Codebook for the EMU Formation Dataset Interview Summaries

Codebook for the EMU Formation Dataset Interview summaries

Horizon 2020 Project EMU Choices

June 2018

Background information

The EMU Formation data has been collected as part of the Horizon 2020 research project EMU Choices with funding from the Research Executive Agency of the European Commission (Grant # 649532). The data was collected in a joint effort by Stefanie Bailer, Katharina Barsch, Xavier Coller, Robert Csehi, Hanno Degner, Lisa Dellmuth, Clement Fontan, Niamh Hardiman, Shaun Hargreaves Heap, Hussein Kassim, Yiannos Katsourides, Zdenek Kudrna, Simona Kukovic, Thomas Lehner, Dirk Leuffen, Marco Lisi, Josip Lucev, Magnus Lundgren, Leonardo Morlino, Gisella Orsini, Rod- erick Pace, Sonja Puntscher Riekmann, Uwe Pütter,Jakob Redl, Sabine Saurugger, James Scott, Dimitrios Sotiropoulos, Cecilia Emma Sottilotta,Jonas Tallberg, Silvana Tarlea, Noemi Trino, Ana- Sofia Valderas, and Fabio Wasserfallen.

This dataset covers the process of the domestic preference formation through 141 interviews conducted in all 28 EU member states. This documents provides qualitative data gathered through these interviews. Quantitative data in the form of position and inﬂuence scores for up to 23 national and external actors that participated in the formation of positions related to four contested policy issues are reported in a separate document EMU Formation dataset: Aggregated scores.

Citation and further information

For more information on the EMU Formation data, please refer to:

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All data outputs of the EMU Choices project are available at www.EMUchoices.eu/data.

1 1 Introduction

This document provides easy access to qualitative data gathered in 141 interviews conducted in 28 member states by the EMU Choices consortium. The interviews were carried out with 3 to 8 experts in each member state. Interviewees were selected on the basis of their involvement in the national and EU-level decision- making during 2010 to 2015. All interviews are based on standardised questionnaire that combined open questions and structured questions (see attachment). They were conducted on the basis of a detailed procedural manual (see attachment). The individual country reports listed in this document contain summarised transcripts of answers to open, prompted and ranking questions. This document is published as a complement to the full data ﬁle, which is available for download in CSV format: EMUf qualitaitive data.csv. This ﬁle is available at the www.EMUchoices.eu and from www.zenodo.org open archive.

1.1 Structure of the country summaries

Each country summary contains nine sections, starting with the list of interviews and their quality rating.1 The next section provides summary observation on all country interviews by the interviewer. The third section lists open answers for the four contested issues selected as proxies for the fiscal redistribution (GRC and ESM) and fiscal discipline (FCO and SPA) dimensions of the EMU reform debate.2 The aggregated position scores for these four issues are provided in the quantitative part of the EMU Formation dataset. Sections four and five list open answers on the role of governments, national parliaments and political parties in the policy formation process. The sixth section summarises dominant policy ideas on monetary and fiscal policy in each member state. Sections seven and eight contain answers to open and prompted questions on the vision for the EU, while section nine covers government’s negotiation strategy during the euro crisis.

1.2 The list of questions

Each section includes definitions of questions and prompts. The codes used in question titles can be used to call the question from the EMUf qualitaitive data.csv file, where each row is identifiable by a QQQ.ZZZ code. The QQQ is the question code (e.g. GV1) and ZZZ is a numbered indicator (e.g. O01), whereby the letter also indicates a question type: o = open answer; m = prompted answer; a = ranked answer. Available questions are listed below.

GRC: Willingness to support Greece in early 2010

Greece was nearing a sovereign default. As the EU and Eurozone searched for solutions, some member states expressed preparedness to support Greece, while others resisted such proposals. The EuroGroup agreed to on March 15, 2010 to make support available, if requested (Greek authorities made the request on May 2, 2010).

1The interview rating is an indicator of the quality of the interview based on the judgment of the interviewer who conducted all interviews in the given member state. It can be found at the beginning of every country report. The Codes/weights are: 100/100% = all best-rated interviews; 75/75% = excellent interview, 50/50% = average interview; 25/25% = acceptable interview. All unacceptable interviews were excluded. 2See Wasserfallen, F. and Lehner, T. (2017). Mapping Contestation on Economic and Fiscal Integration: Evidence from New Data. EMU Choices Working Paper 2017.

2 Our assumption is that domestic and international actors shape a government’s negotiating position. Which actors - ministries, institutions, parties, or interest groups - were most inﬂuential in shaping the negotiating position of the government, and what positions did they advocate?

Prompt Open answers and structured prompts:

O00 Open answer.

ESM: The size of the European Stability Mechanism

On 29.10.2010, the European Council agreed on the need to set up a permanent (fiscal) crisis mechanism, the ESM, as a cornerstone of the permanent crisis management framework for the Euro area. It was planned to replace the already existing, but temporary European Financial Stability Facility, EFSF. The size of the ESM (its effective lending capacity) was debated with reference to the size of the existing EFSF. Our assumption is that domestic and international actors shape a government’s negotiating position. Which actors - ministries, institutions, parties, or interest groups - were most influential in shaping the negotiating position of the government, and what positions did they advocate?

Prompt Open answers and structured prompts:

O00 Open answer.

FCO: The legal form of the debt break

This was a debate about the legal nature of the commitment to the stability and ﬁscal discipline contained in the Fiscal Compact (TSCG). Some member states rejected the TSCG, while others insisted on the constitutional-type of commitment and yet others were reluctant to accept such a hard provision. The early drafts proposed “national binding provisions of a constitutional or equivalent nature”, whereas the adopted text refers to “provisions of binding force and permanent character, preferably constitutional”. Our assumption is that domestic and international actors shape a government’s negotiating position. Which actors - ministries, institutions, parties, or interest groups - were most inﬂuential in shaping the negotiating position of the government, and what positions did they advocate?

Prompt Open answers and structured prompts:

O00 Open answer.

SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

3 Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV). Our assumption is that domestic and international actors shape a government’s negotiating position. Which actors - ministries, institutions, parties, or interest groups - were most influential in shaping the negotiating position of the government, and what positions did they advocate?

Prompt Open answers and structured prompts:

O00 Open answer.

GV1: The Change of Position and the change of Government

According to your expertise, was there a major change in the position of this country in the reform negotiations on the two-/six-pack/ﬁscal compact and EFSF/ESM, or the banking union? If yes, were these position changes linked to changes of the government?

Prompt Open answers and structured prompts:

O00 Open answer O01 Two-/six-pack/ﬁscal compact position under initial government O02 Two-/six-pack/ﬁscal compact position under later government O03 Banking union position under initial government O04 Banking union position under later government O05 EFSF/ESM position under later government O06 EFSF/ESM position under initial government

GV2: The Impact of the Eurozone non-membership [in scores]

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU?

4 Prompt Open answers and structured prompts:

O00 Open answer M01 The government pushed for reforms within the current Treaties. M02 The government supported mechanisms that ensure participation of Eurozone non- members in the new governance structures. M03 The government pushed for reforms that will not make it more diﬃcult to later adopt the euro. M04 The government pushed for reforms outside of the current Treaties. M05 The government supported mechanisms exclusively designed for member of the Eurozone. M06 The government was not worried about further integration within the Eurozone, as there is little interest in adopting the Euro in the foreseeable future. M07 Other argument.

PL1: The role of the National Parliament [in scores]

Could you tell us whether the national parliament’s (majority party) role in inﬂuencing the national government’s position became stronger, weaker or stayed the same in the EMU reform discussions from 2010 to 2015? Could you explain why?

5 Prompt code Open answers and structured prompts:

O00 Open answer. M00 stronger (1), weaker (-1) or the same (0)? Open Answer. M01 weaker: The parliament lacked new control instruments. M02 weaker: The parliament lacked information on the policy of the government. M03 weaker: The parliament did not have suﬃcient time and resources for discussing the policy of the government. M04 weaker: The parliament got fewer media attention. M05 weaker: Other argument/observation M06 no change: Nothing important in the power relation between the government and parliament changed. M07 no change: The parliament got new control instruments for involvement, but did not use them. M08 no change: Other argument/observation M09 stronger: The parliament acquired new control instruments. M10 stronger: The parliament was better and more swtly informed on the policy of the government than previously. M11 stronger: The parliament had suﬃcient time and resources for discussing the policy of the government. M12 stronger: The parliament got more media attention. M13 stronger: Other argument/observation.

PL2: The role of the governing party [in scores]

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Prompt Open answers and structured prompts:

O00 Open answer. M00 stronger (1), weaker (-1) or the same (0)? Open Answer.

6 PL3: The role of the opposition party [in scores]

Could you tell us whether the role of the MPs of the most important opposition party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015? Could you explain why?

Prompt Open answers and structured prompts:

O00 Open answer. M00 stronger (1), weaker (-1) or the same (0)? Open Answer. M01 weaker: The parliament lacked new control instruments. M02 weaker: The parliament lacked information on the policy of the government. M03 weaker: The parliament did not have suﬃcient time and resources for discussing the policy of the government. M04 weaker: The parliament got fewer media attention. M05 weaker: Other argument/observation M06 no change: Nothing important in the power relation between the government and parliament changed. M07 no change: The parliament got new control instruments for involvement, but did not use them. M08 no change: Other argument/observation M09 stronger: The parliament acquired new control instruments. M10 stronger: The parliament was better and more switly informed on the policy of the government than previously. M11 stronger: The parliament had suﬃcient time and resources for discussing the policy of the government. M12 stronger: The parliament got more media attention. M13 stronger: Other argument/observation.

ID1: Dominant Macroeconomic and ﬁscal policy principles [in scores]

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU

7 member states. Thus, could you please rank the following three macroeconomic and ﬁscal policy principles from most important (1), to in-between (2), and least important (3).

Rank Open answers and ranked prompts:

O00 Open answer. A01 The state should provide signiﬁcant economic governance with state-led industrial policies and the like. A02 Balanced budgets and stable debts are the macroeconomic and ﬁscal priorities. A03 The state should focus on public investments and counter-cyclical demand management.

ID2: Dominant Monetary policy goals [in scores]

Monetary policy decisions are often trade-oﬀs between providing a competitive exchange rate, boosting the economy or prioritizing price stability. Of course, the speciﬁc policy actions again depend on the given economic circumstances. However, could you rank the following three monetary policy goals is from most important (1), to in-between (2), and least important (3)?

Rank Open answers and ranked prompts:

O00 Open answer. A01 A competitive exchange rate (i.e., devalue the currency, if necessary). A02 Growth and low unemployment. A03 Price stability.

ID4: Next Integration Steps [in scores]

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the government for reforming the EU? Multiple options are possible.

8 Prompt Open answers and structured prompts:

O00 Open answer. M01 Relaunch of Treaty change / Constitutional debate. M02 Work within current Treaty provisions. M03 Creation of new institutions for multi-speed Europe. M04 Other (please describe in open answer).

ID5: The Vision of the European Union [in scores]

The positions of member states’ governments in the EMU reform negotiations may be inﬂuenced by the government’s general vision of what the EU should be. How would you describe the relevant government’s preferred vision of the EU? For example, did it favour a development of the EU in the direction of federal union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]

Prompt Open answers and structured prompts:

O00 Open answer. M01 Federal Union. M02 Intergovernmental Institution. M03 Multi-speed Europe with a core and more ﬂexible integration around it. M04 No change (status quo). M05 No preference. M06 Other (please describe in open answer).

ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why?

Prompt Open answers and structured prompts:

O00 Open answer.

9 ST1: Negotiation Strategy during the Euro Crisis [in scores]

Finally, we are interested in the negotiation strategies that national delegation chooses to achieve the goals determined by their governments. Negotiation experts have observed the following three strategies in various international bargaining situations. Can you give us an estimate of how often the delegation from this country uses the following strategies on the scale: Very often (4) - Often (3) - Rarely (2) - Very rarely (1) - Never (0)?

Prompt Open answers and structured prompts:

M01 Hard bargaining: tries to extract concessions from the other side, delays or blocks negotiations for its own benefit. M02 Threatening: uses threats (for example opt-outs or long transitional provisions) to influence other parties positions. M03 Soft bargaining: is prepared to make concessions to opposing states or to propose an exchange of concessions for mutual benefit.

ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the national delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

Prompt Open answers and structured prompts:

O00 Open answer.

10 Contents

1 Introduction 2 1.1 Structure of the country summaries ...... 2 1.2 The list of questions ...... 2

2 Austria 15 2.1 The list of interviews in Austria ...... 15 2.2 The summary observation on country interviews ...... 16 2.3 Open answers to questions on 4 contested issues ...... 16 2.4 The stability of government positions and the role of Eurozone non-membership ...... 20 2.5 The role of parliament: governing and opposition parties ...... 21 2.6 The dominant views of economic policy ...... 24 2.7 ID2: Dominant Monetary policy goals ...... 25 2.8 The future course of EU integration ...... 25 2.9 Negotiation strategy during the Euro crisis ...... 28

3 Belgium 29 3.1 The list of interviews in Belgium ...... 29 3.2 The summary observation on country interviews ...... 30 3.3 Open answers to questions on 4 contested issues ...... 30 3.4 The stability of government positions and the role of Eurozone non-membership ...... 33 3.5 The role of parliament: governing and opposition parties ...... 33 3.6 The dominant views of economic policy ...... 35 3.7 The future course of EU integration ...... 37 3.8 Negotiation strategy during the Euro crisis ...... 38

4 Bulgaria 39 4.1 The list of interviews in Bulgaria ...... 39 4.2 The summary observation on country interviews ...... 41 4.3 Open answers to questions on 4 contested issues ...... 41 4.4 The stability of government positions and the role of Eurozone non-membership ...... 44 4.5 The role of parliament: governing and opposition parties ...... 45 4.6 The dominant views of economic policy ...... 48 4.7 The future course of EU integration ...... 49 4.8 Negotiation strategy during the Euro crisis ...... 51

5 Cyprus 51 5.1 The list of interviews in Cyprus ...... 51 5.2 The summary observation on country interviews ...... 53 5.3 Open answers to questions on 4 contested issues ...... 53 5.4 The stability of government positions and the role of Eurozone non-membership ...... 57 5.5 The role of parliament: governing and opposition parties ...... 58 5.6 The dominant views of economic policy ...... 61 5.7 The future course of EU integration ...... 63 5.8 Negotiation strategy during the Euro crisis ...... 65

6 Czechia 66 6.1 The list of interviews in Czechia ...... 66 6.2 The summary observation on country interviews ...... 67 6.3 Open answers to questions on 4 contested issues ...... 67 6.4 The stability of government positions and the role of Eurozone non-membership ...... 70

11 6.5 The role of parliament: governing and opposition parties ...... 72 6.6 The dominant views of economic policy ...... 74 6.7 The future course of EU integration ...... 75 6.8 Negotiation strategy during the Euro crisis ...... 77

7 Germany 78 7.1 The list of interviews in Germany ...... 78 7.2 The summary observation on country interviews ...... 79 7.3 Open answers to questions on 4 contested issues ...... 79 7.4 The stability of government positions and the role of Eurozone non-membership ...... 82 7.5 The role of parliament: governing and opposition parties ...... 83 7.6 The dominant views of economic policy ...... 85 7.7 The future course of EU integration ...... 87 7.8 Negotiation strategy during the Euro crisis ...... 88

8 Denmark 89 8.1 The list of interviews in Denmark ...... 89 8.2 The summary observation on country interviews ...... 91 8.3 Open answers to questions on 4 contested issues ...... 91 8.4 The stability of government positions and the role of Eurozone non-membership ...... 96 8.5 The role of parliament: governing and opposition parties ...... 99 8.6 The dominant views of economic policy ...... 103 8.7 The future course of EU integration ...... 104 8.8 Negotiation strategy during the Euro crisis ...... 109

9 Spain 110 9.1 The list of interviews in Spain ...... 110 9.2 The summary observation on country interviews ...... 111 9.3 Open answers to questions on 4 contested issues ...... 111 9.4 The stability of government positions and the role of Eurozone non-membership ...... 123 9.5 The role of parliament: governing and opposition parties ...... 124 9.6 The dominant views of economic policy ...... 128 9.7 The future course of EU integration ...... 130 9.8 Negotiation strategy during the Euro crisis ...... 134

10 Estonia 135 10.1 The list of interviews in Estonia ...... 135 10.2 The summary observation on country interviews ...... 136 10.3 Open answers to questions on 4 contested issues ...... 136 10.4 The stability of government positions and the role of Eurozone non-membership ...... 140 10.5 The role of parliament: governing and opposition parties ...... 142 10.6 PL3: The role of the opposition party ...... 145 10.7 The dominant views of economic policy ...... 146 10.8 The future course of EU integration ...... 148 10.9 Negotiation strategy during the Euro crisis ...... 151

11 Finland 152 11.1 The list of interviews in Finland ...... 152 11.2 The summary observation on country interviews ...... 153 11.3 Open answers to questions on 4 contested issues ...... 154 11.4 The stability of government positions and the role of Eurozone non-membership ...... 159 11.5 The role of parliament: governing and opposition parties ...... 160

12 11.6 The dominant views of economic policy ...... 164 11.7 The future course of EU integration ...... 166 11.8 Negotiation strategy during the Euro crisis ...... 171

12 France 172 12.1 The list of interviews in France ...... 172 12.2 The summary observation on country interviews ...... 174 12.3 Open answers to questions on 4 contested issues ...... 174 12.4 The stability of government positions and the role of Eurozone non-membership ...... 177 12.5 The role of parliament: governing and opposition parties ...... 178 12.6 The dominant views of economic policy ...... 180 12.7 The future course of EU integration ...... 181 12.8 Negotiation strategy during the Euro crisis ...... 183

13 Great Britain 184 13.1 The list of interviews in Great Britain ...... 184 13.2 The summary observation on country interviews ...... 185 13.3 Open answers to questions on 4 contested issues ...... 185 13.4 The stability of government positions and the role of Eurozone non-membership ...... 189 13.5 The role of parliament: governing and opposition parties ...... 193 13.6 The dominant views of economic policy ...... 197 13.7 The future course of EU integration ...... 198 13.8 Negotiation strategy during the Euro crisis ...... 200

14 Greece 201 14.1 The list of interviews in Greece ...... 201 14.2 The summary observation on country interviews ...... 202 14.3 Open answers to questions on 4 contested issues ...... 203 14.4 The stability of government positions and the role of Eurozone non-membership ...... 206 14.5 The role of parliament: governing and opposition parties ...... 206 14.6 The dominant views of economic policy ...... 209 14.7 The future course of EU integration ...... 210 14.8 Negotiation strategy during the Euro crisis ...... 212

15 Croatia 213 15.1 The list of interviews in Croatia ...... 213 15.2 The summary observation on country interviews ...... 214 15.3 Open answers to questions on 4 contested issues ...... 214 15.4 The stability of government positions and the role of Eurozone non-membership ...... 218 15.5 The role of parliament: governing and opposition parties ...... 220 15.6 The dominant views of economic policy ...... 222 15.7 The future course of EU integration ...... 224 15.8 Negotiation strategy during the Euro crisis ...... 226

16 Hungary 227 16.1 The list of interviews in Hungary ...... 227 16.2 The summary observation on country interviews ...... 228 16.3 Open answers to questions on 4 contested issues ...... 228 16.4 The stability of government positions and the role of Eurozone non-membership ...... 231 16.5 The role of parliament: governing and opposition parties ...... 233 16.6 The dominant views of economic policy ...... 235 16.7 The future course of EU integration ...... 236

13 16.8 Negotiation strategy during the Euro crisis ...... 238

17 Ireland 239 17.1 The list of interviews in Ireland ...... 239 17.2 The summary observation on country interviews ...... 240 17.3 Open answers to questions on 4 contested issues ...... 240 17.4 The stability of government positions and the role of Eurozone non-membership ...... 246 17.5 The role of parliament: governing and opposition parties ...... 247 17.6 The dominant views of economic policy ...... 251 17.7 The future course of EU integration ...... 253 17.8 Negotiation strategy during the Euro crisis ...... 256

18 Italy 257 18.1 The list of interviews in Italy ...... 257 18.2 The summary observation on country interviews ...... 258 18.3 Open answers to questions on 4 contested issues ...... 258 18.4 The stability of government positions and the role of Eurozone non-membership ...... 261 18.5 The role of parliament: governing and opposition parties ...... 262 18.6 The dominant views of economic policy ...... 264 18.7 The future course of EU integration ...... 266 18.8 Negotiation strategy during the Euro crisis ...... 268

19 Lithuania 269 19.1 The list of interviews in Lithuania ...... 269 19.2 The summary observation on country interviews ...... 271 19.3 Open answers to questions on 4 contested issues ...... 271 19.4 The stability of government positions and the role of Eurozone non-membership ...... 274 19.5 The role of parliament: governing and opposition parties ...... 276 19.6 The dominant views of economic policy ...... 278 19.7 The future course of EU integration ...... 280 19.8 ID4: Next Integration Steps ...... 280 19.9 Negotiation strategy during the Euro crisis ...... 282

20 Luxembourg 283 20.1 The list of interviews in Luxembourg ...... 283 20.2 The summary observation on country interviews ...... 284 20.3 Open answers to questions on 4 contested issues ...... 284 20.4 The stability of government positions and the role of Eurozone non-membership ...... 286 20.5 The role of parliament: governing and opposition parties ...... 287 20.6 The dominant views of economic policy ...... 289 20.7 The future course of EU integration ...... 290 20.8 Negotiation strategy during the Euro crisis ...... 291

21 Latvia 292 21.1 The list of interviews in Latvia ...... 292 21.2 The summary observation on country interviews ...... 293 21.3 Open answers to questions on 4 contested issues ...... 293 21.4 The stability of government positions and the role of Eurozone non-membership ...... 296 21.5 The role of parliament: governing and opposition parties ...... 299 21.6 The dominant views of economic policy ...... 302 21.7 The future course of EU integration ...... 303 21.8 Negotiation strategy during the Euro crisis ...... 307

14 22 Malta 308 22.1 The list of interviews in Malta ...... 308 22.2 The summary observation on country interviews ...... 309 22.3 Open answers to questions on 4 contested issues ...... 309 22.4 The stability of government positions and the role of Eurozone non-membership ...... 315 22.5 The role of parliament: governing and opposition parties ...... 316 22.6 The dominant views of economic policy ...... 320 22.7 The future course of EU integration ...... 321 22.8 Negotiation strategy during the Euro crisis ...... 324

23 Netherlands 325 23.1 The list of interviews in Netherlands ...... 325 23.2 The summary observation on country interviews ...... 326 23.3 Open answers to questions on 4 contested issues ...... 326 23.4 The stability of government positions and the role of Eurozone non-membership ...... 329 23.5 The role of parliament: governing and opposition parties ...... 329 23.6 The dominant views of economic policy ...... 332 23.7 The future course of EU integration ...... 334 23.8 Negotiation strategy during the Euro crisis ...... 335

24 Poland 336 24.1 The list of interviews in Poland ...... 336 24.2 The summary observation on country interviews ...... 337 24.3 Open answers to questions on 4 contested issues ...... 337 24.4 The stability of government positions and the role of Eurozone non-membership ...... 340 24.5 The role of parliament: governing and opposition parties ...... 342 24.6 The dominant views of economic policy ...... 344 24.7 The future course of EU integration ...... 346 24.8 Negotiation strategy during the Euro crisis ...... 348

25 Portugal 349 25.1 The list of interviews in Portugal ...... 349 25.2 The summary observation on country interviews ...... 350 25.3 Open answers to questions on 4 contested issues ...... 351 25.4 The stability of government positions and the role of Eurozone non-membership ...... 355 25.5 The role of parliament: governing and opposition parties ...... 356 25.6 The dominant views of economic policy ...... 359 25.7 The future course of EU integration ...... 361 25.8 Negotiation strategy during the Euro crisis ...... 363

26 Romania 365 26.1 The list of interviews in Romania ...... 365 26.2 The summary observation on country interviews ...... 366 26.3 Open answers to questions on 4 contested issues ...... 366 26.4 The stability of government positions and the role of Eurozone non-membership ...... 369 26.5 The role of parliament: governing and opposition parties ...... 370 26.6 The dominant views of economic policy ...... 372 26.7 The future course of EU integration ...... 374 26.8 Negotiation strategy during the Euro crisis ...... 375

27 Slovakia 376 27.1 The list of interviews in Slovakia ...... 376

15 27.2 The summary observation on country interviews ...... 377 27.3 Open answers to questions on 4 contested issues ...... 377 27.4 The stability of government positions and the role of Eurozone non-membership ...... 380 27.5 The role of parliament: governing and opposition parties ...... 381 27.6 The dominant views of economic policy ...... 383 27.7 The future course of EU integration ...... 385 27.8 Negotiation strategy during the Euro crisis ...... 387

28 Slovenia 388 28.1 The list of interviews in Slovenia ...... 388 28.2 The summary observation on country interviews ...... 389 28.3 Open answers to questions on 4 contested issues ...... 389 28.4 The stability of government positions and the role of Eurozone non-membership ...... 393 28.5 The role of parliament: governing and opposition parties ...... 394 28.6 The dominant views of economic policy ...... 398 28.7 The future course of EU integration ...... 399 28.8 Negotiation strategy during the Euro crisis ...... 402

29 Sweden 403 29.1 The list of interviews in Sweden ...... 403 29.2 The summary observation on country interviews ...... 404 29.3 Open answers to questions on 4 contested issues ...... 404 29.4 ESM: The size of the European Stability Mechanism ...... 405 29.5 The stability of government positions and the role of Eurozone non-membership ...... 407 29.6 The role of parliament: governing and opposition parties ...... 408 29.7 The dominant views of economic policy ...... 410 29.8 The future course of EU integration ...... 412 29.9 Negotiation strategy during the Euro crisis ...... 413

16 2 Austria

2.1 The list of interviews in Austria

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer Aut02 50 Sal01 75 Sal03 75 Sal04 50 Sal05 75 Sal06 75 Sal07 100 Sal08 25

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

17 2.2 The summary observation on country interviews

Austria took a pragmatic stance throughout the Eurozone crisis. On the one hand, Austria followed like- minded ’Northern’ Euro area members, especially Germany, Finland and the Netherlands. The government expressed skepticism towards the introduction of any redistribution mechanism and demanded strict conditionality, if financial assistance was to be granted to Euro area members. On the other hand, the Grand Coalition of social democrats (SPO) and christian democrats (OVP) showed some understanding for the ’Southerners’ (e.g. Chancellor Faymann tried to mediate between Tsipras and Germany in 2015). As the coalition was led by the Social Democrats, one would have expected stronger ideological stance towards austerity measures in the economic adjustment programs. Yet, both the OVP-led finance ministry and the government as a whole tried to sell the EU crisis response as a technical reform negotiated by experts (financial ministries), rather than a political project that is shaping the future of the EMU. In this context, the Austrian government lacked any vision of the EU’s future and preferred working with the current treaties (rather than advocating treaty change). The Euro crisis helped to increase the political clout of the right-wing populist party FPO, which clearly positioned itself as both anti-EU and anti-Euro. FPO used the crisis to strengthen its voter base with nationalistic slogans like ’our money for our people’, which attracted much media coverage, especially by tabloid newspapers, which forced coalition parties to shift towards a less pro-European position. The opposition parties (FPO and Greens) used the ratification of the treaty change on ESM (Art. 136 / 3 TFEU) to secure new information and participation rights in ESM-related decisions in the Nationalrat (lower chamber). Eight interviews were conducted to collect data on the domestic politics of EMU reforms in Austria. Intervie- wees included Members of Parliament, government officials, representatives of interest groups and journalists.

2.3 Open answers to questions on 4 contested issues

2.3.1 GRC: Willingness to support Greece in early 2010

Aut02: Although Austria and Austrian banks were less exposed to Greece then their German or French counterparts, there was a concern about financial stability in the euro zone. It made the government open to the idea of providing some support to Greece. Moreover, Austria tends to side with other richer northern countries of the EU on such fiscal matters. Sal01: Coalition government; socialdemocrats were more willing to help than the conservatives; Faymann pushing for help also because to prevent a spread to Italy; Sal03: Most influential were the European and foreign actors (Commission, US government, leading European Economies, ECB); Austria only played a subordinate role and there was no other position to make at that time; there was also no awareness and therefore no long debate in Austria; Sal04:

18 The key actors were the heads of the government. Faymann and Prull. Furthermore the president of the ”Nationalbank” also played an important role. The influence of the European actors was very limited. The position of Austria was positive. Much more positive than later on. Sal05: Chancellor, Finance Minister, the National Central Bank but also private banks were important for the preference formation process. Sal06: ”This is very easy to answer. This was all done by the ministry of finance. This is our core competence”. Josef Prull (finance minister and Vice Chancellor) sometimes spoke on the phone to the Chancellor, just to inform him. One could say the parliament had taken the position as they are the sovereign, but that did it only when it was already decided by the ECOFIN. Interviewee can’t remember that Germany was against. Sal07: At the beginning of this crisis the executive actors (government) were ready to ”help” or assist, however the interviewee had the impression that the government (Faymann, Prull) didn’t develop its own position but tried to follow the majority. In general it was clear in the Austrian debate that something had to be done.

2.3.2 ESM: The size of the European Stability Mechanism

Aut02: Same as GRC. The only difference is that public was more mobilized through media, although not radical- ized, because the domestic austerity had relatively mild impact. The influence of international actors on domestic debate stems from their capacity to provide numbers and forecast the extent of necessary financing to achieve fiscal sustainability and conditionality for ESM programs. Sal01: The role of the chancellor got more important. Also the Greens played a more important role as the pre- condition for the introduction of the ESM was the ratification of the TFEU Art. 136.3 which needed a 2/3 majority in the Austrian Parliament. The coalition needed the votes of the Green Group in order to achieve this qualified majority. The interviewee also referred to the fact that ESM and the fiscal compact were linked and that the left was in favour of the ESM and the conservative in favour of the fiscal compact. This was some kind of a deal. Sal03: In that case there was the governor of the Austrian Central bank who played a key role (maybe not so much influence, but he tried to convey the debate). Also the national media had more influence. In general this was a question decided by the finance ministry and the Austrian national bank. The Austrian Parliament only started to play a role after everything was taken care of. Sal04: Regarding this question the influence of the finance minister was stronger because all the details about the ESM were negotiated between the finance ministers. Media started to play a ever more important role. Sal05: Finance ministry was much more important concerning this technical question. European actors didn’t play

19 an important role. Sal06: Can’t remember a real debate about the size of the ESM. Concerning the discussion on the fire power of the ESM, as there was the discussion on a ”banking licence” for the ESM, this wasn’t real, this was just a phantom. Sal07: The financial ministry had the lead in that question, but the FPO and the tabloid newspapers gained more and more influence. At the beginning of the discussions Faymann was indifferent and went then with the majority. This was also caused by an enhanced German influence on the Austrian preference formation process. Sal08: NA

2.3.3 FCO: The legal form of the debt brake

Aut02: The Austrian approach to the transposition and implementation of the fiscal compact is modeled on the German one. The debate was more on economic than legal strength of the debt brake rule. Automatic reliance on statistics for policymaking would prevent countercyclical policy, hence the support for the structural deficit criteria. Although it is more difficult to calculate and forecast, there was no better measure available. The debate about the compact was taking place under the pressure of the financial markets that needed a clear signal for stabilization. Sal01: For Austria the FC was not important at all; tough negotiations on the debt brake; conservatives wanted to establish very strict rules; the social democrats accepted the debt brake but didn’t want to have too strict rules and left wing organizations like the Arbeiterkammer rejected the idea all the way. At the end it was somehow similar to the German model. However Austria didn’t expect itself to be targeted by the rules of the Fiscal Compact. It was ”for the others”. As indicated before: ESM and fiscal compact were linked. Sal03: parties in general and as a result the parliament had an enormous influence; special and influential role of opposition parties; the issue itself came from the European or international level (Commission, German Government, etc.). The ministries were more or less absent. Interest groups tried to influence. The low influence of the European actors also comes from the non existing communication activities. Sal04: Strong influence of the German government. The position of Austria changed over time: First they were very much in favour and then its support diminished. The opposition was heavily against the whole pact and the media was also split. Concerning the quality newspapers this meant that Die Presse was in favour whereas Der Standard was more on the opposite side. Sal05:

20 The finance ministry and the national central bank (ONB) had a big influence on the debate. The ONB argued that one has to accept the fiscal compact in exchange to Germany agreeing to the ESM and other anti-crisis-measures. The chancellor acted pragmatically and supported a compromise position between the conservatives and the critical social democrats. Sal06: The Finance Ministry was clearly in favour, but the social democrats were against, as were the Lan- deshauptleute (the governors of the Bundeslander) Sal07: The OVP was very much in favour of a strict and enforceable debt break rule, but the SPO wasn’t and so the compromise was far away from what the OVP wanted initially. There were big discussions within the SPO to completely reject the Fiscal Compact as the FPO and Greens did. Especially the NO of the Greens had an influence on the critical (mostly left wing) SPO MPs. The FPO on the other hand had more influence on the OVP, whose members somehow stopped to express pro-European ideas like a new Convention to reform the treaties. Thus Greens and FPO. Sal08: NA

2.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

Aut02: The issue was too technical to be discussed broadly. Sal01: The interviewee couldn’t really remember the discussions on that issue. Sal03: OVP and economic chamber, pre position was clearly 100 but the closer the decision comes, the weaker the Austrian position gets, because different interests get in. The interviewee can’t remember anymore who really was against it. Sal04: Strong influence of the finance minister and of the German government. Sal05: Discussions on this topic were much less intense. Austria didn’t perceive to become a victim of this regime so there was no broad or intensive debate. As almost every actor was in favour it’s difficult to measure the influence. Sal06: This decision was only taken by finance ministry. There was no reason for the chancellor to step into that discussion. It doesn’t have an effect on the chancellory and also the media would only hold the finance ministry responsible. Sal07: The OVP was clearly in favour although not all ministers were as convinced as the finance minister (Maria Fekter) who was heavily influenced by the experiences and discussions at the ECOFIN meetings. The chan-

21 cellor and his party (SPO) took a pragmatic stance, but didn’t object RQMV. The opposition was against the stronger role of the Commission. In general there wasn’t much of a debate and even in the parliament this issue seemed to be too complicated for intensive discussions. The same is true for the media. Sal08: NA

2.4 The stability of government positions and the role of Eurozone non-membership

2.4.1 GV1: The Change of Position and the change of Government

Aut02: There was no change of governments’ positions, although all actors became more critical of austerity as they observed its effects across the EU [although both government accepted that there was hardly any scope for Keynesian policies]. there was also reform fatigue and disappointment that new reforms are introduced before the previous ones could be evaluated properly. Sal01: No dramatic change; however nobody wanted any any of that (EFSF, ESM, etc.), so there was a pragmatic change to accept the new crisis imposed instruments, but at the same time more solidarity also means more say in other affairs (stricter rules). Sal03: before the crisis (Gusenbauer, Molterer) there was a clear pro-position; first Faymann years: business as usual; OVP was originally very pro European under Prull and Spindelegger, but since then especially under the influence of the Chambor of labor and trade unions together with the media the atmosphere gets very critical sometimes almost populistic and it’s difficult for the government to be in favour of any European proposal; there is no issue where Austria hasn’t changed its initial position, weakened it or even skipped it. Austria has ruined its reputation in Brussels as a reliable partner for finding an alliance. 2010 and 2011 was ok and then it really went down. Example would be Greece: the position changed almost monthly; positions change faster than the season; Sal04: Eurobonds were a big topic for a short period and the SPO was in favour for some time, but later on the topic as well as the support of the SPO for topic vanished. Sal05: The support for the institutions like ESM/EFSF has increased, because the importance was seen only some years after they were founded. However this in more caused by experience than by changes on governments. Concerning the policies vis-a- vis the crising countries (Memoranda of understanding) it was the other way around - support decreased. Sal06: no changes in the Austrian position whatsoever. Sal07: As Austria basically always affiliated itself to the mainstream there were no big preference changes identifiable. Very pragmatic approach. The interviewee confirms that the civil servants have a very high expertise in all these fields but couldn’t tell the same about the knowledge of the politicians. However the rhetoric approach and so the wording have clearly changed over time. Especially the OVP when Maria Fekter was finance minister. The same is true for the media discourse, in particular in the tabloid newspapers which became more and more critical. Banking Union: There really was a change concerning the Austrian position.

