Does it pay to lobby? Examining the link between firm lobbying and firm profitability in the European Union

Adam W. Chalmers (King’s College London) & Francisco Santos Macedo (Independent researcher)

It is no secret that a broad variety of firms divert significant resources into lobbying the European Union’s political institutions. Naturally, scholars have questioned whether or not private companies’ lobbying efforts actually translate into tangible changes in the content of the EU’s legislative output. Their findings suggesting that firms more often than not lose their ‘lobbying battles’ then present a puzzle. Why would firms continue to pour money into lobbying that rarely succeeds? In their article “Does it pay to lobby? Examining the link between firm lobbying and firm profitability in the European Union” published in the Journal of European Public Policy, Adam William Chalmers and Francisco Santos Macedo study the relationship between firms’ lobbying efforts and a success metric arguably closer to their key interests than changing legislative outcomes: profit. Drawing on original data comprising information on the lobbying and financial performance of over 700 firms over four years, Adam and Francisco show that spending more money on lobbying is positively associated with firms’ overall profitability. While private companies’ lobbying may rarely shape EU legislation, evidence suggests “that the institutional structure and lobbying context of the EU, which both requires considerable lobbying expenditures in the form of informational lobbying, and which promotes longer term relationships between lobbyists and public officials, is conducive to seeing financial returns on firms’ lobbying efforts.”

Bounded rationality and the Brexit negotiations: why Britain failed to understand the EU

Filipa Figueira (University College London) & Benjamin Martill (University of Edinburgh)

Ever since the British electorate set the United Kingdom on a path to leave the European Union, negotiations between London and Brussels aimed at ensuring that British interests are protected along the way have been anything but the proverbial ‘walk in the park’. Several observers have pointed out that flawed assumptions held by British negotiators about their European counterparts’ willingness to meet the UK’s demands translated into stuttering talks. In their article “Bounded rationality and the Brexit negotiations: why Britain failed to understand the EU” published in the Journal of European Public Policy, Filipa Figueira and Benjamin Martill explore the sources of these biased assumptions. Drawing on evidence from a series of interviews with officials in London and Brussels conducted between 2017 and 2018, Filipa and Benjamin identify several inhibitors of rational decision-making that shaped the UK’s approach to Brexit negotiations, including a reliance on ill-fitting analogies based on past experiences and the exclusion of key sources of reliable information for decision-makers. Filipa and Benjamin conclude that “evidence from the Brexit case suggests adaptation and learning may be more difficult to achieve even in situations of high policy salience, since assumptions become ‘locked in’ and discrepant evidence cast aside.”

How women in the executive influence government stability

Svenja Krauss (University of Essex) & Corinna Kroeber (University of Greifswald)

Many European democracies are still some way off from achieving equal gender representation at the highest echelons of political power. Nonetheless, over the past decades the number of women holding ministerial portfolios in government cabinets has increased. How does the growing number of women in leadership positions shape the politics of governments? In their article “How women in the executive influence government stability” published in the Journal of European Public Policy, Svenja Krauss and Corinna Kroeber offer evidence indicating that women in positions of power in the executive branch bolster government stability. Drawing on previous research showing that women in leadership positions are more likely to favour compromise and consensual solutions to conflicts than their male colleagues, Svenja and Corinna argue that governments run by female prime ministers and cabinets with a higher share of female members are more likely to avoid early termination due to internal conflicts. Using original data from 27 European countries between 1945 and 2018, Svenja and Corinna show that while there is no discernible effect of female prime ministers on government duration, cabinets with a higher proportion of female members are more resilient and less likely to face early termination than governments dominated by men. These findings suggest that “female ministers are able to introduce different behavioural norms and change the nature of politics towards a more compromise-oriented setting.”

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.”

Caught between 1945 and 1989: collective memory and the rise of illiberal democracy in postcommunist Europe

Peter Verovšek (University of Sheffield)

Thirty years after the revolutions of 1989, a divide between Western and Central Europe remains apparent. In his article “Caught between 1945 and 1989: collective memory and the rise of illiberal democracy in postcommunist Europe” published in the Journal of European Public Policy, Peter Verovšek argues that the commitment to the rule of law and protection of individual rights in West European democracies contrasts with the emphasis on the nation’s popular sovereignty and republican majority will characterising the approach to democracy in much of Central Europe. Peter notes that differences in societies’ collective memory, centred on two different historical ruptures, help explain the diverging conceptions of democracy in Western and Central Europe. While Western Europeans turn to the symbolic date of 1945, representing a repudiation of nationalism and the importance of protecting individual freedoms from the state, collective memory in Central Europe is shaped by the fall of communism in 1989, ending an oppresive political system imposed by an external power. Peter argues that “the differing memory cultures in these two regions help to explain why the West emphasizes the liberal protection of rights by a neutral, internationally embedded state, whereas postcommunist Europe emphasizes majoritarian voting and national sovereignty.”

