Robert Keohane and Stanley Hoffmann, "European Community Politics & Institutional Change (WPS 25,...

8/4/2019 Robert Keohane and Stanley Hoffmann, "European Community Politics & Institutional Change (WPS 25, 1989) Karl

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European Community Politics and Institutional Changeby Robert O. Keohane and Stanley Hoffmann

Department ofGovernmentHarvard University

Working Paper Series #25

In this essay, two of America's foremost analysts of international relations attempt to characterizethe pattern of decision-making in the European Community and the process that has led to furtherpolitical and economic integration associated with 1992. They argue that the EC is an experiment inpooled sovereignty rather than a traditional effort to transfer sovereignty from states tosupranational institutions. If the expansion of the Conununity ultimately depended on bargains amonggovernments, they argue, some forms of institutional spillover have also cooperated to strengthenCommunity decision-making. Finally, they speculate about the future of the Community in the lightof German unification and changing East-West relations more generally. This is a bold attempt toplace recent developments in the EC within the context of classic theories of international relations.


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EUROPEAN COMMUNITYPOLITICS AND INSTITUTIONAL CHANGE

Robert o. KeohaneStanley Hoffmann

Department of GovernmentHarvard University

November 3, 1989

Revised version of paper prepared for Florence Workshop on theDynamics of European Integration, September 10-12, 1989.

The authors are indebted to victoria Gerus for researchassistance: to James A. Caporaso, Ernst Haas, Peter Hall, AndrewMoravcsik, Calypso Nicolaides, Helen Wallace, and William Wallacefor extensive written comments on an earlier draft of thismanuscript, and to Jeff Frieden and participants in the FlorenceWorkshop and in Harvard Seminar on European Political Institutionsfor suggestions and criticisms.


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2Even a sweeping view of European integration must have a

clear focus; otherwise complexity would simply overwhelmanalysis. Our emphasis throughout this paper will be on thecommunity, rather than on Europe as a whole; and we willspecifically stress the political institutions of the Communityand their evolution.

There is little doubt that, as William Wallace puts it inhis paper, both Europe and the world political economy have beentransformed, economically, socially, and politically, since 1945.The major trends are familiar to us all: trade and finance aremuch more highly internationalized; international regimes formanagement of the world political economy more complex:environmental dangers more severe; Europe less central topolitical and economic decisions, the United states less powerfulin relative terms. The European community has displayed amagnetic attraction for countries on its periphery, leading bothto expansion of the EC itself and the development ofinstitutional ties with EFTA countries and other Western Europeannon-members. Recently, the sharp boundaries between Western andEastern Europe have begun to blur, as the EC's magnetism andGorbachev's Perestroika create major changes in what used to beknown as the "Soviet bloc."

We accept the assumption of this project that the politicsof European integration can only be understood within the contextof these changing economic and social dynamics. The Community ispart of a larger complex of activities, including those, such as


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3Western European Union, which are outside the Communitystructure. A number of contributions to this project describethese activities, as well as the Community's relations with itsneighbors and associated states. Nevertheless, to make ananalytical contribution to such a vast field in the compass of ashort paper, it is necessary to be selective in what one wishes

-to describe, interpret, or attempt to explain. Our focus here ison decision-making and institutional change in the EuropeanCommunity.

We seek in Part I to characterize obse~ved patterns ofdecision-making. The European community, we argue, is anexperiment in pooling sovereignty, not in transferring it fromstates to supranational institutions. Nevertheless, the conceptof "supranationality" that Ernst Haas developed twenty years agoremains relevant, although it has so often been stereotyped,misinterpreted, or ignored. The European Community can best beviewed as a set of complex overlapping networks, in which asupranational style of decision-making, characterized bycompromises upgrading.common interests, can under favorableconditions lead to the pooling of sovereignty.

In Part II we move from statics to dynamics, seeking toprovide some clues to the dramatic and unexpected extension ofCommunity policies and strengthening of Community institutionsthat has occurred in the 1980s. In particular, we explorewhether lIspillover" has taken place as posited by


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4neofunctionalist theory. We contend that the expansion ofCommunity tasks depends ultimately on the bargains between majorgovernments: but that after such a bargain has been made,Community tasks can be further expanded as a result of linkagesamong sectors, as envisaged in the theory. However, such anexpansion is by no means automatic; there are limits onspillover. More unexpectedly, a sort of institutional spilloverhas occurred: enlargement of the Community to twelve members setin motion a process that strength~ned Community decision-makinginstitutions.

Finally, in our conclusion we speculate about the future ofthe Community in the light of changes taking place in worldpolitics, particularly in relations between West and EastGermany, and between Western and Eastern Europe in general. Thecrucial question that we briefly address, but do not pretend toresolve, is that of the degree to which the European communitycan meet the aspirations of the Federal Republic, its strongestmember, while making those aspirations acceptable to itsneighbors, both within the Community and to the east. Europeproved that it could create institutions to promote cooperation,even without a hegemon in its midst: now it must test whetherthis system of cooperation can adapt effectively to rapid changesin world politics, especially within Europe itself.


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I. SUPRANATIONALITY IN THE COMMUNITY

As students of world politics and political economy, we arestruck by the distinctiveness of the Community among contemporaryinternational organizations. Most evident, perhaps, is theCommission, a coherent executive body, comprised of over 10,000professionals, which is able to take initiatives and whosePresident plays a role at summit meetings of heads of governmentof industrialized countries. When Jacques Delors became its headin early 1985, he decided that the best realm for a "relance" ofthe Community would be the internal market, rather than eithermonetary union or diplomacy and defense, areas in which there wasno good prospect of under-state bargains and convergence ofinterests. And when the Council met in Milan in June 1985, itfound on its table the famous White Paper prepared by theCommission about the creation of a single market. It is hard toimagine the European Community without the initiatives undertakenby the Commission.

Another distinction of the European community is its legalstatus: no other international organization enjoys such reliablyeffective supremacy of its law over the laws of membergovernments, with a recognized Court of Justice to adjudicatedisputes. As Dehousse and Weiler argue in their chapter, thecommunity legal process has a dynamic of its own. Despite anumber of cases of nonimplementation of Community law, by the


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6standards of international organizations implementation has beenextraordinary. A recent study concludes that nationaladministrations implement Community law about as effectively asthey apply national law, and in its own analysis of issues ofimplementation, the Commission has concluded that most nationalcourts "are collaborating effectively in the implementation ofCommunity law." (1) Indeed, of the Community institutions it isthe Court that has gone farthest in limiting national autonomy,by asserting the principle of superiority of community law, andthat of the obligation of member states to implement bindingnational acts consistent with Community directives.

In addition to its executive capacity and legal powers, theCommunity has financial resources at its disposal. Furthermore,unlike any other organization in the world political economy, itmakes trade policies for twelve states, constituting the largestmarket in the world. The contrast with the new North AmericanFree Trade Area is instructive: the latter constitutes anagreement between two sovereign countries, with arrangements fordispute-settlement between the united states and Canada butwithout common policy-making institutions with authority tonegotiate on behalf of both countries with the rest of the world.From an institutional standpoint, the transformation of Europeduring the last two or three decades has been dissimilar from thetransformation of institutions elsewhere in the DEeD area.

Boundaries are difficult to draw in a world of complexinterdependence -- since relationships cross boundaries and


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7coalitional patterns vary from issue to issue, it is neverpossible to classify all actors neatly into mutually exclusivecategories. Europe is no exception. But institutionalboundaries are clearer than those of trade or loyalty. Thetwelve EC states make decisions jointly, whereas EFTA members, nomatter how important they are to the European economy (as PerWijkman shows in his contribution), do not participate in thatdecision-making process. As Philippe de Schoutheete hascommented, there is a "Community-centered network" which includes"peripheral influences" and "non-community activities", butEurope has an institutional core, which is the EuropeanCommunity; and the Community clearly has a political system.