22 However it was not based on any government changes, but on the mere consequences of the crisis on the European level. Sal08: NA

2.5 The role of parliament: governing and opposition parties

2.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview Aut02 Sal01 Sal03 Sal04 Sal05 Sal06 Sal07 Sal08 P.. The inﬂuence of the majority party in the parliament - + + + 0 0 0 -

P.. The parliament acquired new control instruments. Stronger P.. The parliament was better and more swiftly informed on the policy of the government than previously. Stronger P.. The parliament had suﬃcient time and resources for discussing the policy of the government. Stronger P.. The parliament got more media attention. Stronger P.. Other described in PRL1.2.O0. Stronger P.. The parliament lacked new control instruments. Weaker P.. The parliament lacked information on the policy of the government. Weaker P.. The parliament did not have suﬃcient time and resources for discussing the policy of the government. Weaker P.. The parliament got fewer media attention. Weaker P.. Other described in PRL1.2.O0. Weaker P.. Nothing important in the power relation between the government and parliament changed. No change P.. The parliament got new control instruments for involvement, but did not use them. No change P.. Other described in PRL1.2.O0. No change

Aut02: The parliament was ill-informed on some reforms due to the time pressure in the speed of their introduction. The quick decision-making on the EU level did not allow for proper domestic negotiations. Sal01: public debate got broader and more serious - the EU was no longer far away; Sal03: The parliament got stronger because the government got weaker (due to the lost elections). And the opposition parties use this fact very effectively. At least they are in the news. There is almost like a competition. Sal04: Parliaments fight for more influence and power in EU affairs. But this started already before the outbreak of the crisis, but became stronger up until now (see also CETA, TTIP). Also in light of the shifting of more and more competences to the European Parliament, the national parliaments try build a counter force. However this is not only true for the crisis, but the crisis was a window of opportunity. Sal05: NA Sal06: legally the parliament became more powerful, but not de facto. They (members of parliament) don’t use their powers. The finance ministry sends many reports to the parliaments, but it seems as if the MPs don’t read them. Because all parliamentarians are only interested to find little pieces of information that they can sell to the media.The powers are useless. They don’t to be hold responsible.

23 Sal07: The parliament had a very important role concerning the public discourse of the whole euro zone crisis. As a consequence of the discussions within the parliament the members of government had to present and promote their positions on a lot of different issues. Due to the necessity of a 2/3 majority concerning the ratification of article 136 3 TFEU the Greens as an opposition party were able to negotiate far reaching information rights and rights of participation in all ESM matters (the role model was the German Bundestag). This lead to much more discussion on EU issues (in public but also in the quality newspapers) and is clearly a strengthening of the role of the parliament. However if one tries to identify the parliament’s capacity to effectively influence the government’s position, it gets more difficult as the coalition always backs the government. Sal08: If the government wishes the parliament delivers. Competences were transferred to the European level.

2.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview Aut02 Sal01 Sal03 Sal04 Sal05 Sal06 Sal07 Sal08 P.. Governing party inﬂuence 0 + - + 0 0 0 -

Aut02: NA Sal01: The new control instruments strengthen the whole parliament. Sal03: Because the two governing parties lost the last elections 2013. Sal04: NA Sal05: NA Sal06: NA Sal07: Concerning the governing parties or parliamentary groups nothing important has changed as the new control rights haven’t been used be governing coalition. The MPs just defended what the government proposed. Sal08: NA

2.5.3 PL3: The role of the opposition party

24 Figure 3: Change in the opposition party inﬂuence

Interview Aut02 Sal01 Sal03 Sal04 Sal05 Sal06 Sal07 Sal08 P.. Opposition party inﬂuence + + + + + 0 + 0

P.. The opposition acquired new control instruments. Stronger P.. The opposition was better and more swiftly informed on the policy of the government than previously. Stronger P.. The opposition had suﬃcient time and resources for discussing the policy of the government. Stronger P.. The opposition raised public awareness of the issue with voters and the media. Stronger P.. Other described in PRL3.2.O0. Stronger P.. The opposition lacked new control instruments. Weaker P.. The opposition lacked information on the policy of the government. Weaker P.. The opposition did not have suﬃcient time and resources for discussing the policy of the government. Weaker P.. The opposition did not manage to raise public awareness of the issue with voters and the media. Weaker P.. Other described in PRL3.2.O0. Weaker P.. Nothing important in the power relation between the opposition and the government changed. No change P.. The opposition got new control instruments for involvement, but did not use them. No change P.. Other described in PRL3.2.O0. No change

Aut02: Since the ESM treaty required constitutional majority in the parliament, the Green party used the coalition’s request for support as of leverage to improve information exchange and parliamentary oversight in ESM and related matters. Sal01: The opposition parties got more and quicker information; however it depends on the respective party and its experts what they can do with this information. Sal03: They (the opposition parties altogether) use their new rights and their stronger role due to the weaker government to get more media attention and to criticise the government. Sal04: FPO got stronger throughout the crisis. Parties like the FPO take an advantage out of every crisis as they can the most opposite position and have no risk, because they also have no responsibility. The Greens had in one particular case very much influence, because the ratification of Art. 136.3 required a 2/3 majority which the governing majority didn’t possess. So the Greens could successfully push for more control and information rights for the parliament. Sal05: NA Sal06: The opposition has the problem that they are not perceived to be active unless they blackmail somebody. The government accepted that the Greens linked their yes to the ESM with the government’s willingness to try to establish the Financial Transaction Tax. If the government had not have accepted this link it would have been interesting to see how the Greens would have reacted to the international pressure. Sal07: Throughout the crisis the FPO became more and more powerful in influencing the government’s positions. Especially if their rejections of financial assistance packages or other European proposals were also critized by the tabloid newspapers, the government got under pressure. The new control rights and the increase of parliamentary debates were used to raise more public awareness. Also the other major opposition party ”Die Grunen” were strengthened. In particular their decisive role for the ratification of the new Art. 136 3 TFEU gave them a negotiation power that led to extensive control instruments, but they were also able to push the government into the direction of Financial Transaction Tax. Sal08: The interviewee distinguishes between the role of an MP within the parliament (committees, plenary sessions etc.) and his or her role in general in the public. Whereas the interviewee doesn’t see that the MPs role in the parliament got stronger, he/she nevertheless identifies a strengthened position in the public sphere (in particular in the media)

25 2.6 The dominant views of economic policy

2.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview Short Name Aut02 Sal01 Sal03 Sal04 Sal05 Sal06 Sal07 Sal08 Low debt/deﬁcit 1 1 1 2 2 3 2 Public investment 1 2 2 1 3 1 1 State guidance 3 3 3 1 2 3

Aut02: NA Sal01: NA Sal03: The basic macroeconomic idea or the way Austria would describe itself is as a social market economy; but since the crisis we have a more crisis oriented policy on the basis of either no model or the model of ”let us distribute as much as possible to the most important groups of voters, so that the larger parties can stay in power as long as possible. This is not sustainable. If it was anti cyclical we would have to invest in investment policy and not in consumption. Sal04: big influence of Germany Sal05: Keynsian poinID4t is ranked first although there is no keynsian fiscal policy and the rules based fiscal policy is dominating. However in comparison to the other EU member states it’s still the closest. Sal06: In Austria the dominant thinking of the Conservatives and of the Social Democrats is that the state should pay for everything (the welfare state but also giving financial support to the enterprises). Sal07: NA Sal08: NA

26 2.7 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview Short Name Aut02 Sal01 Sal03 Sal04 Sal05 Sal06 Sal07 Sal08 1 Devaluation 3 3 3 3 3 2 Monetary activism 2 2 2 2 2 3 Price stability 1 1 1 1 1 1 1

Aut02: The current ECB policies are accepted in no particularly criticized. However, there is a broader debate about potential consequences of heterodox monetary policies. Sal01: The interviewee indicates that it’s difficult to say for ”Austria” as there are different groups. Economic Minister: in favour of competitive exchange rates Finance Minister and the National Bank: in favour to prioritize price stability ”The Rest”: in favour of boosting the economy with activist monetary policy. Sal03: Government has a very little role in that. ECB is important and also social partners. Austria would favour a very strict monetary policy. Price stability over all. However their fiscal policy does not support price stability. Very odd. Sal04: big influence of Germany Sal05: Price stability was part of the Austrian Keynsian system which faded out. Competitive exchange rate does not necessarily mean devaluations for Austria. Stable exchange rates to our main trading partners was always considered to be an orientation on competitiveness. Sal06: NA Sal07: NA Sal08: NA

2.8 The future course of EU integration

2.8.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Austrian Government for reforming the EU? Multiple options are possible.

27 Figure 6: Next integration steps

Interview Aut02 Sal01 Sal03 Sal04 Sal05 Sal06 Sal07 Sal08 1 Treaty relaunch 2 Withing treaty 3 Multi-speed 4 Other

Aut02: NA Sal01: It’s important to keep it balanced and workable. So the governmental level should try to find solutions to existing or upcoming problems on the basis of the existing treaties. Sal03: However, Austria has no clear position and 0 vision. If you keep changing the rules it doesn’t help to strengthen trust. Brexit will most probably lead to a treaty change (voting weights etc.)... Sal04: quite pragmatic approach to work with the current treaty provisions; however debates about the creation of new institutions for multi-speed Europe increases and Austria is not strictly against it and is very much influenced by the German position and debate. Sal05: NA Sal06: NA Sal07: The main idea is to work with the current treaties but the Austrian government most probably wouldn’t object steps in the direction of a multi-speed Europe if a majority is in favour. However nobody wants to touch this question. Sal08: The interviewee personally advocates a retransfer of competences back to the member states and a partition of the euro zone in different areas (north, south etc.).

2.8.2 ID5 The Vision of the European Union

The positions of member states? Governments in the EMU reform negotiations may be inﬂuenced by the government’s general vision of what the EU should be. How would you describe the relevant government’s? preferred vision of the EU? For example, did it favour a development of the EU in the direction of federal union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]

28 Figure 7: The Vision of the European Union

Interview Aut02 Sal01 Sal03 Sal04 Sal05 Sal06 Sal07 Sal08 1 Federal 2 Intergovernmental 3 Multi-speed 4 Multi-speed & exits 5 Status quo 6 No preference 7 Other

Aut02: Austria does not oppose treaty change in principle, as long as it is preceded by the proper convention and the recent reforms are consolidated. Since the EU is de facto a multi-speed arrangement, it makes sense to work pragmatically on this basis Sal01: NA Sal03: no vision of anything; the governing parties just want to get to the next elections. Sal04: NA Sal05: No common vision what so ever; only low level discussion on EU aﬀairs; with the new prime minister (2016) this could change: he seems to be open for steps in the direction of a federal union as well as he would be part of the core if something like a core Europe evolves. Sal06: NA Sal07: Austrian government: no big ideas or visions;big fear that these debates could just help the right-wing pop- ulists of the FPO; Sal08: The interviewee advocates a development in the direction of a clearly intergovernmental institution. The current government: no preference;

2.8.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? Aut02: NA Sal01: NA Sal03: NA Sal04: No, preference led to a pragmatic stance on EMU reforms. Sal05:

29 NA Sal06: NA Sal07: It did not inﬂuence the Austrian position on EMU reform, but it is consistent with it. No big vision but a pragmatic handling of the status quo. Sal08: Pragmatic approach was in line with the missing preference concerning a respective vision.

2.9 Negotiation strategy during the Euro crisis

2.9.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview Aut02 Sal01 Sal03 Sal04 Sal05 Sal06 Sal07 Sal08 S. Extracting concessions (hard strategy) Often Very often Very often Often Often Very often Very often Very often . S. Threatening opt-outs and delays (threats) Often Very often Very often Often Often Very often . S. Making concessions (soft strategy) Rarely Rarely Very often Rarely Rarely Rarely Rarely Rarely .

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

2.9.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Austrian delegation changed during the Euro crisis negotiations? If yes, please explain how and why? Aut02: Austria negotiated hard on the ESM as it provided strategic advantage at the beginning. In some other cases, such as the 2nd Greek program, the Austrian government preferred hard strategy, but since other countries such as Germany and Finland played the hardball, it could take more conciliatory approach. Sal01: Austria started to negotiate harder at the beginning and softer over time. Sal03: no, normally it’s always to late; one example that stands for many: we have an initial position (expressed in some meeting by a section head), so everything looks good and then suddenly they start to fear the changes and then they start to think, that they don’t like it, so they change their position... so we don’t contribute anything constructively to anything anymore... Sal04: The OVP finance ministers throughout the crisis were always very much on the strict German side; The strategy has not changed, but especially during the time of Maria Fekter as finance minister, the way how a position was communicated was different.

30 Sal05: NA Sal06: NA Sal07: The strategy hasn’t really changed, as the interviewee can’t identify a superordinate strategy. Sal08: No.

3 Belgium

3.1 The list of interviews in Belgium

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer GRE02 100 GRE04 75 GRE05 50 GRE13 50

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

31 3.2 The summary observation on country interviews

Administration: In general, Belgian government is characterized by a strong division of powers between different ministries (mainly, Finance and Foreign Affairs), and the different level of governments (regional parliament can veto an international agreement as they threatened to do so in the case of the FC). In general, Ministry of finance and Prime Minister office prepare the negotiations and the positions are then validated by the KAIRN which is a restricted government including the most powerful ministers and a representative of each party of the governmental coalition. Politics: Belgium had no government between April 2010 and November 2011. Then, the NvA (far right flemish independentist party) came into power in 2013. The NVA has strong views against European integration but was supportive with EMU reforms because they are fiscally conservative. Hence, no strong resistance from them. Interviewees: As the power is dispersed, my interviewee cover different administrative bodies. Only the NvA flemish speaking representatives refused my itw propositions constantly. Apparently, the NVA refuses, as a general rule, to give interviewees to academics. Observations:

• Belgium’s main objective was to be united and follow the majoritarian movement at the EU level because 1) they had no government 2) they did not want to weaken the position of Van Rompuy who was the chair of the Council. • BEL played a pivotal role with other Benelux countries for the RQMV. • BEL is not seeking anymore a federal Europe, mainly because of NVA and diﬃcult context • Regional Parliaments played a very strong opposition role for the FC because they have the power to veto an international agreement. Hence the CETA issue could have been anticipated as diﬃculties were already experienced.

3.3 Open answers to questions on 4 contested issues

3.3.1 GRC: Willingness to support Greece in early 2010

GRE02: Finance Ministry has the lead. More than PM or any other player. Belgium was in favor of the loan to Greece because of possible domino eﬀects and possibility to earn money at the end. GRE04: Help to Greece with conditionality is a consensus for all BEL parties. Very few debates. In BEL, Treasury has the lead and then, it goes through restricted government. Restricted government is PM + all the vice PM (each party of the coalition has one). Then administrative coordination organized by the Ministry of Foreign aﬀairs, but not the place for decisions GRE05:

32 Very fast timing from Belgium authorities. Van rompuy was head of the EU council, willingness to strengthen his positions GRE13: PM + ministers within the kairn (restricted goverment in belgium) plus ministry of ﬁnance does the preparatory work and thus has the lead

3.3.2 ESM: The size of the European Stability Mechanism

GRE02: Very much in favor of ESM because it is considered as a backstop for small countries with extensive banking sector such as Belgium. Wanted also a bigger amount for dissuasion of speculators. Everybody thought that the crisis was over at that time and that the funds of the ESM were not going to be used. GRE04: EU authorities wanted to send a signal to the markets. The fact that BEL had no goverment at that time was putting pressure for getting an agreement and not being singled out. So the amount of the ESM was not a real debate. Consensus that the amount should be high. GRE05: NA GRE13: Interviewee does not talk about Belgium. Yet, he points out that on the issue of ESM capitalization, german goverment was more ﬂexible than Bundesbank in the sense that he wanted a higher capitalization. yet Merkel could not criticize Buba because of independence principle and the govermental position was constrained.

3.3.3 FCO: The legal form of the debt brake

GRE02: Belgium position is rather 70 than 60. Federal government wanted tough ﬁscal rules but it was too hard to modify the constitution because of political deadlock. As the TSCG is an international treaty, Agreement

33 with regional parliements is compulsory (as the CETA in 2015 shows). The regional level (regions and regional parliement) resisted very much because they did not want to loose control over important sources of financing. Therefore, the belgium application law of TSCG is not very binding for now GRE04: There was a true debate in two steps. The first debate was about whether there should be a TSCG at all. Left-wing parties which were opposed at first, rally the federal position and there was an agreement on TSCG (left parties compromise). The second debate was about the legal statute of the TSCG. Right wing parties agreed that it should not go into the constitution and there was a compromise. Then later on in the debate, left wing parties woke up and show disagreement with the TSCG. Civil society and media disagreement also became more salient. Le soir (a french speaking belgium newspaper) and the socialist party were against it. For the right wing parties, as Belgium was enjoying some growth at that time, they believed that respecting the tSCG was going to be easy and they show no strong disagreement. Regional parliement show strong opposition in Wallonie and Brussels and delay the political process. GRE05: the legal nature of the transposition of the Fiscal Compact was a cooperation agreement. It includes both federal and regional levels. Therefore it is more binding than ordinary legislation. BEL was more a 70 than a 60. There was a concertation committee including all regional and federal ministries. BEL was not very happy about TSCG but decided to go on with it because it would be positive for euro integration. GRE13: Again, the Interviewee talks mostly about EU level negotiations. For him, budgetary positions of the EU countries did not determine negotiation positions. He stated that UK positions were central for the final form of TSCG. At first, UK refuses the Fiscal Compact and did not want to change treaties. Before council, UK stated that it could sign an international treaty if some concession (to change city in a offshore center) could be made. Private negotiations with Germany but refusal from Germany. From here, it was either the TSCG or protocol 12 on the exceisse defictit procedure (for more info http://eur-lex.europa.eu/legal- content/EN/ALL/?uri=CELEX:12008M/PRO/12). France was super vexated about the UK private negotiations with Germany and did not want protocol 12, so TSCG.

3.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

GRE02: Belgium was not 0 but 100. Indeed, a agreement has been found among Benelux countires (NEL and LUX) in the ﬁrst place. Therefore PM had the lead on that topic. GRE04: BEL was 100, not in 2005, BEL was angry against treaty breaches of big states without sanctions. Finance and foreign aﬀairs made an agreement with Benelux on RQMV. GRE05: BEL was 100 GRE13:

34 not aware of the Benelux deal, did not follow this issue

3.4 The stability of government positions and the role of Eurozone non-membership

3.4.1 GV1: The Change of Position and the change of Government

GRE02: NA GRE04: NA GRE05: NA GRE13: NA

3.5 The role of parliament: governing and opposition parties

3.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview Gre02 Gre04 Gre05 Gre13

P.. The inﬂuence of the majority in parliament + 0 0 0

P.. The parliament acquired new control instruments. Stronger P.. The parliament was better and more swiftly informed on the policy of the government than previously. Stronger P.. The parliament had suﬃcient time and resources for discussing the policy of the government. Stronger P.. The parliament got more media attention. Stronger P.. Other described below. Stronger P.. The parliament lacked new control instruments. Weaker P.. The parliament lacked information on the policy of the government. Weaker P.. The parliament did not have suﬃcient time and resources for discussing the policy of the government. Weaker P.. The parliament got fewer media attention. Weaker P.. Other described below. Weaker P.. Nothing important in the power relation between the government and parliament changed. No change P.. The parliament got new control instruments for involvement, but did not use them. No change P.. Other described below. No change

GRE02: The political context made Parliement stronger. Because of banks failures, very high bankers wages, banks

35 beneﬁts in parallel with growing public debt, Parliament was more legitimate to ask more control over the executive. GRE04: weak except the TSCG moment. at the regional level it is diﬀerent, because Wallon and Bxl regional parliement show resistance. GRE05: very weak. Only ex post ”control” GRE13: Belgium Parliement did not really want a role in the decision making process. Consensus on european issues except socialist party, Green party. No need to control the goverment because the goverment is controlled by its own divisions.

3.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview Gre02 Gre04 Gre05 Gre13

P.. Governing party inﬂuence + 0 0 0

GRE02: There was more conflict within parties because of the political context (ie. banking and political scandals, very non transparent lobbysits...). This internal conflict led them to control government more. GRE04: very weak. Strong party leaders are already in the governement GRE05: a bit more tension between flamish and wallon political parties but no real change GRE13: do not play a role

3.5.3 PL3: The role of the opposition party

36 Figure 3: Change in the opposition party inﬂuence

Interview Gre02 Gre04 Gre05 Gre13

P.. Opposition party inﬂuence 0 + 0 +

P.. Nothing important in the power relation between the government and parliament changed. No change P.. The parliament got new control instruments for involvement, but did not use them. No change P.. Other described below. No change P.. The parliament acquired new control instruments. Stronger P.. The parliament was better and more swiftly informed on the policy of the government than previously. Stronger P.. The parliament had suﬃcient time and resources for discussing the policy of the government. Stronger P.. The parliament got more media attention. Stronger P.. Other described below. Stronger P.. The parliament lacked new control instruments. Weaker P.. The parliament lacked information on the policy of the government. Weaker P.. The parliament did not have suﬃcient time and resources for discussing the policy of the government. Weaker P.. The parliament got fewer media attention. Weaker P.. Other described below. Weaker

GRE02: No role of opposition party until Greece 2015. But then, all parties were strongly critical about rescue plan. GRE04: In Netherlands, NVA shows resistance to Europe BUT they agree with reforms (because they are in favor of strict budget rules etc). Greens against reforms but no leverage. GRE05: Green disagree with TSCG but no leverage GRE13: a bit because NVA. Used to be proEU party because UE could dismantle the Belgium state. Now, it is more jacobinist, more sovereignty orientated. Socialist parry also wants EU, more growth and is social orientated

3.6 The dominant views of economic policy

3.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

37 Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview Gre02 Gre04 Gre05 Gre13

Balanced budgets and stable debts are the macroeconomic and ﬁscal priorities. 1 1 1 1

The state should focus on public investments and counter-cyclical demand management. 2 1 1 1

The state should provide signiﬁcant economic governance with state-led industrial policies and the like. 3 3 3 3

GRE02: NA GRE04: NA GRE05: Believe in the virtuous circle of the commission (stability, investment and structural reforms), because it brings all parties on board GRE13: depends of the timing

3.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview Gre02 Gre04 Gre05 Gre13

A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 3

Growth and low unemployment 1 2 1 2

Price stability 2 1 1 1

GRE02: CB and min ﬁn discussed ECB unconventional measures. Criticism: it was too late, that’s why, they did not deliver much results. No other criticism because very strong belief it was only temporary. GRE04: Very happy that the ECB is there and there is no national debate on monetary policy (Wallon want more growth oreintation and Flamish more price stability. ON activist ECB measures, some fears in small policy circles about O rate policy. GRE05: division between NL and FR parts. Happy there is no more debate. GRE13: NA

38 3.7 The future course of EU integration

3.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Government of Belgium for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview Gre02 Gre04 Gre05 Gre13

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

GRE02: Very complicated. BEL wants a focus of the SGP on the benchmark of expenditures. Both on the preventive and corrective parts. But Germany says it needs a treaty change. So on the long term, might want a treaty change to strentghten european rules GRE04: two steps. waiting for Germany and French election (pragmatism) and hope for a relaunch of european itnegration with treaty change in the future GRE05: two steps strategy (cf GRE4) GRE13: need to do better on speciﬁc issues (l’Europe des projets)

3.7.2 ID5. The Vision of the European Union

The positions of member states? governments in the EMU reform negotiations may be inﬂuenced by the government?s general vision of what the EU should be. How would you describe the relevant government’s? preferred vision of the EU? For example, did it favour a development of the EU in the direction of federal union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]

39 Figure 7: The Vision of the European Union

Interview Gre02 Gre04 Gre05 Gre13

I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. Multi-speed Europe with possible exits

I.. No change (status quo)

I.. No preference

I.. Other (see below)

GRE02: Federal union was the horizon for a long time but since 2010, gears towards intergovernemental insitution GRE04: Federal is utopic. Since NVA, goes towards multi speed GRE05: federal union undermined by NVA GRE13: the issue about european vision is not relievant today, must focus on real decisions

3.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? GRE02: No, the reforms already happened when stance was changing. GRE04: NA GRE05: NA GRE13: NA

3.8 Negotiation strategy during the Euro crisis

3.8.1 ST1: Negotiation Strategy during the Euro Crisis

40 international bargaining situations. Can you give us an estimate of how often the delegation from this country uses the following strategies?

Figure 8: Negotiation strategy during the Euro crisis

Interview Gre02 Gre04 Gre05 Gre13 ST Hard bargaining: tries to extract concessions from the other side, delays or blocks negotiations for its Very R own benefit rarely 1.. ST Threatening: uses threats (for example opt-outs or long transitional provisions) to influence other Very Don’t R parties positions rarely know 1.. ST Soft bargaining: is prepared to make concessions to opposing states or to propose an exchange of Very R Rarely Rarely Rarely concessions for mutual benefit rarely 1..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

3.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the delegation of Belgium changed during the Euro crisis negotiations? If yes, please explain how and why?

GRE02: no GRE04: NA GRE05: NA GRE13: NA

4 Bulgaria

4.1 The list of interviews in Bulgaria

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer BUD07 100 BUD10 50 BUD15 75 BUD16 75

41 Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

42 4.2 The summary observation on country interviews

In BGR, as in most of the other non-EAMS, the most relevant actor has been the finance ministry, although compared to other CEE countries, the role of the National Bank was more visible. In fact, in BUL, there seems to have been an institutional rivalry between the finance ministry and the national bank (it became clear after interviews with the former finance minister and the current deputy governor of the National Bank). Parliament is rather sidelined, whereas political parties seem to have a strong commitment to european integration and also to a great extent to the euro. At the European level the EFC, and the informal non-EAMS dinners were mentioned as most influential on the BUL position, also stressing the BUL was also influencing others in these meetings. Interestingly, the Eurogroup was also mentioned as most influential in BUL government position, even though the country is not part of the Eurozone. One of the explanations is that the country’s position is often influenced indirectly by its aim to become a Eurozone member state ASAP (see its monetary policy with fixed exchange rate), which makes the government position often rather sympathetic to the common Eurogroup position. Parliament played a rather unimportant role in the country’s preference formation process, and so did other actors. Even though the range of interviewees covered members of the civil society as well, their input was rather marginal compared to those having been actively engaged in policy-making.

4.3 Open answers to questions on 4 contested issues

4.3.1 GRC: Willingness to support Greece in early 2010

BUD07: Bulgaria’s position at ECOFIN meeting was that there should be an immediate package. Also, we stressed that there shouldn’t be too much discussion on the matter, and that the package should be larger, enough to calm the markets. We argued that conditionalities could come later. As for the actors, the Finance Minister was most influential, whereas the Foreign Ministry was not much involved. The Prime Minister then was rather influenced by me (Finance Minister). The National Bank, and the parliament had zero influence. The whole issue was fully under the decision-making of the Finance Ministry. We even created a crisis unit within the ministry informing other ministries. As for international actors, there were a number of discussions at informal ECOFIN breakfasts, and also during non-euro area MS ministers’ dinner which had been initiated by Anders Borg, and the Danish Finance Minister. In fact, there was a lot of influence exerted on decisions during these meetings. But it should also be noted that BUL also exerted some influence on others, e.g. Borg and the UK on GRE banking exposure. BUD10: Bulgaria actually supported the GRE rescue package. In this, the Central Bank played a rather relevant role given the fact that 22-23 percent of the BUL banking sector was owned by GRE banks. During this time, the opinion of bank was practically the opinion of the government. However, Simeon Djankov as Finance Minister was really influential as well, and probably some of the other advisors to the PM as well. BUD15: The key actors have been the National Bank and the Ministry of Finance. The Ministry of Foreign Affairs

43 played a role in coordinating, but otherwise the National Bank and the Finance Ministry are responsible for substance. There is a mechanisms, a Council of European Affairs which is a deputy-level meeting where most positions are worked out. The Foreign Ministry never takes a strong position, the National Bank always takes a rather ”Bundesbank” position. On fiscal issues, the Finance Ministry generally goes with the National Bank, but sometimes also go with the Foreign Ministry. As for GRE, we did not know what was going on, but internally for us this was a big risk, an important issue (30 percent of banks are GRE in BUL), and we saw the problem of no credit. Nobody outside the Eurogroup knew what was going on. Internally the discussion was: we have to solve it (we are exposed), but we did not think about the measures (bailout was a secondary issue). First we had a position of ”100” but then turned towards a more conservative view. We did not want to take a position because we were negotiating ERMII and we did not want to jeopardize it. BUD16: There was some talk on the defensive side: the government said we were not going to pay, but GRE should be saved, and they repeated that multiple times. There was some exposure in the banking sector: over 20 percent of banking assets were owned by 3-4 GRE banks. There was an understanding that GRE was our neighbor, and we needed to help but we should not pay for this. The National Bank was rather quiet on the issue, it was the Finance Minister, Djankov, but he was also Deputy PM so it wasn’t simply the Finance Ministry, it was rather a government position. Also the PM, Borisov supported him: he delegated most power over EMU related issues and finances to Djankov, but not in the media. The Parliament and the Foreign Ministry did not really play a role. For media it was too complicated to understand the euro crisis as such.

4.3.2 ESM: The size of the European Stability Mechanism

BUD07: Bulgaria was pushing for a substantially larger fund from the beginning. We thought that the one proposed was too small for markets. Spain was discussed at the same time. At this point, the Finance Ministry was the only active participant. Also, bilateral meetings mattered: I was invited to GER and NL which were more informal exchanges of ideas and positions. The governor of the National Bank was rather inert at that time, it wasn’t really a factor. Media was, in general, in favor of not giving anything to anybody. During this time, the Finance Ministry and the Minister (myself) had an unusually strong position given the fact that I also served as Deputy Prime Minister. Secondly, I came from the World Bank which gave me a certain credibility within government. BUD10: The position by many during the debates was that the fund should be as small as possible. As far as I can remember this was also advocated by Djankov and the Central Bank [RC: actually wrong, Djankov claimed the opposite]. Nevertheless, there was a certain fear that the risk could regionally spread around which should be stopped ASAP. As far as actors were concerned, once again, it was dominated by the Finance Ministry and the Central Bank. Parliament did not play a role at all. BUD15:

44 I’m sure we wanted to cap it at 500bn. The US was saying: ”show the wall of money”, but we always had a conservative position on this. Historically we were ﬁscally conservative. We believed that countries have to be prudent, we supported the GER position. As for the actors, it was the same setup. BUD16: I do not think any position was publicly debated, but I would say it was the same decision-making method. But it was virtually absent from the public debate. Djankov was supporting the pact, but emphasized that we did not have to pay.

4.3.3 FCO: The legal form of the debt brake

BUD07: We actually tried to put it in the constitution, but we failed, so was put through different legal mechanisms. In fact it is not really ordinary legislation, but rather a law of implementation in financial decisions which is harder to revise. It creates something like a constitutional issue of who can change it. According to the law, it is only the Finance Ministry that can initiate any change on this. As for the actors, the dominance of the Finance Ministry was similar in this case as in the previous one. BUD10: Bulgaria has had a relatively balanced and conservative fiscal policy running fiscal surpluses between 1998 and 2008. In 2008, stricter requirements in fiscal policy were introduced, the same policy and even stricter that is required by the EU. The promoter of this strict stability pact in BUL was the Ministry of Finance and the Central Bank. Also, among the initiators there was the public opinion, and free-floating economists who proposed it as a fiscal measure compiled with a flat tax. BUD15: We wanted a constitutional change, there was a constitutional committee setup, which was also supported by the National Bank. Yet, it could not pass through Parliament. Alternatively, the following year, they adopted a new fiscal rule (a rule of public finance). The actors are same, but national parliament was more involved. BUD16: Djankov wanted to push it through the constitutional way, but it was clear from the beginning that he would not succeed, so they went for the second-best option.

4.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

45 Our assumption is that domestic and international actors shape a government’s negotiating position. Which actors - ministries, institutions, parties, or interest groups - were most inﬂuential in shaping the negotiating position of the government, and what positions did they advocate?

BUD07: We were against this measure because we feared that it could have a spillover effect outside finance. Once again, the Finance Ministry influenced the final decision most. BUD10: The government was mainly supportive of this issue. However, it was interesting as it was the Ministry of Foreign Affairs that formulated a legal position on this. It was then discussed in parliamentary committee. BUD15: Initially we were opposing it and then we went with GER on the issue. We did not want changes in the way decisions were taken. BUD16: I would say it was similar to the first issue, probably it was more dominated by the Finance Ministry, and also the National Bank, but I am not sure about their role here.

4.4 The stability of government positions and the role of Eurozone non-membership

4.4.1 GV1: The Change of Position and the change of Government

BUD07: There was no real change in the positions between 2009 and 2013. BUD10: There wasn’t a change of position. It wasn’t really an issue, we insisted that EU should come to the level of BUL ﬁscal discipline. BUD15: We could not build a blocking minority, so eventually we had to go with what was decided. On the SSM (banking union) we were critical of the whole process. We said, if that’s going to be for the whole EU, you have to give equal opportunities and rights to MS. It was about voting rights. Also an issue was access to liquidity. BUD16: There wasn’t really a change of position, at least not in the public. There was some talk about the banking union, saying let’s join the banking union without joining the euro area.

4.4.2 GV2: The Impact of the Eurozone non-membership

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU?

46 Figure A: The Impact of the Eurozone non-membership

Interview BUD07 BUD10 BUD15 BUD16 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

BUD07: It certainly played a role as the Eurogroup always met before ECOFIN and we always thought that this was an arrogant, non-democratic system. In return, however, we created non-euro area MS dinners, where the most vocal MS were SWE, UK, POL and BUL. We were quite critical of euro area decisions (especially on GRE). We were active together with POL, in fact, unusually active. We constantly argued that if something is affecting the whole of the EU, we need to be part of the discussion. When it was not allowed we created the non-euro-group. We were often running counter-proposals to GER and FR (e.g. on voting mechanisms) and managed to ’kill’ a few ideas of theirs BUD10: BUL is in reality an associated member of the euro area, very similar to what EST and LIT did before their accession. The only difference for us is that we are formally not contributing to ESM, so it is cheaper to be an associate member. This is also the thinking of the government and the economist community and the Central Bank. Nevertheless it is also often emphasized that becoming a member would provide credibility and stability. The crisis only had one impact on the government thinking: we do not want to enter the euro area this time. Now it’s different, it’s changing again. BUD15: It depends on government’s view of the euro area as such. BUD16: It played a role in a sense that we understood that we did not have to pay for anything. For the past 6-7 years, there has been a consistent and visible discrepancy between confidence in the Euro and the monetary independence of BUL. Public support was high towards the EU, but the Euro was more and more perceived as a crisis. We are fiscally conservative, we have a hard currency board, every time there is a discussion on the euro area reform, the PM, and the finance minister tries to brag about being a ’good student’ that we have low debt, low deficits, etc. We try to emphasize that we are Northerners in the Balkans, we are more like FIN, and NL. The official position is: we are poor but we are disciplined, and we should support fiscal hawks. That’s the rhetoric. On the other hand, there is a growing disappointment: there has been so much effort in keeping fiscal discipline in place, and yet we are not members of the euro area and we are being criticized.