Destabilization rights and restabilization politics: Policy and political reactions to European Union healthcare services law

Scott Greer (University of Michigan) & Simone Rauscher Singh (University of Michigan)

Developments around EU healthcare services law have been characterized by a puzzling phenomenon. Buzzing political activity in Brussels and member state officials vying to shape EU law in accordance with their respective preferences contrasts with minimal practical changes in national healthcare systems. In their article “Destabilization rights and restabilization politics: Policy and political reactions to European Union healthcare services law” published in the Journal of European Public Policy, Scott Greer and Simone Rauscher Singh explain this disjunction. Drawing on evidence from interviews with German and British public health officials, members of EU institutions and lobbyists, Scott and Simone show that the observed pattern of a broadening political activity at the European level and few actual changes on the ground is a consequence of policy-makers’ strategic choices. Given broad compliance with the patchy legal framework of EU healthcare law is costly for member states, healthcare policy-makers opt for the smallest possible change necessary to comply whenever a national practice is at odds with EU law. Relative to compliance, stepping up their political engagement at the European level to wrest back control over healthcare policy from EU institutions is far less costly for member states. Scott and Simone’s analysis shows that member states’ political engagement in Brussels does not necessarily imply their preference for European policies on healthcare services but “reflects states’ desire to restabilize healthcare law.”

The making of a European healthcare union: a federalist perspective

Hans Vollaard (Utrecht University), Hester van de Bovenkamp (Erasmus University Rotterdam) & Dorte Sindbjerg Martinsen (University of Copenhagen)

Ever since the 1950s, EU member states have sought to protect national competences to organize, finance and provide healthcare from integration at the European level. Despite these efforts, the EU has a become a significant player in public health, regulating key questions on the access to and delivery of healthcare in member states. In their article “The making of a European healthcare union: a federalist perspective” published in the Journal of European Public Policy, Hans Vollaard, Hester van de Bovenkamp and Dorte Sindbjerg Martinsen explain how the EU attained authority in public health against all odds, and offer an outlook on a European healthcare union in the making. Hans, Hester and Dorte show that the free movement of goods, services and workers allowed the European Commission to expand its involvement in healthcare, complemented by the Court of Justice’s favourable interpretations of EU healthcare legislation. Member states’ use of EU fora to pursue voluntary co-operations in the health sector and their willingness to delegate competences to the EU-level in exchange for financial support further facilitated the development of a European healthcare union. However, Hans, Hester and Dorte caution that this union remains fragile. While EU officials see the Europeanization of healthcare as an “instrument to foster a European sense of belonging among the citizens of the EU member states”, evidence that a European healthcare union cultivates citizens’ loyalty toward the EU appears thin at best.

Clientelistic budget cycles: evidence from health policy in the Italian regions

Francesco Stolfi (Macquarie University) & Mark Hallerberg (Hertie School)

When elections are around the corner, incumbent governments face incentives to ramp up their redistributive spending to attract the support of voters, giving rise to so-called political budget cycles (PBCs). In their article “Clientelistic budget cycles: evidence from health policy in the Italian regions” published in the Journal of European Public Policy, Francesco Stolfi and Mark Hallerberg argue that clientelistic fiscal expansions prior to elections are more prevalent in jurisdictions with few employment opportunities offered by the private sector. Clientelistic public expenditures are a particularly promising strategy for incumbents seeking re-election in poorer jurisdictions with a large share of voters relying on jobs in the public sector to support their livelihoods. Francesco and Mark support their claim with original data on income and public health personnel spending in Italy’s 21 regions between 1989 and 2012. Their analysis shows that prior to elections regions with higher per-capita incomes were less likely to see increases in public health personnel spending than poorer regions. Francesco and Mark conclude that “[i]f we take into account the incentives of incumbents and voters in poorer societies, then clientelism becomes a powerful factor explaining differences in the extent of PBCs between countries at different levels of development.”

EU Actors Under Pressure: Politicisation and Depoliticisation as Strategic Responses

Edoardo Bressanelli (Sant’Anna School, Pisa & King’s College London), Christel Koop (King’s College London) & Christine Reh (Hertie School, Berlin)

By Edoardo Bressanelli, Christel Koop & Christine Reh

As the unfolding coronavirus crisis powerfully shows, long gone are the days when EU decisions – including decisions not to act – left Europe’s citizens indifferent, and when the supranational was largely irrelevant for public opinion and electoral politics across the member states. Indeed, the current pandemic is only the last in a string of existential crises that have struck and unsettled the Union over a decade. These crises have politicised Europe, tested the endurance and survival of the supranational system to its core, and put EU-level actors under unprecedented pressure. Our Special Issue “EU Actors Under Pressure: Politicisation and Depoliticisation as Strategic Responses” explores how and why actors respond to the various, sometimes competing, ‘bottom up’ demands.