The kind of entity that is emerging does not, however, muchresemble the sort of entity that the most enthusiasticfunctionalists and federalists had in mind. For they envisaged atransfer of powers to institutions whose authority would notderive from the governments of the member states, and a transferof political loyalty to the Center. According to the mostoptimistic scenarios, a "United States of Europe" would have comeinto being -- a state, with the key attributes of internal andexternal sovereignty: "supremacy over all other authoritieswithin that territory and population," and "independence ofoutside authorities." (2)

Portrayals of the state are often bedeviled by the image ofa ideal-typical "state" whose authority is unquestioned and whoseinstitutions work smoothly. No such state has ever existed;


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8viewed close-up, all modern states appear riddled withinefficiencies and contradictions. Nevertheless, the Europeancommunity by no means approximates a realistic image of a modernstate, much less an idealized one. If in comparison with theauthority of contemporary international organizations theCommunity looks strong, in comparison with highlyinstitutionalized modern states, it appears quite weak indeed.This weakness is reflected in the fact that individual economicagents do not have direct access to the European Court of Justicefor redress of grievances. But it is also political: asdiscussed elsewhere in this volume and later in this paper, thecommunity depends inordinately on one state -- Germany. TheEuropean Community political system rests on national politicalsystems, especially that of the Federal Republic.

The anomalous situation of the Community -- stronger than amere international organizations, weaker than a state -- is madeevident by looking once again at the problem of compliance withcommunity law. Although by international organizationalstandards compliance has been extraordinary, the Communitysuffers a significant degree of non-compliance. (3) Governmentsmay deliberately fail to comply with Community law, rationalizingtheir noncompliance or blaming their legislatures. (4) Morepervasive is faulty compliance, as a result of a collapse ofenforcement at the bureaucratic or jUdicial levels, or due toenforcement in a manner that distorts or conflicts with Communitynorms (5). While it may be true that the record of enforcement


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9of Community decisions in a given country is not much differentfrom that of the enforcement of national laws and regulations,this is a meager consolation when the record is poor, as it is ina number of countries such as Greece, Italy and Belgium. Asmajority voting becomes prevalent, it can be expected thatnational resistance to majority rule may be reflectedincreasingly in failure to implement unpopular measures. Faultycompliance can generally be corrected through diligent detectivework by the Commission and action, when necessary, by theEuropean Court of Justice; but deliberate noncompliance, howevercamouflaged or rationalized, is more difficult to correct.

Like international regimes, such as the trade regime underthe auspices of the General Agreement on Tariffs and Trade(GATT), the European Community establishes common expectations,provides information, and facilitates arms-lengthintergovernmental negotiations. It is designed to protect itsmembers against the consequences of uncertainty, as the formationof the European Monetary System (EMS) during a period of dollarvolatility and weakness indicates. Yet the flexible and dynamiccommunity is much more centralized and institutionalized than aninternational regime, and receives a much higher level ofcommitment from its members. It has gone well beyond any known"international organization."

The originality of the Community is also evident in foreignaffairs. Traditionally, confederations, federations and unitarystates confer to their central institutions what Locke had called


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10the "federative power" -- the power to act for the state ininternational affairs, or, to use the correct legal term,external sovereignty. This is not the case in the EEC, whosecentral institutions have full jurisdiction over only externaltrade, no more than a power of coordination over the rest offoreign policy, and no power yet over defense. In internationalmeetings other than those of the GATT, the Community is not yet adistinctive actor; at best it is represented along with itsmembers (as at the G7 meetings); usually the member states arethe actors, in world monetary, diplomatic and military affairs.The "principle of subsidiarity" which prescribes that, in thecreation of the single market, the Community take over unly thosefunctions that the states cannot adequately perform, has notreally been applied in foreign affairs and defense, for if it hadbeen, the role of the EEC as an actor would be far more importantthan it is - indeed it would perhaps even be the exclusive actorin matters of security.

Thus, the Community is not a state in the classic sense.What are we to call it?

If any traditional model were to be applied, it would bethat of a confederation rather than a federation, since thecentral institutions are a) largely intergovernmental, b) moreconcerned with establishing a common framework than with networksof detailed regulations, and c) apparently willing to tolerate avast amount of national diversity in standards and practices,through "mutual recognition," to create a kind of free market of


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competing national norms, and to allow for a multiplicity ofexceptions, delays and derogations. Popular loyalty has not beentransferred to the center from the member states. And theintergovernmental bargains that were essential to the developmentof a single market are consistent with the confederal model.

However, confederalism alone fails to capture the complexityof the interest-based bargaining that now prevails in theCommunity, among representatives of interests, between them andcommittees of bureaucrats, and among bureaucracies (with theformation of transnational coalitions of functional bureaucrats).For this process, the most appropriate label, perhapssurprisingly, is Ernst Haas's notion of "supranationality." Theconception of supranationality, rarely referred to in the recentliterature on Europe except with disdain, has suffered grievousmisinterpretation and stereotyping over the years. For Haas,supranationality did not mean that Community institutionsexercise authority over national governments: "General de Gaulleequates supranationality with a federalism which he detests; JeanMonnet identifies it with a federalism of which he is a leadingpartisan. Both gentlemen mistake the essence of the phenomenon."Haas also denied a necessary association between supranationalityand a "Community viewpoint." That is, supranationality is not atthe end of a continuum, whose other end is occupied by strictintergovernmentalism. Instead, supranationality refers to aprocess or style of decision-making, "a cumulative pattern ofaccommodation in which the participants refrain from


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12unconditionally vetoing proposals and instead seek to attainagreement by means of compromises upgrading common interests."(6) Haas saw this process as implying, structurally, "theexistence of governmental authorities closer to the archetype offederation than any past international organization, but not yetidentical with it." (7)

Haas viewed supranationality as a style of politicalbehavior through which political interests would be realized, notas a depoliticized form of technical decision-making. What Haascalled the "three core assumptions" on which theories of regionalintegration were based can be seen more accurately as theinstitutional results of the supranational decision-making style:"1) that a definable institutional pattern must mark the outcomeof the process of integration, 2) that conflicts of interestsinvolving trade-offs between ties with regional partners and tieswith nonmembers should be resolved in favor of regional partners,and 3) that decisions be made on the basis of disjointedincrementalism."(8) Haas emphasized that "learning is based onthe perceptions of self-interest displayed by the actors," andthat lessons will only be generalized "if the actors, on thebasis of their interest-inspired perceptions, desire to adaptintegrative lessons learned in one context to a new situation."(9) And he emphasized connections between politics andeconomics: "The supranational style stresses the indirectpenetration of the political by way of the economic because the'purely' economic decisions always acquire political significance


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13in the minds of the participants. In short, the kind of economicand social questions here dealt with are those at the very coreof the modern welfare state."(10)

As discussed below, the Single European Act reinvigoratedCommunity institutions, particularly by providing for qualifiedmajority voting on issues related to the internal market. It canbe argued that what this accomplishs, in institutional terms, wasthe dramatic revival of a largely supranational decisionmakingstyle that was lost after 1966, frequently lamented in the yearsthereafter, and only partially restored with the reforms afterthe Paris Summit of 1974.(11) Yet this style is supranationalitywithout supranational institutions: the Commission is not asupranational entity in the sense of being an authoritativedecision-maker above the nation-state, nor has loyalty beentransferred from the nation-state to it. "Progressive regionalcentralization of decision making" has taken place. But we donot observe political integration in the more demanding sense ofHaas's formulation in The Uniting of Europe: "The process wherebypolitical actors in several distinct national settings arepersuaded to shift their loyalties, expectations and politicalactivities toward a new center, whose institutions possess ordemand jurisdiction over the pre-existing national states."(12)

The current ascendancy of a qualified supranational style ofdecisionmaking does not assure its continuation: theintergovernmental decisions on which the current situation rests


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14(analyzed in the next section) could collapse, or entropy couldset in as present goals are accomplished without new ones beingagreed upon. Least of all does our use of the language ofsupranationality imply that Europe possesses sovereignty in anysimple unitary way. Quite to the contrary, the EuropeanCommunity is an exercise in the pooling and sharing ofsovereignty.