4.5 The role of parliament: governing and opposition parties

4.5.1 PL1: The role of the National Parliament

47 Figure 1: Change in the majority party inﬂuence

Interview BUD07 BUD10 BUD15 BUD16 P. The inﬂuence of the majority in parliament 0 0 0 0 .

P. Stronger The parliament acquired new control instruments. . P. The parliament was better and more swiftly informed on the Stronger . policy of the government than previously. P. The parliament had suﬃcient time and resources for discussing Stronger . the policy of the government. P. Stronger The parliament got more media attention. . P. Stronger Other described below. . P. Weaker The parliament lacked new control instruments. . P. The parliament lacked information on the policy of the Weaker . government. P. The parliament did not have suﬃcient time and resources for Weaker . discussing the policy of the government. P. Weaker The parliament got fewer media attention. . P. Weaker Other described below. . P. Nothing important in the power relation between the No change . government and parliament changed. P. The parliament got new control instruments for involvement, No change . but did not use them. P. No change Other described below. .

BUD07: Parliament wasn’t an actor really. We went to committee meetings and explained our positions, but that was it. On the other hand, Parliament was reasonable in most cases so there wasn’t really a debate we had to deal with. BUD10: It got stronger during 2014-15 when in the banking crisis which involved money there was a greater involvement of the parliament. BUD15: They never really had a role, government can tell the majority in the parliament what to do. BUD16: The parliament has no expertise and capacity, but they could hire experts, but they do not really do so, at least from a technical point of view. They created the Fiscal Council, it should be a think tank that should discuss macroeconomic and ﬁscal issues, but they voted on a political quota principle, and only one of them knows English. Also, they only have budget for two experts to hire.

4.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview BUD07 BUD10 BUD15 BUD16 P. Governing party inﬂuence na 0 0 0 .

48 BUD07: Not really relevant in Bulgaria BUD10: After the 2013 elections, Bulgarian politics was characterized by unstable governments with ad hoc majorities. The economy was doing ok, but parliament is unstable which eﬀectively rendered it irrelevant. The most relevant actors have been: the Central Bank, the Finance Minister and the Commissioner. Also, the president was important between 2010-2015 advocating early entry of euro area, banking union implementation, etc. BUD15: I don’t really remember anybody dealing with the issue. We did not have a critical thinking approach, it was only the National Bank BUD16: Menda Stoyanova, chairwoman of Finance and Budget Committee. Deljan Dobrev also, he was former Min- ister of Energy.

4.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview BUD07 BUD10 BUD15 BUD16 P. Opposition party inﬂuence 0 + 0 0 .

BUD07: Most issues did not gain too much political attention so it was not discussed really which did not give room for politicians to actively get engaged with the topic. BUD10:

49 In the beginning they were critical of the government not getting into the euro area, then they advocated banking union, although more in rhetoric than in action. BUD15: After 2014 they tried to raise public awareness more. BUD16: Socialists are not interested in EU issues, former Minister of Finance (2005-09), he was against euro accession, when he became PM. Socialists do not have any speciﬁc economic advisor board, they strictly relied on two people.

4.6 The dominant views of economic policy

4.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview BUD07 BUD10 BUD15 BUD16 ID The state should provide signiﬁcant economic governance with state-led 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 2 1 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 1 2 2 2 .. management.

BUD07: State-led industries really not an issue. BUD10: Public investments for the past two years. BUD15: NA BUD16: Also important: low direct taxes.

4.6.2 ID2: Dominant Monetary policy goals

50 Figure 5: The ranking of monetary policy goals

Interview BUD07 BUD10 BUD15 BUD16 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 ..

ID Growth and low unemployment 1 3 ..

ID Price stability 2 1 2 ..

BUD07: NA BUD10: Only price stability. BUD15: 1 is ﬁxed exchange rate BUD16: One and only objective is currency board with ﬁxed exchange rate.

4.7 The future course of EU integration

4.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Bulgarian Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview BUD07 BUD10 BUD15 BUD16

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

BUD07: On single market issues. BUD10: perfection of current regime. No ﬁscal union, regulatory competition. BUD15: National Bank’s view: we need ﬁscal capacities, Finance Ministry view: political option is current treaty provisions. If we want to sustain the EU, we have to take a step back. The Euro area went too far as well, and we should go back to four freedoms. BUD16: we should simply use the measures already existing, compliance mechanisms should be strengthened, trouble is always an implicit bailouts (moral hazard)

51 4.7.2 ID5. The Vision of the European Union

The positions of member states? governments in the EMU reform negotiations may be inﬂuenced by the government’s general vision of what the EU should be. How would you describe the relevant government’s preferred vision of the EU? For example, did it favour a development of the EU in the direction of federal union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]

Figure 7: The Vision of the European Union

Interview BUD07 BUD10 BUD15 BUD16 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

BUD07: Bulgaria was always in favor of more integration, yet not in a federal way necessarily BUD10: the incumbent government is a supporter of two-speed union (hoping that it could mean more subsidies from the EU) BUD15: Go back to initial idea of free trade and single market. But not single currency because it needs ﬁscal centralization and taxation. BUD16: Under Borisov: federal union. We are weak, so the best thing to do is to sell our vote to the strongest bidder, the alternative to more centralization is the dissolution of CAP, etc.

4.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? BUD07: It did, for instance in helping out GRE. BUD10: NA BUD15: NA BUD16: NA

52 4.8 Negotiation strategy during the Euro crisis

4.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview BUD07 BUD10 BUD15 BUD16 S T Hard bargaining: tries to extract concessions from the other side, delays or R Very rarely Rarely Rarely Very rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Very rarely Never Very rarely Very rarely provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Rarely Often Rarely propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

4.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Bulgarian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

BUD07: Most issues did not concern us, and where we really had a ﬁrm position, there wasn’t much debate as we were part of the majority opinion. BUD10: NA BUD15: There is a ’Soviet attitude’ still: we have to agree with big players. BUD16: NA

5 Cyprus

5.1 The list of interviews in Cyprus

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

53 Interview code Quality rating by interviewer CYP01 25 CYP02 75 CYP03 100 CYP04 50 CYP05 75

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

54 5.2 The summary observation on country interviews

Cyprus has always been very introverted, i.e., focusing on those issues that are perceived to directly affect Cyprus itself, most notably the Cyprus problem. The only exception to this pattern has traditionally been issues relating to Greece, although their significance is fading away too and -currently- they are mostly debated in terms of the way they affect Cyprus. Therefore, wider European issues do not concern either the people or the elite. The presidential system presents the most important specificity of the institutional setting that is relevant here. Most important decisions go through the government and its various agencies which are the most able to produce decisions based on expert knowledge given the substantial support they have in terms of technocratic skills and resources to avail, contrary to other actors. The diminishing power of the trade unions is an important case in point here. The rise of particular societal groups that express discontent or opposition to particular issues (e.g., the forced sales of property) is another point, yet this process is still in its infant stages and to some extent depended on political parties. The government maintains its stronghold on most significant areas of decision making; however, some independent agencies are gaining power as time goes by and enjoy the support of the public (e.g., the Attorney General and the General Auditor of the Republic). Political parties are in an ambivalent position: many things still depend on them but they enjoy very limited support from the people. I focused on persons that belong in the two most important elite groups in the country: politics and economy. At the same time I chose people that were (and to a large extent remain) in key positions to have both good knowledge of what happened -and still happens- and influence on decision-making. The persons interviewed represent the major political and economic actors involved in the negotiations with the European institutions but also intra-country negotiation and decision-making. Limitations included: the time span between data collection and the actual occurrence of the facts; the unwillingness of the interviewees to disclose all the information they possessed on some occasions probably fearing to expose other actors or persons that still hold power (bear in mind that government employees depend on politicians and political parties for promotion and positioning on critical posts). This is a set of very high quality interviews with very knowledgeable interviewees, conducted carefully, and recorded with notes of outstanding clarity. If anyone wants to learn more about Cyprus, it may be worth the effort to read through the interview files. There were only a couple of questions posed by the consistency reviewer.

Generally, the positions of Cyprus were rather clear, whereas the ﬁnance ministry and the head of government were the key actors in the preference formation. Also, the parliament and other domestic actors articulated their position and had some inﬂuence. Cyprus was sympathetic with Greece. Interestingly, international and European actors were, according to all interviewees not important at all.

Attention: the ﬁnance and econ ministries are the same.

5.3 Open answers to questions on 4 contested issues

5.3.1 GRC: Willingness to support Greece in early 2010

55 position of the government, and what positions did they advocate?

CYP01: All domestic actors had the same supporting view for Greece. The only hindrance of warning came from the President of one of the Cypriot banks who was worried of what would happen to the Cypriot banks from the solution to the Greek problem. He did assign scores in most boxes but he did it very hastily and without giving it too much thought CYP02: All domestic actors were wholeheartedly in support of Greece. There was an anti-German feeling among the population and many politicians at the time. Everyone supported Greece’s demand. If anyone dared to have an opposite view would be harshly criticized. He recalled that the only worries were expressed by the Central Bank and their concern was related to the form of the Greek debt haircut but it was a minor concern. He assigned scores but he did it rather randomly. Regarding the international actors he couldn’t remember if they had a position but he thought that none of them influenced the debate in Cyprus particularly on this issue given the long and strong ties between Greece and Cyprus. At the time these institutions did not have significant contacts with the Cyprus’ parliament. He also remembers that some European MPs were hostile to Greece. In the meetings with European MPs from other countries he recalls that they had no objection to assisting Greece CYP03: All domestic actors were in favour. No government and no party would survive if they didn’t support Greece. Those that reacted differently did so only years later when Cyprus was affected by what happened in Greece. Moreover, the private banks at the time had assured the government that they would have no problems to recapitalize. The entire system of Cyprus (political and financial) had no real sense of what was happening. Everyone thought that the crisis would not affect Cyprus. It was after this period that the ministry of Finance started realising the links with Greece’s financial system and the dangers for Cyprus. Regarding the international actors their influence was mostly indirect in the sense that we knew their positions. At the time no international actor had warned or pressured Cyprus about anything. Even if they had a different opinion it wouldn’t affect domestic debates because everyone wanted to help Greece. CYP04: All Cypriot actors shared the same positive stance not only because of the traditional and historical ties with Greece but also because of the financial/liquidity problems of the Cypriot banks which they thought would be resolved if they supported Greece. Since all actors were strongly in support of Greece it doesn’t really matter to attribute weights to any actor. Of course the most important ones are (for this matter) the President and the Ministry of Finance. With regard to international actors they had no influence on domestic debates and moreover they did not express any direct opinion CYP05: All domestic actors strongly supported Greece because of the special bonds between the two countries. The most influential actor was the President because the decision was taken at the European Council. The Ministry of Finance has a strong say too. Unfortunately, though, such sensitive and significant issues are so much studied in Cyprus as they should have. There was no influence from international actors.

5.3.2 ESM: The size of the European Stability Mechanism

Our assumption is that domestic and international actors shape a government’s negotiating position. Which

56 actors - ministries, institutions, parties, or interest groups - were most inﬂuential in shaping the negotiating position of the government, and what positions did they advocate?

CYP01: He did not have any recollection or knowledge of any actor’s actual position on the issue. At the time all these issues were dealt very formally and superficially in the parliament he said, essentially adopting all EU recommendations (particularly when they were endorsed by the Cypriot government). Because of that he did not actually put scores in the boxes. He also said that no international actor intervened to his knowledge CYP02: No recollection of this issue. He was pretty sure that it was something dealt with by the Cypriot government. These more technical issues as he named them are usualy left to goverment agencies and articularly the Finance Ministry. At that time the parliament was almost totally absent from any such discussions and moreover they did not (the MPs) express any real interest in learning about these issues. The presidential system of Cyprus has historically kept the parliament to a secondary position. Regarding the particular issue he said that all domestic actors would definitely support a bigger size of the ESM since it would be to the benefit of Greece and other south European countries. At the time in Cyprus everyone believed that the crisis wouldn’t influence Cyprus. His answers for domestic actors were based on the assumption that if Cyprus supported the position for more than 500 bn it must have been a common position of all governmental actors. Regarding the international actors he said that none of them had tried to influence anyone in Cyprus for this, at least to his knowledge and he was not aware of their position CYP03: The only actors that had a saying were the government and the National Central Bank. Most actors were not even asked about issues such as this. However, all had more or less the same position: more money as a means to counterweight those countries that asked for less. Regarding international actors he said that none of them pressed Cyprus on this issue and their influence on domestic debates at the time was negligent even if they did say something. CYP04: All domestic actors had the same position for increasing the amount. However, it was never an issue in internal debates indicative of the lack of knowledge and understanding of European affairs by the Cypriot political system. It was a matter essentially, if not exclusively, handled by the Ministry of Finance. The international actors had no influence on this. CYP05: All domestic actors had the same position for increased fire power of the ESM. The most influential domestic actor was the Ministry of Finance. International actors did not try to influence domestic debates.

5.3.3 FCO: The legal form of the debt brake

CYP01: Three domestic actors were crucial here because of the nature of the subject: the government, the Central

57 Bank and the Attorney General. He could not recall their specific positions but he seemed positive that if Cyprus advocated ’ordinary legislation’ it must have been an agreed position between the above actors. He also noted that the parliament had amended the constitution so that the EU law to supersede. Cyprus’ law. Regarding the international actors he preferred not to enter scores because he did not remember their positions although he was sure that none of them approached him. He did remember that there was some pressure from the EU on Cyprus because our country had delayed the adoption of balanced budgets (his knowledge was based on information from government officials) CYP02: At the time the discussion was mostly related to Greece and no-one in Cyprus expected that Cyprus would also be affected. Most domestic actors (if not all) supported some form of obligation but not of a strict and binding nature. The most influential actors on this issue were the government (particularly the Ministry of Finance), the Attorney General and the National Central Bank. he also recalled some friendly advises from the IMF and some European MPs to accept more binding provisions CYP03: All domestic actors shared the same position. However, issues like these were very little debated among domestic actors at the time. It was something very much decided within the government and the National Central Bank. The General Attorney was also asked and he said that all four options were legally accepted. Regarding international actors none of them pressured the government and none of them had a real impact upon domestic debates at the time. They were aware of their stances however. He also pointed that these actors exercise pressures on a country only when they are in agreement between them. CYP04: Domestic actors never discussed this issue probably because the crisis had not yet affected Cyprus. How- ever, even without proper study all had similar positions. This also applied to the General Bank which is considered the most strict on these issues. The Ministry of Finance has the major saying and influence on such issues. With regard to international actors he could not recollect any interference and he believes that it wouldn’t matter a lot at the time because noone in Cyprus felt the burden at the time. CYP05: Cyprus formulated its position based on the principle of the national interest which is particularly important for small states like Cyprus. The most influential domestic actor was the Ministry of Finance while all other domestic actors probably didn’t realize that this discussion was taking place. This state of affairs is not only due to the weaknesses of the Cypriot political system but also to the overall structure of the Cypriot state: the President has no checks and balances since the Turkish Cypriots withdrew from the institutions of the Republic and therefore no-one forces him to consult or deliberate with other actors. Moreover, the various ministries are hierarchically equal between them which means that they usually dont talk to each other over issues they believe they have ownership. No international actor exercised any pressure on domestic debates.

5.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

CYP01: Because of Cyprus’s small size all actors favored the status quo. He could not remember the international

58 actors’ behavior but he believes that their impact wouldn’t have been strong because it was clearly against Cyprus’ interests and in a period when Cyprus was not yet under stress CYP02: At the time the House of Representatives did not hold any discussions about this issue. However all parties in the parliament but also all other actors supported the position that was finally submitted by the government. There were two main reasons for that: first, Cyprus, being a small state it wanted to maintain as much power as possible in its hands. Second, the overall context was to help Greece at any cost and by opposing the RQMV they all thought that they helped Greece. He said that if had known in advance how things would actually develop he would have supported the RQMV because he came to realize that both the Greek and the Cypriot government were responsible for not taking timely measures. All domestic actors opposed the RQMV the most influential being the Government agencies. Regarding international actors he had knowledge of their position and he assigned scores on their influence speculatively. In any case he believes that at that particular time they wouldn’t have any substantial influence because Cyprus economy was still going well and Cyprus could not be easily pressurized on such an issue. CYP03: All domestic actors shared the same position with the government. It was a matter that touched upon the powers of Cyprus and everyone realised that they would be significantly reduced if the new proposal was accepted. However, it was not given any particular attention by any of the actors. Since all actors had the same position it wasn’t of any significance who could influence more. However, it was an issue mostly dealt within and between government agencies and the National Central Bank. Regarding international actors the government knew their stances but beyond that noone had tried to influence Cyprus decisions or had any influence in domestic debates. Maybe they knew that Cyprus wouldn’t be a real obstacle if the major countries agreed on something. Concerted pressures are usually exercised when all international actors share similar positions. For example, when everyone wanted Cyprus to sign the memorandum but this was on a later stage CYP04: It was a common position of all domestic actors. Again we must always keep in mind that issues like this never preoccupied public debates in Cyprus because the country had no fiscal problems. It was largely theoretical discussions that all believed did not actually matter. The most influential domestic actors in determining Cyprus’ position on such issues are the President, the Ministry of Finance and the Central Bank. International actors had no influence on internal debates although they knew each of them position. CYP05: Although all domestic actors shared the same position the Ministry of Finance had the biggest influence in formulating this opinion which again was based on the country’s national interest (as a small state). There was no impact of international actors on domestic actors and debates nor any attempt to influence domestic actors.

5.4 The stability of government positions and the role of Eurozone non-membership

5.4.1 GV1: The Change of Position and the change of Government

CYP01: he answered generally saying that Anastasiades administration positions (elected in February 2013) are more compatible with those of the EU institutions on these issues. Although the previous (Christoﬁas) government did not challenge these reforms either within the EU it was obvious at least in Cyprus that they did not

59 agree with any of them. However, not only because of Cyprus small size but also because most Cypriot political actors agreed with the reforms they did not question them at the EU level. CYP02: The only difference between the two governments is that the leftist Christofias publicly declare in Cyprus that he did not agree but when in the EU he endorsed all proposals. Anastasiade’s government is definitely more positive and deceptive to these proposals CYP03: There were no actual differences between the positions of the two administrations. They basically had the same line. On such issues the technocrats of the Finance Ministry and the National Central Bank are more influential than any other actor CYP04: Although the two governments were in theory ideological different within the EU their positions had no difference. He also gave an example to show that the party system was not involved and not informed on such issues: the Central Bank was invited in the parliament to discuss the two-six-pack fiscal compact after it was decided within the EU and no-one realized it! CYP05: There were never preparatory meetings between domestic actors ad between departments/agencies of the government (to the best of his knowledge) to formulate positions on these issues. It was mostly handled by the Ministry of Finance

5.5 The role of parliament: governing and opposition parties

5.5.1 PL1: The role of the National Parliament

60 Figure 1: Change in the majority party inﬂuence

Interview CYP01 CYP02 CYP03 CYP04 CYP05 P. The inﬂuence of the majority in parliament + + - + 0 .

CYP01: The finance committee of the parliament acquired more importance and weight in public discussions. The parliament lacks sufficient technocratic know-how. The presidential system of Cyprus must be factored in because unlike other European countries this means that the executive is very powerful compared to the legislature CYP02: A new legislation was voted that enables the parliament to exercise some control over the 3-year fiscal frame of Cyprus The House lacks sufficient and qualified (e.g. accountants) personnel The presidential system of Cyprus does not allow for effective control over state budgets because it only allows the approval or disap- proval of a budget item. The public is also more sensitized now which helps the parliament to put more pressure on the government CYP03: The parliament can only reject something proposed by the government and this puts enormous pressure on them to comply. Moreover, the parliament totally lacks expertise and know how to deal with issues related to the economy CYP04: The troika has enforced a number of budgetary restrictions that must be discussed and decided in parliament something that strengthens its position vis a vis the government They still lack qualified personnel to deal with such issues CYP05: Because of his absence from Cyprus he felt that he was not so eligible to answer this but he believed that nothing actually changed

61 5.5.2 PL3: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview CYP01 CYP02 CYP03 CYP04 CYP05 P. Governing party inﬂuence + - - + 0 .

CYP01: The governing party in both cases (first AKEL and the then DISY) were minorities within the parliament after the first period of their respective administration. This situation made the government more reliable on them and therefore he believes that their role increased. They were responsible for finding common ground with different opposition parties each time the government needed to pass legislation. In this regard he believes that the governing party acquired more significance for the government (intrumentally) CYP02: Their numbers shrank in consecutive elections and since they do not have a majority in the House they do not have leverage over their government. Cyprus presidential system is not dependent upon any majority in the parliament. Usually the governing party is reduced to trying to find support for government proposals. CYP03: They are basically left without margin for alternative policy. They are forced to comply CYP04: They are now pressured to be more informed and study better CYP05: The role of the MPs of the governing party retained its importance in influencing the national government regardless of the party in power

5.5.3 PL3: The role of the opposition party

62 Figure 3: Change in the opposition party inﬂuence

Interview CYP01 CYP02 CYP03 CYP04 CYP05 P. Opposition party inﬂuence + + 0 0 0 .

CYP01: NA CYP02: since no party holds a majority it means that even the major opposition party needs to find support from other minor parties CYP03: The government focuses on finding the parliamentary support they need according to the type of legislation. In most cases they can find the necessary support with changing alliances. They do not rely just on one party. This weakens the major opposition party which on some occasions also votes with the government CYP04: NA CYP05: NA

5.6 The dominant views of economic policy

5.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

63 We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and ﬁscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview CYP01 CYP02 CYP03 CYP04 CYP05 ID The state should provide signiﬁcant economic governance with state-led 2 3 3 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 2 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 3 2 2 1 2 .. management.

CYP01: Stabilizing the economy is the most important priority in times of turbulence CYP02: NA CYP03: Comment: The interviewee said that a few years back there was a strong belief that the interventionist role of the state ought to be the number one priority but the crisis has changed this. CYP04: NA CYP05: NA

5.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview CYP01 CYP02 CYP03 CYP04 CYP05 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 3 2 ..

ID Growth and low unemployment 1 2 1 1 3 ..

ID Price stability 2 1 2 2 1 ..

CYP01: Actors and experts are guided by their ideologies, therefore he believes that ideology is a proxy here for their beliefs CYP02: NA CYP03: NA

64 CYP04: NA CYP05: NA

5.7 The future course of EU integration

5.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Cypriot Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview CYP01 CYP02 CYP03 CYP04 CYP05

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

CYP01: The fundamental treaties should not change easily and is not easy to challenge them either. He did not preclude a relaunch of the treaty but not at this stage. Working within the treaties in the direction of more social justice and member-states equality is the most important thing he said. CYP02: Sarcastically he wondered whether there will even be an EU in a few years the way things are developing. He was very critical of decisions taken with diﬀerent standards and based on the size of the country. The dissimilarity is the main source of grievances and lack of trust towards the EU (Cyprus bail-in is a very good examples of this type of decisions). The way the EU functions today creates inequalities and unequal treatment of countries CYP03: The treaties should aim to more social justice, equality between member-states and against a multi-tier EU. The EU has distanced itself from its founding principles and the only solution is to return to these principles. Otherwise, many more countries will defect from the EU as was the case with the UK. He was extremely critical of the way Cyprus was treated by all EU institutions in 2013 with the bail-in but also since then, but also by all low and high level EU bureaucrats and technocrats. These technocrats are not willing to listen and discuss. They only pressured Cyprus to comply to their instructions. Their behaviour is often insulting. CYP04: More equality and respect among members states is required (he gave the example of Cyprus treatment with the bail in), as well as more social sensitivity and solidarity CYP05: More transparency needed. Sense of ownership, i.e., dont enforce decisions on a member state when the state opposes this particular decision. The EU should facilitate in all possible ways the member states to implement the changes that are decided. He also said that a relaunch of the Treaty should not be excluded if necessary.

65 5.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview CYP01 CYP02 CYP03 CYP04 CYP05 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

CYP01: For small countries like Cyprus is crucial to maintain some sufficient degree of autonomy and sovereignty otherwise they will be reduced permanently to a secondary status. Is the only was for small but also medium size states to maintain a say in the developments of the EU. Cyprus’s small size and the Cyprus problem necessitate the intergovernmentalism option because it offers more tools to use. CYP02: The Anastasiade’s current government supports a federal union without having a concrete vision Christofias administration had not preference CYP03: NA CYP04: He believes that both governments never really bothered about this. All Cypriot governments view the EU as a place/way of guaranteeing Cyprus safety against Turkey and they do not actually discuss this issue. CYP05: NA

5.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? CYP01: Neither government had a clear vision of the EU as they were/are preoccupied with national issues. He answered based on intuition as he said because he was not informed despite his status if any such discussion ever took place. CYP02: No Cypriot government actually concerns itself with these matters. The overarching perception is that we are a small country and we usually agree with the majority. Because both governments lack a clear vision there was no effect on their positions on any of the packages. They usually judge when a matter arises. He gave an example to indicate that both governments lack a vision: they both agreed to a unified/single tax basis although this is harmful for Cyprus CYP03:

66 The Cypriot government has never actually concerned itself with deploying a vision for the EU. They only offer vague declarations. This definitely influences the way Cyprus positions itself on various EU issues. Cyprus usually focuses on a short-term horizon and never in the long-term. Our short-term priorities shift based on our unresolved national problem which must be seriously factored in when anyone analyzes Cyprus’ positioning within the EU. It is also the result of our small size because we know that we can not exert any significant influence. CYP04: Not at all. There were no prepared positions, no vision and no internal discussion/preparation in big Euro- pean debates CYP05: No it didnt. Federalism is a a vague vision that essentially supports further integration in all fields without elaborating on particular issues or incorporating particular positions in an overall strategy

5.8 Negotiation strategy during the Euro crisis

5.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview CYP01 CYP02 CYP03 CYP04 CYP05 S T Hard bargaining: tries to extract concessions from the other side, delays or R Never Very rarely Never Rarely Very rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Never Never Never Never provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Very often Often Often Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

5.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Cypriot delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

CYP01: Not essentially he said but he also believes that the change in government in 2013 signaled a total compliance to EU decisions and directives because the new government ideologically agrees with these reforms and directives. He also thinks that because of this congruence the new government does not actually have a

67 strategy. CYP02: Cyprus did not have a strategy in the ﬁrst place. We were merely followers CYP03: Our strategy has not changed because of the crisis. It has always been the same CYP04: No signiﬁcant change in strategy die to government change apart from the fact that the new government is more compatible with the EU ideology CYP05: It didn’t change at all

6 Czechia

6.1 The list of interviews in Czechia

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer CZE02 75 CZE03 75 CZE04 75 CZE01 100

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

68 6.2 The summary observation on country interviews

The Czech Republic is a non-Euro Area country, where the EA reform proposals were not discussed with the same attention as in the Eurozone. Overall, the formation of the EU policy positions is strongly centralized, with the PM’s Oﬃce and Ministry of Finance as dominant actors. Other stakeholders are not very involved, unless they have a particular interest in the speciﬁc proposal.

The interviewees were the highest level public servants responsible for EU aﬀairs as well as representatives of the largest employer and labor associations.

6.3 Open answers to questions on 4 contested issues

6.3.1 GRC: Willingness to support Greece in early 2010

CZE01: There is a inclusive consultation procedure for all EU positions that allows all relevant actors to contribute. One of its pillars is provided by the civil service and a formal commenting of all relevant documents. The other pillar relies on so-called national convent, which is a less formal participatory forum for all interested stakeholders. However, unless that issue gets politicized, it tends to be decided by the office of government [head of government] and ministry of finance. Other actors tend to make detailed contribution only in cases of their special interest. CZE02: The Necas government was not supportive of any assistance to Greece and other programs. At the same time, the Czech Republic - as the non-member of the euro zone - was not expected to contribute to the Greek program. Nonetheless, it had provided bilateral loan to one of the Baltic countries [NB: EUR 200 mil in Feb 2009 to Latvia] and contributed to the capital increase at the IMF. Hence, the debate about supporting other countries to place in some form. The government’s logic was that if it is to implement austerity for its own economy, it should not assist on the wealthier countries at the same time. Moreover, the government emphasized the need to avoid ”Greek path” and urged internal reforms. Consequently, it also emphasized that external assistance to Greece and other countries could undermine the pressure for structural reforms. By implication, the government’s position was closer to 0, i.e. no immediate assistance to Greece. The only exposure of the Czech Republic to the first Greek program walks through the EFSM, which the government tried to deemphasize as it argued for the use of the euro zone instruments such as the EFSF. The empty spaces in the template mean that the given actor had no specific position and no influence on the check debate. The interviewee reported influence scores in a way that as of to 100. These scores have been normalized as I entered them to MSQ output template. CZE03: Since the Czech Republic is not euro zone member, it was not participating in the first Greek program. Nonetheless, political decisions of this nature are typically made on the top level by the Prime Minister. In 2010, the government of Necas was rather euro skeptic and glad to avoid discussion about helping the

69 richer EU members. Moreover, the government was pursuing austerity at home and argued that other EU countries need the fiscal pressures (that would be alleviated by external help) to sustain their reform efforts. CZE04: Since the Czech Republic is euro zone non-member, there was no debate about supporting Greeks. The only exposure was through EFSM, but even that was not direct since the guarantees came through EU budget. Other exposure came through the IMF, whose capital was increased to support European economies and the Czech Republic participated in this increase. Hence, the reported positions refer primarily to the IMF case. The decisions are made by the government’s EU committee, which also adopts mandates for COREPER. Information and consultation is provided by number of working groups. These groups are headed by Deputy ministers, but in practice most work is done by lower civil servants. These officers do not receive much of political guidance [unless the particular issue gets politicized], so they base their recommendations on a very general programmatic documents such as coalition agreements or framework policies. On the very technical level it is rare to receive detailed comments; if other actors contribute at all they tend to express their general views. Note: the position scores are derived from general reluctance for any form of fiscal burden-sharing. In the specific case of the IMF capital increase the central bank, Minister of finance and the PM to the decision to participate.

6.3.2 ESM: The size of the European Stability Mechanism

CZE01: NA CZE02: As the euro zone non-member, the Czech Republic is not part of the ESM. However, domestic actors are aware that at some stage the country may join the Eurozone. Therefore, the changes to Eurozone institutions are followed at least on the technocratic level to make sure that the country would be able to comply and op- erate within the reformed EMU (i.e. the ” backward induction” argument works at least on technical level). There is an established consultation mechanism consisting of working teams that include all actors specified in the template. However, not every issue is discussed within this structure. On the top of this process there is the government’s EU committee consisting of ministers. If there is no consensus reached on some EU agenda, this committee takes the final vote. The euro zone measures with potential fiscal consequences were discussed only between experts of the office of government and Ministry of finance. The ministry of foreign affairs and the central bank were not really involved. In such technical matters other actors such as trade unions, provide only general comments - often categorical positions on some more general issue that are not particularly constructive for discussion of technical matters. CZE03: Any form of fiscal burden-sharing presents a major hurdle for Euro adoption in the Czech Republic. Politi- cians are well aware of the fact that in neighboring Slovakia the government collapsed over the ESM decision. Consequently, any debate was sidelined by the argument that is not a Czech problem until the country joins the Eurozone. Positions are the same as in GRC question. CZE04:

70 The ESM was politicized, because of the change in the Lisbon Treaty [article 136]. Some politicians did not understand that it is relevant only for the euro zone countries and started arguing that the Czech Republic has to contribute 40 billion crowns to capital and another 200 billion of guarantees. That misconception brought more political attention then the fact that the ESM will become applicable once the country joins euro zone.

6.3.3 FCO: The legal form of the debt brake

CZE01: NA CZE02: The Czech Republic was one of the two member states that did not sign fiscal compact. However, this position was less categorical than it seemed. There was a strong procedural aspect to the Czech no. As the text of the fiscal compact changed at the final summit, the Czech PM did not have a clear mandate to accept such changes and wanted more time for consultations. Yet, there was a time pressure to conclude the chaotic legislative process and sign the agreement at the summit. Once the FC was not signed along with all the other member states, the senior coalition party found it advantageous for domestic political reasons (especially in relations to the president Klaus and it’s euro skeptic wing) to keep it that way. The fact that the UK did not sign it either, also helped to maintain this position, even though the country had not signaled any categorical redline during sherpa’s negotiations. CZE03: Necas government pursued fiscal consolidation, hence its policy was compatible with fiscal compact. Nonethe- less, it decided not to sign in FC primarily for domestic political reasons. When the CSSD formed a new government in 2013, they changed their position. In 2010 they were critical of the FC, yet in 2013 they were willing to adopt its principles albeit in watered-down version and without establishing the fiscal council. CZE04: The Czech refusal to sign FC was the political accident. The Prime Minister Necas had the mandate to adopt it, but only in the pre-negotiated version. However, the text was changed at the summit so he felt obliged to discuss it back at home. Nonetheless, once the UK and Czech Republic became non-signatories, the internal politics realigned and the government no longer supported the FC [even though its fiscal policies were consistent with the compact]. The final position to which position scores refer is the rejection of compact.

6.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

71 jority. others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

CZE01: NA CZE02: Although this reform is not directly applicable to the Czech Republic, it was taken very seriously. There was a perception that it is a major precedent as member states give up control of their economic affairs. It was also viewed as yet another example of furtive integration/supranationalization. There was a considerable legal-theoretical debate whether the reverse qualified majority voting is feasible under the current treaties. Although many lawyers were critical of the proposal, the Czech position in the end aligned with the northern member states (e.g. Germany) as it is usual when the country does not have a direct stake in some euro zone issues. CZE03: There was no debate of this issue as such matters are considered technicalities pertinent only to the current members of the euro zone. Neither the public nor the usual stakeholders are interested. Therefore, such positions are determined by the technocrats at the Ministry of finance or the office of the government [state secretary for EU affairs]. Since such issues are not politicized, technocrats usually prefer not to rock the boat and support Commission’s proposals. CZE04: There was only expert legal debate about the RQMV. Many domestic experts doubted its legality and politicians were concerned about circumventing the Council.

6.4 The stability of government positions and the role of Eurozone non-membership

6.4.1 GV1: The Change of Position and the change of Government

CZE01: There was no change of position. The banking union is opposed by the central bank. The issue of providing temporary bridge loan to Greece from EFSM was politicized and opposed by the public. CZE02: There were no significant changes in the government’s position. The Necas’ government (2010-2013) was generally more euro skeptic, but with the exception of the fiscal compact it did not obstruct the EMU-focused reforms. The government of Sobotka (2013+) is more pro-European and it signed up for the fiscal compact, but the law on fiscal responsibility that would implement FC did not pass through the parliament. The law would require constitutiol majority, yet there was no agreement on key parameters of the debt break or fiscal council. Moreover, both governments are also influenced by active presidents who intend to oppose many EU reforms. CZE03: There was no change of government positions despite the post 2013 government being more pro-EU on economic questions. With regard to the banking union, there is a fear that the Czech National Bank would lose

72 its role in favor of ECB and will not be able to protect ﬁncial stability. Initial government = Necas. Later government = Sobotka CZE04: There was no big change in government positions. Both governments sided with the northern EU members on these issues.

