Close

Aiding the state: administrative capacity and creative compliance with European state aid rules in new member states

Nicole Lindstrom (University of York)

Following the 2008 financial crisis, administrations in EU member states faced incentives to prop up their domestic industries and shelter national economies from the pressures of transnational markets. These incentives set the stage for tensions with the European Commission, which may allow ‘horizontal’ state investments benefiting overall European competitiveness, but polices ‘vertical’ state aid favouring domestic companies over single market competitors. In her article “Aiding the state: administrative capacity and creative compliance with European state aid rules in new member states” published in the Journal of European Public Policy, Nicole Lindstrom finds that the Hungarian government, usually a vocal proponent of state intervention, reported high proportions of horizontal state aid in the aftermath of the crisis. Nicole contrasts this finding with evidence of higher proportions of post-crisis vertical state aid in Estonia, an otherwise paradigmatic neoliberal state. Drawing on interviews with Hungarian and Estonian state aid officials as well as members of the European Commission to explain this counterintuitive pattern, Nicole offers a novel insight into the role administrative capacity plays in EU member states’ compliance with state aid rules: Skilled civil servants in the Hungarian administration shared the political leadership’s ideological commitment to assist domestic industries and facilitated the appearance of rule-conforming behaviour, while in practice implementing policies that ran counter to the EU’s objectives. Nicole’s findings show that “national administrators are important but hitherto understudied agents in navigating growing tensions between the uniform application of supranational free market rules and increased domestic politicization of the core incentives and obligations underlying the single market project.”