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Coversheet for Thesis in Sussex Research Online A University of Sussex DPhil thesis Available online via Sussex Research Online: http://sro.sussex.ac.uk/ This thesis is protected by copyright which belongs to the author. This thesis cannot be reproduced or quoted extensively from without first obtaining permission in writing from the Author The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the Author When referring to this work, full bibliographic details including the author, title, awarding institution and date of the thesis must be given Please visit Sussex Research Online for more information and further details i 'Punching Above its Weight? A Case Study of Luxembourg's Policy Effectiveness in the European Union' Martine Huberty UNIVERSITY OF SUSSEX Thesis submitted for the degree of Doctor of Philosophy, January 2011 ii I hereby declare that this thesis has not been and will not be, submitted in whole or in part to another University for the award of any other degree. Signature:……………………………………… iii Acknowledgements The Sussex European Institute (SEI) and the Department of Politics and Contemporary European Studies have been an excellent place to conduct this PhD. This research would not have been possible without the professional advice, wisdom, endless patience, generous help and humour from my supervisors: Professors Paul Taggart and Tim Bale. I owe a special thanks to Paul for providing creative inspiration and his knowledge of EU decision-making; and Tim for his methodological expertise and professional support. Furthermore, I would like to thank all those at SEI who helped me in my research including: Paul Webb, Jim Rollo, Lucia Quaglia, Dan Hough, Francis McGowan and Jörg Monar. Discussions with Lucia and Jim were particularly helpful in elucidating some finer details, as well as clarifying the ‗big picture‘- a big thanks to both of them for giving me their time and insights. I am grateful for the financial support, and owe a great deal to the Fonds National de la Recherche (FNR), Luxembourg, who funded not only this research over the past three and a half years, but also gave me the opportunity to present my research at conferences. Without this generous support and the helpful staff who deals with funding at the FNR, my research would have been considerably more difficult, if not impossible to conduct. In addition I am indebted to all of the interviewees who took the time to speak with me. Their contribution, frankness and honesty have been invaluable to this research, and provided very useful insights into the workings of Council meetings and relations between both member states and individuals. I hope to do justice to their trust. I would also like to thank Erik Jones and other discussants at various conferences at which I presented earlier versions of the present research. Their feedback and critical advice have helped me clarify some points in my research. I am also very grateful to my fellow DPhil students whose friendship has made this research so much easier. In particular, I would like to thank Stijn Van Kessel, Ruth Johnson, John Fitzgibbon, Dan Keith and Elefterios Zenerian. I would also like to thank my friends back in Luxembourg and elsewhere for their support, notably Tania Matias and Carole Bentner, who have always been there and hopefully always will be. Finally, I owe the biggest thanks of all to my family: Nelly, Alex, Charly, Cely and Jean-Pierre, thank you for your love. iv UNIVERSITY OF SUSSEX MARTINE HUBERTY THESIS SUBMITTED FOR DEGREE OF DOCTOR OF PHILOSOPHY PUNCHING ABOVE ITS WEIGHT? A CASE STUDY OF LUXEMBOURG’S POLICY EFFECTIVENESS IN THE EUROPEAN UNION Summary This thesis deals with member states' policy effectiveness in the European Union, using Luxembourg's capacity to get what it wanted in three crucial areas as a case study. Policy effectiveness is defined as the successful exercise of a member state's ability to include most of its policy preferences into the final legislation. The factors considered to influence policy effectiveness include the negotiation context, more specifically the decision-making procedure and time pressure. The distribution and intensity of other member states and holding the Presidency are also expected to play a role. Furthermore, individual-level factors such as experience, past relations or belonging to the same political family are rarely systematically included in research, but these are also included. Finally domestic politics, such as the approval procedure and institutional coordination are considered. The decision making process, especially within the Council, is still a black box to most scholars - a challenge which in this research is met by elite interviews with the negotiators involved, by process tracing and by document analysis. I empirically assess three cases where Luxembourg is reputed to have been policy effective: the creation of the Stability and Growth Pact (SGP) in 1996, the reform of the v same in 2005, and the payment of unemployment benefits to frontier workers (EC Regulation 883/2004). In terms of Luxembourg's policy effectiveness, I find the following: 1) that Luxembourg was highly policy effective in the creation of the SGP, due to Jean- Claude Juncker's double hat of Finance Minister and Prime Minister, as well as his expertise and his personal relations with other Heads of State. 