6.4.2 GV2: The Impact of the Eurozone non-membership

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU? Figure A: The Impact of the Eurozone non-membership

Interview Cze01 Cze02 Cze03 Cze04

G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

CZE01: The Czech Republic does not have strong positions on the euro zone issues unless there is a risk of single market fermentation or its impact the cohesion funds or employee mobility. As for the ”other” strategy the government always insisted that non-economic questions pertinent to the euro zone have to be discussed by all EU members. CZE02: There are several redlines implied by the euro zone non-membership. The Czech government would impose any separate institutionalization of euro zone within the EU. It was also propose any kind of euro zone treasury and/or physical capacity. It strives to avoid any kind of two-speed EU that would separate Eurozone from the rest. The government was keen to avoid any kind of euro zone-only decision-making and insisted on inclusive negotiations [the criticism was aimed at Euro summits where non-members stay behind the closed door]. At the same time, the government accepts that euro zone should decide euro zone-only agenda that does not have any spillovers to single market or other policies. The current government would not oppose euro zone integration if it provides more stability, which is generally perceived as beneﬁcial for the Czech Republic. As to ”other” strategy of non-EA government: As the euro zone reforms are not directly applicable, the bureaucrats tends to avoid extra work and there is no systematic eﬀort to shape future EMU structure. CZE03: In general, the relevant government preferred more intergovernmental and less supranational EU policies.

73 They feared loss of influence in the EU to the consolidating euro zone. While the domestic reforms follow closely the euro zone reform designs, there is no rush to join the single currency [even though the country currently fulfills all Maastricht criteria]. CZE04: The government was keen to avoid treaty change, arguing that first there needs to be consensus on what [policy design] and the agreement on how to do it legally should follow. In general, the policy is to prevent two speed Europe, by preventing euro zone deciding issues that impact on other EU members. At the same time, treated changed is perceived more favorably than intergovernmental agreements outside of the EU framework.

6.5 The role of parliament: governing and opposition parties

6.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview Cze01 Cze02 Cze03 Cze04

P.. The inﬂuence of the majority in parliament + 0 0 0

P.. The parliament acquired new control instruments. Stronger P.. The parliament was better and more swiftly informed on the policy of the government than previously. Stronger P.. The parliament had suﬃcient time and resources for discussing the policy of the government. Stronger P.. The parliament got more media attention. Stronger P.. Other described below. Stronger P.. The parliament lacked new control instruments. Weaker P.. The parliament lacked information on the policy of the government. Weaker P.. The parliament did not have suﬃcient time and resources for discussing the policy of the government. Weaker P.. The parliament got fewer media attention. Weaker P.. Other described below. Weaker P.. Nothing important in the power relation between the government and parliament changed. No change P.. The parliament got new control instruments for involvement, but did not use them. No change P.. Other described below. No change

CZE01: The European semester provided the parliament with marginally improved instruments of control. CZE02: The activity of the parliamentary committees largely depends on commitment of individual MPs. Up until the migration wave of 2015, the work of these committees was not politicized. It is only now that parliamentary committees start to explode their existing tools fully. CZE03: There is a trend to strengthen committees in the parliament and Senate, but it is very gradual process. CZE04: NA

74 6.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview Cze01 Cze02 Cze03 Cze04

P.. Governing party inﬂuence 0 na 0 0

CZE01: NA CZE02: The same as the parliamentary majority question. CZE03: NA CZE04: NA

6.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview Cze01 Cze02 Cze03 Cze04

P.. Opposition party inﬂuence - 0 0 0

CZE01: The oposition is less successful in turning the government’s EU policies against it, primarily because cross- party agreement on the opposition to migration. CZE02: When expedient for the domestic politics, opposition parties criticize the government for either accepting or not accepting EU reforms. However, it is largely instrumental and nothing signiﬁcant had changed during

75 the last ﬁve years. CZE03: NA CZE04: NA

6.6 The dominant views of economic policy

6.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview Cze01 Cze02 Cze03 Cze04

Balanced budgets and stable debts are the macroeconomic and ﬁscal priorities. 1 3 2 3

The state should focus on public investments and counter-cyclical demand management. 3 1 1 2

The state should provide signiﬁcant economic governance with state-led industrial policies and the like. 2 2 3 1

CZE01: NA CZE02: NA CZE03: NA CZE04: The rankings come from another interview [SAL7/CZE5].

6.6.2 ID2: Dominant Monetary policy goals

76 Figure 5: The ranking of monetary policy goals

Interview Cze01 Cze02 Cze03 Cze04

A competitive exchange rate (i.e., devalue the currency, if necessary) 1 3 2 2

Growth and low unemployment 3 1 2 3

Price stability 2 2 1 1

CZE01: NA CZE02: The Czech National Bank had intervened to lower the exchange rate to Euro by 5 precent in 2013. This was aimed at increasing export competitiveness and preventing deﬂation. At the same time it complicated the use of the EU funds. CZE03: The Czech national Bank intervenes to lower the interest rate of Czech koruna in order to support export led growth. CZE04: The rankings come from another interview [SAL7/CZE5].

6.7 The future course of EU integration

6.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Czech Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview Cze01 Cze02 Cze03 Cze04

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

CZE01: The government fears multi-speed Europe, fragmentation of the single market and above all limitation of cohesion funds. CZE02: Although the government opposes multispeed Europe in economic matters, it would accepted in other policy domains such as defense or external border security. CZE03: There is a perception that at some stage EU treaties will have to be changed, but not in the short term. For

77 the government is afraid of is the development of multi-speed Europe. CZE04: NA

6.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview Cze01 Cze02 Cze03 Cze04

I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. Multi-speed Europe with possible exits

I.. No change (status quo)

I.. No preference

I.. Other (see below)

CZE01: Necas’ government supported more strongly the intergovernmental approach, while Sobotka’s government is more attached to the status quo. CZE02: There is no consensual vision. CZE03: There are very few people who support further federalization. The most dominant opinion is to preserve intergovernmental character of the EU as much as possible. The Czech politicians are not keen on external accountability for their actions. : The historical experience of the Czech RepublicIt’s often invoked against supra-nationalization as Brussels is perceived as a replacement for dominant actors of the past, i.e. Moscow, Berlin and Vienna. CZE04: Political parties do not have systematic strategy or vision with regard to the future course of the EU. there is some clarity only on the things to be avoided [2 speed Europe; exclusion of euro zone non-members; migration quotas].

78 6.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? CZE01: NA CZE02: NA CZE03: NA CZE04: NA

6.8 Negotiation strategy during the Euro crisis

6.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview Cze01 Cze02 Cze03 Cze04 ST Hard bargaining: tries to extract concessions from the other side, delays or blocks negotiations for its Don’t Don’t Don’t R Rarely own benefit know know know 1.. ST Threatening: uses threats (for example opt-outs or long transitional provisions) to influence other Very Don’t R Never Never parties positions rarely know 1.. ST Soft bargaining: is prepared to make concessions to opposing states or to propose an exchange of Very Very Very R Never concessions for mutual benefit rarely rarely rarely 1..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

6.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Czech delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

CZE01: Necas’ government was less prepared to make concessions than the current one. CZE02: The strategy diﬀers on case-by-case basis. However, the Czech Republic is rarely in a pivot position to negotiate hard. Occasionally, it may use threats on very politicized issues such as migrant quotas or VAT reverse charge. CZE03:

79 The hard bargaining strategies are used only in very exceptional cases such as Treaty of Lisbon [opposed by then-President Klaus], ﬁscal compact [opposed by PM Necas] or migration quotas [opposed by Pres. Zeman and most of the population].The negotiation strategy thus changes on a case-by-case basis. CZE04: The rankings come from another interview [SAL7/CZE5].

7 Germany

7.1 The list of interviews in Germany

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer BAS00 75 BAS01 100 BAS02 50 GER04 100 GER05 100 GER06 50

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

80 7.2 The summary observation on country interviews

The most publicly and internally contested issue was ﬁnancial assistance for Greece. While Merkel put strong emphasis on European stability in general, especially the liberal party (FDP) favored the option of bankruptcy while the left (Die Linke and to a lesser extend the Greens) found any austerity restrictions out of the question. In addition, power relation between the branches made the issue very salient. Especially at the beginning, but also later due to the crisis nature of the issue, decisions were mainly driven by the executive. The parliament fought for more decision rights, which were granted by the Supreme Court, but was hardly capable of translating these instruments into actual power. However, the coalition parties (CDU and FDP) came under more scrutiny from some of their MPs who tried to mobilize public opinion against aiding Greece for their individual beneﬁt.

The other issues were debated far less intensely. The debt break had already been envisaged in the German constitution so that it was not very controversial. When it came to the ESM lending capacity, considering the size of the German contribution, there was consensus to keep it small. This was only opposed by the more or less powerless opposition parties. As for the RQMV, again there was little debate internally, but Germany was generally in favor, seeing it as a tool to get other members more compliant.

The processes in Germany were largely driven by the executive. However, other actors constantly tried to exert inﬂuence. Especially in the Greek question, public opinion and media (Germany?s largest tabloid (BILD) ran a campaign to push Greece out of the Euro) were considered inﬂuential by our interview partners. In addition, the Supreme Court played an important role in Germany. Even though it was not called upon often, it loomed over every decision as a potential veto player which was used by actors to pressure for certain policies that could not be overturned by the Court at any stage.

In general, the ministry of finance together with the chancellor was most influential. At that point Germany was led by a conservative liberal coalition and while the conservatives wanted to keep Greece in the Eurozone, the liberals were not in favor and wanted to pursue a Greek bankruptcy and exit. In consequence parties tried to utilize their respective ministry (finance: CDU, economics :FDP) to exert influence. However, a grass root-movement within the liberal party forced an internal referendum to let party members decide on the party position concerning Grexit. The referendum was seen as an attack on the party leaders. The FDP thus lost a lot of political capital and was weakened in the coalition.

Due to the executive driven decision making we conducted five interviews in ministries (finance, economics and foreign). We spoke to officials who worked in or led relevant sub-sections in the ministries. Due to their expertise and their openness to the methodological concept of scaling the German data is very comprehensive in terms of data points.

7.3 Open answers to questions on 4 contested issues

7.3.1 GRC: Willingness to support Greece in early 2010

Our assumption is that domestic and international actors shape a government’s negotiating position. Which

81 actors - ministries, institutions, parties, or interest groups - were most inﬂuential in shaping the negotiating position of the government, and what positions did they advocate?

BAS00: Speech of Jean-Claude Trichet. Also the Bundestag was surprised by the developments and not very much involved in the government’s preference formation procedure. Big influence of the banking sector as experts have done calculations what effect i.e. a bankrupt Greece would have on the German banks. The same is true for French banks and it’s obvious that the French government has also shared its evaluation with the German government. On the other hand the government was also heavily affected by its legal interpretation that what has been decided in Maastricht (no bail-out) needed to be implemented. Only against the background of the extraordinary circumstances and risks the government decided to accept the financial assistance for Greece. It’s also possible to end up with position 0 on the basis of a more left wing oriented ideology as the debate on state bankruptcy has shown. BAS01: German Position is 50 rather than 0, it was clear that help was absolutely necessary but harsh conditions were an absolute requirement for the Germans BAS02: conditions under which help would be granted were very important, conditions for Germany needed to be very strict. GER04: For GER Greece bankruptcy was not an option, thus GER position not 0 but scale extended to 0 - no assistance, 25 assistance with harsh conditions, 75 assistance with soft conditions, GER positon: 25, GER supported framework of goals rather than explicit conditions; Merkel and Scheuble very important, the Bundesverband der Deutschen Industrie (main industrial association) wanted to support Greece but had no influence. GER05: adjusting scale to 0 no help, 50 help with moderate conditions; main actors were finance ministry, chan- cellery and economics ministry but lead was finance ministry, economics ministry tried to sabotage ministry of finance. At the time GER was lead by a conservative liberal coalition. The ministry of finance was under conservative rule while the ministry of economics was lead by a liberal minister. The conservatives (mainly Merkel but with dissens in her own party) did not want to allow Greek bankruptcy while the liberals were generally in favor of maintaining the option of a Grexit. However since the liberals were in a weak political position within the coalition they tried to exert influence through the ministry of economics. GER06: German position confirmed, Netherlands and nordic countries supported GER as well as some eastern Eu- ropean states, scale adjusted 50 moderate conditions

7.3.2 ESM: The size of the European Stability Mechanism

BAS00:

82 The most important point for Germany at the beginning was that they were against a permanent mechanism. The size was just the second question. BAS01: German Position confirmed BAS02: NA GER04: confirmed German position GER05: German position confirmed, debate was mainly about the threat to banks within each member state rather than focus on Greece or other critical countries, supreme court was considered in terms of size, to be on the safe site constitutionally the ESM had to be small GER06: NA

7.3.3 FCO: The legal form of the debt brake

BAS00: The Fiscal Compact was more of a symbolic kind in order to give Germany an argument that the strict budgetary rules are not obsolete and that no country will be able to get money from the ESM without accepting and adopting the rules of the fiscal compact. The idea came already years earlier from Merkel’s EU policy advisor Meyer-Landrut. That the German opposition (SPD and Greens) opposed the fiscal compact strongly made the symbolic act even bigger. Finally SPD and Greens agreed because the CDU/CSU + FDP government gave in concerning an enhanced cooperation on the Financial Transaction Tax. Another key factor for the German debate were also interviews of foreign politicians (like Greek Finance Ministers and the like) played an important role and lead even more to the image Germany against the rest. BAS01: Confirmed German Position, FPD stronger position than CDU in government coalition, FDP pushed for German position BAS02: NA GER04: German position confirmed, implication for economic and fiscal policy restraints were discussed GER05: there was a strong consensus in GER, so that influence is hard to tell GER06: CDU and FDP resorts very much in favor of constitutional solution

83 7.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

BAS00: This was kind of a compromise between France, the Commission, Van Rompuy and for a lesser extent the ECB. Germany originally argued for automatic sanctions but found the compromise with France in form of the reverse majority voting. In the real negotiation process the parliament was absent and only discussed it later in detail. BAS01: German position conﬁrmed BAS02: NA GER04: Germany wanted to be the decider through majorities, but the absolute preference was automatic mechanism but compromise between France and Germany led to RQMV, adjusted scale 0 sanctions via QMV, 50 sanctions need to be blocked RQMV, 100 automatic sanctions GER05: was the same as ESM GER06: NA

7.4 The stability of government positions and the role of Eurozone non-membership

7.4.1 GV1: The Change of Position and the change of Government

BAS00: The government changed in 2013. Until then the majority was very small and the CDU/CSU+FDP government was much more dependent on the consent of the opposition. This changed with the big coalition at the end of 2013. Although there was no big change in government, one could ask the question in the other way, in the sense, that a 3rd Greek bail-out package would have been very very unlikely under a CDU/CSU + FDP government. BAS01: FDP had very restrictive position and SPD was more moderate but no particular positions changed BAS02: no changes GER04: BMW became more inﬂuential and pushed for longer duration to pay back debt, SPD pushed against regu-

84 latory forces and changed fine print by delaying debt payments for Greece GER05: conditions for Greece became weaker due to social democratic influence, did not influence the big issues but the fine print, e.g. conditions for Greece GER06: no real change since BMF was lead ministry with stable CDU leadership, concerning Greece the involvement of the SPD the policies became more moderate in terms of conditions, on GRC scale SPD would be around 60 but it did not really change negotiation position

7.5 The role of parliament: governing and opposition parties

7.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview BAS00 BAS01 BAS02 GER04 GER05 GER06 P. The inﬂuence of the majority in parliament + + + + - + .

BAS00: The control instruments improved over time. In 2014 the parliament is better and more swiftly informed than in 2010. The Constitutional Court also strengthened the position of the Bundestag as they deﬁned all the cases where the Bundestag has a veto power (ESM programs, secondary market interventions etc.). Another point why the parliament in general was more visible is that MPs who left the party group voting behavior got a lot of media attention which created an incentive for MPs to come up with their own position. This strongly inﬂuenced the public discourse.

85 BAS01: parliament demanded more information and got more informed over time BAS02: much stronger, formal information procedures helped parliamentarians to engage into the matter. parliamentarian wanted to be informed. GER04: stronger - decisions by supreme court: more decision rights for parliament and more information flow to the legislative bodies GER05: weaker - CDU not much power due to strength of chancellor GER06: stronger - new control instruments, sufficient time and resources, at the beginning crisis response made it difficult for immediate parliamentary participation, later the first two aspects went into effect

7.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview BAS00 BAS01 BAS02 GER04 GER05 GER06 P. Governing party inﬂuence + + + + - + .

BAS00: NA BAS01: government change to grant coalition, opposition parties less inﬂuence BAS02: again more informed but not really more inﬂuence, chancellor had to convince parliamentarians GER04: stronger - fought for principles through media and public opinion, public opinion supported those principles GER05: weaker - strong Merkel GER06: stronger - especially CDU group, made very clear that they are sceptic and used public opinion to put pressure on government

7.5.3 PL3: The role of the opposition party

86 Figure 3: Change in the opposition party inﬂuence

Interview BAS00 BAS01 BAS02 GER04 GER05 GER06 P. Opposition party inﬂuence + - + 0 0 0 .

BAS00: However there were two different periods. First the influence got very high as the government of CDU/CSU + FDP couldn’t guarantee a majority for the assistance packages due to the MPs of these parliamentary group which voted against their party line. When the big coalition came into place the influence diminished but was still higher than in 2010. This was also noticeable concerning the information policy of the government. Now the rules and obligations for the government are more nuanced but when the opposition was needed, the MPs also got direct informal details of the negotiations (phone calls etc.). BAS01: government change to grant coalition, opposition parties less influence BAS02: but not stronger influence GER04: no change - FDP left parliament, grant coalition afterwards, small opposition GER05: no change - no majority, no agreement of states needed, not always a clear position GER06: no change -

7.6 The dominant views of economic policy

7.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

87 also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview BAS00 BAS01 BAS02 GER04 GER05 GER06 ID The state should provide signiﬁcant economic governance with state-led 3 2 1 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 3 3 2 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 1 1 2 1 .. management.

BAS00: NA BAS01: ﬁrst parts of the other two options would be rankable but the second parts respectively are inacceptable BAS02: other two option not realistic as complete statement (state-led industrial policies), counter-cyclical demand empirically does not work GER04: NA GER05: NA GER06: NA

7.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview BAS00 BAS01 BAS02 GER04 GER05 GER06 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 2 3 2 1 3 ..

ID Growth and low unemployment 1 3 2 1 2 1 ..

ID Price stability 1 1 1 2 3 2 ..

BAS00: NA BAS01: NA

88 BAS02: NA GER04: NA GER05: NA GER06: NA

7.7 The future course of EU integration

7.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the German Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview BAS00 BAS01 BAS02 GER04 GER05 GER06

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

BAS00: NA BAS01: treaty change would be desirable but not possible BAS02: only realistic option GER04: practical reasons, nothing else goes GER05: relaunch, current treaty, multi speed GER06: Bratislava road map - distinct steps to stress the beneﬁts of EU towards European public, practical vision: how to better EU within treaties

7.7.2 ID5. The Vision of the European Union

The positions of member states’ governments in the EMU reform negotiations may be inﬂuenced by the government’s general vision of what the EU should be. How would you describe the relevant government’s? preferred vision of the EU? For example, did it favour a development of the EU in the direction of federal union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]

89 Figure 7: The Vision of the European Union

Interview BAS00 BAS01 BAS02 GER04 GER05 GER06 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

BAS00: Ever deeper integration while maintaining or even strengthening the intergovernmentalism. BAS01: Multi-speed Europe is only realistic possibility BAS02: other options would be more favorable but multi-speed Europe is the only realistic frame GER04: NA GER05: Intergovernmental institutions, multi speed GER06: intergovernmental institution, other: make current institutions more eﬀective, also for practical reasons

7.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? BAS00: Yes. BAS01: practical consideration were in the foreground, also due to time constraints BAS02: no, practical considerations were in the foreground GER04: NA GER05: NA GER06: no change, practicality was key, more efficiency and crisis response institutional mechanisms

7.8 Negotiation strategy during the Euro crisis

7.8.1 ST1: Negotiation Strategy during the Euro Crisis

90 international bargaining situations. Can you give us an estimate of how often the delegation from this country uses the following strategies?

Figure 8: Negotiation strategy during the Euro crisis

Interview BAS00 BAS01 BAS02 GER04 GER05 GER06 S T Hard bargaining: tries to extract concessions from the other side, delays or R Very often Rarely Often Very often Rarely Often blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Rarely Never Very rarely Very rarely Rarely Often provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Often Very often Often Rarely propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

7.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Austrian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

BAS00: NA BAS01: a mixture of strategies, that were applied to particular situations BAS02: ”the usual give and take”, took issue with the term ”threats”, no threats GER04: usually did not threaten, not Merkels style but Varoufakis was threatened because he did too; after German Greece relations became confrontative - to reduce this Germany oﬀered for example technical help, depen- dence on partner: Ireland was easy, so was Cyprus in contrast to Greece GER05: NA GER06: no change - BMF was lead ministry and was under CDU leadership the entire time, BMF mostly set goals and strategy

8 Denmark

8.1 The list of interviews in Denmark

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

91 Interview code Quality rating by interviewer STO07 75 STO08 25 STO09 50 STO10 100

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

92 8.2 The summary observation on country interviews

Denmark’s preferences on the reform of the Eurozone were shaped by its position as a non-EA country that is closely integrated with the EA. Danish support for EMU reforms was motivated by increased EA stability and sustainability, which is a share interest. While Denmark generally supported the Greek package, ESM, stricter SGP sanctions or banking union, there was also a concern that EMU reforms might deepen the distinctions between EA and non-EA member states within the EU, by side-lining the latter. Conse- quently, Denmark joined other non-EAs in protecting their voice in EU economic and ﬁnancial policies and at the same time seriously considered opting-in to the banking union. The Danish policy positions were formed primarily among the Oﬃce of the Prime Minister and the Ministry of Finance, which considered closely the proposals originating on the EU level. They were not strongly contested by any actors within the domestic politics, because they did not impact Denmark directly. Four interviews were conducted in Den- mark with representatives from the parliament, government as well as employer and trade union associations.

8.3 Open answers to questions on 4 contested issues

8.3.1 GRC: Willingness to support Greece in early 2010

STO07: I can say from the debate in this house ”no willingness to support” Greece. When they were bailing out, Denmark was part of the bailout Ireland. And that was because one of the largest Danish banks, Danske bank, had business interests there. I think the government was aware that this was very dangerous. In the crisis years they looked at Greece as the first country that would fall out. Nobody was that worried about Greece, is was most about Italy and Spain. If those two economies would fall, then that would affect the whole of Europe. Denmark included. So they were worried about Greece to the extent that, if Greece go bankrupted will the whole Eurozone fall? We were never asked to help Greece because we are not a Eurozone country. We were not part of the EFSF. Would Denmark help out as a last resort? The initial position was that there was no interest in the Danish government to see the Eurozone fall apart. As a last resort maybe help was needed, but it would be very hard to push through this house. The big general presentation was that Greece out themselves in the position they are in. Certainly not the public, because they did not know about it. I think what surprise me a lot during that time, was that no one in this country discussed how serious this was, in public. So the public perception of how serious this was, was quit weak. Because people did not feel it in their everyday lives. What they say in the country, was that their housing loans became cheaper, and gasoline became cheaper, so they only saw the positive effects of the crisis. The biggest influence would be the government. We had two ministries at this point in time, we had Margrethe Vestager, that now is the European commissioner. She was the Minister of Economic Affairs and the Interior from 2011 to 2014. The second was the finance ministry and the foreign affairs ministry and the prime ministers office. Those were the four central ministries. STO08: The crises in Greece was seen as a (euro area member state) EAMS-issue. So initially it was seen as a problem of the euro MS and not Denmark. Somewhere 40 position? I remember some discussions in the parliament

93 on how to Position somewhere in the middle. I think everybody understood that something had to be done. Leaving the euro was bad. And also we should not encourage irresponsible. Position 50? There were a lot of different views on that with the government position and the parliament position. Influential actors: Some of the European institutions. The big countries. The EC and IMF. If we had to choose on category we would say the big member states. Germany is always influential and highly regarded in Denmark. STO09: IThe ”position” used here is with reference to the support/money of the EAMS, not Danish money/support. The ”true” initial position would be different from ”100” if Denmark had to pay it themselves. The question was not asked for the position of Denmark if they had to pay themselves. I do not know what the initial position would be if Denmark had to support with their own money, however I got the feeling that it would be closer to position ”0”. Since I only asked for the initial position for Denmark with regard to the money of the EAMS, I will rate that position ”100”, but we were not in a position that we should support Greece. It was for the euro countries, so of course we wanted them to support Greece but it was their decision. We cannot decide on others money. So it is more close to position ”100”, but we were not part of it. Influential actors: I think that has been the positon of everybody here in Denmark (closer to position 100). You can ask the unions, the employers federations, Venstre party, Social Democrats, we agree on that. We want a stable euro. If something doesn’t work. If there is a crisis in the euro we have a crisis because we have a fixed exchange rate. So we want to have it stable. Except the very right or very left wing parties, which have around 25 percent of the votes, maybe even 30 percent, the rest of Denmark is in agreement. That was the initial willingness, but we didn’t have to pay, so easy to have that stance. They should be helped but not with our money. We are part of the IMF, but our part of the IMF budget is very little. It was not our money. STO10: So if Denmark would participate with Danish financing? Then the answer is zero (in position). Because if the question is ”do we think that the EA-MS should come up with fiscal support for Greece”, then it would be a positive number, somewhere between zero and hundred. That would be a government position but at that time we had a two party government and the most important actors would be the finance minister and the PM. Both from the liberal party and probably the party leader from the conservative party back then.

Position of the interviewee, who was involved in the decision making process: I was responsible, back then I was only number two. But yes I had some responsibility in preparing the governments position. But Denmark is outside and did not participate in the ﬁnancial package to Greece. But we did participate in the EFSM. I was negative, so my position was zero.

8.3.2 ESM: The size of the European Stability Mechanism

STO07: Interviewee: Its diﬃcult because we never had a debate. In general Denmark would argue for it being, at that point it was discussions here about if the 500 billion was enough. So I would probably put us, above the zero, somewhere at 30-40. Because it was an actual discussion. Denmark did not have any stake in it, ”is this

94 enough” was discussed, because at that time we were fearing Spain, Italy and other countries, that might go bankrupted as well as Greece. So it was an actual discussion here, but since we were not gonna pay in to it. There was not a trade off, so it was easy to say ”lets put some more money in it” because it wasn’t Danish money, or Danish tax payers money. Some people in this house argued ”Let put it above the 500billion”,but it’s a free right, and a free rider statement. There was no official statement from the government, but here in the parliament there was people arguing that the 500 bn was not enough. The people arguing this were in the opposition at that time. It was both the social democrats and (...) SF. Some of the influential actors were involved in saving the Danish banks so they had a general picture that was inpated by them, by the national bank and other actors. In that it was very uncertain at this moment in time, how solid the Italian and Spanish economies were. It was partly from things they just read, economist writing, and partly because of the briefings, that some of the members of this house was given by the national bank and other actors. The main governing parties, as a government did not have a position because they were not part of this. I don’t know what the politicians said to each other internally. The official position is that Denmark has no comment on this because we are not part of the ESM. But I think there was a general sense, unofficially, this is off the record, that there were a lot of worries of some of the southern European states and their budgets and their economies. Q: As you may know, we have to be systematic in this project because we do interviews in all EU member states. Thus, could we please go through the following list of domestic and international actors and you tell me whether and to what extent they influenced the formation of the negotiation positions of the danish government? Interviewee: I think the government was worried. And at that time the discussion debate was very much like ”pick a number”. I think they were worried that 500 bn was not enough. But on the other hand, they were not willing to contribute anything themselves. So if they had been really, really, really worried; they did it with the bail-out of Ireland, Danish money was put in to the helping package there, because there was a big Danish bank that was heavily involved in banking in Ireland. So there, in Ireland, the government found that ”ok, the risk here is so high, and it will affect the Danish financial sector so much, if this big bank cracks”. Because it was basically the biggest bank in the country at the time, the Danske Bank. So when it came to that, they were willing to put money into Ireland even though they are not part of Eurozone. When it came to the southern economies, Greece, Spain, Portugal and so forth, the Danish government looked at the numbers and probably said ”you know it will affect us, but, not as much as if we would have more direct investments here, so basically we are not gonna do anything, we cannot go to the parliament and ask them for money to bail-out these economies”. What would have happened if Italy would be defaulted, then the Danish government would probably have acted. But as it wore, they bailed-out Ireland but not the southern economies. So that gives you a bit of a sense, would they have been willing to act? Yes, if they would have taken it very seriously, because they did so in the case of Ireland. Interviewer: Was this a domestic debate? Interviewee: It was mentioned in the meetings in the European affairs committee. It was a debate on weather this was enough. But sence we as a nation only looked at this as sort of an orientation of what was gong on in the Eurozone, we were not part of it. Denmark was not asked for a yes or a no. and then it was easier to not make a decision. So you never had a discussion where Denmark actually made a decision, or decided weather 500 bn was enough or not. It was part of the discussion, but there was no conclusion on it. STO08: Dont know. It’s a hard issue. I think Denmarks position was that ESM is a good thing. STO09: The ”position” used here is with reference to the support/money of the EAMS, not Danish money/support. The ”true” initial position would be different from ”100” if Denmark had to pay it themselves. The question was not asked for the position of Denmark if they had to pay themselves. I don’t know what the initial position would be if Denmark had to support with their own money, however I got the feeling that it would be closer to position ”0”. Since I only asked for the initial position for Denmark with regard to the money of the EAMS, I will rate that position ”100”. Again. Its not our money. So we would tend more towards the 100 position, but its not our money. So its easy to have that view. We are not supplying these funds. If you set up a lending facility they have to be able to cope with everything happening (hence the position

95 100). That was a logic position to have. And as long as its not our money its very easy to say ”give it all”. This is the government position. The majority of parliament. STO10: You also have to take down that Denmark was not participating. It was never an issue. And even us we did not ask for this to be opened as I mentioned before. So that was never an issue. So therefore we were not very outspoken on the size of the ESM. We would let the euro area decide that. We cant allow ourselves to have a strong opinion on the size when we do not intend to participate. I would still say that the position would probably be zero because we would probably have no sympathy for the countries in the Eurogroup that 500 would be the trigger, it does not have to be larger. This is not just the capital its also paid in capital. 80 billion euros. So when they took this decision they had to actually pay in some money upfront, a total of 80 billion. So are a very budged restricted country so we had understanding that they were reluctant to pay in more than what the 500 total, and 80 billion paid in did require. So zero. That would be exactly the same as I responded before, so the PM and ﬁnance minister would have a 100 inﬂuence and all the other actors would be the same as before. I don’t want to add no other actor, because the thing that these two questions had in common, is that it was only euro area initiatives, it was never opened to ”outs” and even us did not ask for it being opened. So on these things, we did not have a really strong positions, we understand and morally supported that they did this, but we also were more sympathetic towards the more restrictive countries led by Germany. We would do this but no more money than this.

8.3.3 FCO: The legal form of the debt brake

STO07: It’s the position zero, because its almost impossible to change the Danish constitution, so no sane government would ever do that. We did pass PISA-legislation here, the budget rule. So we did as we committed. We are part of the fiscal compact. And we voted it through a law called law nr 547 in 2012, its called the ”budget law”. Here the most influential actor for the budge law is the government. The finance minister. STO08: Position 50. The Danish government usually wants these decisions to be very binding so that the MS adhere to them. Something more binding than ordinary. Our government wanted a binding thing in the Euro-area, and have more freedom for those nonEAMS. The debt brake rule is only one part of the fiscal compact. Our public debt is under the limit so we have a position that every country should have it as well. Contrary to the other things in the FC which is for structural unbalances, we have a stronger position. What influenced us the most on this specific part of the FC, the institution that did the analysis of what this could mean for Denmark. The Economic Council (its Danish, an independent body) and the Danish National Bank, ministry of finance and economy. The last two years the Economic Council have done a fiscal overview to say if Denmark is doing good or bad in the fiscal matters. We made a new law for the FC. STO09: It would be 50 position. STO10:

96 First I have to say that I understand the title ”the debt break rule”. However, economically its more correct to say the ”Structural Balance Rule”. Because what is actually in the Fiscal Compact is a structural balance rule. Then the idea of the fiscal compact is that you implement this in national legislation, and as I said, Denmark was the first, and for a long time, the only ”out” country to actually do this. The question is then: how do we implement the Structural Balance Rule? That can be done in various ways and you can do it so it also implies a debt break, but you don’t necessarily have to do so. But what you do have to do is implement the Structural Balance Rule. I just have to say this because in a strict sense we have implemented everything in the fiscal compact but we have done so by a structural balance rule in Danish legislation. And this is different to the Germans, that have implemented both a Structural Balance Rule and an explicit Debt Break Rule. But lets just say that this means the substantial rules of the fiscal compact, the Structural Balance Rule. Then our position, I have to understand the difference between zero and fifty. Because I can say right away that we a very much against position 100. Because I would take both these boxes. I would say zero then, but may I provide an explanation to you? Because this is a heavy debate and it still is in the EU. There is a formulation in the fiscal compact which says you have to implement this at home the Structural Balance Rule, and you do so, in national legislation, preferably of a constitutional nature. And that was important to us because we have a legal system, and some other countries have the same. We have a legal system that we only have two levels of law. We have the Danish constitution and then another level which is ”all other laws”. And the constitution in Denmark is practically impossible to change and that’s why we, among others, insisted that it should not be a requirement of the fiscal compact that you have to put this into your constitution. Because that would not be possible for us. The Germans on the other hand, insisted that it should be constitutional, because they can change their own constitution each and every day. So a compromise was made with much struggle. But it made it possible for us to put this into in a Danish law, and it is a law. Its not a text with no legal status, it’s a law, but its not in the constitution. And that was important for us, otherwise we could not sign the fiscal compact. Again the PM and the finance minister were influential and had exactly the same positions as before, zero and influence 100. Position of the interviewee who was part of the decision making prozess: my personal positon was 0.

8.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

STO07: Again, we are an opt-out country. So it says in our opt-out that we cannot speak against something that the other countries want to go ahead with. That’s part of our opt-out. So obviously we did not do that. The general Danish position, without being to speciﬁc on the SGP, was ”it would be good with general European rules to make sure that southern Europe got their house in order”. But it’s a ”free-rider” positon. We had a solid economy compared to some of the other euro MS. The general idea, was ”we were behind the

3In the pilot version of the MS questionnaire there was also a question about withholding EU funds from member states in breach of SGP criteria. Some answers may thus refer also to this question, although they are reported under SPA.

97 Germans here”. There should be some rules that some European countries should live up to. We would be like 60, if applicable. It was mostly information from the then minister. The finance ministry. But there was not much debate about it, it was just taking note ”ok this is what Denmark thinks”. The finance ministry saying, it would be a good thing if we had more regulation in the European level, and then people say ”ok ok”. Because it was not applicable to Denmark you did not have a hard debate on it. Its still applicable because Denmark could be in the procedure, but are not sanctioned. This has to do with the public budgets. Q: Domestic and international actors shape the government’sênegotiation positions shown above. Which actors, such as ministries, institutions, parties, or interest groups, had in your view the biggest influence in the formation of the negotiation positions of the danish government and which positions did they advocate? Interviewee: The ”finance ministry” would say that it would be an ”ok” idea, if they would have a position. Like 50-60. ”Committee of EU affairs” 50-60. ”Media”: it was discussed but I don’t remember what they said. I think they were just referring to things happening, decisions made in Brussels. ”Public opinion”: the general public opinion was also that ”southern Europe get your house in order”. But the specifics of the SGP of the mechanisms in the SGP were not a public debate. The idea in general to have some rules that would regulate budget deficits and so on, yes. But not this specific mechanisms or the procedure. ”Germany”: closer to 100 in the position. In influence I dont know, all I know is that they were influential. STO08: NA STO09: We didn’t agree with ourselves. So we would be in a middle position like 50. Of course the Denmark has wanted that you could be withholding EU-funds if you don’t stick to the rules. But it was not really outspoken. We should say 75 instead. I think this is what people saw was the right thing to do, but most people did not really go for it. I have never heard any minister or something, saying that this should be done. The biggest influence is coming from the euro countries. It was not really outspoken anywhere. The logic position would be to say: if you break the rules you don’t get money. And that would normally be the positon of Denmark. But in this case it was very little outspoken. Very few people wanted to say anything about this. STO10: I only have the answer to question ”Withholding EU Funds from Deficit Countries”.