Unlike international organizations, the European Communityas a whole has gained some share of states' sovereignty: themember states no longer have supremacy over all other authoritieswithin their traditional territory, nor are they independent ofoutside authorities. Its institutions have some of the authoritythat we associate with institutions of sovereign governments:on certain issues individual states can no longer veto proposalsbefore the Council; members of the Commission are independentfigures rather than instructed agents. Especially when it is ledby a statesman with a vision and a method, such as JacquesDelors, the Commission is an indispensable fount of proposals andprodding; under the complex provisions of the Single EuropeanAct, furthermore, its recommendations can only with greatdifficulty be amended by the Council.

Yet national governments continue to play a dominant role inthe decision-making process. As Siedentopf and Ziller point out,"community institutions and national government bodies involveddo not act autonomously, but in cornmon." (13) Policy isfragmented by sector, although within sectors a great deal of


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15informal coordination, among national bureaucrats and interestgroups, takes place. There are innumerable committees ofnational experts and bureaucrats, preparing the Commission'sproposals and the Council's decisions. (14) The Council hasrecently asked one such committee, rather than the Commission, tosupervise the granting of licenses to banks, although at thiswriting the method of supervision is not yet settled and follow-up supervisory arrangements are an open question. The executionof the Council's directives by the Commission is closelysupervised by committees of national bureaucrats, some of whichcan overrule the Commission's moves. The Community has a highlycomplex policy-making process, in which formal and informalinstitutions at different levels in the formal structure, if inthe formal structure at all, are linked by a variety of networks.

The European Community operates neither as a political"market" characterized by arms-length transactions amongindependent entities -- nor as a "hierarchy," in which thedominant mode of regulation is authoritative rule. Rather, theEC exemplifies what sociologists refer to as a "network form oforganization," in which individual units are defined not bythemselves but in relation to other units. (15) Actors in anetwork have -a preference for interaction with one another,rather than with outsiders, in part because intense interactionscreate incentives for self-interested cooperation and for themaintenance of reputations for reliability. Bressand andNicolaides, and Sharp, analyze the rapid growth of intercorporate


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16networks in Europe during the 1980s, especially in high-technology industries such as telecommunications andbiotechnology. In these industries, as well as in the Communityitself, authority remains dispersed but joint benefits can begained by the exchange of reliable information -- which long-termpartners have more incentives than rivals to provide. (16)Wessels shows how the complex system of Committees, workinggroups and expert groups creates networks of European bureaucratsand of national administrators who play a dual role - asrepresentatives of their states and as European agents. Thereare also networks in which bureaucrats and representatives ofprivate interests cooperate in the'preparation of public policyas in the various theories of "neo-corporatism", derived from

the diverse practices of the modern West European states.The notion of a network is more a metaphor than a theory.

It helps to emphasize the horizontal ties that exist amongactors, and the complexity of their relationships, but it doesnot elaborate clear hypotheses about behavior. In 1975 ErnstHaas sought to take related notions a step farther bycharacterizing the European Community as a "semi-lattice" form oforganization, somewhat between a hierarchy and a simple matrix:

"There is a clear center of authority for some activitiesand decisions, but not for all. Lines of authorityduplicate and overlap; tasks are performed in fragments bymany sUbsystems; sometimes authority flows sideways andupwards, at other times the flow is downward."


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17Haas went on to predict that in a semi-lattice form of

organization, actors would first react to increased complexityand interdependence by incremental, piecemeal approaches --seeking to "decompose" issues. In the longer run, he speculated,these actors might realize that they were sacrificing potentialbenefits with such a response, and might devise new policies.(17)

As Haas recognized, the networks of the European Communityneither constitute a hierarchy nor a Gemeinschaft, despite thecommunity rhetoric. with respect to the latter, it is enough torecall the quarrels during the early 1980s over Britain'spayments to the Community budget. Britain argued on the basis ofequity, while its Continental opponents lamented what they saw asreinstitution of the principle of juste retour, characterized byForeign Minister Claude Cheysson of France as "not a communityidea." (18) Reciprocity in Europe is often quite specific --demanding "tit for tat" exchanges of equivalent value. Yet as inthe Community's "North-South bargain,n actors in the EC sometimespractice "diffuse reciprocity," transferring resources to othersin the expectation that doing so will increase the legitimacy ofthe Community and its long-term stability, as well as providingth~ donors with political influence in the interim. (19)

The inappropriateness of statist, strictly inter-governmental or even confederal models of how European politicsoperates stems from the inconsistency of these images with thenetwork metaphor or the semi-lattice model, which serve as thebest approximation to the evolving reality. "Supranationality,"


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18despite the unfortunate connotations of federalism encrusted ontothe term, is compatible with these notions. The Communitypolitical system can best be visualized as a elaborate set ofnetworks, closely linked in some ways, partially decomposed inothers, whose results depend on the political style in ascendanceat the moment. When conditions are propitious and leadershipstrategies appropriate, as they have been since 1985, thepolitical style of supranationality enables connections to bemade among points in the network, and for an expanded conceptionof tasks. When conditions are less benign or strategiesinappropriate, the results are policy stagnation and separationof policy spheres. To explore how benign or malign conditionsdevelop, we now turn to the dynamic side of our analysis. Howshould we understand the institutional changes in the Communitythat have taken place during the last five_years?

II. INSTITUTIONAL CHANGE AND "SPILLOVER" IN THE COMMUNITY

Political scientists interested in theory-development thriveen puzzles -- contradictions between what we should expect basedon conventional theory and what we actually observe. During thepast two decades, such contradictions have appeared between theRealist state-centric view of world politics and the spread oftransnational relations; and between the view that hegemony isessential to cooperation and the reality of extensive cooperationafter the waning of American dominance. (20) Now the sudden and


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19unexpected success, so far, of the Single European Act (SEA)similarly confronts us with a puzzle.

In the years immediately before the signing of the SEA inFebruary 1986, few observers anticipated more than haltingprogress, and many expected stagnation or even decay of Europeanmovement toward regional centralization of decision making. Inhis skeptical analysis of European decision-making during the1970s, published in 1983, Paul Taylor stressed the limits imposedby states on European integration, arguing that "the challengesto sovereignty were successfully resisted and the centralinstitutions failed to obtain the qualities of supranationalism."(21) His academic analysis echoed the cover of the Economist onMarch 20, 1982, showing a tombstone with the words, "EEC bornMarch 25th, 1957, moribund March 25th, 1982, capax imperii nisiimperassett." (It seemed capable of power until it tried towield it.) (22) Even after agreement on the Single EuropeanAct, as Albert Bressand points, out, its significance wasunderestimated both by skeptics and by federalists. MargaretThatcher referred to it as a "modest decision," and AltieroSpinelli predicted that it "will almost certainly have proven itsineffectiveness within two years." (23) The Economist commentedthat "Europe has laboured long to produce a mouse." (24)

The reality since 1985 has of course belied thesepredictions. Most publicized has been the movement towardcompletion of the internal market mandated by the Single EuropeanAct. Of the original 300 directives proposed in the Commission


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20White Paper, 39 per cent had by mid-1989 undergone final adoptionby the Council and five per cent had received some degree ofassent from that body. The new doctrine of mutual recognitionthat each member country must accept products made under eachother's product laws, subject to Europe-wide standards -- hasbeen especially important in facilitating action to removetechnical barriers to free trade: "Half the directives to stopnational product regulations and safety rules blocking the freeflow of goods" had gone through the Council by mid-1989. (25)