2) In the reform of the SGP, that Luxembourg was not policy effective despite holding the Presidency; Juncker was President of the Eurogroup and still had that same double hat. The widely distributed and intense preferences of France and Germany combined to produce an agreement which Luxembourg did not favour, but had nevertheless helped to produce. 3) Finally, that, in Regulation 883/2004, Luxembourg was medium policy effective because of domestic constraints, a low distribution and intensity of preferences of the other member states and because of unanimity. All of my case studies show evidence of two developments in terms of decision-making processes: the shift of decision-making from public to informal arenas, and the involvement of the European Council in areas which are not formally within its competence. Indeed, the compromises found were proposed in the Council of Ministers after several key member states had seen and agreed to them beforehand. Incidentally, the evidence also indicates that the European Parliament did not influence the legislative outcome at all in these cases. These results suggest several practical guidelines for member states. vi Contents Acknowledgements iii Summary iv List of tables xii Abbreviations xiv Chapter One: Introduction 1 1.1 Setting the scene 1 2 The framework of this thesis 3 2.1 Domestic politics 4 2.2 The negotiation context 5 2.3 Distribution and intensity of preferences in the Council 5 2.4 The presidency 5 2.5 Individual-level factors 6 3 Why choose Luxembourg and why these case studies? 7 3.1 Has Luxembourg ever punched above its weight in the EU? 7 3.2 The single case study method 13 3.3 The case studies 15 4 Plan of the thesis 16 Chapter Two: The current political system in Luxembourg 20 1 The political landscape 20 1.1 Population, society and employment 22 1.2 The economy and the budget 25 1.3 Political parties 29 1.4 National elections 32 1.5 Culture of corporatism 34 2 Luxembourg and the European Union 36 vii 2.1 Geopolitics: relations with France, Germany and the Benelux 36 2.1.1 France and Germany 36 2.1.2 The Belgian- Luxembourg Economic Union (UEBL) and Benelux 37 2.2 Past and present: how these relations pan out 39 2.3 The results of the European elections: a country of euro-enthusiasts? 41 2.4 The broad principles and strategies of European policy 42 2.5 Objective: to keep on punching above one‘s weight 46 3 Conclusion 46 Chapter Three: Member state policy effectiveness 49 1 Member state power in the EU: how should it be defined? 49 2 The sources of policy effectiveness 56 2.1 Domestic politics 57 2.2 Voting power 59 2.3 Economic weight 64 2.4 Institutional power 67 2.5 Individual-level factors 69 2.6 Party coalitions and alliances at the European level 71 2.7 The negotiation strategy 73 3 Small states and their policy effectiveness in the EU 75 Chapter Four: The analytical framework 80 1 Policy effectiveness 80 1.1 Assumptions of this framework 80 2 The concept of policy effectiveness 82 2.1 The categorisation of policy effectiveness 88 3 What influences a member state‘s policy effectiveness? 88 3.1. Domestic politics 88 3.1.1 The approval procedure 89 viii 3.1.2 Institutional coordination 92 3.2 The negotiation context 93 3.2.1 The decision-making procedure 94 3.2.2 Time pressure 98 3.3 Distribution and intensity of preferences 101 3.3.1 Number of actors 101 3.3.2 Distribution of preferences 103 3.3.3 Intensity of preferences 104 3.4 The presidency 106 3.4.1 Asymmetrical information 108 3.4.2 Asymmetrical control over the negotiation procedure 109 3.5 Individual level factors 110 3.5.1 Past relations 110 3.5.2 Same political family 111 3.5.3 Expertise and longevity 113 3.5.4 The inclusion in the delegation of negotiations 115 4 Methodology 116 4.1 Interviews 116 4.2 Document analysis 120 5 Contributions to the literature 123 Chapter Five: The Negotiations of the Stability and Growth Pact in 1996, 1997 1 Introduction 126 2 Issue and context 127 2.1 The build- up to the negotiations 127 2.2 Setting the stage for the idea of a Stability Pact: a German idea? 128 3 The Commission proposal 130 4 The timeline of the negotiations 131 5 What is the Stability and Growth Pact?
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