8.4 The stability of government positions and the role of Eurozone non-membership

8.4.1 GV1: The Change of Position and the change of Government

STO07: Interviewee: That’s really hard. Cant say that. I mean, it was a change of position, obviously. But it wasn’t like Denmark had a very independent position because we weren’t part of the legislation. So we were supporting what ever Germany was supporting with a few exceptions. Like we didn’t like the budget rule to be a constitutional type. So of course there was a change of positon, but it was also how the crisis changed, so changed the government position. To changes were linked to the development to the council of ministers in the EU. So you did not see a big diﬀerence between one government handling the crisis and the next. They handled it the same way. That’s not where you could tell the diﬀerent party colours (red or blue). The Danish positon changed with, what happened in the council, or sort of in the general picture. STO08: Interviewee: The position did not change.

98 STO09: Interviewee: No. I think we had the same position all the time. Regardless of government. The two parties are deciding and they are the majority. Some others were supporting too but no change during the period. STO10: Interviewee: In all these matters? No. And it did not change with the change of government. When it comes to the most of the intertiol economic issues the Danish position is relatively stable across time and is relatively robust with regard to change of government. Denmark is consistently no matter what government we have, among the, we consider ourselves strong supporters of sound and sustaible economic policies. With a strong emphasis budget discipline. And notably strict rules and strict complies and enforcement of the ﬁscal rules of the Stability and Growth Pack. And this is a very string Danish position when we have a blue-government (right wing) led by liberal party, but also when we have a red-government (left wing) consisting of the social democratic party and the Social Liberal party. I may also add that when we have a red-government that position is relatively strong for especially the social liberal party. The position with a strong emphasis on sound and sustaible ﬁscal policies, supported by strict EU rules. Within a red-government (left wing) consisting of the social democratic party and the Social Liberal party, that position is probably stronger for the Social Liberal Party than for the Social Democratic party. (This is completely of the record).

8.4.2 GV2: The Impact of the Eurozone non-membership

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU?

Figure A: The Impact of the Eurozone non-membership

Interview STO07 STO08 STO09 STO10 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

STO07: Obviously Denmark does not have a big voice in the council, because they are not a Eurozone member. And they don’t participate in the talks of the Eurozone countries. When the finance ministers have meetings with the Eurozone countries, Denmark is not there, along with Sweden and other non euro members. So they cant influence. But they try to play a constructive role, if they have something to contribute, they try to. The governement doesn’t want treaty reforms because that takes a lot of time. And if we are unfortunate it triggers an EU referendum in Denmark. We’ve had a lot of them. The Danish government generally supported Germany in pushing for reforms. Denmark was very supported on the legislation that was done on private banking and all this, and regulating the financial sector. The government, specially the Thorning- government was for that. But in the council that was sort of the German position. Denmark is part of that northern European, where they pointing at southern Europe saying ”have your house in order”. They are very much pro structural reforms. But most structural reforms needs to be done on a domestic level, its not EU competence. So yeah, they supported that, but they did not actively go out and promoted their own suggestions. They were mostly out supporting the brits for influence by non Eurozone state members. Denmark and Sweden rally behind the UK position trying to make sure that the the non-EU countries had a say. Poland also was a loud voice in the discussion. But they did not come up with separate proposals.

99 The brits and the polish pushed proposals on how to involve non-eurozone countries. Denmark did not do that, as far as I know. Maybe they did it in the council. But they did not do it publicly. It was not a public position. You have to ask the government about that. If they sit at the coreper there are discussions and negotiations that I don’t know about as an employee in the Danish parliament. The government tells the parliament, what they think the parliament needs to know. That’s how it works. We ask them questions and then they answer. But they don’t come. Unless its something like a treaty negotiation, then we have a lot of meetings with the yes side in this house. Q: The government supported mechanisms are exclusively designed for member of the Eurozone. Interviewee: Yes and no. Mostly because the Danish government has taken the position many years ago since we got the opt-out in the beginning of the 90ties. The opt-out says that ”we cannot interfere with the continued integration between other EUMS” and we pretty much stick to that line. Basically our hands are tied. So what ever influence happens it does so though regular diplomacy. Q: The government pushed for reforms that will not make it more difficult to later adopt the euro. Interviewee: Its not on the agenda here. We had a referendum in the 2000, as Sweden had. And the Danes voted no. And that is still applicable today. Sometimes we conduct opinion polls but I don’t think the Danes have been for adopting the euro in many many years. And not before the crisis. The eurzone is not looked upon in the population as a very good idea. The government has to think, ”can I win a referendum on this question” and that has not been possible since the year 2000. Q: The government was not worried about further integration within the Eurozone, as there is no (or very little) interest in adopting the Euro in the foreseeable future. Interviewee: Of course the government is worried. Moving outside the circle of power in a EU outside the eurozone is a worry. That’s why the brits where worried. The Danes a worried that too many decisions are taken amongst the Eurozone finance ministers that they are not part of. But they cant do anything about it. So they try to put themselves in a position where other members states will take them into consideration. STO08: Interviewee: I think Denmark wants to be in the fiscal pact. They want to join even if they are not a EAMS. We want to be in the union without us being in the euroarea. Usually we are very positive about things that the EU proposes the national governments to do. The position of the government is to try to be as close as possible to the core of the EU, including the euro, without becoming a member. The official stance of the main political parties that take part in various governments is that we should be part of the euro. But its not politically feasible at the moment, so they try to navigate, not discussing if we should be in the euro, but try to be as close as possible, in terms of the decisions that are taken. They try adhere to some of the things even if we are not obliged to, but Denmark still chooses to do it anyway because it’s a political signal of wanting to be influential in the major decisions. They like to word ”responsibility” they want to do it with responsibility when joining the EU projects. Q: The government supported mechanisms that ensure participation of non-members of the Eurozone in the new governance structures. Interviewee: Yes but not by forced participation. That would allow Denmark to choose. STO09: Interviewee: Of course it is a fact that we are not part of the Eurozone. Its not a fact that these two parties that were deciding the policy they like. And that influences what we are trying to do. Fixing the euro, that was up to the Eurozone countries. we could not interfere there. Of course, when they made institutions, like the banking union, it was very important for us that we could join if we wanted to join. We wanted to have an open door, if there are new institutions. So we can get it, but we can decide also to not get in. Q: The government pushed for reforms within the Treaties. Interviewee: No, you could say that some things didn’t work so you had to change it. There were a lot of rules in the euro area but nobody complied to the rules. So you decided to change the rules. It’s a strange thing that you don’t comply to the rules, and because of that you have to change the rules. Everybody saw the need to do something that would make the euro work again. But it was up to euro countries, we did not push for anything. They had to find the way out of the dilemmas. You can say that we would try to help them if we could. But we could not. Q: The government supported mechanisms that ensure participation of non-members of the Eurozone in the new governance structures. Interviewee: we wanted to able to be part of what they decided. To be able to, not to be forced into. Q:The government pushed for reforms that will not make it more difficult to later

100 adopt the euro. Interviewee: I don’t think anything has been done that would make it more difficult to join the euro. I don’t think there has been much though about this. We want to join the euro. Both the social democrats and the Venstre. So there’s a majority. But not a majority that can decide it. Dansk Folkeparti and the most left party can block euro membership, and they will. But we want to join in the future. It does not give so much meaning in having a fixed exchange rate forever, without joining. STO10: Interviewee: Yes, it influenced our position in the sense that we in most respects said that everything should apply to everybody. Except that we at the same time insisted that when it came to economic sanctions this could not apply to ”outs”. The difference which was already in the Stability and Growth Pact, namely that the substance of the rules should be for everyone but things like economic sanctions should only be for ”ins”. We argue that that principle should apply as we develop new rules this goes for the Six-pact, that strengthened the Stability and Growth Pact and implemented the macroeconomic new balance procedure and so on. And this is a pretty general point so, yes, in that respect it was influenced our positions. Q: The government pushed for reforms outside the Treaties. Interviewee: Especially because the changing of a treaty in the EU is such a time consuming and bureaucratic exercise. And I think that our assessment has been that we could make the changes that we need, without changing the treaties. But we did have to change secondary legislation like we did for example for the six pack. Q: The government supported mechanisms that ensure participation of non-members of the Eurozone in the new governance structures. Interviewee: we supported the participation of the ”outs”. The first crisis mechanisms, well first Greece got the bilateral loans. Then we invented the EFSF, only for EA-MS. And then the EFSM at the same time also for ”ins”. And we supported that. But then when the EA-MS decided that they should have a permanent stabilization mechanism. And they invented the ESM, at that point we did not. Because the ESM was a permanent mechanism for loans to troubled EA-MS. Then we did not argue that that should be opened to ”outs”. We have not each and every time insisted that everything should be opened to ”outs”. We have done so when we found that it would be to our advantage. But we did not want to commit ourselves to, for instance, participation in the ESM. Q: Other argument: Interviewee: I would say the government pushed for reforms in the EU initiatives that would not create too much of a split between ”ins” and ”outs”. Among other things, for other reasons, that we never, at some point in the future, vote amount the euro again, then the jump should not be the distance to euro area participation from where we are now should not be too large. So that has been an argument in its own act that most initiative should apply to both ”ins” and ”outs”. Because it has been a general fear to us, or concern, that ”ins” and ”outs” would grift apart the differences would be too significant. Without any really good economic direction now and we have also been very concerned about the single market. Just like the UK and Sweden and others. Because that is, and developing, deepening the single market is an advantage for everyone regardless of your currency. So we’ve been very occupied that we should not, or that we should make sure that we do not ”split up” the single market, so we make a true single market only for the EA-MS and then some sort of kvasi single market for the ”outs”. That is not the way to go. The single market has to be for all regardless of currency.

8.5 The role of parliament: governing and opposition parties

8.5.1 PL1: The role of the National Parliament

101 Figure 1: Change in the majority party inﬂuence

Interview STO07 STO08 STO09 STO10 P. The inﬂuence of the majority in parliament 0 0 0 0 .

STO07: The parliament was part of the discussion from the beginning but they lead heavily towards the expertise you found in the national bank and the Danish banks, in the finance ministry, economics ministry. We have this minority government, so the minority government has to come to this house to get support for what ever steps they want to take. If its to propose a new legislation or stating an opinion in the council of ministers in the EU, or what ever they have to pass through this house. For the SGP and the Fiscal Compact it was the business of the European Affairs Committee. When they came to the budget law it was a matter or the finance committee. So the house was heavily involved in all of this. But they did not have an independent stance, vis a vi the government. They lead on the expertise of the government and the ministries there to form their own opinion. Q: Other arguments? Interviewee: we did pass though a ”beratning”. That is the agreement between the government and the parliament about how to conduct EU affairs. We got a national reflection of the European semester. We got a little bit of new powers. But its not directly related to the SGP and all of this. Its related to the European semester. So we got the national semester. The Danish government got the ability to ask the government earlier on than they done previously about what they are reporting back to the EU. So in March/April the national government had to report back to the EU, on what type of reforms they want to do. And the Danish government got in three sessions a year where the government has to come to this house and explain what their intentions are. What they are likely to put in the report they are gonna send to the EU institutions. In that sense the got a little bit of new powers. All the national parliaments are responsible for the national budgets and all of a sudden when you have the European semester you also had a ”European aspect” that was an action of the government alone. And here a lot of the national parliamentarians waned to get involved also. STO08: It was the same, it stayed the same. The parliament as one, there was no change. There were differences in parties in parliament, on what to think about the crisis and what to do about the crisis. But the change of government does not matter because the opposite parties would have something to say about what the governments stands was. And it did not matter what government it was. Q: Other argument. Interviewee: It’s a difficult question because we got a new government in 2011, and that might be an effect of the crises. It’s the decision of the government and they need the parliament, and that has always been the same. No new mechanisms were adopted that would enable the parliament.

102 STO09: Interviewee: The position of the parliament got weaker during the process. More and more was decided elsewhere. Its not the position ”weaker”, its more close to ”no change”. But if any direction it maybe a little bit weaker. But ”no change” is the best. The decisions were taken drop by drop. There were a lot of compromises, you had to accept these compromises. So the parliament was always a little less outspoken on these matters because most of the parties accepted the compromises as they came. So the positions ”weakened” a little. But the overall, of what was important for us, did not change on the way. Q: Other argument: Interviewee: We have minority governments in this country so you have to have a majority in parliament. But on these matters the majority was there all the time. STO10: would say nothing important changed with respect to the ”power relation”, but I guess we had some changes with regard to procedures, in the sense that as time evolved during the crisis, and the EU came out with more and more initiatives, the parliament was also involved more. And the various governments simply had to spend more time involved in parliament and explaining the European issues and taking mandates in Danish positions. No change in the ”power relation” but more involvement.

8.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in influencing the national government in EU affairs became stronger, weaker or stayed the same from 2010 and 2015? Figure 2: Change in the governing party influence

Interview STO07 STO08 STO09 STO10 P. Governing party inﬂuence 0 0 na 0 .

STO07: Because there is no big difference between the handling of this crisis between one government and another. STO08: In 2010 we had a two-party government. They overall agreed on these issues, then in 2011 we had a three party government that was more diverse in terms of economic issues. So it was more a struggle, there was more disagreement between 2011-2014. I would say that it was more diverse in the government from 2011, but weather that changed the influence, I cannot say. STO09: NA STO10: It stayed the same. Because as I explained I think the Danish position have basically been the same across the governments that we have had. Of course if you say 2010-2014 we only had two different governments. But if you say 2009 to now, we’ve had three different governments. Our official positions in the EU in these matters have been very much the same regardless if we had a red (left wing) or blue (right wing) government. And therefore the government and the opposition in parliament they have pretty much been in agreement in all these issues.

8.5.3 PL3: The role of the opposition party

103 you explain why?

Figure 3: Change in the opposition party inﬂuence

Interview STO07 STO08 STO09 STO10 P. Opposition party inﬂuence 0 0 0 0 .

STO07: The parliament got new control mechanisms and they used them. The majority and minority on EU issues is different than on regular issues in the house. When it comes to EU affairs you have the majority that are all the middle parties in the house. When it comes to all the other types of affairs, school, education, military, you have a left and a right division. And it has been this way for many years. And from time to time these parties in the middle make general agreements that is followed. And that’s why we don’t have a EU opposition as such. Our EU opposition is parties that generally say no in the Danish referendum on EU issues, that’s the extreme left and the extreme right. That means your type of questions don’t fit the Danish political picture. And that’s why is no change in the power relation. Because all the middle parties agree on the EU issues no matter who is in government. STO08: NA STO09: It was the same majority all the way the same parties. So no real change. STO10: (Same answer as previous question) Interviewee: It stayed the same. Because as I explained I think the Danish position have basically been the same across the governments that we have had. Of course if you say 2010-2014 we only had two different governments. But if you say 2009 to now, we’ve had three different governments. Our official positions in the EU in these matters have been very much the same regardless if we had a red (left wing) or blue (right wing) government. And therefore the government and the opposition in parliament they have pretty much been in agreement in all these issues.

104 8.6 The dominant views of economic policy

8.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview STO07 STO08 STO09 STO10 ID The state should provide signiﬁcant economic governance with state-led 3 3 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 2 2 2 .. management.

STO07: NA STO08: NA STO09: NA STO10: Interviewee: it’s a supplement to the one I ranked as important (the balance budget and low debts). I would say the the principle of long term ”Fiscal Sustainability” would have to be added. And structural reforms.

8.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview STO07 STO08 STO09 STO10 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 ..

ID Growth and low unemployment 2 3 3 ..

ID Price stability 1 1 3 ..

105 STO07: Interviewee: ”Prioritize price stability” is important for a small open economy like the Danish one. We don’t see devaluation as a true competitive edge. Because it might change again tomorrow. And its difficult to trade with countries if they devaluate and revaluate all the time. ”Boost the economy” well it has happened, but its not seen as something that will last very long if you do it via the monetary policy. That’s the general economic philosophy. STO08: Interviewee: The monetary policy is not for the government to decide. So its rare that they talk about Dan- ish monetary policy. Monetary policy is not a issue for our government, they leave that to our national bank. So you never hear them talk about these issues. You can hear them talk about boosting the economy with monetary policy. If they should decide on any, then all the issues are important. They want a competitive exchange rate that is not fluxuating, because they know what it can do to the economy. We are tied to the euro so we cannot use monetary policy. We can only use or monetary policy to defend our exchange rate. STO09: Interviewee: Our fixed exchange rate gives us prize stability. So prince stability is number one. And the other two are out of the question. We hope that the fixed exchange rate will give us prize stability. The parties that are making out the majority wants to join the euro. And the prize stability is what we want, nothing of the other two options. And especially now when we have a fixed exchange rate. And there is a broad consensus in keeping the fixed exchange rate. STO10: Interviewee: ”Provide a competitive exchange rate (i.e., devalue the currency, if necessary).” This is a non existent option for us. The whole point of our exchange policy rate is that it should be maximum credible so this is a non issue. ”Boost the economy”: No because we have a fixed exchange rate policy so monetary policy in Denmark is dedicated to one, and only one purpose, and that is fixing the exchange rate. And then we also get low inflation. But there is no other objective for monetary policy. Non of these are important. But you have to put as an optional: our monetary policy. Denmark has a fixed exchange rate policy and the monetary policy therefore only has one objective mainly securing the fixed exchange rate. Everything else is not important.

8.7 The future course of EU integration

8.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Danish Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview STO07 STO08 STO09 STO10

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

STO07: We know that we de facto have a multi-speed Europe, but you wont see a Danish government work for that as a goal. They are going to be the ones that try to hold on the rage and make sure that the European integration does not go in to many diﬀerent directions. So deﬁnitely within current treaty and then spend

106 energy on EU countries living up to what already agreed on so the implementation part of the EU cooperation is extremely important. What we face on the underground, for Danish companies, is that you still have a lot of technical trade barriers around Europe, that are much more important to get rid off then new legislation. You have a lot of ideas and things that should work, but in reality it doesn’t work. One major hick up in Denmark is about the full freedoms, free movement of labour, so the same issue that the UK has. Where it is felt that for Danish tax payers its unfair for them to pay a lot of money for people that have worked very briefly in Denmark. So there is a general, also among political level, that the EU should also take into consideration the tax payers welfare state. And Sweden has the same thing. And that’s because of the way we finance our welfare state. We finance it via taxes, and in other countries you finance it via insurance. And Denmark Sweden don’t want to change our system into a insurance-based system where everyone has to individually pay for an insurance to make sure that if you lose your job then you get some sort of insurance. We don’t want what system. We want a system where everyone no matter how much or little they earn, are insured, if they lose their job. It’s a problem according to Danish politicians, if Danes pay a lot into the tax and then people that only work here for three months can receive full benefit, of they get unemployed in this country. So you need adjustments In the free movement of labour. But not in the level of treaty based anything. STO08: The Danish government is not in favour of a multi speed Europe. Its not something they would push for. STO09: We don’t want to have any more decisions that have to go through a referendum. We are best of if we don’t have to have any treaty changes. And there’s a consensus on that. STO10: IWe think that Europe in the light of Brexit. The EU should concentrate on delivering concrete results of value added to citizens, concrete and targeted results promoting growth and jobs without discussing treaties, rules and institutional issues and without integrating further. With no further developments of the EMU or the euro area. This is the way we would prefer to go. The other option would be to the opposite, namely integrate further, develop the euro area with a fiscal policy union and enlarge a new debate about wide- ranging treaty changes. And we would definitely go for the first option and not the last.

8.7.2 ID5. The Vision of the European Union

The positions of member states’ governments in the EMU reform negotiations may be inﬂuenced by the government’s general vision of what the EU should be. How would you describe the relevant government’s? preferred vision of the EU? For example, did it favour a development of the EU in the direction of federal union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]

Figure 7: The Vision of the European Union

Interview STO07 STO08 STO09 STO10 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

STO07: L`ekke-Rasmussen ﬁrst Cabinet (5 April 2009 - 3 October 2011); Venstre party. Q: Intergovernmental Institu-

107 tion? Interviewee: Im sitting here as a civil servant in the Danish parliament so what I say has no impact on what the government does. Im here to help the Danish member of the parliament to sort out EU questions. I am not part in a political process as such. Because they are not member of the euro and because they are not member of the EU integration project they were very active in the participation to ﬁnd constructive solutions during the negotiations of the six-pack and all these diﬀerent instruments, but they also knew that it would not apply to them, so obviously they helped what the big countries would do. But if I only have these options it would be that the Danish government felt like a lot of the other countries was best solved in the council. Intergovernmentalism and intergovernmental. But its not a vision, it was more like: ”oh we have to be practical, we need to do something fast”. Where we are now, we had de facto, multi-speed Europe.

Election (15 September 2011); Thorning-Schmidt first Cabinet (3 October 2011 - 3 February 2014); Social Democratic party. Q: Other? Interviewee: No. We had a large majority of the mandate in this house (parliament). We wanted to stay as close to the core as possible. But since we have opt-outs, there are certain limits to what ”as far as possible” means. It was pretty much status qou (in comparison to the previous government). You have to understand that, if you change government from a right to left-side the political majority around EU is a different one. The Lars Lèkke-Rasmussen government founded the support with the party that is a very EU-sceptical party. The Thorning-Schmidt was formed with the support of another left-wing EU-skeptical party. So when it comes to EU issues it’s a completely different majority, that does not change over the years. The only thing that has change recently, after the crisis, is that all the big parties now, in the center, are becoming more EU-skeptical. So from a Danish point of view I cant really see that we would have conducted a very different policy at the Lèkke-Rasmussen government prevail in 2011. I don’t think the Danish position fits in any of these options. I think one of the problems with EU-policy in Denmark is that has been, because of the very referendums we’ve had, a very much ”yes” or ”no” to the EU. The yes party in one big group, and the no party over here. -horning-Schmidt second Cabinet (3 February 2014 - 28 June 2015); Social Democratic party. It was no difference because the EU-majority was still the same. But they did agree towards the end of the Thorning period. When they decided that ”we will have a referendum” on one of the Danish opt-outs in justice and home affairs, the basic majority in this house said they wanted to be as close to the core as possible. This means that they wanted to be active in the EU. But since they have the opt-outs, in so many areas, where Denmark cannot play such a visible role. But just in general, the Danish EU-position is very well coordinated in this country. We don’t have a lot of ministers that go to Brussels and say different things. There’s a strong coordination. And it has to do with the way Denmark became a member of the EU. And that means that, in general, Denmark, likes the council. Because they feel that they can speak with a strong voice in the council. And the general idea of strengthening the EP, that’s not a Danish thing. But Denmark is interested in a strong commission that can propose things that already has compromise within them. They like to ... the countries to the commission, before they come up with the proposals. STO08: All the governments and also the next government (Thorning-Schmidt) had the same position on the EU policy. There are parties in the parliament that are against, but the government is very positive on EU and EU-policy. The parties in governments are usually pro European. I would say intergovernmental institution and that it would be the same through out all three cabinets. With a federal aspect as well but definitely intergovernmental, because they would like to be in charge. I think the positions are the same with the several governments in the big terms. STO09: No change (status quo). Lèkke-Rasmussen first Cabinet (5 April 2009 -3 October 2011); Venstre party. I I think the best answer for Denmark is ”no change”. We don’t want multi-speed Europe, no federal union. Of course some intergovernmental institutions might be needed but we don’t want the EU to decide much more than they do now. That is the Danish position and has been the Danish position for all three cabinets. There was no major change when a change of government. EU policy is very much the same. And EU policy is decided between the Social Democrats and Venstre Party. It has been so all the time. The parties bringing the Social Democrats to power are not part of EU policy and the same for the Venstre-government. Dansk

108 Folkeparti and the most left wing parties are very EU-sceptical. So the EU core policy is decided between Venstre and the Social Democrats. So it doesn’t change with government, it’s the same all the time. STO10: Lèkke-Rasmussen first Cabinet (5 April 2009 - 3 October 2011); Venstre party. Q: Others? Interviewee: I would say that its pretty difficult, and that goes for all the Danish governments in the period. Its difficult to check one of these exact boxes. It would require more explanation. Maybe I can try to elaborate on it first. I would say, during the crisis from 2009 until now, we’ve had three different governments. The first was led by the liberal party and PM Lokke Rasmussen. The second government from 2011-2015 was a government led by the social democratic party with Thorning-Schmidt as PM. And then the third government is consisting of only the liberal party taking office in the summer of 2015, and once again led by Lars Lèkke-Rasmussen. Overall the Danish vision of Europe is relatively stable, overtime and across governments of different colors, blue (blue is rightwing) or red governments (red is left wing), to speak in Danish terminology. We have formal opt outs: the Euro, defense and justice and home affairs. When Denmark voted no to the Maastricht treaty in 1992, then we agreed on the Edinburg-agreement. And then voted yes to the Maastricht treaty with that Edinburg-agreement in 1993. And that’s were we got these opt-outs. The Danish position over time and across governments has been typically that they want it to be as closed to the core of Europe as possible. And if we go back to the first government, in this period, then the clear position was that wanted to get rid off the opt-outs. So that Denmark could become full member of the European union. In that sense, to turn into the vision of Europe, you could say that the vision was to have a united Europe, a Europe where the vision of label between the national state and the EU level should more or less be as it is. In other words no more integration, that we probably found the right level of integration. Interviewer: Is that applicable to all three cabinets? Interviewee: It is. I would say. But of course there has been probably adjustment in the Danish position over time, given all that has happened during these years. During the economic and financial crisis and sovereign debt crisis. Because if we go back in time the pretty clear position was that the government wanted (and this goes for the majority in parliament) wanted Denmark to join the euro. And right now there is no really explicit policy in this. I would say that it would probably still be the long term goal (to join the euro) but given that we’ve had a number off..The EU and the euro area has developed a lot, we have adopted a number of measures during the crisis and there are still a lot of open questions. So we don’t know exactly what the euro area and what the EU will look like in one year or in ten years. And the Danish government and the majority of parliament, would like more clarification of what Europe and what the Eurozone would look like in order to take more firm position on where should Denmark be. And the Brexit challenge brings even more uncertainty as to where will Europe go in the future. So right now we don’t have extremely clear positions on what is the exact vision of the eurozone and where should Denmark be in that Europe. Election 15 September 2011 Thorning-Schmidt first Cabinet (3 October 2011- 3 February 2014); Social Democratic party.

8.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? STO07: I think Denmark wanted to play a constructive role as possible. So the Euro countries handled what need to be done in the Eurozone. And Denmark wont stand in the way. The six-pack, the two-pack does not apply to Denmark. But Denmark was happy that it happened. Because they felt they agreed with the German position, that something had to be done. And Denmark was happy that it happened in the council. Denmark thinks that the ability to take important decisions in the EU system, lies within the Council. And then it was the small things, about the Danish system of finance in housing loans, that had the attention of the government, but also the members of this house. We had to lobby on that issue. We have a particular system, that does not fit very well with the PISA-recommendations. So there’s a lot of work to be done

109 so that the commission allow enough flexibility. EU legislation for Denmark to keep the system because its cheap and we have not had, until now, we’ve had not had a lot of problems with the housing sector in Denmark. And that’s where people have their money, in their houses. And we have compared to other countries, a lot of debts in our houses. But the Danish pay their debts. It looks more stable than it actually is. STO08: I don’t know if they are so explicit about their European approach. In 2010 when we got the recommendations from the EU, the government were very keen on ”we need to do these reforms and do this so we can do what EU is telling us to do, so we are good people”. Unlike other MS, maybe eastern European and southern European who would battle a little more with the EC (European Commission) and the European institutions. The Danish government is a bit more, due to the reason that we are a small country, but also because we do believe in a strong economic policy. The government would be too afraid of too big deficit in the MS, if they want the other MS to act in a responsible way then Denmark has to be in the lead. STO09: Of course some things had to change. But this was more the rules for the Euro, so it was left to the Eurozone to make the Euro work again. It was the euro countries to make the necessary positions. We would have liked, both Venstre and Social Democrats, would have been happy if we were part of the Eurozone but we are not. its up to the Eurozone so we have not been interfering. But we have been very clear that we don’t want a multi-speed Europe, both Venstre and the Social Democrats. This is what I mean with ”no change”. We don’t want more federalism and we don’t want multi-speed. STO10: As mentioned Denmark is complicated. In the sense that we are outside the euro area and we even have a formal opt-out. Just like the UK, we are the only ones with a formal opt-out. But on the other hand we are extremely close to the euro area. And I would clearly argue that Denmark among all the ”outs”, Denmark is clearly the country which is closest to the euro area. Why? Because we have a fixed exchange rate policy, so in practical terms we already have the same monetary in exchange rate policy as the EA-countries. And we’ve had it longer than anyone else, because we’ve had the same exchange rate for around 30 years. So we have a fixed exchange rate policy, which in itself means that we are a de facto, or as we sometimes say ”the secret member of the euro”. And we also participate in a number of initiatives that are mandatory for the EA-countries but optional for the ”outs”. First and formal the Fiscal Compact, which was agreed in the beginning of the Danish presidency in 2012 and it was opened to ”outs”. A lot of ”outs” including Sweden, signed the Fiscal Compact as a formal agreement but a number of ”outs” did not implement the substance which said that you have to implement the Structural Balance Rule of the Fiscal Compact in national legislation. Denmark did that as the first ”out” country. I believe there are only two others that have done so. I think Bulgaria and Romania, but not Sweden, not UK not Poland, no other ”outs”. So we have not only signed the fiscal compact but we have also implemented it in national legislation. Like wise the competitiveness or so called ”Euro-Plus Pact” from 2011, that was also opened and we decided to join. The Five Presidents’ Report, there’s a number of initiatives, one of them has been settled, the issue of national competitiveness council. Their work has so far, as the only ”out”, said that it will join the initiative and set up a national competitiveness council. So more or less every time you have an initiative for the EA-MS which is opened, Denmark joins. The big outstanding question is of course the banking union and we have not decided weather we should join the banking union or not, yet, I will elaborate on that later. But that is still an option. And the very thing about opening up these initiatives for non EA-MS, Denmark is clearly the country in the EU which is leading that policy. We are the first country every time so say that the initiatives should be opened. The Banking Union was, and now I’m very direct, it was opened for participation for ”outs”, because, and only because of Denmark insisting on this. When the commission presented their original proposal for the single supervisor mechanism, at the informal ECOFIN council in Cyprus in 2012, they said that this is an initiative only for the EA-MS. And it was opened and only because the Danish minister insisted, with no help from the other ”outs”, insisted that it should be opened for others. And then as we have negotiated the banking union ever since we have made sure that the initiatives in general were opened, so that applies also when we came to to Single Resolution Mechanism (SRM). The point here is

110 that Denmark is very active and the most active ”out”, in saying that we should have option of being like the EA-MS. And we do so ourselves more or less every time big outstanding question is the banking union. And finally, Denmark is probably also the non EA-MS that has most clearly supported all the initiatives that EA-MS has taken during the crisis. So to answer you question more directly, yes, that has influenced out position, out vision of Europe because we have worked so hard for a number of years to keep all these initiatives open. Before the crisis this was not really an issue, because the treaty was really clear what is for EA-MS and what is for ”outs”. For instance, the fiscal rules of the Stability and Growth Pact, pretty much everything is for every body, except the sanctions, so called ”notices” and sanctions only for EA-MS. And there where no new initiatives larged each an every day, but that changed with the crisis. So when the crisis came we had to decide what is the strategy, are we standing where we are ”status qou”. And then that the EA-MS indicate further with new initiatives or should we try to implement a strategy where we insist that by initiative everything should be opened or many things at least, should be opened to the ”outs”. And then we will join whenever we see that it is to our advantage. And that is what we have chosen. In that sense we do consider ourselves. Of course formally we are ”out”, but in substance we are somewhere in between ”in” and ”out”.

8.8 Negotiation strategy during the Euro crisis

8.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview STO07 STO08 STO09 STO10 S T Hard bargaining: tries to extract concessions from the other side, delays or R Very rarely Very rarely Rarely Rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Never Rarely Very rarely provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Often Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

8.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Danish delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

111 STO07: It depends on what type of legislation. In some we were a full member of. When It had to do with the regulation of the banks, when we were a full member. The PISA legislation where it was decided how much of a buffer the banks needed, to be in business, the Danish government was actively for the business itself. So the banks itself sheltering that burden. So we wouldn’t fall back on the tax payers. And they were active in the council and they supported the commissions proposal on this. For the internal market there was a very active participation and very constructive, also because Denmark had some special set ups where they actively had to go in and lobby against some parts of the PISA-legislation. You had this house actively engaged in what ever had to do with the housing market. On everything that had to do with the euro countries and their legislation we were very passive. So it was two different strategies depending on the type of regulation. STO08: NA STO09: Opt-outs is always in the background of the Danish governments when negotiating. The negotiation strategy of the danish delegation has not changed. We were trying to seek for compromises all the time. STO10: The hard strategy was not really used, but I would prefer to say sometimes. It was not often. Q: Soft strategy? Interviewee: If this also include willingness to make compromises in general I would call that soft myself. If I did interpret this in being a pragmatic negotiation willing to make compromises somewhere in-between all the different positions, then I would say often. But this is not strictly what it says.

9 Spain

9.1 The list of interviews in Spain

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer ESP01 50 ESP02 50 ESP03 50 ESP04 75 ESP05 75 ESP06 100

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

112 9.2 The summary observation on country interviews

Six interviews were carried out in Spain. Interveiwees were actors that were positioned very close to the core of the decision making processes. The quality of information is high across all interviews. There were no major biases detected and the interviews developed in a cordial atmosphere. Interviewees expressed their opinions freely although one rejected to be recorded. Two interviews were carried out by Skype since the interviewees lived abroad at the time of the interview. Most interviewees showed interest in the project and asked for updates. Information gathered may be limited in the case of two interviewees (ESP1 and ESP5) in the RQMV issue. They did not recall the position of main actors in this particular issue. Generally speaking, RQMV was a diﬃcult issue to talk about given that in Spain it was seen as a very technical matter and was not publicly discussed. This is why the rate of NA may be higher than in other issues discussed.

As for the formation of preferences, after interviewing six relevant actors for their position close to the core were decisions were taken (with, perhaps, the exception of ESP3, who was/is a MP), my feeling is that very few actors participated in the formation of preferences (PM, some minister and in a very limited way, some advisor) since most of the interviewees indicated that the President of the Government usually decided on the issues dealt with. This situation should be understood in a very especial context in which the economic crisis, the situation of Greece and its possible future effects over Spain (but especially, the feeling that Spain could not follow the Greek example to avoid the bailout) the need to send clear messages to the markets, and the economically weak position of Spain in the EU delimited a very small scenario where the chances for political actors to take uninfluenced decisions were very slim. Consequently, there were three types of influences in the formation of preferences. First, the idea of what Germany would like (tangentially, what other international actors would like) or Germany?s wishes as interpreted by Spanish actors. Second, the willingness and expectation of creating a southern pole in Europe integrated by countries experiencing similar hardship (irrespective of ideological positions). Spain looked closely to the position of Italy, Portugal, France. Third, the interpretation of what markets were demanding.