The scope of the Single European Act is not exhausted by itsprovisions for completion of the internal market. The Actrepresents a bargain about other issues as well, includinglimited foreign policy cooperation. Decision-making procedureshave also changed dramatically. As Helen Wallace points out inher paper for this conference, the Council has institutedqualified majority voting not only on issues related to theinternal market as mandated by the SEA, but also on issuesrelated to the Common Agricultural Policy and the external tradepolicy of the EC. The scope of the Luxembourg Compromise of1966, an informal agreement which required unanimity on allquestions deemed of "national interest" importance by a member,has been sharply restricted since the signing of the Single Act.Under the Single Act, issues relating to the adoption of measuresrequired for the establishment and functioning of the internalmarket (Article 100 A), as well as certain other issues, are tobe decided by qualified majority voting. In December 1986 the


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council amended its procedures on voting to require the Presidentto call for a vote on such issues, at the request of a member ofthe Councilor the Commission, whenever a majority of the membersof the Council favor a measure. The Commission recently reportedthat "the now fully accepted possibility of adopting a decisionby a qualified majority forces the delegations to displayflexibility throughout the debate, thus making decision-makingeasier." (26)

As surprising as these changes have been to observers ofEurope, continuity as well as discontinuity can be discerned. Inparticular, as Philippe de Schoutheete pointed out in acommentary on our paper distributed at the Florence conference,four major actions were taken during the frustrating years after1973, which have played a major role in the European revival thatwe now observe: the creation of the European Council in 1974, thedecision to have the European Parliament elected directly by thepeople, the establishment of the European Monetary System, andthe enlargement negotiations that added six new members to theoriginal six. Nevertheless, although institutional changesbetween 1974 and 1985 prepared the way for the dramatic events ofthe last five years, there is little doubt that Europeandecision-making has quite suddenly become more decisive,expeditious, and effective.

Since none of us anticipated such a dramatic and coherentrevival of Community policy-making, any attempts to explain itshould be viewed with skepticism. What was unpredicted by


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22analysts working with established theories cannot, in general, beadequately explained, post hoc, through the use of suchtheories. (27) Indeed, perhaps a new theory of joint Europeandecision-making should be invented, discarding loaded terms suchas "supranationality" and "spillover," and drawing instead oncontemporary theories of strategic choice in collectivesituations, or recent attempts to understand institutionalinnovation. (28) Yet without attempting such an ambitious taskhere, it may be useful to recall some of the insights ofneofunctionalist theories of change, ambiguous and insufficientas they may have been. It seems unfortunate to us that many ofthe accounts of European Community politics have discarded oldertheories, such as neofunctionalism, without putting anythingtheoretical in their place: recourse is had to mere descriptionof processes and events. Attempts to avoid theory, however, notonly miss interesting questions but rely implicitly on aframework for analysis that remains unexamined precisely becauseit is implicit.

state Decisions and the World Political EconomyAny attempt to understand the institutional changes of the

single European Act must begin with a recognition thatgovernments took the final crucial steps leading to itsnegotiation and ratification. (29) Franco-German relations,based on a series of mutually beneficial bargains, have alwaysbeen at the core of the politics of the European Community. The


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23revival of a supranational style of decision-making, and thestrengthening of European institutions in the Single Act,resulted most immediately from decisions by governments to press,in their own interests, for a removal of internal economicbarriers and for institutional changes that would permit such apolicy to be carried out.

To say this is not to declare that a state-centricperspective will provide a satisfactory explanation of the SingleEuropean Act, only that such an explanation must b~gin withgovernmental actions, since these actions are what we observeleading directly to the Act. The analyst must eventually gobeyond these interstate bargains to the domestic politicalprocesses of the member states, on the one hand, and to theconstraints of international institutions, on the other. Yetthese interstate bargains remain the necessary conditions forEuropean integration and must be recognized as such.

At the same time, we must recognize that governmentaldecisions were made in the context of a political economy of the1980s that was greatly changed from that of the previous decade.American policy had facilitated European integration in the 1950sand early 1960s, but the economic turbulence of the 1970s hadcreated incentives for competitive extra-European affiliations(especially with oil-producing states). In the 1980s,oligopolistic competition intensified, but for European industry,it appeared increasingly necessary to merge or collaborate toattain sufficient economies of scale, and technological


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capability, to cope with American and Japanese competitors. The"conversion" of the French Government in 1983 and the enthusiasmof Britain for deregulation opened the way for elites from bigbusiness and the commission, concerned about the "waningcompetitiveness" of the EC vis a vis the United states and Japanand the perception that "international business seemed to turnits back on the EC." The "national champion" strategy of the1970s, which had increased the perceived diversity of nationalsituations and competition among European states, was nowperceived as a failure; European firms could only compete on aninternational scale if their home market became united ratherthan fragmented. (30) Thus events in the world political economywere important influences on the governmental decisionsassociated with the Community's revival.

"Spillover" and the Single Act

At the core of the dynamic theory of political integrationdevised by Ernst Haas and the neofunctionalist school was theconception of "spillover." Haas was interested in what he calledthe "expansive logic of sector integration," which followed aninitial bargain, such as that between the French desire for acommon agricultural policy and Germany's search for a commonmarket in industrial goods.


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Spillover for the neofunctionalists was not a manifestationof enthusiasm for the ideology of Europe, but a more prosaicresult of "swapping concessions from a variety of sectors":

Lack of agreement among governments can give rise toincreased delegated powers on the part of these[supranational] institutions. Dissatisfaction with theresults of partial economic steps may lead labor andindustry to demand new central action. Supranationalinstitutions and national groups may create situationswhich can be dealt with only through central action,unless the nations are willing to suffer deprivationsin welfare ....No statesman, even if he deeply dislikesthe process, can permanently isolate his nation from acommitment to unity which is only partiallyimplemented, unless he is willing to pay the price indiminished welfare. (31)Haas was sophisticated about the politics of spillover in

contrast to the distortions of his views common in thecontemporary literature. "The spillover process," as he said,"is far from automatic." It depends on the continued division ofGermany and "the tacit recognition of that status in the minds ofWest German leaders." Furthermore, spillover does not presumecontinued enthusiasm on the part of elites; indeed, itssignificance is most evident in the continuation of regionalintegration even as elan declines. (32)

"Spillover" is an ambiguous phrase. It can be used simplydescriptively, to refer to the enlargement of "an authoritativeand legitimate international task." (33) But its theoreticalinterest derives from a causal conceptualization. Joseph S. Nye,for instance, defines spillover as referring to a situation inwhich "imbalances created by the functional interdependence orinherent linkages of tasks can press political actors to redefine


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26their common tasks." (34) This latter definition can be usedeither to characterize changing incentives facing states, or to amore complex pattern of transnational activity in which nationalactors "appear as differentiated actors, a plurality ofnegotiating units (classes, status groups, subregions,clienteles, bureaucratic agencies, ideological clusters, etc.)."(35)

Whether the changing incentives posited by the causalconception of spillover provided an explanation for taskexpansion was controversial among neofunctionalists. Nye arguedthat "the functional linkage of tasks has been a less powerfulmechanism than was originally believed to be the case," andsought to construct a "revised neofunctionalist process model" inwhich deliberate linkages, actions of external actors, elitesocialization, and other factors played comparable roles. Leon N.Lindberg and Stuart A. Scheingold even sought to refute Haas'sconception that spillover led to the Common Market: "Thesuccessful transformation that gave birth to the Common Marketwas not a result of functional spillover."(36)

The neofunctionalist literature on political integrationtherefore yields three competing hypotheses about task expansionin the Community:

1. Task expansion occurs as a result of the impact of newpolicies on the incentives facing differentiated actors,including multinational enterprises, transnational interest


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27groups, Commission technocrats, and semi-autonomous elementsof national bureaucracies. These actors form coalitions toincrease the extent of community decision-making in newsectors, in order to protect gains from policy integrationin sectors on which agreements have already been reached.

2. Task expansion occurs as a result of the impact ofnew policies on the incentives facing states, whichremain relatively coherent actors with functioninghierarchies of authority, and which continue to makethe crucial policy decisions in the Community.

3. Task expansion occurs as a result ofintergovernmental bargains, which are not generated byprevious decisions to expand community prerogatives ordevise joint policies.

