debate has started about whether the EU needs to

29

be prepared to support regions that may be faced with the negative consequences

from the single currency with additional funding.

d. Different concepts about the EU

Although an attempt to bridge the two hypotheses can be a useful exercise, this

has certain limits. These are limits posed by the fact that each approach implies a

different concept about what the European Union is all about.

The side-payment approach conceptualises the EU as a Union of states, with the

guarantee of the veto, in an intergovernmental set-up, capable to reduce

transaction costs for negotiating agreements via issue linkages that can be

mutually beneficial, creating therefore a positive-sum game for all. According to

Moravcsik “[s]uch theories suggest that the EC is best seen as an international

regime for policy co-ordination, the substantive and institutional development of

which may be explained through the sequential analysis of national preference

formation and intergovernmental strategic interaction” (1993, p.480).

Goal-oriented approaches view the regional policy as a tool to promote

convergence of the poorer regions and member states with the richer ones of the

EU. Furthermore they place regional policy within a certain concept for the EU as

an “index of the political and social cohesion of a new system; large transfers of

funds, as a very tangible expression of solidarity, presuppose the existence of a

developed sense of Gemeinschaft… which is, of course, not a feature of

international organisations" (Tsoukalis, 1997, p.187, italics in original). Goal-

oriented approaches do not of course neglect the bargaining framework within

which EU decisions for large budget packages are taken. However they view these

evolutions within this concept for the European Union, as well as a clear

functional linkage between the topics, such as the single market and the EMU,

which downgrades the bargaining in the European Councils to a ‘goal-oriented

activity’, rather than a ‘game-theory application’.

30

We are not aiming here to provide an overall evaluation of the performance of the

two approaches in the EU record. Our discussion has focused on the regional

policy and we tried to present and discuss the main points of each hypothesis. Our

conclusion is that each approach has certain merits and certain limits in explaining

the regional policy of the EU. The case study of Greece has helped to reveal some

of these and this has been our objective.

V. Concluding remarks

From our analysis we conclude that when it comes to the major decisions for the

adoption of the regional policy and its funding, the intergovernmental approach is

accurate in capturing the bargaining that is taking place. It is not accurate though

to fully explain the historical transformation of redistribution in the EU from an

interstate transfer to a policy in the late ‘80s, as the concept of ‘tactical linkages’

is inadequate. On the other hand the goal-oriented approach may work well to

describe some of the trends that the regional policy has promoted in recent years

on certain member states, such as being a catalyst of institutional change in

Greece. It is though inadequate to provide a thorough explanation of the

circumstances under which the major decisions have been taken concerning the

adoption of this policy. The evolution of the regional policy has been challenging

traditional approaches to the policies and the politics of the European Union,

raising serious questions over their ability to explain, even more to predict the

current developments of the EU.

As far as our original question, about whether the regional policy has been a side-

payment or a goal-oriented activity for the case of Greece we conclude that for the

cases of the decisions taken in Maastricht and Edinburg it has not been a side-

payment. Furthermore, we aimed to show that ‘something’ has happened in the

Greek political arena in recent years in favour of a decentralisation of power from

31

the central administration to the local and regional authorities. This ‘something’

we believe has to do with the European Union in general and the regional policy

in particular and this is what we tried to demonstrate.

The EU today has launched the discussion on the new regulations for the

structural funds and the third round of the Community Support Frameworks that

will run for the years 2000-2006. The Commission has submitted its proposals and

a thorough debate is taking place in the European Parliament. Another tough

intergovernmental debate is expected to take place for the adoption of these new

regulations. Out of this debate we expect both the traditional hypotheses of the

regional policy to claim credit for the outcome, as it has been the case in the past.

The years of 2000-2006 will be the first years of the single currency, as well as the

years of the next enlargement. Until then perhaps new approaches of the politics

and the policies of the EU may be in place that will be better equipped to explain

this institution called the European Union.

32

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Christodoulakis, N. (1994) ‘Greece and European Monetary Union: a challenge or a helping hand’, in Mortensen, J. (ed.) Improving Economic and Social Cohesion in the European Community (London: Macmillan).

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Marks, G. (1993) ‘Structural Policy and Multilevel Governance in the EC’, in Cafruny, A. and Rosenthal, G. (eds) The state of the European Community, Vol.2: The Maastricht Debates and Beyond (Boulder: Lynne Rienner) pp. 391-411.

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Pollack, M.A. (1995) ‘Regional Actors in an Intergovernmental Play: The Making and Implementation of EC Structural Policy’, in C. Rhodes & S. Mazey (eds) The State of the European Union, Vol.3, (London: Longman) pp.361-89.

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34

Appendix A

Trends of the Greek economy

Table 1: Net transfers through the EU budget, 1984-1994 (Receipts minus contributions expressed in ECU m. and as % of national GDP)

1984 1988 1992 1994ECUm % ECUm % ECUm % ECUm %

Greece 1008.2 2.34 1491.6 3.30 3512.9 4.65 3812.6 4.62

Source: Tsoukalis, 1997.