These expectations were taken into consideration. At a different level, since there was some degree of consensus among domestic actors concerning the position of Spain or what Spain should do (in respect the four issues selected), domestic actors (very significatively, Parliament) could be said to be less relevant for the formation of preferences. It should be noted that FCO was a controversial issue in Spain (it still is) once it was approved by parliament (in August, with no public debate), but not before. However, even in this issue, PM Zapatero had made his mind with the influence of a very limited number of advisors and looking to the case of Germany. A different scenario would have existed if, for instance, labor or banks and entrepreneurs associations would have opposed some of the decisions taken

9.3 Open answers to questions on 4 contested issues

9.3.1 GRC: Willingness to support Greece in early 2010

113 ESP01: The interviewee recommends the book The Age Ice, chapter 3. He acknowledges that Spain did not have at this moment much room to maneuver. Germany and the policies Germany had implemented had a leverage over Spain. Above all, the largest influence were the creditors of Greece: Germany and France, that is to say, German and French Banks. For this case, Europe was divided between creditors and debtors, banks who were creditors or debtors. Spain was among the debtors and sided Greece because it thought if anything happens to Greece, the next one is me. South European countries were in a situation of extreme weakness. Inside Spain the position was clearly siding Greece, but absolutely conditioned to the policies enacted in Germany. When he is asked whether there were some domestic actors against the dominant position (siding Greece), he does not remember any actor. There were no discrepancies, but support for Greece (although he later qualified this statement when going to specific actors). When he is asked about the role of particular actors, he replies that the influence of different actors was dependent on the political weight of the particular actor. For instance, the ministry of economy had a lot of influence in this matter but parliamentary groups, little influence. His view is that the decision to support Greece was taken by the president of the government (Zapatero, PSOE) although advised by his ministry of economy (Elena Salgado) who attended ECOFIN and presided the meeting (may 9th) that changed the Spanish economic policy in which Spain ended up accepting whatever was proposed to the Spanish delegation. The decision was absolutely conditioned and was taken by the President of the government. Most actors supported the position of the government, although in parliament, some parties (mainly the Popular Party, conservative) worked to erode the position of the government expecting for early elections and a victory. Major actors had no influence. Similary, the interviewee declares that Spain had no influence at all in Europe and once the position for austerity was decided, Spain had no room to maneuver. There is a lack of references to the international actors’ position on domestic debate, largely because there was not much debate (the position of Spain was taken by PM Zapatero as advised by his economy minister Ms. Elena Salgado and later discussed in Parliament). ESP02: It is normal that Spain was in favor of the bailout to Greece given that the monetary uncertainty in the EU made Spain’s position fragile and this uncertainty could knock Spain down. There were not many divisions in Spain on this issue. The leading positions were that of the Ministry of economics and the president of the government. These are the two main actors, although there is an economic council and a cabinet, where things are discussed, but the two leading roles were that of the Ministry of economics and the President of the government. Ministry of external affairs. He may have some participation in the debates of the cabinet, although I believe that he had a lesser role than the president and the ministry of economy. Parliament. Limited influence, lower than 40. PSOE, as a party of government, was influential not just for its support to the president of the government, but also for its veto power. If the PSOE had not supported Zapatero (PM), it would have been much more difficult for him. PP. As the main opposition party, the PP gave some comfortability to the government. IU. Very limited influence. Committee on European Affaires. No recollection of its position. National supreme court. No influential. Unknown position. Bank of Spain. It is always influential. I assume the position was in favor of the bailout, although I am no t sure. I would be surprised the Bank of Spain would hold a different position since it was interested on the stability of the system. Commercial banks. Most likely were influential. They were in favor of the stability. Unions and employers association were also in favor but had no influence. Media: all media are influential. No government governs with its back towards the media. Media in Spain have never been against stability in Europe and against trying to help Greece. I do not think it is necessary to press the government to get its support to Greece. But if the government would have opposed to the bailout, their strength (media) would have been measured by their capacity to make the government derail from its position. Media are always influential. Public opinion: I do not know. I do not think they are so important as mass media and certainly, less important than what the Bank of Spain has to say. ECB. I am not sure, honestly, but it is difficult to see the ECB against the solution [adopted]. European Council: In favor of Greece, who was part of the EC. Spain is part of the EC then it was subjected as well to the influence of other governments. Other members, no doubt, influenced in the Spanish position. Governments are independent, but not autistic; in the EC there is dialogue, of course, other member states influence on Spain. Influence is measured not only in terms

114 of conditioning a position but also in terms of making an actor to change its position. If Spain would have adopted a position contrary to the bailout, then the EC would have had a stronger influence than if Spain would have been part of the consensus [as it was]. European Commission. The debate emanates from the commission. EP. Little influence. EP votes many things but I do not think it was a relevant actor in this issue. Other European governments. Influence derives from personal and ideological positions but essentially refers to the largest countries (Germany, France, Italy) although the UK had much less influence. Influence related to the size. ESP03: If we take as a reference the parliamentary representation, there was unanimity in the bailout to Greece. The government had an unenthusiastic position, knowing that the Spanish society was in favor and that the rest of political parties were in favor. I suppose that this influenced the government although it is true that the positioning was taken by the government. [at this point, when going to the particular actors, the interviewer reminds of the year the bailout to Greece took place] Ministry of external affairs: sometimes it is difficult to discern the weight of each ministry in a joint decision. No other ministry had influence. National parliament was less influential, but among parliamentary groups, the Popular party was not against the bailout, but it questioned the decision and pointed at the difficulties and the consequences of helping Greece. At the end, it is the government that makes the decision and the socialist group supported it, but the influence was minor. CiU was very important to avoid the bailout for Spain, but relative to the Greek bailout it was minor. The same with the parliamentary committee the interviewee copresided. She remembers vaguely the role of the Spanish Central Bank. She believes the Bank had some influence, more than Parliament. Interest group Industry (CEOE, employers association). She does not remember the position of the CEOE and recognizes that there are usually multiple voices. Media: she has no recollection of the general position of mass media or some of the most influential. She remembers the position of people who wrote articles published in newspapers, but has no recollection of the general position or of particular media. She understands that there were multiple voices. European Parliament. She has no recollection; she does not remember resolutions of the EP, although she assumes that it had a minor influence and some type of diversity. Foreign governments: In the position of Spain there are always influence from the governments of countries with whom Spain has more relationships: France, Italy the countries of the South. And also, the position of Germany is very influential because at the end you know it is key for a thing to happen. If Germany does not support something, it is very difficult that it gets on. Germany was against the bailout but I believe it was for tactical reasons to have an stronger position in the negotiation ESP04: The interviewee indicates that there were two major actors involved, the ministry of economy and the president of the government. Both actors were very much under pressure to solve the problem of the debt (in Greece) provided that Spain was next to be scrutinized. When reviewing actor by actor, the interviewee understands that the Economic office of the president (under the ”other ministry” heading in the questionnaire) had some role, although minor (30 in influence). The interviewee does not recall the national Parliament had a major role in terms of policies, although the interviewee infers from the position of the parties and the general political climate that most significant actors (if not all) were in favor of supporting Greece. IN this respect, the parliamentary committee on European affaires had also a limited influence, although it was the committee where the Secretary of the State for European Affairs had to report to (and debate with) MPs. As in other cases, the interviewee had no recollection of the National Supreme Court having a position or influencing the position of Spain. As in other cases as well, labour organizations (UGT and CCOO) were considered together as having no influence, like the employers’ association (CEOE), although the interviewee acknowledges that he has little information. He does not signal any relevant media although recalls that the consensus was to favor the support to Greece. This is why it is marked 100 in the position but none in the influence column. The same applies to the major commercial banks. Regarding public opinion, the interviewee understands that PO favored supporting Greece, but he is not clear whether PO adopted this position because Spain had already taken the decision to support Greece. Concerning the international actors, the interviewee understands that the European central bank supported Greece and had a lot of influence over Spain. At this point refers as well to the Spanish central bank, whose influence was more diffuse, related

115 to some reports that the Department for studies and prospective issued. Generally speaking, European actors were very influential with the exception of the European parliament. The interviewee understands that the EP has multiple and different voices, and some MEP did not support Greece. He understands (and this is something that can be applied to the four questions of the beginning of the questionnaire) that the Eurogroup Working Group is dependent on the Europgroup and consequently gives it the same rating. Other governments influenced the position of Spain because Spain kept talks with other EU partners. The interviewee mentions Germany, Greece, Portugal, but recalls that the most influencing were the talks to Portugal (marked in the questionnaire) because Spain and Portugal shared similar risks at that moment. ESP05: GRC.1. The president of the government is the main actor here according to the interviewee. After Mr. Pa- pandreu announces that the fiscal deficit is much higher than expected, Mr. Zapatero adopts the traditional position in Spanish politics: Spain has to support the measure that is more coherent with the politics of integration and consolidation of the euro. Consequently, helping Greece with EU mechanisms, not bilateral mechanisms, is the route to follow. But there is another reason which is the risk of contagion to Spain. The point is who has the responsibility for managing the crisis of the euro in Spain and who are the actors that condition him? While Solbes (former ministry of economy) is in charge (2008-9) he is more conservative in fiscal terms. The framework is the same: we are Europe, we are in favor of consolidating Europe, then we have to take measures that facilitate integration supporting countries experiencing difficulties. But Solbes has his own alternative vision that is based on the priority of the stability of public budgets rather than reforms, policies, etc. He had a more nuanced vision since he saw the implications for all, but especially for Germany since they would have to be financing directly or indirectly the Greek deficit in the long run. When Solbes leaves and he is substituted by Elena Salgado (ministry of Economy), she is more an agent of the President’s vision of the economy, she is less autonomous. The points of view of the President, much more political, gets imposed. So, in the big picture Spain is an Europeanist country, we have to support European mechanisms to respond to Greece and there is less nuance here [with Salgado]. So, the determinant factor here is the President of the government, supported in this task by the economic office of the president, which has a vision that participates of the dominant vision of southern European countries: this is a crisis originated in problems of design of the monetary union architecture and the only way to solve it is to perfection the union, gaining in integration, and this requires that Germany abandon the wrong moralist vision that southerner countries have been undisciplined and now it is time to punish them giving them the bailout with hard interest rates. Most economic counselors [to the President] share his vision that they need to create common (EU) mechanisms to help Greece. But I think that it is just the President and his economic counselors. Among the international actors, the interviewee indicates that Germany and the centgral bank mark the dominant position in the EU and the attitude that Spain has is developed within this framework. But the main attitude of the Spanish government to support a European bailout is determined by the Europeanist vision that president zapatero adopts as part of the legacy of other Spanish presidents. There are no other alternative visions among the economic counselors. Contrary, they help him to articulate the political vision he [the President] already has. Zapatero resists the creation of a Southern block to counteract Germany’s vision. He believes that Europe had to support Greece and he was interested in making clear that Spain was not Greece. The ministry of Economy and Treasury (Salgado) had no influence over Zapatero. She articulated and supported and was instrumental for Spain to support Greece, however, Zapatero had already made his mind before talking to Salgado. So, she had a lower influence. She was more of an executer of Zapatero’s ideas rather than defining the situation. The Bank of Spain was the transmission belt with the Central European Bank. Among the commercial banks, he remarks the president of the Santander Bank (Mr. BotÌn), who was influential on the vision of the President. Banks were in favor of supporting Greece to avoid contagion effects. When the uncertainty of the country was up, the cost of the credits to the banks was higher, making them weaker, and the weakness of the banks made the risk premium grow, so it was like a vicious circle. SO, anything that fed this circle was bad for the banks and the banks lobbied to adopt a solid response to support the bailout to Greece. Mass media and public opinion. In general, all media, although he acknowledges that El Pais had a prominent role influencing Mr. Zapatero’s position. He indicates also the name of Mr. Barroso, a manager of another media group articulated around the TV channel La Sexta).

116 However, he indicates that all media are influential and that the public opinion is important and influential. If Zapatero had seen a resistance the political cost of the decisions is one of the criteria that influence the decisions taken that is my experience with politicians and certainly with Zapatero. They are influential. If the public opinion would have been against it, then Zapatero would have modulated his position. There was influence in this sense. European central bank. Had an intermediate opinion. ECB guarantees the monetary stability and the bailout could risk this stability and one of the fundamental principles of the monetary union, the fact that there cannot be financial support from one state to the other. The ECB was resistant to any measure that could be interpreted in that way, in which the BCE had to have a relevant role, especially because of Germany. The ECB is the property of its shareholders, and the largest shareholder is Germany, which owns the 27 percent, so any measure needs to be supported by Germany. And Germany was resistant to weak monetary policies. So, BCE was in favor, but it had an intermediate position. European Council. It is always more resistant to European positions. The European commission did not have much influence. The management of the crisis has been intergovernmental in the council, not in the commission. The commission lost a lot of power. It was relevant because of the bottom up technocratic work (all papers produced that went up), so it had some influence but in terms of the decision, it was reduced. Parliament and Commission are usually in favor of Europeanist reactions, while in the Council there is always more resistance. He understands that the Eurogroup Working group can be assimilated to the position of the Europgroup. IMF. There was a debate about the IMF participation in the bailout. Germany was in favor because the criteria for the bailout would be harder, France was against it because they thought that the message sent would be that Europe is incapable of solving its own problems, that an external institution had to intervene. US government was important. Zapatero had made his decision, but the fact that Obama called him to support the position gives ammunition [to defend his position]. ESP06: The Spanish position derives from a generic position that Spain would have taken in any circumstance but was also affected by the fact that there was a government of PSOE in Spain and PASOK in Greece, both in the same political line. But I do not think that was determinant. In any scenario, Spain would have been in Greece’s side. Re relevant actors. Parliament and parties: there was convergence in the opinions. There was no disagreement in the support to Greece. Banks: the economic relation (in financial terms) between Spain and Greece was null, there was something about insurance, but nothing in banking, very marginal. This was a government decision, obviously supported by society that never questioned this decision, but there no private interests that tried and if there were, they were not visible. EU countries. Leaders of social democratic parties, Portugal, and large countries had influence (France, Germany, UK), Italy had little influence. They were in favor of the bailout, but with some conditionalities.

9.3.2 ESM: The size of the European Stability Mechanism

ESP01: He has no recollection of this topic. He suggests to read the book indicated earlier (it has been translated into English), chapter 3. ESP02:

117 In this case, Economic ministry and the president of the government. In this case, the rest of actors would be aligned with the positions discussed earlier (in the previous question). The reason is that the type of decisions are similar (no requiring a particular legislation), channels of decisions are the same, actors are the same, and the problem is the same. [this is why the same points appear in the answers to this question]. ESP03: The government was the most relevant actor, always, and the analysis of the situation carried out by the government. Spain was in a situation in which the loans were considered positive. The evaluation of the government was that Spain would need the loans [ESM] and [the government] would not go against the loans [ESM]. Central European Bank. Influential when it began to give loans. ECB was against the ESM. It was closed to enlarge the lending capacity. That was a major problem for Spain. When the ECB changed its position, everything was easier for all, and for Spain. At the beginning the ECB was in a 10 or 20 or even 0, but later the policy changed in favor of enlarging the loans towards a 90. European Council. It was divided. European commission was more favorable in its position but had less influence over Spain. European parliament was more divided and had multiple voices. IMF. She has no recollection. She believes that IMF was more or less aligned to the ECB, although she does not remember its particular position. [It would not be extravagant to assume that she understands that the IMF had a similar position than the ECB] Other governments. Countries with similar needs were more or less aligned and tried to go ahead with their relative strength (this is why it took so long to implement this particular policy). And here there is a gap between north and southern countries. If you go by yourself to Europe, usually you have nothing to do. But if you are with other countries, if you feel accompanied, then you can put up a fight. It is absurd that Spain [the government] stands up by herself if she does not look for a minimum of complicities. ESP04: The major actors were the government (in toto) and the bank of Spain (central bank), who issued some reports about this matter. When dealing with the particular actors, after reviewing them, the interviewee indicated that since the topic was related to the previous one, the interviewee does not see differences with the position of the actors or their influence, except in the Ministry of External Affairs and that the Economic office of the president had no role here. Consequently, I copied for this question the same answers than for GRC.1. ESP05: He thinks that the positions of the actors are very similar to the ones indicated in the previous question. The reason: those supporting the bailout are in favor of a response to the crisis based on European mechanisms, ant the more [mechanism], the better. In this case, this topic is a proxy for the other and vice versa. There are two visions about the management of the eurocrisis. One, which comes from the north of Europe, that says, Greeks are irresponsible and we cannot provide with a European response (meaning sharing the costs of the bailout) because it is a moral hazard, this has to be contained, going step after step. Ant the other vision, that of the South of Europe, that says, look, this has nothing to do with the Greeks being irresponsible, because if the crisis begins rather than in Greece, three or four months later, it would have begun in Ireland, who had not this problem of public debt, and you would not been able to build this narrative. So, south European countries say, this is not a problem of fiscal irresponsibility, is a problem of design of the Eurozone, then, we have to provide a European response to solve it. If you are part of the second vision, then all is part of it, you have to create a European response, and the mechanisms have to be conclusive, then you cannot say that if there is intervention there needs to be the necessary, and if there is no necessary, the markets will not like you, then once you have anchored your position and you are in one of the two bands, then the one [the controversial issues 1 and 2] is proxy of the other. That’s my vision. I do not want you to think that I am lazy, is a matter of been analytical. ESP06: Relevant actors were more or less the same as indicated earlier: president of the government, ministry of economy, commission, BCE and IFM. These actors were more or less aligned, although there were discrepancies. The position was that there had to be a pro European solution, that is, to put enough money on the table to calm down the markets front the uncertainty about having no money to support Greece or any other country. Role of parliament and parliamentary committee on European affairs. In Finland, for instance,

118 the prime minister and the minister [of economy], systematically stopped meetings in Europe to say, I have to explain the parliamentary leaders that we are in this point to see whether we have support or no. With the program to support Greece, the German ministry had to go to Parliament to explain it before voting for it. In the program for Spain, the German minister had to go to the German parliament to explain it, but this program never went to the Spanish Parliament. We do not have the same sensibility to disagree on European issues. We are a very pro European country so that debates about Europe, in part because we feel they are given to us and we have no inﬂuence capacity, in part because of this European feeling that we accept almost anything that comes from Europe, then, there is little checking from Parliament [meaning that the parliament is little active in European matters]. In part, there is little parliamentary checking in general. European Council. The key word here was a trillion dollars. That was the restriction and ﬁnally the European central bank put the money.

9.3.3 FCO: The legal form of the debt brake

ESP01: This was a position taken by Moncloa (Presidency of the government) and the ministry of economy, and nobody was aware. It was done in a week (approval of the debt brake rule in the congress of deputies) and agreed with Rajoy (leader of the largest opposition party, PP, conservative). There was a serious protest pronounced by Rubalcaba , PSOE’s secretary general and candidate, because it damaged his (electoral) position. I believe it was excessive, this procedure express to reform the constitution in such an important debate They wanted to go unnoticed. In this procedure express, there is no room for the debate and no actor can have an influence. The only influence was Elena Salgado (ministry of Economy). The idea was to send a message to the markets. Germany, Merkel, was a major influence to impose this legislative measure to prioritize payment of debts. Spain was so in need to avoid the bailout that brought this measure to the constitution unlike other countries like France or Italy. Spain did want to visualize a constitutional change in order to send a very powerful message to the markets and Germany to avoid the bailout. Zapatero’s obsession was to avoid Spain being rescued by the EU. They would do whatever was needed to avoid the bailout. The interviewee’s idea is that the whole issue was managed in secrecy by the PM, during the summer time, and introduced in the constitution (using an amendment) by a quick votation in Parliament. There was not much domestic debate and consequently, there was no influence of external actors. The interviewee does not remember any international actor participating in the debate. Germany (which was brought up earlier in the interview as a relevant player) made the decision to introduce in the legislation (constitution, laws, legal order) the issue of the debt, that it will be a priority the payment of the debt and budget stability. This idea is Germany’s, so that the markets can see that the governments are serious about it. However, the decision to have in the Constitution is clearly Spanish, there was no need to have it in the constitution, but we decided it. When the interviewee is asked about international actors he indicates that the EC was in favor, but he acknowledges that he does not know to what extent they were influential, although he speculates with the fact that somebody would advise Zapatero’s collaborators to emulate what Germany did. Germany, thus appears as an indirect influential actor. SPA. Indicates that there were no major actors

119 influencing for Spain to take this position and that it was a natural position for Spain. Spain is a indebted country in general south European countries were against the reverse qualified majority voting. I believe it was a natural position for Spain so that the large countries would not impose their positions. Most likely the position was taken by Moncloa. There was no debate in Spain about this issue. This was a technical matter, very complicated to understand and the large majority of people had no idea about it. This is a very Brussels thing that did not reached Spain. ESP02: Clearly, that was a decision that was not an easy one, that was taken in a risky scenario, and I believe that in a book that PM Zapatero published, he mentioned a Trichet’s letter this is a measure [the issue].. that was a head that was offered to all people with influence in international markets. The most relevant actors were the president of the government, the ministry of economy, the parliament, because there was a constitutional reform and the two largest parties were influential actors because without them, the reform would not have been achieved; this was a reform that I do not know whether it was very popular, I do not know whether polls were influential given the results, the same can be said about trade unions. The ECB, EC, commission, an d other European actors (and the MFI) were influential. All opinion makers in the European institutional architecture, and those who make decisions, were very influential. In this case, being a reform that is like a corsÌ, that is not adopted pleasantly, to gain credibility, the recipient of this measure are all those who are opinion makers outside the country. If there would have not been doubts about the credibility of Spain, this measure would have not been implemented. This was a reactive measure. Those people who are opinion makers were very influential. Although the president and the ministry of economy were the most influential, it is true that since the decision was taken in the cabinet, all ministries were at some point influential Parliament was influential since it had to pass the constitutional reform. The socialist party ended up voting for the reform and without the PSOE no reform would have been possible, although many MPs did not like it. However, there was no mutiny, the party voted in block in favor of the constitutional reform. The PP was less influential since it was not the party of government, but was in favor of the reform. IU was neither influential and was contrary to the constitutional reform. Courts have no opinion unless in this matter some actors would have posed a constitutional question to the constitutional court. Courts are reactive, they do not issue opinions freely. The Bank of Spain was in favor and was very influential, like the commercial bank, although they were less influential. Trade unions were against the constitutional reform, but they were not influential, like the CEOE, although on this case the CEO was in favor of the constitutional reform. Media: the interviewee is reluctant to give names; he refers to media that have the highest numbers of readers or listeners, although he acknowledges a variety of opinions. There was criticisms regarding the content and the speed at which the reform was passed in parliament. Media are always influential, although they are not the addressee of the reform. However, the most influential in the reform were those who decided inside [Spain] and the addressee outside. The position of the rest was quite irrelevant. European parliament: ignores the position but indicates that most likely there would be different opinions. Most likely it was not 100 (position), since this is the only parliament in the world were all parties are in the opposition. Limited influence. Other governments: All big countries influenced at some point and made pressures for Spain to assure the stability of the eurozone. Spain was then a risk for the eurozone, a source of unstability, and other countries PMs were indicating how to leave the risk zone and stop being a danger for the eurozone. The largest countries were very influential, like the commission and council. UK most likely had some influence as well, but much lesser. I am talking about Germany, France, Italy. ESP03: Clearly Germany and the Spanish government, who assumed the position of introducing changes in the constitution because there was not much room to maneuver. When discussing particular actors, she things that the ministry of economy and the treasury had influence on this issue but no other ministry had. She understands that the parliament had multiple voices although MPs ended up passing the constitutional reform because of discipline. She understands as well that CEOE (employers association) had multiple voices, although the organization was in favor of the reform. Mass media. There were multiple voices but there was a polarization many media against and many in favor, quite aligned according to ideology. She does not highlight any media in particular. No EU institution tells you what you have to do. They set up goals

120 and results and they save this appearance of respecting to policies and internal decisions in countries. It is not that they said constitutional reform or law. No, they said the result is that there has to be budget equilibrium. European parliament. There were many voices that thought that there was nothing to do. Then, if this is zero, the median [the position score] goes down. I do not think there were people in the commission that would say that there is nothing to do in this particular issue. Germany and the EU in general influenced the Spanish position. Perhaps nobody said ”you have to modify the constitution”, but you have to guarantee this the most visible and solid way possible. The government decision was to act in a convincing way and to show how a great sacrifice it was for Spain in order to give guarantees. The president of the government took a decision clearly prioritizing the general interest rather than his electoral interest and although nobody was asking him to modify the constitution, the message he was sending was so forceful that allowed the markets to relax (at least this is the interpretation of the moment). This decision left the socialist party in a very complicated situation [for the upcoming election], but Zapatero accomplished his goal, that Spain did not ask for the bailout. But the PP got the absolute majority of seats. ESP04: The interviewee names a number of relevant actors here, among them the President of the government, the ministry of economics, the economic office of the president, the Partido Socialista Obrero Espaol (PSOE) given its negotiating position in Parliament, and the Parliament. Spain passed a constitutional reform after debating in parliament and agreeing PSOE and PP (the two largest parties) with some other minor groups this reform. The interviewee makes an interesting comment: Spain is a peculiar case since the constitutional reform implemented to introduce the Debt Brake Rule is not the result of the application of a EU Treaty, since the reform comes first and then the Treaty later. When talking about the particular actors, the interviewee recalls that the ministry of external affairs had some influence to the point that thanks to the constitutional reform, the word ”Europe” is the first time that it is introduced in the constitution. Rather than other ministry, the interviewee indicated that the economic office of the president had an important role in preparing the position of the Government and the strategy to introduce the Debt Brake Rule in the constitution. The parliament had a relevant role since it had to approve the constitutional reform, although the leading role was that of the president of the government. The parliament was the site where parties negotiated the agreement. . Although the PSOE supported the government, it had multiple voices affecting not the position of the government, but the implementation of the reform. Other partiers like the Catalan nationalist CiU supported the reform but had little influence in his opinion. IU, a leftist party with very little presence in Parliament by then, opposed the constitutional reform since it was part of a pack labeled ”austerity policies”. The interviewee has no recollection of the position of the Parliamentary Committee on European Affairs but he understands that the role was very limited since the whole reform was directly debated in the plenary of the parliament. The Bank of Spain (central bank) is considered an institution of reference for economic matters and the interviewee understands that the BoS was consulted by the government or by the economic office of the president. The interviewee has no recollection of any role played by the national Supreme Court or commercial banks. Labor (unions) groups were against the constitutional reform and had no role. Like the political party IU, they were against austerity policies to which the constitutional reform was linked. Media had no influence in his point of view since the debate about the constitutional reform took place during August, when the country is on holidays, and almost by surprise given the economic situation of Spain and the need to send a clear message to the EU and the markets. For this reason, the interviewee thinks that public opinion was not relevant and had no position (in general). International actors were relevant, especially the European central bank. He recalls a letter by Draghi indicating the convenience to introduce the Debt Brake Rule in the constitution, but the European council played no role since the interviewee believes that the EC did not discuss the case of Spain. The interviewee does not remember the position of the European council or the European parliament on this particular issue. The EFC had the same position as the Eurogroup for the same reason explained above. The country that influenced the most the position of Spain was Germany, while other governments or international institutions played no role. ESP05: The interviewee understands that there is factor explaining the grouping of the countries as we indicate it in the question. Hungary and Slovenia are irrelevant and they will have their reasons to use the constitutional

121 level. Germany has the provision in the constitution for historical questions and the case of Spain is different. Among the major actors, he thinks that Germany, the public opinion, the central European bank, the Bank of Spain, although it is not an actor, it is a factor: the electoral cost (elections were approaching in Spain), the markets, and the President of the Government, Zapatero, the most important of all. He understands that domestic factors were very important contrary to academic literature that indicates that external factors were the most relevant. This was a decision taken autonomously by the president of the government. In august 2011, the risk premium was very high, and Zapatero concludes that the only way to solve the situation is that the ECB buys Spanish, Italian debt. That was very close to violate the principles of the ECB and Germany was totally against. At this moment, there were a number of conversations in which through the governor of the Bank of Spain, Miguel ÌAngel˚ Fernandez OrdÌez (MAFO), Trichet accepts to buy debt from Spain in exchange for Spain to do a couple of things to send to the markets the message that the debt in Spain is sustainable, so that the ECB is a technical decision to calm down the markets but it is not a way of financing the Spanish debt. They decide to secretly exchange letters in which the ECB sends a letter to Zapatero indicating that we believe that Spain should do this and this to guarantee that Spain can access private debt markets. He indicates four things. The letter was secret, but since it was published in Zapatero’s book, you can also read it: reduce expenses, measures to promote competitiveness, and a key element another labor market reform. He did not call it that way. And Zapartero’s reaction was to say yes and no. there are some things I can do but a labor reform I cannot do it because elections will take place in six months, we are not doing ok and if I carry out a labor reform, I die. This is interesting because this letter is written with the intermediation of MAFO, who is much more fundamentalist than Trichet, and he had been insisting on a labor reform for a while. So, it is MAFO who says to Trichet, you tell this to Zapatero because this is what the Spanish economy requires. Then Zapatero receives this letter and his reaction is that I can do several things but the labor reform I cannot because it has a high political cost. Then Zapatero comes with this idea, out of the blue, of the constitutional reform, which is not demanded by the ECB or anybody else. Why? Zapatero thinks that he has to do something that sends to the markets and the ECB a solid message indicating that we are serious about it. The labor reform cannot be done, in part, because there are some ministers (like the labor minister, Valeriano GÌmez) that indicate that it goes against the constitution, and because of the political cost with elections fast approaching, and Zapatero did not want to be in the books of history as the person that ruined the socialist party. Then he thinks that he has to do something that is equally convincing and comes out with the constitutional reform, which does not imply an immediate reduction of public expenditure, does not imply a general strike So, it is a decision taken by himself. If you talk to JosÌ c Enrique Serrano, his chief of staff, he says, look, I was called to his office (Zapatero’s office) and tells me we are going to do this (constitutional reform), and I reply, well, this is foolish, we cannot do this in four days, without consultation and Zapatero replies, the decision is taken, do not argue against it, you have to help me to implement it. Then he (JosÌ c Enrique Serrano) tells you that they did it in one night, translating the article from the German constitution So, Zapatero does it for two reasons. First, to avoid a high political cost and, second, because he knows that the German constitution has this provision and Merkel has mentioned it in two occasions, and she is saying that other countries should have it as well. Zapatero thinks that this (reform) is going to please Merkel, she has the key to prevent Trichet to force upon us a labor reform, and I do not have a high political cost. So, within this framework let’s go to the actors and the positions. (from now on I will follow the template provided for the question and will add significant comments made by the interviewee). The president is the main actor here. The economic ministry influences in the sense that it articulates the Spanish position. Zapatero tells Elena Salgado (the ministry), we are going to do this, and she begins moving the machinery. She implements it. The ministry of international affairs was not relevant The economic office of the president, the same as the ministry of economics, it had more influence because it was closer to the president. The national parliament was not totally in favor of the reform. Clearly, psoe and pp were more or less in favor. CIU and PNV abstained and the rest of groups IU, ERC, were aginst it. The dominant opinion in the PSOE was clearly against the reform, perhaps only a 10 percent of MPS supported it, although at the end they voted in favor, but it had very little influence. Zapatero only consulted the decision with two people: rajoy (the opposition leader, PP) and Rubalcaba, who was by then the elected candidate to lead the party in the coming elections

122 and was vice-president of the government. PP was influential because without his support, the reform would not have taken place. Other parties were not relevant in terms of influence. The private banks, generally speaking, were in favor, but they were not directly influential. Zapatero knew that banks (as the employers associatins) would be in favour of the measure, but they did not participate. The Central Bank of Spain influences a lot because it leads Zapatero to move indirectly. Mass media were not relevant for the decision. Public opinion influences a lot insofar what guides Zapatero’s decision is ”what measure I can take to have the least electoral cost”. Markets. Spain was in a difficult position with the risk premium close to 500, which was considered by many as high enough for Spain to ask for a bailout. This the most influential of all actors The signal sent with the constitutional reform is interpreted by the markets as a very positive signal. What markets do is, look, how much do I have to charge spain if Spain wants to sell me a bond that I will have to pay in 10 years, how sure am I that Spain will pay me in 10 years. If you introduce in the constitution the obligation of spending no more of your revenues, then that gives a security, tranquility and I charge you less. Markets were totally in favor. Germany (Merkel), Germany has it in the constitution, she is asking the other countries do it as well, and she is resisting that the ECB buys debt so that she at the end influences that Zapatero takes action. ESP06: The main actors were the president of the government (Mr. Zapatero) and the president of the opposition party (Mr. Rajoy [nowadays, president of the government]). Also the ministry of the economy, but this was managed in a very personal way. The ministry of economy pushed for the idea, the president of the government supported it from the beginning and agreed with the opposition leader. Once that was clear, they decided to go to parliament. Economic office of the President. It played a role, but it is better to think of individuals (in this office) that had some influence over the president of the government although it was not an issue of their responsibility. I am thinking of Rubalcaba, who was then the candidate of the socialist party but had left the government. He was not in favor of the constitutional reform. Parliament had no major role. There was a majority against the constitutional reform. IN fact, the president took the decision and announced it, (that is quite usual in politics: when you know a decision may be controversial, you take it and present it as a fait accomplie because if you open the debate you will not advance in the decision). Role of ECB and Commission. Summer 2001, tension in the markets. Countries wanted that the ECB had a position, buying sovereign bonds, but the ECB did not want to take this decision insofar the countries did not adopt more concrete and stronger structural adjustment measure. In the case of Spain this was exceptionally set in the famous letter signed by Trichet and the Governor of the Bank of Spain (and in the case of Italy, signed by the governor of the ECB and the governor of Bank of Italy) in which they say that they believe that these countries should implement a number of reforms among which the one we are treating (FCO) was not listed, but there were other reforms, labor reform, fiscal consolidation, improvement of productivity, these were things that were suggested. Of course, in the letter there was no link between the ECB decision and the implementation of these reforms, but it was understood that national governments had to pay attention to these suggestions. The president of the government had to take a decision about the measures to implement. The ministry of economy was not that of changing the constitution. But the president of the government thought that of all measures, changing the constitution would be the most efficient. And as a matter of fact, it gave credibility to Spain.

9.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

Our assumption is that domestic and international actors shape a government’s negotiating position. Which

123 actors - ministries, institutions, parties, or interest groups - were most inﬂuential in shaping the negotiating position of the government, and what positions did they advocate?