The first of these hypotheses is purely neofunctionalist; thethird is statist; and the second represents a synthesis of thetwo perspectives: states remain the crucial actors but theyrespond to conditions created by their past actions and maytherefore be to some extent prisoners of those actions. Which ofthese hypotheses is best-supported by the evidence of the late1980s will not be clear before much empirical research has beencarried out. Nevertheless, the neofunctionalist hypothesis, andthe state-centered variant of it, should be on the research


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28agenda. As Helen Wallace observes in her paper, the internalmarket program, agreed upon in intergovernmental bargains, "hasprovoked a more thorough coverage of the freedom of movement ofall four factors of production and the reactivation of apreviously stalled debate on a common transport policy. Itcould even be argued that the neo-functionalists' concept of'spillover' is now being vindicated." (37)

Indeed it could be so argued -- although this contention hasnot yet been meaningfully proven, and will surely have to bequalified. In particular, it appears to us that spillover doesnot account adequately for the major decisions, such as those ofthe Milan summit in 1985 and subsequently that led to the SingleAct. If spillover and pressure from the European institutionshad been sufficient to create such a step-level change, it wouldhave occurred much earlier. After all, the members hadrepeatedly committed themselves to full economic union, but ithad been accomplished neither through spillover from the earlierbargains nor through mere pledges. A large part of theexplanation for these major changes must, we think, be foundelsewhere. For these events, an emphasis on intergovernmentalbargains should will probably be more fruitful. It is much moreplausible to conjecture that spillover leads to task-expansion inthe wake of a major intergovernmental bargain, than to hold thatsuch bargains are themselves explained by the changing incentivescoming from past policy change. As we have seen, the 1992program was much more strongly affected by events in the world


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29political economy outside of Europeabout international competitivenessinternal logic of spillover.

Our hypothesis is that successful spillover requires prior

especially by concernthan it was driven by the

programmatic agreement among governments, expressed in anintergovernmental bargain. Such a bargain is clearly importantin accounting for the Single European Act. Without theturnaround of French economic policy in 1983, and the decision bythe British Government to accept treaty amendment in order toinstitutionalize deregulation, no consensus could have beenreached on a program to dismantle barriers within Europe. TheBritish Government was very clear that it was entering into abargain, and not acting on the basis of an ideology of unity orsolidarity with Europe. When Margaret Thatcher was asked in Mayof 1989 why she had agreed to ratify the Single European Act, shereplied simply that "we wished to have many of the directivesunder majority voting because things which we wanted were beingstopped by others using a single vote. For instance, we have notyet got insurance freely in Germany as we wished." (38)

Focusing on an intergovernmental bargain, i.e. ongovernmental decisions, leaves out one actor: the Commission.When Delors became its head in early 1985, he decided that thebest realm for a "relance" of the Community would be the internalmarket, rather than either monetary union or diplomacy anddefense, areas in which there was no good prospect of inter-statebargains and convergence of interests. When the Council met in


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30Milan in June 1985, it found on its table the famous White Paperprepared by the Commission about the creation of a single market.The Milan summit endorsed that program, and also decided on theinstitutional reform that led to the Single Act. still, it canbe argued that Delors did no more than focus the states'attention on the one issue - the single market - that wasacceptable to the three major actors, Britain, West Germany andFrance.

In one sense, attributing major changes to anintergovernmental bargain only begs the question of accountingfor such an agreement. In seeking to answer this question, wecould benefit from recalling some of the neofunctionalistarguments. In particular, we should keep in mind Haas's ownwarning that incrementalist strategies, which are necessary forspillover, depend on shared objectives, based on a commonunderstanding of causality as well as ultimate goals. In the1950s and early 1960s, Europe thrived on what Haas called "apragmatic synthesis of capitalism and socialism in the form ofdemocratic planning." with such shared objectives, tactics andmeans can vary, as interests and alignments change; furthermore,the specific objectives of the participants can be quite diverseas long as, with respect to proposed Europe-wide policies, theyare complementary. Haas explained the ratification of theEuropean Coal and Steel community Treaty in the early 1950s notas the result of idealistic enthusiasm but as "the convergence,not of six separate national interests, but of a sufficiently


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31large number of separate national party positions to push theTreaty over the top ....The very ambiguity of the Treaty, ofcourse, made this pattern of convergence possible. Somethingseemed to be 'in it' for everybody and a large enough body ofotherwise quarreling pOliticians was persuaded to launch thefirst experiment in deliberate integration." (39)

There is much in this description that could be applied tothe Single European Act. Like the Treaty of Rome, itsratification resulted less from a coherent burst of idealism thanfrom a convergence of national interests around a new pattern ofeconomic policy-making: not the Keynesian synthesis of the 1950sand 1960s but the neo-liberal, deregulatory program of the1980s. Reliance on "mutual recognition" rather thanharmonization reflected the decision to focus Communityattention on removal of barriers rather than on means of economicintervention. (40) This particular bargain illustrates thegeneral point that the members of a regional organization mustregard themselves as having a great deal in common,distinguishing themselves from outsiders. It is, as one of uswrote during the earlier debates, "not that the units be in'objectively' similar situations but that there be 'subjective'similarity -- a conviction on the part of the policy-makers thatthe similarity exists." (41) It was only after the shift inFrench economic policy in 1983, and the general turn towardderegulatory preferences, that such sUbjective similarityreappeared in Europe.


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32Yet these underpinnings for the intergovernmental bargain

the Single European Act had little to do with spillover, whichexplains neither mutual recognition nor deregulation. We areleft therefore with the task of trying to explain why theinterests of the major actors became convergent after havingfailed to be "subjectively similar" for so long - despite manyearlier attempts at creating a single market. In the case ofEngland, the decisive factor was external: a change in Britain'srelation to the EEC, whose Council finally made large concessionsto Mrs. Thatcher's demands aimed at reducing Britain's budgetarycontribution. This made it possible for her to move on to thetask she deemed important - deregulation - and to overcome herown objections to the abandonment of the rule of unanimity, sincea qualified majority rule was necessary to the adoption of thesingle market program.

The decisive concession to her had been made possible by achange in French policy. In order to account for the newdefinition of France's interest, we have to examine bothinternational and domestic factors. The fiasco of the Socialistpolicy of 1981-83 did not require a turn to the EEC. ManySocialist leaders and businessmen, as well as the Communists,advocated autarchy and the removal of the franc from the EMS.But such a choice would have a) put Mitterrand at the mercy ofhis Communist allies and of the Left of his party, b) cut Franceoff from West Germany and the U.S., to which Mitterrand, at thattime, wanted France to cling, and c) most probably undercut even


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34states change) or on a transnational one. This core idea of theneofunctionalists is consistent with much of what we know abouthow changes in the international political economy affectincentives for states. It leaves open for investigation,however, the question of how fast and how far spillover from aninitial bargain will extend.

Spillover and Geographical ExpansionAny explanation of the institutional changes in the Single

European Act must take into account the fact that for a decadebefore the mid-1980s the Community was preoccupied by itsexpansion to include twelve governments, rather than the originalsix or the nine of the 1970s. During these years much concernwas expressed about the anticipated negative consequences ofenlargement for decision- making. For the better part of adecade the Commission declared, as in 1978, that "with twelvemembers, the institutions and decision-making procedures will beunder considerable strain and the Community will be exposed topossible stalemate and dilution unless its practical modusoperandi is improved." (43) As William Wallace put the issue in1978:

"The fundamental question is ...can one at the same timeenlarge the Community and strengthen it? M.Calvo-Sotelo insisted that we could and would; manyinterventions in the working Group discussions impliedthat we couldn't and wouldn't. My own conclusion isthat we can -- but that we are unlikely to, unless thecurrent members accept the full responsibilities ofenlargement and act towards each other and towards the


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33farther France's competitiveness. Thus we end with a tentativeconclusion congruent with regime theory: the existence of a"regime" - in this case, the EEC - while it did not provoke thenew definition of British and French interests, affected thesestates' calculations of incentives, and made it possible for themto see a policy of European relance as advantageous. And whilethis relance is not a simple case of spillover, the four majoractions taken during the period 1973-84 (cf. p. 21 above) madesuch a relance more attractive by making it appear more capableof succeeding.