Table 2: Trends in GDP and GDP per head, 1986-1993

Annual growth rate

GR E IRL P EUR4 EUR8 EUR121986 1.6 3.2 -0.4 4.1 2.9 2.9 2.91987 -0.5 5.6 4.5 5.3 4.7 2.6 2.91988 4.4 5.2 4.2 3.9 4.9 3.3 4.31989 3.5 4.7 6.2 5.2 4.7 2.9 3.51990 -1.1 3.6 9.0 4.4 3.4 1.4 3.01991 3.3 2.2 2.6 2.1 2.3 1.0 1.51992 0.9 0.8 4.8 1.1 1.1 -0.5 1.01993 -0.2 -1.0 2.5 -1.2 -0.7 -0.5 -0.5

1986-93 1.5 3.0 4.1 3.1 2.9 2.2 2.3Annual population growth

1986-93 0.6 0.2 0.1 -0.1 0.2 0.5 0.4

GDP per head (PPS)

1986 51 71 63 52 64 109 1001993 49 76 78 60 70 107 100

Key: GR = Greece, E = Spain, IRL = Ireland, P = PortugalSource: Commission, 1994.

Table 3: Index Scores for GDP per head in the Greek Regions in ECU, 1981-91 (EC=100)

Region 1981 1984 1986 1987 1988 1989 1991 Diff. 1991-81East. Macedonia & Thrace 44 52 42 41 42 44 37 -7Central Macedonia 48 49 40 38 39 41 39 -9Western Macedonia 46 43 35 34 35 37 40 -6Thessalia 48 48 39 37 38 41 38 -10Ipeiros 39 39 32 30 31 33 31 -8Ionian Islands 44 46 38 36 37 40 37 -7Western Greece 45 46 38 36 37 39 36 -9

35

Central Greece 65 62 51 49 50 53 50 -15Peloponese 54 52 43 41 42 45 41 -13Attica 52 54 44 42 44 40 46 -6Northern Aegean 35 37 30 29 30 32 30 -5Southern Aegean 47 51 42 40 41 44 41 -6Crete 43 45 37 35 36 38 37 -6

Source: Leonardi, 1993.

Table 4: Index Scores for GDP per head in PPS* in the Greek Regions in ECU (EC/EU=100)

Region 1980 1991 1995 Diff. 1995-1980East. Macedonia & Thrace 41 45 59 +18Central Macedonia 52 47 66 +14Western Macedonia 48 48 60 +12Thessalia 48 45 61 +13Ipeiros 38 38 43 +5Ionian Islands 41 44 61 +20Western Greece 45 43 56 +11Central Greece 72 60 65 -7Peloponese 52 49 57 +5Attica 59 55 74 +15Northern Aegean 42 44 50 +8Southern Aegean 36 36 74 +38Crete 45 49 71 +26

* Purchasing Power StandardsSource: Data for 1980, 1991: Leonardi, (1993); Data for 1995: Eurostat.

36

FOOTNOTES

37

iThe report of newspaper “ELEFTHEROTIPIA”, December 5, 1991, p.7, was titled: “Greek veto in the Maastricht agreements, if Greece is not integrated in the WEE” where statements of the Greek foreign minister on this issue were reported (my translation).

iiGreece is at the moment the member-state that spends by far more per capita money towards national defence. The receipt of national defence on the annual budget is perceived to be oppositely analogous with the process of integration of the European Union.

iiiFrom newspaper “ELEFTHEROTIPIA”, Sunday 13th of December 1992, p.5, my translation.

ivAccording to Leonardi: “[t]he issue of whether the IMPs have in fact helped local economies to adjust their production strategies away from traditional products and toward new economic vistas has never been seriously addressed” (1995, p.7).

vThe IMPs’ innovations both in content and in methodology have been acknowledged as “a major break with previous trends in the Community’s regional policy and the precursor to the formulation of the Community Support Frameworks” (Bianchi, 1993, p.49).

viEspecially after the accession of three additional less wealthy countries in the ‘80s.

viiSuch an approach should probably start by examining the regulations of the IMPs few years back. According to Bianchi: “Regulation 1787/84 outspokenly broke with both traditional Community regional policy and the history of legislative ambiguity and compromise that had long clouded the course of an effective regional policy at the European level” (1993, p.66).

viiiNowadays, at the discussions on the new regulations for the structural funds that will run until 2006 a similar debate takes place. With its original proposals, the Commission attempt to keep the decision making power to set the guidelines for the funds, withdrawing from the power to co-decide with the member states, but returning later to check whether the money have been spent according to these guidelines, with ex post evaluation of the use of the funds. It is further suggesting a 10% of funds to be kept an as ‘efficiency reserve’ to be given in the middle of the term to those member states with the best performance, a proposal that was received with scepticism in the European Parliament. In a way, the Commission is trying to ‘bureau-shape’ its role, by keeping the main decision making to her and delegating the implementation of these decisions exclusively to the member states. The final decisions on this issue will be very interesting for the topic under discussion.