Our collection challenges the view – captured most prominently by the post-functionalist idea of a “constraining dissensus” – that domestic contestation necessarily limits EU-level room for manoeuvre. Strategic adaptation to the new, politically charged environment, we argue, opens space, too, for ‘enabling dissensus’. Actors may opt for self-restraint, but they may also seek to capitalise on pressures to advance their substantive goals, to expand their competences, and to bolster their long-term survival. As Frank Schimmelfennig argues in his contribution, EU-level actors have agency in response to bottom-up pressures, and they engage in “strategic politicisation management”.

In our introduction, we contend that actors will choose the response most likely to further their shared goal: the survival of the Union and, therefore, the long-term preservation (and, potentially, expansion) of their own powers. Behaviour at the supranational level, we argue, is based on how EU-level actors perceive and process the pressures from domestic politics. If acting ‘politically’ is acceptable for national political elites and the broader public, EU-level actors will attempt to politicise decision-making, behaviour or outcomes at the supranational level; if not, they will pursue depoliticisation strategies.

Depoliticisation strategies aim to ‘reclaim the shadow’ and to make new conflict over integration less visible and polarising. This is the case for the EU’s Court of Justice which, as Blauberger and Martinsen show in their contribution, engages in judicial self-restraint under high levels of contestation. This is also true, partially, for the European Commission, which, assertively, uses its power to withdraw legislation when facing domestic opposition (Reh, Bressanelli and Koop). Moreover, in the process of reforming the EU’s economic governance, Franchino and Mariotto point to a shift towards the more technocratic and implementation-focused supranational level.

By contrast, politicisation strategies are designed to move matters into the heart of politics. Hobolt and Wratil show that the Council of the EU shifts away from its consensual logic when policy issues are salient domestically; Moschella, Pinto and Martocchia Diodati observe that the European Central Bank, under conditions of domestic contestation, moves communication away from an exclusive focus on monetary policy. Bunea demonstrates that the Commission has recently increased openness and consultation beyond established stakeholders in inter-institutional negotiations, whilst Reh, Bressanelli and Koop find that an under-pressure Commission uses decisions not to withdraw legislation to pursue its own ‘responsive’ agenda. Finally, Kelemen explores a paradox of EU politicisation: a leader like Orban benefits from membership in the European People’s Party while consolidating his illiberal regime in Hungary. Growing Euroscepticism and the domestic politicisation of Europe do not necessarily lead to a stand-still. As our Special Issue shows, EU-level actors – facing intense pressure on the system they serve and on their own existence – choose differentiated strategic responses. Some limit and depoliticise EU action; others politicise and, even, empower the supranational level. As yet another crisis hits Europe, we will soon see which (de)politicisation strategies actors like the Commission and the ECB choose to pursue. ‘Business as usual’ would be a very risky and unlikely option indeed.

No match made in heaven: Parliamentary sovereignty, EU over-constitutionalization and Brexit

Susanna K. Schmidt (University of Bremen, photo credit: Lukas Klose)

The British electorate’s choice to leave the EU has been tied to a lack of European identity among the British public, high unemployment rates in some areas of the United Kingdom, as well as voters’ education and income. In her article “No match made in heaven: Parliamentary sovereignty, EU over-constitutionalization and Brexit” published as part of Journal of European Public Policy’s special issue on “The Brexit Policy Fiasco”, Susanne Schmidt argues that existing accounts explaining the Brexit referendum overlooked an important institutional factor. Susanne argues that the EU’s political system, riding on integration through European law interpreted and enforced by the Court of Justice of the European Union (CJEU), has always stood in stark contrast to the United Kingdom’s polity, with strong roots of parliamentary sovereignty and majoritarian decision-making. Focusing on one of the most politicized policy-fields in the context of the Brexit decision, Susanne traces how the CJEU’s case law gradually constitutionalised the EU’s policy-making on intra-EU migration, imposing limits on Member States’ majoritarian decision-making. Ironically, in light of its common-law tradition the United Kingdom’s administration ranked among the most effective compliers with EU law, magnifying the tension between EU law’s constraints on political decision-makers and the United Kingdom’s tradition of parliamentary sovereignty. Susanne’s analysis shows that recognizing the institutional mismatch between the EU’s and British political systems “is necessary to understand why ‘taking back control’ could resonate so easily with British voters.”