Spillover is an important concept, but it can only beusefully employed within a carefully delimited sphere. Before itis used effectively in research, different meanings of theconcept of spillover will need to be distinguished, as above, andthe conditions under which spillover can be expected to operatemust be kept in mind. (42) The "theory of spillover" hastherefore not been discredited: in the wake of anintergovernmental bargain based on sUbjective similarity and acommon policy orientation, actors can have incentives to promotetask expansion into new sectors in order to protect gains alreadyachieved. But it remains to be seen, from empirical research,how much this theory will explain of the institutional changesnow being observed in the European Community.

Bargains that cover only certain sectors, omitting toprovide for sectors linked to those, can stimulate a spilloverprocess either on an interstate basis (as incentives facing


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35communities in approaching enlargement in a morepositive spirit." (44)

Despite prevailing expectations, enlargement did contribute tostrengthening of Community institutions, not because of idealismor governments' senses of obligations but because governmentssought to use Europe to promote deregulation, and becausedecision-making was becoming virtually impossible under thepractice of unanimity. By the mid-1980s, it appeared even to theBritish Government that it could not attain expected largebenefits from deregulation without some way to ensure that itspartners would open up their markets; and the most credibleguarantee that this would occur was treaty amendment,institutionalizing the deregulatory process and institutingqualified majority rule over it. with twelve members, theunit-veto system of the European Council would, in the absence ofcomplex package deals, lead to stalemate on increasing numbers ofissues. For a major advance in policy integration to take place,with twelve members, these package deals would have had to be socomplex that the costs of negotiating them would have becomeprohibitive.

The contrast with the French position in 1965-66 is quiteinstructive. The Common Agricultural Policy had been agreedupon, as had the customs union. Both could and did continuewithout implementation of the EEC Treaty provisions for qualifiedmajority voting. De Gaulle could therefore block qualifiedmajority voting, as well as increases in the power of the


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36Commission, without jeopardizing France's economic policy goals.Britain, in 1985, could not do this: changes in the votingprocedures, and indeed treaty amendments, were the price to bepaid for the 1992 program to complete the internal market, sinceto achieve this objective, recalcitrant governments had to beoutvoted.

Ultimate British willingness to accept majority votingreflected its acceptance of the argument that enlargement madeeffective use of unanimity impossible. In June, 1985, theMinister of state, Foreign and Commonwealth Office, MalcolmRifkind, declared: "We believe that enlargement of the Communityto 12 will make the existing procedures more unlikely to becapable of reaching early agreement on matters of importance."Similarly, in the French Senate debates on ratification of theSingle Act, the French Minister of Foreign Affairs, Jean-BernardRaimond, stated that "l'Europe des douze ne pouvait etre gereecomme l'etait la Communaute a six et devait adapter sesmecanismes de decison a ce nouvel elargissement." (45)

Part of the story of the Single European Act, therefore, isthat governments decided to strike a bargain on deregulation,which seemed to them to require, were it to be effective, reformof the decision-making system. Indeed, the Single European Actcan even be seen, as Helen Wallace observed at the Florenceconference, as partly a way of completing arrangements for theenlargement of the Community to twelve members. A new form ofspillover, not from one economic sector to another but from one


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37institutional dimension to another, took place. Under conditionsof unanimity decision-making, expansion of the Community led toanticipation of institutional stalemate, and (since the keyactors sought policy changes) created incentives for formalinstitutional change.

Thus in a dialectical manner, the enlargement of the six tothe Twelve, first appearing as an antithesis to effectivedecision-making, became a decisive element in decision-makingreform. Spillover took place, not as a functional expansion oftasks, but rather in the form of the creation, as a result ofenlargement, of incentives for institutional change.

Spillover in contemporary Europe: Insights and LimitsJacques Delors explicitly refers to imbalances, or

spillover, as the most likely motor of further integration. Asin Haas's theory, spillover for Delors (as for Monnet) does nottake place automatically but through pragmatic politicalstrategies. Economic integration and political cooperation aretwo parallel roads that will merge some day. Economicintegration must precede social policy, but will lead to a demandfor such a policy, just as within the realm of economicintegration, deregulation (on which all members agree) mustprecede joint programs and policies, but will create a need forthem:

"History is knocking at the door. Are we going topretend that ~e cannot hear? ..It will not be enough tocreate a large frontier-free market, nor, as implied bythe Single European Act, a vast economic and social


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38area. It is for us, in advance of 1993, to put someflesh on the Community's bones and give it a littlemore soul." (46)How realistic is this expectation? There is little doubt

that the realization of the single market will create demands forfurther measures. The "Delors package" adopted by the Council inFebruary 1988 - an agreement to increase the resources of theCommunity and the funds for the poorer countries - is an exampleof such demands being met. But it is equally important to beaware of the limitations on spillover (one of which is the legalrequirement of unanimity in areas other than the internal market,and even in the tax and social dimensions of the latter).

The current controversy over monetary union provides anexample of both the existence and the limits on spillover incontemporary Europe. The very success of the European MonetarySystem has generated concern in Italy and France that theirmonetary policies are being controlled by the Bundesbank. At thesame time, the agreement to abolish capital controls by July I,1990, has led to fears that the parity grid system of the EMSwill not hold up under the pressure. (47) Thus the logic ofspillover from the internal market suggests to many - although byno means all - informed observers the necessity of monetaryunion, defined as "an area of permanently fixed exchange rates,with no exchange controls or other barriers to the free movementof capital or the circulation of currencies." (48) Perceptionsof functional linkages between the the single market and exchangerate arrangements have led to a process that is both


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39supranational - the report of April 1989 prepared by the Delorscommittee - and intergovernmental - the adoption of its firstphase by the Council in Madrid two months later.

Yet, if the pressures for monetary union reflect a spilloverprocess, we should still take seriously the limitations onfunctionally-driven spillover. Spillover is not automatic. Andnothing in the functional logic of spillover requires a Europeancentral bank. Ultimately, unless there is a radical change ofpolicy in London, its partners will have to choose between acompromise with Britain, which would probably mean no Europeancentral bank, and a break with Britain, creating a system inwhich the Central BanR would be superficially EuropeanizedBundesbank -- a bank independent of governmental direction andprovided with a committee of central bank governors whose rolewould be more consultative than directive. It is far fromcertain that the French and Italians would ultimately prefer thesecond outcome to the first. The German government may alsoprefer the first to a continental EMU in which the de factohegemony of the Bundesbank would be seriously reduced.

On social issues, the same combination of pressure forspillover, and resistance, is evident. The labor unions arepressing for a common "social dimension;" the French governmenthas argued for a common policy of restrictions on foreign (i.e.,American) programs on television, and for a single withholdingtax on income from capital. However, as in the realm of monetaryaffairs, there is more evidence of the "expansive logic of sector


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40integration" than of ready acceptance of new central powers. Thesingle market is proceeding through such principles as "mutualrecognition" and home country control rather than throughharmonization and common rules. Over television, only acompromise around a non-binding directive could be reached. Inthe fields of taxation and social policy, the Commission'sproposals have met such opposition that a relatively loose schemeof regulation -- under which each member will be left free to setits own course within broad limits -- is likely to emerge. Thusthe principles of mutual recognition and subsidiarity may resultin a clever "European" camouflaging of different nationalpractices, and in eliminating the conflict between nationalregulation and Community rules by giving a European label to thEformer. The chief beneficiaries of such a policy would be ownersof mobile factors of production -- capital and highly skilledprofessional people -- and the economies of countries with cheapfixed factors of production (land and cheap unskilled labor inparticular). (49) As long as democratic politics prevailed insuch a Europe at the national level, it would be vulnerable tosocial democratic or populist rebellion.