ESP01: Indicates that there were no major actors influencing for Spain to take this position and that it was a natural position for Spain. Spain is a indebted country in general south European countries were against the reverse qualified majority voting. I believe it was a natural position for Spain so that the large countries would not impose their positions. Most likely the position was taken by Moncloa (Site of the government and residency of the PM). There was no debate in Spain about this issue. This was a technical matter, very complicated to understand and the large majority of people had no idea about it. This is a very Brussels thing that did not reached Spain. The interveiwee preferes to leave it blank. ESP02: Relevant actors were the usual suspects, President and ministry of economy. No other major actors participated on this decision. External affairs. Little influence, but position against the RQMV since no ministry of external affairs likes loosing sovereignty. National parliament, little influence, like parliamentary groups or parties. All of them were close to 0 in terms of the position, but they had very little influence, close to 0. Bank of Spain. They have opinion about everything. I do not remember the position. I am sure they had some papers written on that, but they were not influential. This is something that mowed down us. The influence over this matter was very limited. Commercial banks. This is the typical matter in which some banks, I suppose, would not be against it, but they had no courage to make it public. Little influence. CEOE. Most likely their public position was not too favorable but I would not be surprised if inside the CEOE there would be people that would be in favor. Media. What the media thought was irrelevant since this was a ”forced” decision. There was not a debate. ECB. It is an opinion maker. Another thing is that you share its opinions. The ECB wants that the rules are applied and the RMQV goes in this direction. European Parliametn: it is a free spirit. It is plural. Most likely parties supporting governments may show a larger concern for the implementation of the rules while some other groups give priority to issues related to social justice, environment impact, and the like. There was variety, but it had a limited influence. Supranational or international actors. Financial markets and those that influence over them. They were influential, but not decisive. Other EU countries: the large countries (France, Germany, Italy, UK). ESP03: The government was the main actor, although there was no social debate. It was no debate in Parliament. About the loans or about budget stability or even the bailout to Greece we could make questions in the streets, but about this, no. Not just because it is complicated, but because there was no social debate about it. The majority of MPs shared the position of the government, but their influence was limited. The parliamentary committee on European affairs did not discuss about this issue. Perhaps was treated on some discussions when the secretary of state came to the committee before a meeting of the European Council and said, this is going to be debated, but in any of the discussions of MPs it was debated as something special, or at least I do not remember it. Parties: This is one of those questions in which if you think that your country need X, then there is some consensus about it. Parties were not determinant. If they would have been all against it, things would have been different. Parties had a passive influence. European commission was divided, multiple voices. Germany was the government country that exerted some influence. If Germany was in favor, then the tendency was to be against itaIy was a negative influence [this is why it is left blank]. ESP04: This issue is considered quite technical and the interviewee understands that there was no debate. The main actors were the ministry of economy and the economic office of the president. They were clearly against the RQMV, although not necessarily the ministry of external affairs, who did not have any influence on the issue or participated in the debates. Concerning the particular actors, in the domestic arena, the interviewee indicates that only the economics ministry played a role. No other national actor intervened or had any influence, although the ministry of external affairs was not much in favor of the RQMV. As of the international actors, the interviewee indicates that the European central bank adopted a position in favor of the RQMV given that there is an exchange between fiscal discipline and internal solidarity (integration) and the

124 RQMV may favor integration via internal discipline. The country that exerted most influence in Spain was Germany and, overall the eurogroup, although the marks registered in the questionnaire refer to Germany. ESP05: The interviewee has no recollection about this matter and asks for some extra information about what RQMV is and when it was adopted. He prefers not to answer because he thinks is not competent enough to answer this question. The most he can do is to use proxys to the question and indicates that perhaps introducing his answers would bias the results. ESP06: The ministry of external affairs was a very relevant actor here. There is history about how decisions are made in Europe, the weight of the majorities External affairs had a more active role here, but also, presidency of the government and economy had also a role, and the opposition party, the Partido Popular, because this was negotiated by JosÌ MarÌa Aznar (former president of the government (PP), in the Nice Treaty, when Aznar vetoed the rules for votations, this was the debate about the relative weight that each country has. There is the big four (UK, Germany, France, Italy), then Spain and Poland, who aspire to be ”big” but are not big, and then the small countries. The point here is how many countries of the big ones you have to have to block decisions. Spain wanted to be in a position to block with another of the big four or with a number of small countries. This debate comes from the making of the treaties, especially the Nice treaty, and here, with the Reverse majority voting was reproduced.

9.4 The stability of government positions and the role of Eurozone non-membership

9.4.1 GV1: The Change of Position and the change of Government

ESP01: He does not see a change in the position of PM Zapatero and PM Rajoy. H indicates that those countries that are Europeanist have seen these measures (fiscal compact, ESM, banking union) positively because these are measures to monitor from Brussels the national budgets. It is an advancement for the Europeanization of the budget policies. Europeanist countries are ok with them. The interviewee indicates that, domestically, in terms of European policies, the Spanish governments have kept more or less the same position, except in the management of the austerity policies. The PSOE criticizes them once they were out of the government, although it is true that Zapatero’s government participated of these policies, largely because there was no margin to do anything else given the debt of Spain, a very difficult economic situation to exit the European ”college”. ESP02: Similar policies in both governments (Zapatero and Rajoy). The minor changes that may have happened have not been due to changes in the government, but to changes in the economic circumstances. Now, all the measures that were implemented are considered now as a rigid straightjacket; Spain tried earlier to stay afloat, to swim to survive, now it swims coordinately and can issue opinions more freely. I believe that if the PSOE would govern now, the evolution would have been the same. The interviewee does not perceive changes in the fiscal compact or the EFSM, and in the banking union he does not see differences neither, but a change in the economic environment. The problems with banks were seen during Zapatero’s government, but it emerged with Rajoy’s government. The new government (Rajoy’s) made the banking union a priority, but not for ideological reasons, but for a change in the economic circumstances. The new government began devoting time and energies to the Spanish bank’s bailout. ESP03:

125 There are no major changes, but there is change in the intensity with which a position is defended concerning the stability or any of the other topics have been mentioned. In matters of achieving more integration, more ﬁscal and economic integration, there is not much diﬀerence, but I believe a socialist government would push more, it would try to lead a favorable position for the integration. ESP04: The interviewee does not see any change of position on those matters partly because of the position of Spain in the EU scenario and because more integration (which is a goal of the Spanish governments according to the interviewee) favors a better functioning of the EU ESP05: He does not observes changes between Zapatero and rajoy’s governments. The position of both governments follow the principle that Spain should aim to support more mechanisms of EU integration. ESP06: The major change has been that there is a realignment of Spanish positions with Germany. There has been no discussion about the policies, but in general there has been, in some cases, a unilateral alignment with Germany. These changes are just minor within the context of Spain being very pro EU, accepting most measures oriented towards a deeper integration of the EU. For instance, the idea of a banking union, Spain has been pushing for it before it became a real project; Spain has been in favor of Eurobonds

9.5 The role of parliament: governing and opposition parties

9.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview ESP01 ESP02 ESP03 ESP04 ESP05 ESP06 P. The inﬂuence of the majority in parliament 0 0 0 0 - - .

126 ESP01: The interviewee understands that the role played by the national parliament is weak, mainly for two reasons. First, 80 percent of parliament’s work concerning Europe is to incorporate EU directives to the national legislation. MPs have no leeway to change the directives since they are piloted by Brussels. Second, the position of Spain is mainly decided by the Spanish government and the parliament has little role to play there. The parliament has not the information, it does not follow these issues (lack of interest), the commission for EU matters does not work at all, at the most, they can issue a report about subsidiarity. ESP02: No change. During the whole period, Parliament’s contribution is very modest. In other countries (Finalnd, Germany), Parliaments have a more influential role (they make statements, veto or not), but this is not the case of Spain. ESP03: No change. Parliament has little control over the executive. I believe is one of the European parliaments were less debates exist about EU matters. It is a weak parliament. ESP04: The interviewee sees no change in the role of the National Parliament largely because the absolute majority of seats enjoyed by the Popular Party (conservative) in Congress and Senate led towards a weaker role of parliament vis a vis the executive, who had guarantee the support of the large majority of votes in Parlia- ment. The interviewee indicates as well that there is not much debate since there is a social consensus in Spain about the need to deepen integration for a better functioning of the EU. This consensus is not the result of negotiations among political groups in parliament. Contrary, it is previous, is social, is something that is not discussed. ESP05: The argument for a weaker Parliament is the change of majorities. PSOE did not have an absolute majority of seats in Parliametn while PP had it. Then, the management of the Eurocrisis was conditioned by the fact that the PSOE did not have the absolute majority of seats, while the PP has not had this constrain. For instance, the labor reform carried out by the PP in 2009-2010 generated a lot of upheaval and people identified it with the Euro. When you talk to former PSOE ministries of labor they indicate that the reform could have been done in a different way compensating trade unions with more social expending but they could not do it because there was no parliamentary support (due to the lack of an absolute majority). So, the fact that the PSOE did not have the absolute majority of seats in parliament totally conditioned the response to the crisis. When the PP has had the majority, they have been able to do other things. ESP06: Weaker. Parliament has weakened, but for the interplay of majorities. Until 2011 we had a simple majority that required some agreements for some policies, but after 2011 [with the general elections] the absolute majority of seats [of the PP] make unnecessary those agreements. The capacity of parliament to limit the government actions is much more limited because the government has the absolute majority of seats.

9.5.2 PL2: The role of the governing party

Interview ESP01 ESP02 ESP03 ESP04 ESP05 ESP06 P. Governing party inﬂuence 0 0 0 0 0 + .

ESP01:

127 The interviewee believes that the role played by the MPs belonging to the most important governing party is more or less the same, very weak. No changes have been reported, mainly because these issues are managed straight by the government. Besides, they are not concerned about European politics. In the electoral debates there has not been anything about Europe. They have the idea that the discussion of issues about Europe have no influence over the elector. Even, and I have seen this, having being president of the EU gives nothing to you, electorally speaking. ESP02: During Zapatero’s government, PSOE MPs had a margin to become more influential since the government was weak, but this margin was compensated by external pressures. De facto, even they had the opportunity to become more influential, the position of Spain (high debt in a crazy international financial market) limited this opportunity window. With the PP, this scenario becomes more orderly. MPs have always the opportunity to be influential, but it takes time. On the other hand, the leading role here is that of the executive nd the parliamentary groups have been following suit, in large part because of the urgency of the matters. IN both cases, Zapatero and Rajy, the situation is similar. ESP03: No change. When you are in the executive, the government usually has a lot of strength; the party supporting the government has a limited influence. There are not many discussions about what matters for a ministry or for the government. When there are discussions, the government usually wins, but it depends on how far the ministry is going concerning the policy marked by the party. There are cases in which the ministry develops the program of the party; there are cases in which there are ministries that are stronger than others. ESP04: The same explanation as in PL1. applies to this question: PL1. The interviewee sees no change in the role of the National Parliament largely because the absolute majority of seats enjoyed by the Popular Party (conservative) in Congress and Senate led towards a weaker role of parliament vis a vis the executive, who had guarantee the support of the large majority of votes in Parliament. The interviewee indicates as well that there is not much debate since there is a social consensus in Spain about the need to deepen integration for a better functioning of the EU. This consensus is not the result of negotiations among political groups in parliament. Contrary, it is previous, is social, is something that is not discussed. ESP05: It was irrelevant in the case of both governments. No change has been seen. It was irrelevant for Zapatero and irrelevant for Rajoy. In spain we have political parties that are very presidentialists. The pp is traditionally presidentialist ; the PSOE had a more regional structure, but in Zapatero’s time he had control over the party, there was no alternative voice. So, in both cases the parties are dominated by the leadership of the Presidents (of government). ESP06: Stronger. There is much more party discipline in the PP than in the PSOE for two reasons First, the strength that an absolute majority of seats gives, and second, because of the coherence between the electoral program and the government policies. There is a general perception that there is more coherence between what the PP said it was going to implement and what they finally did, than what the socialist party said (electoral program) and what Zapatero ended up doing. So, the support was stronger for the PP.

9.5.3 PL3: The role of the opposition party

128 Figure 3: Change in the opposition party inﬂuence

Interview ESP01 ESP02 ESP03 ESP04 ESP05 ESP06 P. Opposition party inﬂuence 0 0 - 0 - - .

ESP01: The government is in charge of defining the position of Spain and the legislative has little room here. Besdies, the opposition parties (non socialist) have no concern for EU matters... ESP02: With the PSOE’s government, with the constitutional reform [in parliament], MPs might have had some influence, but with the exception of this constitutional reform, in both governments, the executive has led the way. ESP03: Weaker. The particularity of Spain is that there has been an absolute majority and when there is an absolute majority, the rest of MPs can do nothing.. . here, there has been no debate. We have had an absolute majority willing to exercise it and consequently refusing to convince, debate. We always lack resources the Real Madrid budget is twice the budget of the Parliament: we have the best football league but we do not have the best parliament. This is devastating. Resources are always necessary. We should have more consultants (advisors) to have better discussions with the government or even with private companies, who usually come here with very professional teams and you feel in disadvantage. ESP04: The same explanation as in PL1. applies to this question: PL1. The interviewee sees no change in the role of the National Parliament largely because the absolute majority of seats enjoyed by the Popular Party (conservative) in Congress and Senate led towards a weaker role of parliament vis a vis the executive, who had guarantee the support of the large majority of votes in Parliament. The interviewee indicates as well that there is not much debate since there is a social consensus in Spain about the need to deepen integration for a better functioning of the EU. This consensus is not the result of negotiations among political groups in parliament. Contrary, it is previous, is social, is something that is not discussed. ESP05: The role of PP was important during Zapatero’s term because they could oppose and make it difficult for Zapatero, but nowadays, the PSOE. The opposition influenced on Zapatero but the opposition (PSOE) does not influence rajoy. The key here is that the PSOE did not have the absolute majority and had to find

129 support in other groups and that was diﬃcult because it had to look for support for unpopular measures. And even if you had the support, what other groups asked for in exchange were nationalist type of measures. So the only parties that could support you were nationalist parties,. For instance, the PNV (Basque nationalists) said, ok, I will support your labor market reform but I want that collective bargaining be at the regional level, not the national level, and that would have brought us to the constitutional court so, the key here is the existence of an absolute majority. ESP06: The capacity to act as an opposition party for the PP was much higher (due to the simple majority of seats supporting the socialist government during Zapatero’s term) than for the socialists it was during the PP government because the PP held an absolute majority of seats in parliament). In large part, this is so as well because the socialist party, since the austerity policies implemented by Zapatero (may 2010), is in a deep structural crisis. The socialists had a temporary leader (Mr. Rubalcaba), another one that nobody wanted (Pedro S`IAnchez)´ and now who knows

9.6 The dominant views of economic policy

9.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview ESP01 ESP02 ESP03 ESP04 ESP05 ESP06 ID The state should provide signiﬁcant economic governance with state-led 3 3 2 3 3 2 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 1 2 3 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 2 1 2 1 1 .. management.

ESP01: The interviewee indicates that currently, the dominant idea, with the PP’s government, is the balanced budgets and stable debts. However, the option related to public investments and counter-cyclical demand management was clearly dominant in Zapatarero’s government (PSOE) previous to the crisis. ESP02: First option does not ﬁt well in Spain, this is an outdated idea or priority. The main priority is the stability, however, once stability has been achieved, we can think of the third option. ESP03: She equates balanced budgets and public investments. [She shows problems to rank the options. I tried several strategies to capture her views, but she had some diﬃculties to place balanced budgets over public investments or the other way around so I suggested her to give both issues a 1 and she was ok with this]. Clearly we need more investment. Investment on education, health, technology and development, research,

130 has been reduced and this is key for the future. ESP04: For the interviewee the most important economic ideas in Spain are 1 and 2, being 2 a new option introduced in the conversation: EU solidarity mechanisms, banking union and common fiscal policies. The rest are marginal or have much less influence nowadays in his view. ESP05: Labor market (unemployment) and political stability, but when he is reminded that we should focus on macroeconomic principles, he indicates that the labor market. ESP06: I believe that the two large reforms pending in Spain: the labor market reform and the fiscal reform. These two reforms will have to be confronted. It is not a matter of modifying some taxes or the VAT. Spain has a ratio of public income/GDP which is 7 points below the European average (around 40 percent). The capacity of the State to collect taxes is lower than in the rest of Europe and we are offering public services that are similar to the rest of Europe (I am not saying better or worse, but similar). This is not sustainable.

9.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview ESP01 ESP02 ESP03 ESP04 ESP05 ESP06 ID A competitive exchange rate (i.e., devalue the currency, if necessary) ..

ID Growth and low unemployment 1 1 1 1 1 1 ..

ID Price stability 2 3 2 2 2 2 ..

ESP01: Competitive exchange rate (devaluations) cannot be applied to Spain. The interviewee discusses which policy goal is more progressive and reviews the policies implemented by the PSOE and PP’s government. He ends up indicating that for Spain a priority has been growth and low unemployment, followed by deficit control and fiscal policy to guarantee income to support social policies. ESP02: Competitive exchange rate (devaluations) NO APPLICABLE IN SPAIN. Our major problem is growth and unemployment. There is no problem with the inflation (price stability), but we have a problem with fiscal stability and I would put it at the same level as growth and unemployment. ESP03: Competitive exchange rate (devaluations) NON APPLICABLE. As an option, the interviewee indicates that our fiscal policy should change and that our economic policy is based on a different education policy, which is the origin of all, but this is looking in the long run. ESP04: Option 1 is not applicable in Spain. The interviewee introduces another goal that is relevant in his opinion: fiscal consolidation (how to get more money for the state). For him, proce stability is not important because Spain has no problem with inflation since it is low and helps to reduce the public debt. ESP05:

131 Competitive exchange rate (devaluations) NOT APPLCABLE HERE. Other priorities should be, according to the interviewee, inequalities and plutocratic mercantislism, the idea that others called extractive oligarchy (lack of competitiveness in many markets of products and services). He believes that this is the dominant idea. ESP06: COMPETITIVE EXCHANGE RATE IS NOT APPLICABLE. In the long run, budget equilibrium (stability). We should have a strategy that puts us in the way towards budget equilibrium. The fact that we have commitments, for instance, to pay pensions, which are not sustainable in 30 years is very worrisome. At some point we will have to confront reality

9.7 The future course of EU integration

9.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Spanish Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview ESP01 ESP02 ESP03 ESP04 ESP05 ESP06

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

ESP01: The interviewee picks the three options and adds a fourth one based on the social dimension in Europe that he believes is non-existent. We have to go there. Europe has to intervene somehow in the violation of human rights in Europe, not by private actors, but public actors like it is happening in Hungary. In the case of Hungary, Europe should have opened an investigation to expel Hungary. We are experiencing in Europe a wave of xenophobia and nationalism, and that goes against the natural evolution of the European Union. Since Europe has not been able to fully solve the financial crisis, then there is a reaction, ”I will go to my country, I will do it from there, the EU is not doing it..” and you go to protectionism in the left there is an absurd protectionism fighting the TTIP that connects with the Brexit, which is nationalism of the working class. When asked about the changes, the interviewee indicates that there are two schools. First, this is the one I believe in, Europe, in the short run needs to relegitimate by attending and solving the real problems: asylum policies (related to refugees), security (defense), economic, Europe needs to multiply its investment capacities, and the plan Juncker is not enough. The citizen has to see that the EU solves his current problems. Europe is in a critical situation, but the solution is not, ok, we will reform the treaties, institutions and that. This is fine, but it is more for the long run and people are not demanding this. In the long run, the EU will need a reform, but it will have to be carried out in the Eurozone. I accept that there will be a two speed EU for some relevant matters, especially in the Euro countries. Treaty reforms are difficult, but I do not think organizing a convention to change what EU needs is to face the real problems causing a crisis, this is important, the urgent. Europe has to get more means. It is fundamental that the EU has a tax on financial transactions that is actually blocked. The EU needs more means in detriment to the states, more investment capacity, a defense policy, and a social dimension: it would be good that Europe has a European minimum wage, a homogeneous pension system, a fiscal armonization. These are the things that the eu should face immediately. ESP02:

132 With the Brexit, opening constitutional debates would be suicidal. I would discard it. We need a more integration (more Europe), but there are no common positions about it: we would like a single common treasury, a single unemployment protection mechanism, a EU fiscal stabilizer, yes, these are things that can be explored and created; the EP, different EU institutions create opinion about that. Most likely we will go towards this rather than a constitutional reform, which is complicated without solving the Brexit. Changes may include having a budget that can be used for counter-cyclical demands, more treasury integration Apart from centralizing, which is ok, we have a problem now with the integration of national parliaments in the European discourse. Few days ago I read that parties that are not supporting (ciudadanos, psoe, podemos) the government asked for a pension’s rise. They are decoupled with reality, and this is serious. Spain has obligations, there are structural reforms that are difficult to implement and there is no internalization of the obligations we have towards the monetary union. These obligations have costs. This disconnection of the national parliaments shows that Europe is far away in the public political discourse. But this is my own opinion. ESP03: This is the question of the million. I do not believe we should get stocked on a Treaty reform. It is necessary to reform it, but it is not the time for a treaty reform. I believe we need immediate actions [institutional change]that send signals of a European construction that is faster than it has been up to now, and this especially after Brexit. Of course, without renouncing to the Treaty reform, but not now. ESP04: The interviewee understand that since there is no consensus for treaty/constitutional reform, the best path would be to work within current Treaty provisions in a framework of a future multispeed EU of concentric circles, which is the option the interviewee favored in the next question. ESP05: He thinks that Spain should be prepared for a breakup of the Euro. He thinks that the Euro has a high probability to break and if he were the President of the government Spain should be prepared for this. It is inevitable, for him, that this will happen. There is an internal contradiction: For southern European countries it is difficult to grow for structural reasons and for northern countries there is no political willingness to finance deficits of the south. The south of Europe will not grow to finance the level of social expenditure they are used to, if there are continuous cutbacks (in social expenditure) , the public opinions will detach from the EU and that means the EU runs the risk of leaving the EU; to avoid this, somebody has to finance the deficits and that means the north of Europe, explicitly with a bailout or implicitly with the ECB, as it happens now; that means that this is not sustainable since public opinion in the north will not support politicians deciding to finance the south. Consequently, there is nothing that could be done and my guess is that the Euro will break. ESP06: The future of Europe is the building of more Europe (integration). This a general idea. From here you can articulate in different priorities. you can build two speed Europe if there is a group of countries that do not see as a priority the integration of Europe; you may need constitutional changes, absolutely agree; More institutions? I believe that what is required is more legitimacy of the current institutions, which is much more important than creating new institutions: a democratization of the decision processes, more weight of the Parliament, a democratization of the selection processes in the Commission, these are the most important aspects for me. Opening a debate about a constitutional reform is most likely too ambitious, the possibility of being successful is remote, and the possibility of arriving at results we cannot predict is high.

9.7.2 ID5. The Vision of the European Union

The positions of member states’ governments in the EMU reform negotiations may be inﬂuenced by the government’s general vision of what the EU should be. How would you describe the relevant government’s? preferred vision of the EU? For example, did it favour a development of the EU in the direction of federal

133 union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]

Figure 7: The Vision of the European Union

Interview ESP01 ESP02 ESP03 ESP04 ESP05 ESP06 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

ESP01: For Zapatero’s position, Federal union, especially in the eurozone. What has had a role in the crisis has been the intergovernmentalism that has led Europe to a paralysis. So, Federal Union. For rajoy’s government, no change, keeping the status quo. Last time there was an impulse in Europe for the federal union was during Giscard d’Estain presidency of the convention. That was the top of the EU since it was born. But France broke all this, because France is a very nationalistic country, and especially the left broke the Maastrich treaty. It is true, it was substituted by the Lisbon treaty, but without glamour, without being sexy,. Ever since, we have been going down. However, besides nationalistic movements, xenophobia and all that, the EUs has resisted. You ask people and they want Europe and they want the EURO. However, there are strong nationalistic and xenophobic movements in Europe. About the influence of the government’s vision on the reform discussions, the interviewee is not clear and refers to the Zapatero’s government, who promoted the referendum to ratify the EU constitution. Rajoy’s government is Europeanist but it is a government that has had no initiative over these matters. It is a government that has been submerged into the interior of the country. I believe that the fact that our presidents speak no word of English explains the lack of influence of Spain. There has not been interest on the part of the Spanish government to participate in European debates. Contrary to Zapatero’s government, hey have been much more interested on domestic matters. ESP02: In no recent legislature (Zapatero and rajoy), the European constitutional debate has been a priority. The debate has been the architecture of the eurozone. It has been a pragmatic debate, not a constitutional one about whether Europe should be one or 27 or 28. There has not been differences between both governments. They have followed a pragmatic approach but the focus has not been in the building of Europe but in the survival in the environment created. For instance, in the banking union we can see the pragmatic approach. We have a problem, let’s try to solve it in a coordinated way, but this does not open the debate about the big principles sustaining the European Union. ESP03: The interviewee chooses a federal union. Both governments shared the same vision, although she believes that one of them [Zapatero] believes in it and has pushed stronger for it, and the other [Rajoy] has done nothing for it. The ministry of external affairs [Rajoy’s government] , however, has been explicit about the government’ wishes for a Federal union. ESP04: The interviewee understands that all governments in Spain have been pro Europe and have supported a Federal Union, although given the correlation of forces in the EU and the role played by some members, perhaps the best option would be a multi-speed Europe with a flexible core. Examples are those treated at the beginning of the questionnaire where there are various alignments of countries in different issues. ESP05: ID5. Federal union, although I believe it is not viable. This position has influence the Spanish position a lot. Europe is the anchor of Spain to modernity, prosperity, and we have an especial interest in Europe becoming more integrated. This Europeanist vision is dominant in Spain and has shaped the responses given

134 ESP06: Following the general idea of ”more Europe”, I believe that rather than looking for new institutions, we need to look for principles; feelings that make us feel a unity [a community]. Additionally I think we had a relevant challenge: building a digital union. Here is the argument perhaps too economic but it shows the diﬃculties of the EU. In the 60s-70s, there was not much Europe. We were developing the aeronautic industry. Eruope was able to put together a common project Airbus to have a European competitor. In the 80-90 the mobile industry emerges and Europe was capable of putting together the GSM technology so that there was interconnectedness in Europe. As a matter of fact, mobile telephone industry developed further and quicker in the Eu than in the US or japan. In the 90 we had hardware companies. In the 2000s we had no hardware companies but one company making software, in 2010 we have no company for digital economics in Europe capable to compete globably, we have no ambition to build a new digital network, we have no ambition to build new projects of energy, of renewable energies in Europe. This is a burden [blight] for society that we will carry 30, 40, 50 years.

9.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? ESP01: About the influence of the government’s vision on the reform discussions, the interviewee is not clear and refers to the Zapatero’s government, who promoted the referendum to ratify the EU constitution. Rajoy’s government is Europeanist but it is a government that has had no initiative over these matters. It is a government that has been submerged into the interior of the country. I believe that the fact that our presidents speak no word of English explains the lack of influence of Spain. There has not been interest on the part of the Spanish government to participate in European debates. Contrary to Zapatero’s government, hey have been much more interested on domestic matters. ESP02: In no recent legislature (Zapatero and rajoy), the European constitutional debate has been a priority. The debate has been the architecture of the eurozone. It has been a pragmatic debate, not a constitutional one about whether Europe should be one or 27 or 28. There has not been differences between both governments. They have followed a pragmatic approach but the focus has not been in the building of Europe but in the survival in the environment created. For instance, in the banking union we can see the pragmatic approach. We have a problem, let’s try to solve it in a coordinated way, but this does not open the debate about the big principles sustaining the European Union. ESP03: The interviewee chooses a federal union. Both governments shared the same vision, although she believes that one of them [Zapatero] believes in it and has pushed stronger for it, and the other [Rajoy] has done nothing for it. The ministry of external affairs [Rajoy’s government] , however, has been explicit about the government’ wishes for a Federal union. ESP04: (interpretation of his position) Interviewee understand that there is a basic social consensus in Spain that filters the positions of different governments without many practical differences. This consensus is that EU is good for Spain and that a more integrated EU is preferred. This idea permeates the positions taken by different Spanish governments like in the case of the bailout to Greece. ESP05: Federal union, although I believe it is not viable. This position has influence the Spanish position a lot. Europe is the anchor of Spain to modernity, prosperity, and we have an especial interest in Europe becoming more integrated. This Europeanist vision is dominant in Spain and has shaped the responses given ESP06:

135 Both governments (Zapatero’s and rajoy’s) participate of the idea of ”more Europe” with two limitations. As a country [society] we do not feel the urge to build more Europe. In Spain there has been two gener- ation with two projects: my parents, with the transition to democracy (70s and 80s), and in the 90s, the integration in Europe as first-class citizens. Both have been very successful. The role of Spain now is to lead Europe: we are full members, we are big, we can have the same influence as Italy, the Netherlands, we have demonstrated capacity, flexibility, etc. But it is not a vital project for Spaniards, for the society, nobody believes in this when you tell them. And this is a burden because our governments go to Europe with a vision that represents society and nobody believes that they have to go there to lead the EU. We do not make the effort to send functionaries, adopt the proper positions, strong politicians to push for these ideas because they have no support behind. This is a structural limitation. The temporary [conjunctural] limitation is the economic crisis and European support [weakness], but we have overcome it already. The structural limitation marks priorities, for instance how important is to sent good candidates to Europe vs having them here, how relevant is to devote time to prepare the European councils vs devoting time to regional or national debates at the end, this influence priorities. The position of all governments is quite homogeneous: the more Europe, the better.

9.8 Negotiation strategy during the Euro crisis

9.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview ESP01 ESP02 ESP03 ESP04 ESP05 ESP06 S T Hard bargaining: tries to extract concessions from the other side, delays or R Never Very often Very rarely Very rarely Very rarely Very rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Very rarely Never Never Never Very rarely provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Very often Very often Very often Very often Very often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

9.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Spanish delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

ESP01: The ﬁrst option is typical of the united Kingdom. The second option was Aznar’s(Former PM, before Za- patero) style, but not that of Zaptero or Rajoy. Spain has an advantage: spain reaches this position in a

136 natural manner. It is an intermediate country: it is the smallest of the large countries and the largest of the small countries. It is a Mediterranean country that has a good relationship with other countries, favors consensus. It is a comfortable position. I have noted no change, but I have seen that the governments have had no willingness to influence. Rajoy’s government has been hands-off style and Spain has lost international weight. In the last meetings of large EU countries without the UK, Mariano rajoy has not been invited. Nobody calls rajoy. Spain is not there. This is one of our problems. But the problem is that we are not concerned by the European problems. ESP02: Same strategies. What has changed is the situation in the negotiation. Before, we lacked credibility. Now we have gained some credibility, we are listened, and when you have to vote you have the weight that you have. Our strategy has not changed, what has changed is our position given the change in the economic circumstances. ESP03: We have a different role, but not because we have decided it, but because reality has put us in a different role, less influential role, and nothing has been done to change the situation. ESP04: The interviewee sees no change in Spain’s negotiation strategy in large part due to a basic consensus (see above) about EU matters and the position of Spain vis a vis other countries. ESP05: No change perceived. There is a difference based on the ideology, but it is not determinant. What is important is the Europeanist vision, the fact that Spain favors the integration of Europe. ESP06: Spain has maintained a similar position over the years, although with the Rajoy’s government we see a stronger alignment of Spain with Germany.

10 Estonia

10.1 The list of interviews in Estonia

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer STO11 50 STO12 50 STO13 50 STO14 1000

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

137 10.2 The summary observation on country interviews

Three cabinets were in power during these years, while all prime-ministers belonged to the Estonian Reform Party (1. Ansip’s second cabinet 5 April 2007 - 6 April 2011, 2. Ansip’s third cabinet 6 April 2011 -26 March 2014 and 3. Roivas’ first cabinet 26 March 2014 - 9 April 2015). All governments were very pro-European and single-market oriented, preferring the status quo. The period also coincided with Estonia?s Eurozone accession. Decisions were mainly made by the head of government, with the finance minister being very influential. The president has a ceremonial role. Estonia?s foreign policy concern is the influence of Russia; therefore, pro-European. Some of the issues (such as the Greek bailouts) were voted on before Estonia joined the Eurozone. However, the public was in favour of austerity in Greece given that Estonians are poorer than the Greeks. Four interviews were conducted in Estonia that are well documented in the questionnaire, with extensive explanations. STO14 was conducted through skype and completeness of answers is lower. Note: some interviews were the pilot interviews, which might explain why some scales (IDE question) were interpreted differently. We should look into this once more.

10.3 Open answers to questions on 4 contested issues

10.3.1 GRC: Willingness to support Greece in early 2010

STO11: For us at that point of time it was easy, because we were not part of the decision. Even if the EA-MS decided to support we were not part of this package in the beginning. So in our thinking, it did not create the question weather Estonia should support or not. So in that sense its difficult for me to position. Because if we look at the later positions when the programs were discussed and updated, we realized that the support is needed. I think that the position would be above 50, but not more than 75, maybe. Partly because, with this specific problem, we did not consider us the ones that are suppose to support Greece. Maybe did not make the direct connection that if Greece is supported that the euro is coming from us. I would say positon 60. I think it probably came through the position towards Europe. As we have been European we have wanted to be part of the core Europe. The initial position is that ”if someone is in trouble you have to contribute”. It would be more towards supporting Greece than not. If you take the public opinion, it would have been very negative. Because it would be closer to positon 0, not exactly zero. The public opinion had position 20. And the government went against what could be the popular opinion. In the sense that the Reform Party has identified themselves very close to Europe, it was part of their (...) to push through this. And as we were already in the process of joining the EA it would have been very difficult to say that we would not be part of this joint rescue operation. STO12: Position 60-70 on the government. The public opinion was against it because we are a poor country. There was a lot of news on how much pension the Greeks have and it was three times higher than in Estonia. Why should a poor country help Greece? The government was convinced due to different reasons to help. Influential was the European solidarity. STO13:

138 Financial assistance? At this moment, due to the reason that we were not a EA-MS, it was not an issue for us. In 2010 out thinking was that we need to do everything possible to help Greece. This was the view of the government, despite if we were EA-MS or not. In 2010 we were probably 25 in the position. And today we are 25, because we don’t know the situation in Greece and how realistic they are. In 2011, we participated on the Greek issue, when the ESM was established. When we need to make a new phase of Greece we vote in our parliament. And the parliament has always had majority support. If you ask the general public its not so popular. So it’s a politically difficult position. We are giving our money on the basics of credits or guarantees, in very small parts. Because the biggest is Germany and it’s difficult to explain to the public here. If you look at Greece and the size of pensions, salaries, and compare it to ours here in Estonia, Greece are still significantly higher. Estonia, the poor, or less wealthy nation, has to support the richer nations. This is very difficult to explain to the public. The Estonian interest is the united Europe.This is not an issue like ”hey today I go to the restaurant and I want red or white wine”. The government said, it is a realistic plan to support Greece or not. If there is any realism in this plan, we have to show solidarity in the Eurozone. The believe to support Greece, to go out of the macro economical framework and growth, that’s the questions that can be changed from time to time. Its not an emotional issue is more that everybody agrees that if we are in the Eurozone we have to be committed and find a solution. Its 50 percent the governments own expertise and 50 percent looking what is the European recommendation, and what is the idea of Europe, because they are more informed. The European commission, the IMF, Germany, big states that have more on stake. Our initial stance that we were not needed to make any decisions. We have lot of coordination with our regional partners, the Scandinavians. Germany is very important and bigger countries. Our background is that we have less debt, strictly following all the criteria’s. So its easy to use us as an example for other countries with problems. It doesn’t work that way that somebody is coming out with a proposal, and then everybody goes home, and then get back to a position. Its always working together, because its a common project. Its not an important question in order to have a very specific national, narrow, concerns and interests. If not, then your national interest is that Europe works. If it works you have to listen to the others. This is the way. You (interviewer) is asking me if there is someone who directly impacts. There are always impacts but this is a contradiction. It’s a two-way traffic. Even we Estonia sometimes influence big countries, if you have good arguments. Its not so primitive. The key roles are the institutions, the troika. Why? Because they have more expertise. We don’t have the expertise on what is going on in Greece. We have to rely on the ECB, EC, IMF. STO14: Position 20. We were not part of this in 2010 but when Greece started to ask for help again, we wanted to help them but they need to help themselves first. We were not so happy about just helping them, without any consequences. It should be the stick and carrot thing, that if you really do your reforms you will follow the rules, and then we can help you. Otherwise its just like poring water on the ground and nothing happens. We wanted them to show us the results and then we can help you. If you think about the Estonian public, for them they though that the Greeks are getting (§) not showing their statistic right, and we are here in Estonia like pioneers doing everything, almost torturing the public. So we were closer to no immediate assistance to Greece. So 10-20.