The strong demand for European political cooperation (EPC)is not created principally by the establishment of the singlemarket. Behind EPC lies the changing position of Western Europein the fading Cold War and the impossibility, in the long-run, ofkeeping negotiations on economic issues, entrusted to Europeaninstitutions, separate from the definition of a common foreign


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policy.41

Increasingly in coming years, international politicswill be played on the chessboard of economic interdependence,where Community authority is predominant: associationagreements, applications for membership, deals with EFTAcountries, bargains in GATT and the OECD, and the like. Butthese issues will be closely linked to traditional diplomaticconcerns, as both relations with Eastern Europe and theoccasional impingement of economic issues on alliance politics(in both the US-European and US-Japanese relationship) makeclear. As economic and diplomatic issues become entangled withone another, a common European identity, and desire for a morecoherent foreign policy, based both on multiple bargains amongmembers and empathy for one another's positions, may emerge. Andin the case of relations with Eastern Europe, a common WesternEuropean policy may well be (as in the monetary realm) a wayfor Bonn to obtain broader legitimacy for its ostpolitik, and forBonn's partners to try to exert some control over it.

Yet for political cooperation as well as monetary and socialpolicies, there are manifest limits on spillover. So far, thereis little evidence of any spillover into defense policy .. Andeven In a period of expanding political cooperation, the commonfunction under the single Act (unlike foreign economic policyunder the Treaty of Rome) leads to pooled powers rather than topower for a central authority distinct from the states.

Thus we must distinguish between the preservation of thecommunity and its further development, both in scope and


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42institutional autonomy. The former appears reasonably secure -not because there is a single purpose, but because the Community,as it has evolved, not only serves the multiple purposes of itsmembers, but can also accommodate changes of purpose and ofpolicies, within certain limits (the EMS is more of a constraintthan almost any other Community policy). Thus, today, it servesthe French strategy of reaching through "Europe" national goalsthat can no longer be achieved at a purely national level, theSpanish strategy of economic modernization and political returnto Europe, the British ideology of deregulation and realizationof economies of scale, the West German desire for a zone ofmonetary stability, a broad market for German goods, and ananchor in the West. The lesson of the 70s is probably vividenough to prevent destruction of the Community even in case of arecession. An economic slump might put a temporary halt to thedismantling of barriers, to the opening of public procurement, tothe tightening of monetary and fiscal cooperation required by theMadrid Council. It might lead members to use the varioussafeguards and provisions for temporary restrictions (art. 36 and100). But - as in the 70s - the Community would survive, notonly because of its capacity to accommodate different views, butbecause of the habits of cooperation created by its many networksof private and public bargaining, which characterize the Europeanmode of governance.

On the other hand, a further development of the Community inwhat might be called, in short, the Delors direction, is more


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problematic.43

It might be stopped not only by a world recession,

but also by a set of domestic backlashes against the economichardships the single market might impose on certain sectors,professions or regions (the high pro-Le Pen vote in Alsace, thevotes for a slate of "hunters and fishermen" in France in theEuropean election in June, the Republican vote in West Germanyare different manifestations of ~ nationalist undercurrent). Ifthe disadvantaged turn to Brussels for relief and find thatBrussels simply doesn't have either the financial means toprovide it or the political clout to force significantredistribution, such revolts may become more serious.

This review of spillover in the contemporary Communitysupports the generalizations offered above. Spillover depends onprior intergovernmental bargains. When those bargains are freshand viable, pressures appear for intensified cooperation insectors where the bargains were made, and for extendedcooperation in related sectors. But these pressures by no meansautomatically lead to common policies, and they certainly do notnecessarily create new centralized institutions. Indeed, for thelatter to happen, a new set of intergovernmental bargainsperhaps generated in part by prior spillover pressures but by nomeans preordained by them must be consummated. until the endof 1992 spillover pressures are likely to be evident in theEuropean Community, as the bargain of the Single European Actworks itself out. What happens afterwards will depend on thevagaries of domestic politics, the continuation of a benign


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44external environment, and the health of the economies of WesternEurope, as well as on the individuals leading Europeangovernments, and the Commission, at that time.

CONCLUSIONSAs we have seen, the community political system can be

viewed as a network. But networks can be curses or blessings.Their proponents regard them as particularly adaptive andwell-suited to coping with changes in complex, information-richenvironments. Critics of networks, by contrast, question whethersuch forms of organization can act decisively at all: ifsovereignty corrupts, loss of sovereignty may corrupt a~solutely!( 50)

To what extent has the sovereignty wrested from individualmember states been acquired by identifiable Communityinstitutions, and to what extent lost in what often appears as avortex of competing forces -- or perhaps even a "black hole" fromwhich coherent sovereign authority can never emerge? Thecommunity has its share both of centrifugal and centripetalforces: the former are not only national but sectoral,characterized by bureaucratic coalitions, poorly coordinated withone another; the latter are centered on the Commission, theCourt, and to some extent the Council of Ministers. From thisperspective, the relative power of Commission and Council may bea less important issue, despite the decades of debate aboutsupranationalism, than their joint ability, along with the Court,


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45to keep the decentralized coalitions of bureaucrats and interestgroups -- Europe's parallel to America's "iron triangles"(bureaucrats, interest groups, and Congressional committees orsubcommittees) -- in line. Indeed, to ask whether sovereigntyis being "transferred" from nation-states to a community may bequite misleading: more relevant may be the question of whetherthe sovereignty being lost by individual states can be focused atall -- or whether Europe will become simply a network without adecisive or accountable center of authority. To the extent thatthe latter development were to take place, problems for Europe'spartners, and for its own ability to conduct internationalrelations, would multiply.

The issue we raise here is often called the democraticdeficit. It has several aspects. The first is that the Court_often behaves, in the word of one commentator, as a "substitutelegislator", which has moved into areas the Council had notreached and gone beyond the Council's intentions in somecases.(51) It is, indeed, the Court that has gone farthest inlimiting national autonomy, not only by asserting the principleof superiority of Community law, but by insisting on the directapplicability of directives, when specified conditions are met.The Court has also ruled consistently in favor of freedom ofmovement within the internal market when that objective hasconflicted with national policies. Ever since John Marshall, theu . s . Supreme Court has often sought to expand national powers atthe expense of the states. But the Supreme Court derives itslegitimacy from the u . s . Constitution - the very foundation of


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46American citizenship. The legitimacy established by the Treatyof Rome is of a flimsier nature. (52)

To be sure, the judges of the Court would argue that theyhave a far better reason to be a "substitute legislator" than theSupreme Court; the Council is a confederal body only, and theParliament has just a limited power of amendment. Here we reachthe second dimension of the democratic deficit. In moderndemocracies, the elected legislature has - usually - the finalsay on bills within its jurisdiction, and the important power ofchecking the activities of the Executive. The EuropeanParliament has neither. Moreover, whereas enforcement is left tothe states, this usually means the states' bureaucracies, not thenational parliaments. One of the most frequent complaintsconcerns their declining role as integration progresses: "theparliament's role is needed when a parliamentary act is requiredas a means of incorporation, but, in many cases, without therebeing any possibility for the parliament to affect the regulativecontent".(53) The supremacy of Community law turns the nationalparliaments into rubber stamps, and the direct applicability ofCommunity regulations, and of some directives, often eliminatesthem altogether. (54) What the Community's political process doesis to dispossess them of their power in a whole series of realms,and to transfer it to the Council above all, and subsidiarily tothe ECJ. Jacques Delors has expressed his fear of a nationalistreaction of these parliaments. (55) Closer cooperation betweenthem and the European one is imperative. (Precisely because


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47enforcement is the states' business, Delors believes that thereenforcement of the national parliaments' role is more importantthan an extension of the European parliament's powers.)otherwise, the Community will be faced with a double"accountability gap". The vast business conglomerates that aredeveloping allover Europe (and whose representatives playa moredirect role in the Community's public policy than they do in theunited States) will be - indeed they are already - too powerfuland too multinational to be accountable to anyone nationalparliament, and the European Parliament has no control over them.The networks of national bureaucrats who are the decision-makersin Brussels also escape surveillance both at home and in the EECcapital.

To be sure, national parliaments have seen their rolediminish in all parliamentary democracies, either because thebills they vote are usually initiated by the cabinet, or because- in countries where the parliamentary majority, and thereforethe cabinet, is a weak coalition - the legislature is lessimportant than the directorates of the parties in power.However, the national parliament remains the foundation of thewhole government's legitimacy, both because it is elected by thepeople and because the executive emanates from it. TheCommunity's Executive most assuredly does not issue from theEuropean Parliament, and its popular election since 1979 has notprovided the Parliament with an authority comparable to that ofnational assemblies, for two reasons: its limited powers, already


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48mentioned, and another fact, which is the final and morefundamental aspect of the democratic deficit. It is linked bothto the scope of the Community - so far, an essentially economicand diplomatic enterprise - and to its institutional set-up. Tosimplify, one might say that it has policies, but politicsremains a national affair. The campaigns for the election of theEuropean Parliament remain separate national campaigns, withdifferent electoral systems; the parties that compete arenational parties, which get together, on the basis of politicalideology, only once the Parliament is elected. Indeed, theelections to the European Parliament are principally referenda onnational politics, which are charcterized by low voter turnoutbecause there is no "European public" or people yet, and becausethe national referenda have no direct effects on policies. Theabsence a genuine European election reflects the limited scope ofthe EC, the limited powers of Parliament, and the absence of avisible, catalytic, powerful supranational Executive (since theCommission has no powers of decision, the intergovernmentalCouncil is both the ultimate legislator and part of theExecutive).

Some jurists have talked about reverse federalism. The mostimportant functions of the Community - defense, diplomacy, money,direct taxation, education, welfare, immigration policy, culture- remain with the nation state, while Brussels issues directivesabout machine-tools, toys and transport. This is something of acaricature, insofar as the integration of national economies into


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49a single market removes several vital sectors from the exclusivejurisdiction of the nation states, and thus creates a far broader

open field for pooled sovereignty than traditional confederationsever had. But the truth behind this caricature points not onlyat the continuing importance of the nation states in thecommunity, it points at the absence in it of the essentialcategory of modern politics - the public, "we the people". It isthe absence of a European people that is likely to inhibit, forinstance, the Court from developing the extensive kind ofjudicial review the u . s . Supreme Court created since Marbury vs.Madison. In Brussels, we find interests, clouds of corporatelobbies buzzing around the decision-makers: the latter, in theirdirectives, tend to "split .. up ... a postulated coherent policyof the EC and the Member States into a variety of sectoralpolicies", with a "shift from political leadership towards therespective bureaucracies". (56) This leads not only to a"fragmentation according to sectors" both in Brussels and in thestates, but to a neglect of the interests of the groups that arenot well represented among the lobbies and consultativecommittees: consumers, workers, regions and cities. (Indeed, onecould argue that the strength of business in the various membercountries, and the weakening of the labor unions through economicadversity, political mistakes and ideological divisions, arefactors without which the Community could not have progressed asmuch as it has since 1984.)


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50The process characterizing the European Community in its

most dynamic periods, the early 1960s and the late 1980s, isprobably the only one that allows for integration despite theopposition of the states to outright transfers of power andloyalty to supranational institutions (remember that the SingleAct was both a relance and a way of sidestepping the Federalistpolitical union treaty advocated by Spinelli with the support ofthe European Parliament). But a heavy price has to be paid forthis: the paradox of integrated economies and separate polities,the paradox of an elaborate process of mUltinational bargainingcoexisting with an obstinately "national" process of politicallife and elections, the paradox of the emergence of a Europeanidentity on the world scene coexisting with continuing nationalloyalties.

This identity remains hindered by the weakness of theCommunity in world affairs. Foreign policy and defense areactivities that often require great domestic sacrifices, if onlyin the form of resources taken away from internal welfare anddevelopment, for such tasks as national defense and aid to othercountries. In democracies, these sacrifices can be obtained byinstitutions that claim popular legitimacy and support. EuropeanCommunity institutions, dominated by bureaucrats and nationalministers, with a Parliament that has very narrow budgetarypowers and a procedure of foreign policy cooperation that isintergovernmental, can draw on no such legitimacy.


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51Can this strange construction, which is entirely sui

generis, persist for a long time? Is it bound either to retreator to move forward, closer to the supranational model? It hasoften been said that these were the only choices, but theexperience of the "dark years" - 1973 to 1984 - and the analysespresented above indicate that stagnation, not retreat, is a moreplausible alternative to progress. Major progress is hostage toa vicious circle. The creation of a genuine European politicall~fe, with common issues, symbols, parties, media, with a commonpublic and a more democratic set-up, requires a drasticinstitutional reform - for which there is very little pressure,since governments resist it and the national political arenasremain distinct. Persistence and moderate progress alongexisting lines will be facilitated if national political liferemains dominated by "supply side" issues - growth and trade asthe keys to employment and competitiveness - and if internationalpolitics is decreasingly dominated by the security dilemma.

Should such conditions prevail, it is possible that - afterMrs. Thatcher - the members of the Community, having completedthe Single Market and having moved closer to monetary union,might be willing to strike a new bargain. This bargain couldentail both institutional reform - so as to deal with the"democratic deficit" by coming closer to the ideal of a system inwhich the Commission would be the Executive, the Council a kindof Senate, and the European Parliament a real legislature - andfunctional expansion into the field of defense, after drastic


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52arms reductions in Europe negotiated by the two rival alliancesystems and a sUbstantial withdrawal of American forces. But arecession could put the "demand side" first, and bring to theforth the claims for redistribution, the clamor of young peopleprovided with mass education without adequate outlets, the criesof chauvinists blaming foreigners for unemployment andinsecurity. And new international tensions (other than theroutine of economic disputes) would revive either the grip of theU.S. over European security matters or the temptation of nationalGrosspolitik which always lurks in the hearts of statesmen. Thedecision-making procedure of the Community is a fair weatherprocess (its "relance" began as the European recovery wasunfolding), and it could be a buffer against the shocks anddisruptions of foul weather. Ultimately, our analysis of thedynamics of the Community and of spillover suggests that despitethe revival of supranationality and the emergence of a Community-wide political system in which state sovereignty is both pooledand shrunk, what matters most are the bargains among the majorplayers. The two indispensable ones remain France and WestGermany, whose alliance continues to provide the political motorof the enterprise. Suspicion of "Europe", even ofsupranationality, has dramatically declined in France, especiallyin the present generation of elites (cf. the evolution of theGaullist party, and also of the Socialists). But some fear thatthe resurgence of the economic and financial power of the FederalRepublic, its new eminence in East-West relations, and the


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53economic and above all national opportunities provided to it bythe decomposition of Communism in Eastern Europe, may make Bonnless committed to the community. By 1992, Bonn could be in asituation comparable to that of de Gaulle in 1965, satisfied witharrangements completed, but unwilling to extend them further.Its government might become less willing to pay large sums to theCAP and to regional funds, its industrialists and bankers lesswilling to cooperate and merge with others, its diplomats lesseager to seek a European legitimation, once the single market - amajor opportunity for the West German economy - is achieved. TheFrench are especially worried about a combination of a drift ofthe Federal Republic to the East and a new West Germannationalism in the West. Should such a policy change occur, thepreference given by Bonn since 1950 to ties with its regionalpartners over ties with outsiders (including East Germans) wouldcease. Will France and the other continental members be willingto pay a price in order to make a further development of theCommunity - in effect, of controls and limits on West Germanautonomy - more attractive to Bonn? What new benefits woul

Robert Keohane and Stanley Hoffmann, "European Community Politics & Institutional Change (WPS 25,...

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