10.3.2 ESM: The size of the European Stability Mechanism

139 position of the government, and what positions did they advocate?

STO11: That was the time when the size was already decided. The key of the contribution was for us the most important issue. We were somewhere in between these two. When we landed in 500+EFSF contribution. Position: 50. I don’t know about the influential actors. In deciding the size we were very much dependent on the assessment of the institutions, Commission, ECB. What would be there possible (...) The Commission and ECB made the ground work to establish how big the cut would be. I cannot give any influence scale. I think my answers to issue 1 could reflect some of the positions. But at the same time its not directly comparable. In Greece you had a specific case. With ESM you did not know at that time who would be the clients of the mechanism and if they do deserve to be helped or not. With the ESM size you are more inclined to have a bigger than the support Greece. In general, I don’t think this issue was discussed as such. Later in the ratification process, we talked about, why is the size as it is, in that sense we it was already given by the circumstances. STO12: The lending capacity for Estonian warranties is about 0,4 percent of GDP. Here in the government, parliament, news paper there was discussions about how much is the Estonian capacity to put into the ESM. How much we would be able to put in, and not about the amount of money in lending capacity. I don’t remember a discussion at all about the lending capacity. It was more about the proportion, should Germany put more because they are more developed and so on. Perhaps ”no position” is better here. STO13: I don’t remember. The question is 500 bn euro or more. We were considering the arguments of the EC, ECB because they are more experts. The discussion about this ESM was the ”capital key” how much every MS should be part of the ESM. And later the legal counsellor, we have an independent supervisor, and he started a procedure in a national court (Indrek Teder). The national court started a procedure. ESM was an international agreement and he wanted to see if the agreement was in accordance with the constitution. Check the constitutionality. (...) delegating the decision making to the bodies of the ESM. In our law it says does that every ESM decision should have an acceptance by the parliament. Teder started this. The verdict was that this is in accordance with the constitution. It was nitty gritty in the national court. The size of ESM was an issue here, but it was more about what would be the long term reasonable solution. The mechanism has to be effective and then you need to have the right size to deal with the different MS that have a problem. But for us is was very hard to say what the reasonable size would be, 500bn or more. Because if something would happen in France, then the 500bn is too little. For Greece, Ireland, Portugal, its enough. The ESTONIAN position is that if we create some new mechanism it should be really workable. The political question was: ESM or not. The government position was that if the are in the Eurozone we need this kind of mechanism. And the ESM was positive because it was a long term mechanism. The ESFS was temporarily. You can put 75. The EC and ECB are more neutral, like institutions and you have to rely on their expertise. The most influential were the minister of finance the central bank here. Politically its hard to say what’s the best, you have to rely on the expertise. We have to calculate, what is our capital injection, and 500bn was big money to us, but it was doable. STO14: NA

10.3.3 FCO: The legal form of the debt brake

140 adopted text refers to ”provisions of binding force and permanent character, preferably constitutional”.

STO11: We started with the position 0. We were ready to agree with what was then agreed. Binding but not necessarily constitutional. Considering that we were ready to move I would say 40 in position. It was the minister of ﬁnances (Jurgen Ligi) position. It was not disputed. Changing constitution is a very complicated process so it was excluded in the very beginning. But it was not him as a person alone, it was the ministry as a whole. STO12: NA STO13: NA STO14: NA

10.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

STO11: Position 90. There were some attempts to make it lighter than it was during the negotiations. They dependent on our advise, so ministry of finance. We were the exception. STO12: NA STO13: We are very supportive of the sanctions. Estonia strictly always followed these rules. All the rules, growth and stability pact, deficit debt, we are country with the least debt. We always have a balanced or surplus budget, for 25 years. Because of our currency poll system. And we are embarrassed when we see that the things that are agreed in Europe, haven’t been fulfilled. This is the biggest problem to why Europe is in deep shit. Pacta sunt servanda. If we have something agreed voluntarily and then someone does not follow it. That is Greece. And also in France, Spain, Portugal. If you ask, what Is the powerful sanction its difficult to say. Maybe this is a good sanction to withhold these structural funds. Maybe these countries need this money to make the structural reforms. Generally, there should be real mechanisms. These are yet not found. And that’s the biggest problem I Europe. The structural funds are a very nitty gritty issue. The biggest question for all the liability of the Eurozone that have different economies and different competitive level.

4In the pilot version of the MS questionnaire there was also a question about withholding EU funds from member states in breach of SGP criteria. Some answers may thus refer also to this question, although they are reported under SPA.

141 The question is how to put these 19 or 20 economies together. We were supportive of a real sanctionary mechanism. Our concern is that sometimes the EC treat different MS different. This is unacceptable. Why does the EC treat France different from smaller MS. France they have all these problems, but they postpone to do anything. Now there was a decision, some months ago, about Spain and Portugal. The EC decided to not make any sanctionary decisions. The problem is not with the Greek economy, the problem is that Greece have lied for many years and EC knows that they are lying. In the basis of lies any joint project in Europe does not have any perspective to be reliable in the future. And this goes down to the security and foreign policy issues. If there are too many lies, then the answer is what the British people said. If we talk about some Estonian politicians that think that everything is good, they ”thank you thank you thank you”. But I’m saying things as they are. Why does Estonia like Europe? Because our roots are European civilisation. We are joining the European union as a modern form of cooperation. But if Europe itself is not ready to follow these values, rule of law, etc., then it is a weak Europe. And the Eurozone is a good example. STO14: Position 80. We are using the EU funds very efficiently. So we thought that it should be involved some how. If your not following the rules then you should not have the money from the EU. The initial idea in our case was that it should be there. Finance ministry, our PM was following this closely. We are not very strong when we are doing the positions because as an example, if we don’t like an idea we say ”oh this is a wonderful idea”. I remember from the committee meeting (committee on EU affairs) when the finance minister was there with us, and we said that we should push more towards the withholding of EU funds/rule. Before the council meetings in the EU, all our ministers come to the Committee of EU affairs parliament, to get the mandate. We are giving the opinion of the standing committees, but the Committee of EU affairs parliament are the one making the decision on all the laws and directives (EU documents).

10.4 The stability of government positions and the role of Eurozone non-membership

10.4.1 GV1: The Change of Position and the change of Government

STO11: No, we have generally followed. Starting with pro European, and sanctions, and all this should be implemented and if assistance is given it has to be tied to the different conditions. And the recipient has to fulfil the (...). STO12: Maybe in various detailed questions but generally came form the same political fraction. So no. No major change. STO13: I We have been quit supportive, certainly in details. In details there can be some changes but it depends on the debates. Generally, if you have Europe, we need a mechanism, that works when there is one problem. In particular MS, or Eurozone as a whole. The big question is not answered. The sick-pack etc., if there is a need and everybody talks bout that structural reforms are needed, its nice words ”structural reforms”, but if the MS does not implement structural reforms, how can we influence that. There is no answer. If there is no euro as a currency, then its easy and up to every country. Your currency is going down and your country is going significantly poor. And now because of the Eurozone we are creating some kind of difficult, complicated system, which needed. If you don’t follow the criteria’s, the recommendations, because you are an independent country, because your government does not have the mandate of the people. It’s a problem that we try to mage the tiol democratic process. Now we are building some kind of undemocratic process,

142 beyond the the democratic process. We need to ﬁnd new solutions, and new solutions for democracy, new interpretation of sovereignty. We need the euro, to be competitive in the global area. STO14: I don’t recall that there was a major change during these discussions. In the beginning of 2011, the government produced a white paper on the future of the EU, or future on the ﬁncial crisis. The white paper said that: ”all the rules needs to be followed. We are pro stronger rules that concerns all these mechanisms or state budgets”. Maybe its in English. Every four years we do the European union policy paper, its in English. That includes our main directions and positions on every topic, from agriculture to all. There was No big change at the time when we talk about the six-pack, two-pack, EFSF, ESM. We moved towards the direction that we wanted to have some certainty, and to have understanding of how it all works, how its been followed and scrutinized. With regard to the government change the policy did not change at all. The biggest coalition parties stayed the same. And even if the PM changed it did not matter.

10.4.2 GV2: The Impact of the Eurozone non-membership

Interview STO11 STO12 STO13 STO14 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

STO11: There were all kinds of pro-european stands at least related to what the treaties say. This mandate was given by the referendum when we joined the EU. That has guided the government and the thinking for us have been that for a small member state is useful to have some kind of community measures to to follow the decision making. Rather than to use the intergovernmental way. The political parties have been pro European with some exceptions, the centre party and Conservative Peoples Party (EKRE), Eesti Konser- vatiivne Rahvaerakond, ultra conservative party, who are against any integration and whats that Estonia be left alone. Yes you could classify us as already members in 2010, in 2010 we already participated in the Eurogroup meetings, so we were basically involved. We were not involved in ESM, the first round. When the ESM negotiated started then we were involved in beginning. The first packages was for Ireland and then Portugal and Greece came after. In those first parts we did not participate in the program negotiations. When we went on board the programs were already there. All the discussions about the actual reform of the Stability and Growth Pack, the so called Six-Pack was adopted at that time, then all MS were involved, not only the EA-MS, but all. So we did not feel that we were left out, we were part of the negotiating process and regarding that we always been in favour of the EU approach, so basically very close to what Germany has supported at least during these last six years. We wanted that the reforms would be made within the existing legal frameworks. The approach for us was acceptable that there some regulations, directives discussed and approved. In the end they all considered some kind of compromise. Maybe the rules were not as strict as we would have liked but that was the outcome. Q:The government supported mechanisms that

143 ensure participation of non-members of the Eurozone in the new governance structures. Interviewee: Our positon was that everything that concerns EU as a whole, that should be regulated by 27MS. And then only the issues specific for the EAMS. All that concerned the Riga-Framework was discussed by all MS. What concerned the EFSF and ESM afterwards that was business for EAMS, only. That was already in a intergovernmental mode because of the different forms of agreements, EFSF and ESM as an international treaty. STO12: NA STO13: When the Greece started in 2010, we were not legally part of the euro. We did not participate in the first mechanisms, to support Greece. We were in the last round, EFSF. This was after 2011. And forming the ESM we were fully involved. If you are a small crisis, we see that a more integration in the internal market. This was an issue ”why would we join the eurozone if we have problems with Greece and others”? Q: The government pushed for reforms within the Treaties? Interviewee: There are enough opportunities in the treaties. Its slow, nobody has any idea of the outcome. The problems of France, Greece, Portugal, are not problems of the treaties. The problem with them are the structural issues. They have to have a structural reform. Q: The government supported mechanisms that ensure participation of non-members of the Eurozone in the new governance structures? Interviewee: Its difficult to answer. As I remember, in particular Sweden, they have almost always been very committed. Despite that they are not EA-MS. But if you compare to the UK, they are not committed. We cannot oblige nonEAMS legally to be part of the mechanisms. When Latvia had problems, even we Estonia, in 2008 supported then, including Sweden, Norway a lot of countries. STO14: I would say that we were following all the criteria’s, we were almost there all the time, but because of the crisis we did not manage to have this one criteria. That was missing from our sight. But our financial thinking, was towards the Eurozone. And to be part of that. When we joined the EU we started to work towards that. We were following closely what was happening in the Eurozone before we became a part of it. Almost a year or two in advance that you will make it to 2011, so we were really following what was happening in Greece and so on. Q: The government supported mechanisms that ensure participation of non-members of the Eurozone in the new governance structures. Interviewee: I think we as a country, the government and parliament we knew what the government was doing. The were keeping us informed. But I don’t know if the government felt that they were pushed out from the negotiations on the EU level. But I do remember that it was an issue in our committee meetings. That we were discussing that they were not counting on what is happening with the non Eurozone members. In 2010. I started to work with the monetary and economic issue after 2011. But If I hear the colleagues that are not moving towards the Eurozone, they said that they have been left out, in the eurogroup meetings and so. Because everything was decided there. I think that we were a part of the team already in 2010. Our policy has always been that ”the door should be open”. In our case, the worst part was that our biggest neighbours, Sweden, Denmark, they are not Eurozone MS. And our main talking points were that we want that all the rules, meetings they should be open to everybody. And that everybody can be part of it as much as they can. The government and the parliament had an open mind.

10.5 The role of parliament: governing and opposition parties

10.5.1 PL1: The role of the National Parliament

144 Figure 1: Change in the majority party inﬂuence

Interview STO11 STO12 STO13 STO14 P. The inﬂuence of the majority in parliament + + + + .

STO11: From the beginning it increased and now it has been stable. After the ESM was ratified. Because now the different positions are established and they have been followed. Before that during EFSF, they were looking for how to navigate in this parliament and government different positons and different approvals. The ratification was in 2012, in our case in August. So until August 2012 there was a major increase of the parliament. And then it has stayed low, non visible. They have not gotten any new powers. The EU coordination were the government positions were approved by the European Affairs Committee by the parliament, this has been in place from the very beginning when we became members or the EU. The ESM discussion increased their powers regarding those different support programs. From 2010-2012 they moved to the new level. They are now stable but on a higher level on influence. Q: The parliament was better and more swiftly informed on the policy of the government than previously. Interviewee: They are also themselves more interested. And they are warned that they should not keep things to themselves, its better to inform them in time. Q: The parliament had sufficient time and resources for discussing the policy of the government. Interviewee: No ”the parliament did not have sufficient time and resources”. Some of the issued had a high speed.. STO12: Stronger in details. Because of the salary and pension there was huge cuttings everywhere. And the parliament supported that crocodile committee. So yes their impact became stronger. STO13: Like every other question. In Estonia we have a system with European issues. That every European issue should be accepted by the parliament, through the committee of European affairs. Therefore it became stronger. Its strong if you compare it to other countries. In many European countries it’s a government decision. If we measure strong or weak then the Estonian parliament is quit significant. In the ESM and the mechanisms, the many decisions had to be made by the general assembly in parliament. Its time consuming. If the general assembly has to make decisions then there is more public attendees, should be more debate of the level of ordinary people, and that’s the parliament-power. Q: The parliament had sufficient time and resources for discussing the policy of the government? Interviewee: No that’s no, that’s a question mark. This is a general issue for the parliament. Not enough resources, human resources, independent expertise

145 from the government. To make a different opinion from what the government made, you need brains. The members of parliament are not enough. STO14: In the EU affairs committees, we scrutinized all the MOU, for Greece, Spain, Cyrpus. So every time the troika did their new report of Greece, then the whole MOU was in our committee and we were scrutinizing it, so the finance ministry people were talking about the changes in Greece. So we were informed and followed it closely, so our involvement became stronger during the crises. If there was discussions about that the new MOU would be assigned, then it was the plenary. The guarantee was given out to whole Estonia, so in that sense it was the plenary room. The changing of MOU and reviewing of programs was all in the committee of EU affairs. Q: The parliament was better and more swiftly informed on the policy of the government than previously. The EU affairs committee was informed so well. They kept us informed all the time. We got to much info. Q: The parliament did not have sufficient time and resources for discussing the policy of the government? Interviewee: The time was not set by the government. It was set by the EU. As soon as the Estonian positon was formed it was in our committee. Very often the lack of time came from the EU. The government gave us enough time to discuss the policies and topics. The general people that wanted to follow it, maybe did not have sufficient time. Our members in the committee of EU affairs said ”this is absurd, all this info, all these ESM:s and six-packs it was a mess”. Sometimes the members of the finance committee said ”come on I don’t understand, can somebody explain it to me”. Q: The parliament got more media attention? Interviewee: The government got the media time, not the parliament. The media things that if the government has decided something then its already decided. And they forget about the parliament. And they think the parliament will make the same decisions as the government. That’s not the case all the time.

10.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview STO11 STO12 STO13 STO14 P. Governing party inﬂuence 0 + na + .

STO11: Interviewee: They were more involved in the issues in the parliament. More attention. It stayed the same. STO12: Interviewee: Yes the impact became stronger. STO13: NA STO14: Interviewee: They were all from the Reform Party. The finance ministry, the PM office and the committee of EU affairs was all from the Reform Party. The policy on ”where do we go” was mainly decided from the Reform Party. They had a bit more extra party.

146 10.6 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview STO11 STO12 STO13 STO14 P. Opposition party inﬂuence 0 - na 0 .

STO11: They use every opportunity to pin point back that we are supporting the Euro. One occasion every year when the minister of finance is to report on the ESM doings to the Assembly. Then when the new programs come up they have to be approved by the plenary session. The plenary is the whole parliament. The regular reviews are usually approved by the European Affairs Committee, that’s an easier process and not highlighted by the media. But the discussions in the plenary are followed. They had used their powers but the coalition has prevailed. STO12: The budget control committee belongs to the opposition. That is their main instrument. So they had it. Not any new instrument but a lack of using the old. STO13: It depends on the opposition. But the sentiment of these Eurosceptic are increasing. In 2015 we have this new right wing populist. A euroscpetive. Its EKRE. They use different arguments, anti immigration, liber- ties gay. But one issue is that they are using Europe as a problem, using rhetoric’s like ”why do we have to support Greece” and about the Eurozone. A bit the same as the guy from UKIP. I must say that’s nice to hear for the general public. The ordinary people like that, not too many, but it is increasing. Therefore, its dangerous, we see it in Britain, the Netherlands, France and some other countries. and now in Estonia, its coming more. The anti-European is getting some (...) not too much. It all comes down to how effective Europe is, if the EC will continue to make these stupid proposals about the immigration, then we all will soon be anti-Europeans. This is stupid proposal, like quotas. To stupid communications. EKRE was not parliamentary party during the crisis, they were not existing, but some of these people were reasonable in

147 society. They were the people’s union party before, but these were not in the government from 2001-2015, they were some kind of political movement. But the people behind the party, they were active and visible in society. They had six sets in parliament up to 20. Free party came after 2015. So 2011-2015 there were only four parties in parliament. And today its 6 parties, with two new parties. One is EKRE, they call themselves conservative, but they re not, my party is conservative. And the second party is the Free Party, they are difficult to describe. EKRE is the typical thing we see, in Sweden, the Swedish democrats, True Finns. The EKRE are nice guys, I know them personally, but they are professional to use these anti-European sentiments. And the people like it. During the crisis the main opposition was the centre party inside the parliament, but outside the parliament it was the ”EKRE”. Some of these guys who joined EKRE was already anti-Europeans, when we joined the EU. These physical persons. When we had this referendum in 2003 we had a debate in society, and an anti-EU debate. They were not under the brand of EKRE, they were just anti-Europeans then. Now they changed their brand. You don’t need a party; you could just write articles. All the political discussions did no take place in the parliament, it occurred everywhere. If you are opposing the government on a populist platform, and the Centre party opposed it in the platform. I think it became ”weaker” in real politics, in real decision making. You can measure that but at the same time you have problems in Estonia with hospitals. This is a very political debate. But thank god the majority of the Estonians are very practical and (...) people. They understand that this is idiotic arguments and don’t excepts it. But those who accepts this idiotic argument are our Russian minority, they look Putin television at home, Kremlin propaganda is that Europe is stupid, that Europe is going in peaces. And now the Centre Party is sending the same message. This debate is everywhere around the world. Q: The opposition lacked new control instruments? Interviewee: I don’t agree. They are not interested in discussing things like this survey, 500bn or more. Q: The opposition lacked information on the policy of the government? Interviewee: Not correct. in Estonia we are transparent, if you need information, like the opposition etc. you can get all of that. That could be more working documents. Q: The opposition did not have sufficient time and resources for discussing the policy of the government? Interviewee: I already said it. If the coalition in parliament does not have the resources enough. Then the opposition more. STO14: Interviewee: It did not get weaker and not stronger. because of the lack of info, because I don’t even think the EU knew what they were doing themselves, doing things quickly with the mechanisms. So the political parties who were not involved all the time, did not have the time to understand how this mechanisms should work. With EFSF MP:s said ”what is that”. Q: Nothing important in the power relationêbetween the opposition and the government changed? Interviewee: In the EU affairs committee it weakened because of the lack of info. They did not have the tools to scrutinize the main political party and their decisions. Not enough understating of what was happening. Q: The opposition got new control instruments for involvement, but did not use them? Interviewee: The committee on EU affairs was scrutinizing the MOU, so maybe they did not use it.

10.7 The dominant views of economic policy

10.7.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

148 Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview STO11 STO12 STO13 STO14 ID The state should provide signiﬁcant economic governance with state-led 3 3 2 2 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 2 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 2 1 .. management.

STO11: In our case it has always been the approach that should create good conditions for business. And if we are reliable then it creates the trust and confidence for a small open economy. And then we can have investments and create necessary (...). Public investment creates favourable conditions to have the skills to work force and the necessary infrastructure. STO12: NA STO13: We do not have it. Now the power is in the European central banks. From 1992 we have the currency board system. The fluctuating exchange rate is for economies that are very strong, productive, competitive, like Sweden. In our case you need the currency board system, for the private sector companies. Because if they are not competitive in the global market they go bankrupt. The currency rating system is sometimes... if you are too many you can just manoeuvre and keep uncompetitive companies in line. Interviewee: Maybe we could skip this rating? Its difficult. STO14: We want more private companies to do it, and not only the state.

10.7.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview STO11 STO12 STO13 STO14 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 3 ..

ID Growth and low unemployment 2 1 1 ..

ID Price stability 1 2 1 3 ..

STO11: NA STO12: In this country the government cannot impact the exchange rate. The prize stability was the ECB main issue. STO13:

149 NA STO14: Our currency was first in alliance with the deutsche Mark and now its with the Euro. Of course we think that the Estonian government thinks that boosting the economy is important but we don’t boost it with specific (...). Our main argument is that we have a stable tax system and if you want to register a firm you can do that quickly. In 30 seconds. They want to boost the economy but now with money, rather with the opportunity to be active in Estonia, like the EU-residents, they can just start their business in Estonia. We want companies to come to Estonia, to be very active. They want to provide the opportunity to make it easier.

10.8 The future course of EU integration

10.8.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Estonian Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview STO11 STO12 STO13 STO14

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

STO11: Its our preferred option. We have not excluded, if there is a need we can talk about a treaty change as well. We still believe that we can (...). STO12: NA STO13: NA STO14: We were talking about the treaty of Tallinn some years ago. That we should start it. But the reality is that if you open any treaty negotiation then we might not ﬁnish it by the year of 2030, and it would be agony to everybody. We see that there is something we need to change but we understand that if you open the treaty negotiation no one would want it at the moment. We need to work within the current treaty provisions, it’s the reality. But we are not against opening, or discussing a new treaty. Something need to be changed. We are open to a constitutional debate.

10.8.2 ID5. The Vision of the European Union

150 Figure 7: The Vision of the European Union

Interview STO11 STO12 STO13 STO14 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

STO11: For all the three cabinets they all have been very pro European and single market oriented. Of course the crisis as such, in some areas, had some scepticism. Maybe that they are not so ready or prepared to go much further then the fiscal union, at least in a short term perspective. The government is generally very pro European and that period of time we had the Eurozone accession. We started the preparation around 2009, so this crisis erupted when we weren’t in the Eurozone but we couldn’t pull the break anymore. It would be very easy to say ”Federal Union” but I don’t think that it was so. I would say ”no change”, if you purely follow whats in the treaties, that should be sufficient. ”No change” would describe it the best way. The status qou scenario, because we have tried to avoid the intergovernmental solutions, but due to eurozonecrisis we had to take some of those. But its not our preferred solution. You could say Estonia is somewhere between ”Status qou” and ”Federal union”. Its applicable to all three governments, more or less. For the current government, the discussions about the future of Europe are still ahead and there might be some new avenues to follow. But its too early to say if its any change of course. STO12: There was political discussions and mostly against the federal union. More integration but not multi-speed. Ive never used this kind of concept here. I cannot remember that it was used 6 years ago. I would describe it as more integration as ”other”. What happened for the second cabinet of Ansip, then the fiscal integration started, the public opinion changed. Because before that during the crisis it was a huge part of the integration. The same goes for the two Ansip cabinets. Q: Rivas’ first cabinet 26 March 2014-9 April 2015. Estonian Reform Party? ”Other”. Interviewee: There was a change after the stability mechanism and the support for Greece. More integration. Why? Because of Russia, our neighbour, in this country we everything to be rescued from Stalin and Putin. The EU and NATO, back to Europe 20 years ago. Our government does not say it out loud about Russia but the security matter always stands in the back of their head. We met the crisis with dropdown 80 percent GDP and dropping the salaries, and freezing the salaries 10 percent, nobody can believe it or remember. We met the crisis 2007 (...). Certain government had the situation where they had to support Greece and so on. We did it in a very harsh way. And then joining in 2011 with the Stability Mechanism Programs, it wasn’t popular. But the parliament passed it, and after all they put it forward. The Stability Mechanism and the Greek program. And then the discussions about more integration, more Europe, they didn’t stop but they (...). This was after the support measures to Greece. As an outcome was Rivas government did, was to say; no measures to Spain and Portugal. But the official opinion was ”what other message are we sending out to other countries” if we don’t do anything. We had good economic growth in 2011-12. STO13: Q: Ansip’s second cabinet 5 April 2007-6 April 2011. Estonian Reform Party? ”Intergovernmental Institu- tion”. Interviewee: In the eurocrisis time I was minister of economics and communications. I will tell you about the political background in Estonia. I am representing the centre rights political party. Mr Ansip who was the PM from 2007 he is from the Reform Party Liberal. And generally the European issue there can be differences. The main ones are, the Reform Party ”RP” are more ”everything that is coming from Brussels is good for Estonia. The Union of Pro Patria and Res Publica (IRL) ”we have to be more critical towards the things coming from Brussels”. We are more realistic, and the RP are not. So certainly my answer is no to ”federal union”. Ansip personally would agree with everything, federal union etc. In 2010 we had an

151 economic crisis, it’s the global financial crisis plus the internal bubble. One solution was ”we have to join the Eurozone” that was a short term goal. We saw the solution for our crisis to be more integrated in Europe. More integration but no federal union. I don’t know Roivas view. The people and politicians that are talking about a federal union are in a minority. I and a big majority think that Europe should not be over bureaucratic, centralized, inflexible, power in Brussels. But it does not mean, when it comes to the euro-issues, if we do more together it can be more beneficiary for everyone. So I would say ”intergovernmental”. If there’s a common currency like the euro, we need to make the necessary institutional arrangements. We joined the EU in 2004 and then we started immediately with the joining the euro. Because it was our obligation and because it was reasonable. In the Estonian case, our currency was implemented in the 90-ties, in 1992, the currency port system. We were de facto linked to the Deutsche Mark. There was bi fluctuating currency rate. And therefore its more reasonable to be in the table in the European central bank. We missed the opportunity in 2007 to join the euro, because we did not meet the inflation criteria, ours was too high. Then the crisis came and we tried once again to join. Joining the euro that is a good outcome. Reliable money. Nobody knew the Estonian krona. Q: Ansip’s third cabinet 6 April 2011-26 March 2014. Estonian Reform Party Rivas’ first cabinet 26 March 2014-9 April 2015. Estonian Reform Party STO14: Q: Ansip’s second cabinet 5 April 2007-6 April 2011. Estonian Reform Party? ”Intergovernmental Institu- tion”: Interviewee: Background, universe, our level made many questions. Government and parliament pro moving towards the European union. The white paper finance level. It had too apply to everybody. EU helps everybody helps to. Q: Ansip’s third cabinet 6 April 2011-26 March 2014. Estonian Reform Party? ”Intergovernmental Institution”: Interviewee: Yes because in Estonia, the main political party, The Reform Party, liberals, they have been ruling now for over eight years. So it did not change the way of our thinking to the European Union in the government, parliament. We were pushing for that we did not mind the closer the union. Q: Rivas’ first cabinet 26 March 2014 - 9 April 2015. Estonian Reform Party? ”Intergovernmen- tal Institution”. Interviewee: It was the same. Mr Rivas was the head of the EU affairs committee in our parliament, during that time when we talked about EFSF, ESM, six-pack. And he used to be the chair of the financial committee in our parliament. He was leading all the talks about the ESM, and how it should be organized in Riigikohus (parliament). From EU affairs committee he went on to be a social minister, but soon he became the PM, so it has been the same thinking in the parliament on the political level and in the government.

10.8.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? STO11: NA STO12: Q: Other (please describe): Interviewee: This country has a difference when it comes to the fiscal policy, but not the security matters. Not NATO matters and military effects. On fiscal matters, if you run the country on debt level of 13 percent compare to 60 percent or 100 percent (...). Immigration is a word that everybody in this country is afraid of. Why? Because we had Russian immigration 50 years ago. 1/3 of immigrants were Russian. We expected Russian to be integrated until 2007, then the Bronse-night came. STO13: NA STO14: NA

152 10.9 Negotiation strategy during the Euro crisis

10.9.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview STO11 STO12 STO13 STO14 S T Hard bargaining: tries to extract concessions from the other side, delays or R Very rarely Very rarely Very rarely Rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Rarely Never Never provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Often Very often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

10.9.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Estonian delegation changed during the Euro crisis negotiations? If yes, please explain how and why? textbfSTO11: In the ESM we had de discussion about the solution key and we were quit strong in our demands. And you could say that we had the power to block the whole thing. Interviewee: They are not related to the crisis as such, its more the overall European approach. We are not sued to talk in the language of ultimatum, rather try to compromise and hopefully, the day when you really are in trouble you can talk and achieve the compromises you need. STO12: NA STO13: I Our way is not to threat. I’m only answering generally about our attitude towards the EU. Probably we behaved the same way in the eurocrisis. Small countries have to work and explain. STO14: We are so small so we need to be flexible. We hide ourselves between the strong and hard delegations. We never had a harsh positon saying ”this is it!”. We always approached it with ”this is very nice but ...”. Q: How often did the Estonian delegation use threats (opt-outs, long transitional provisions etc.) to influence other partiesêpositions? Interviewee: We were the pioneers. The negotiation position has changed it has changed to the ’stronger’ one. We have gotten used to how to negotiate, and how to be part of the EU, and ”the games” people play. It has gotten stronger and especially now when we are moving towards our first presidency and I see people more active. We don’t do opt outs or threat. We are open minded. It has

153 become harder in a nice way.

11 Finland

11.1 The list of interviews in Finland

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer STO01 50 STO02 75 STO03 75 STO04 50 STO05 75 STO06 100

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

154 11.2 The summary observation on country interviews

The interviews in Finland were conducted face-to-face in August 2016 during the pre-test phase. Interviewers were Ana-Sofia Valderas and Lisa Maria Dellmuth. These interviews generated data that we generally judge as valid and reliable as well as a number of comments that led to revising the questionnaire for the main field phase. We provided interview transcripts, audio files, and comments for revisions of the questionnaire in the end of August 2016. Between December 2016 to March 2017, the data set from Finland underwent a systematic consistency check in four steps by Hanno Degner (University of Konstanz), Thomas Lehnert (University of Salzburg), and Lisa Maria Dellmuth. In December 2016, Lisa updated and polished the final data set, and sent it to Hanno. Hanno provided a consistency check and questions about specific data points in January 2017. Lisa, Hanno and Thomas figured out the answers to those questions in March 2017. One of these questions concerned the credibility ratings, where there is no link between the overall credibility of the interviewees and the credibility ratings of specific scores. In March 2017, they finalized the consistency check.

Potential limitations:

With regard to the potential limitations of the data, there are some missing values in the data where interviewees either did not know or refused the answer. Moreover, the data were collected during the pre-test phase, potentially leading to three potential issues related to the comprehensibility and validity of certain data points.

• The initial questionnaire was too long for the planned time, and early interviews in Finland showed that the respondents needed more time to grasp the coding scheme for both positions and influence ratings, and to provide the scores, than initially planned. This may have led to asking and responding more hastily than necessary. This issue was remedied for later interviews in Finland and other Nordic and Baltic states done by the Stockholm team, altering the timing of the interviews and introducing print-outs of some questions with relatively complex answer categories for the interviewees. • Some identified policy issues for the Finland questionnaire were easier for respondents to evaluate with regard to the various actors’ positions than other issues. Specifically, several interviewees felt that Part II issue 5 (SPA) was rather irrelevant given the aim of the interview. Moreover, Part II 2.3 ”The legal nature of the debt brake rule (fiscal compact)” was perceived to be highly technical according to many interviewees, and made some of them uncomfortable to evaluate actors’ positions and influence on this issue. • Respondents may have been primed differently in the Finland interviews than in other countries due to later changes in the questionnaire.

The reform process appeared to lie in the hands of specialists in ministries of economics or ﬁnance, with interest groups such as banks or trade unions not being able to feed in their preferences but only to react after a speciﬁc package had been adopted. We were surprised to hear that e.g. from the representatives of the trade unions? and employers? federations, and asked about it. Apparently, the process was perceived to have been too quick and technical to be able to retrieve much information from the relevant ministries.

To select interviewees, we identiﬁed a list of top-level civil servants, previous prime ministers, and top-level representatives of various nonstate organizations, such as the national federation of all trade unions. We selected those interviewees to ensure that our interview partners in the political branch have no personal stakes in decision-making and potentially willing to give us non-strategic information. A potential limitation of the data collection process was that we used the ﬁrst version of the questionnaire.

155 11.3 Open answers to questions on 4 contested issues

11.3.1 GRC: Willingness to support Greece in early 2010

STO01: Ministries, because ministry of finance was not in the way that the minister of finance would say ”ok we have to support Greece we just show some solidarity to Greece”, that was not the case. I think we all have the same opinion the problem is that we cant get rid of it without helping and we were so unreluctant to do that. But I would say the ministry of finance and also the institutions because they of course supported our position, that we just cant wash our hands from the solution. But of course the citizens and media they played a big role too. In the media but also when it comes to citizens and inside the parties (at least in some parties), there was this idea that we don’t need to part of the package at all. It really has to be the other parties, and that was the case with the Social democrats and party, and also with the True finns, especially the True finns were saying that no, absolute no to any bailout package. I think the social democrats were more like they didn’t agree on some of the details. And we also understood that we had to be very strict and when it comes to the details of the Greece bailout packages but other decisions and bailout packages that too, so that was out way to make sure that Finland is not paying to much of the mess. That was the only thing to do because we didn’t see it really possible to avoid participating in the solution. But I have to say, that when it comes to this Greece support, we all thought that this will help, that the first decisions when it comes to Greece bailout package, that that would solve the problem and the market will calm down, so we really believed in it. So compare to when we take the next steps and when we ask from 2013-2012 then that was not the case anymore. STO02: Frankly I would use two different scales. Somewhere very close to 0 on the actual question but somewhere very close to 100 as concerns what had to be done as suppose to what was desirable. There was almost total reluctance to assist Greece pretty legalistically it wasn’t of course. In any case what, at the time of the actual decision in May 2010, the decision in the Eurogroup was taken under condition of what was almost total panic. Remember the markets has been extremely rorebell and ultimately no one was going to be responsible for decisions that might undecion of bank failures etc. So what is it you are really asking? Q: Yes, so this issue has come up in the project before is that MS have two positions so to speak. And a pragmatic negotiation position. So what we are after is the true position. Sort of an aggregate measure of the primary preferences of the government on this issue. Interviewee: I would say that the preference was very close to 0. The German counsellor was influential. Quite honestly it was totally unanimity in parliament, in the government that we should not be bailed out. On legal ground, also on economic grounds. Also the Finance ministry experts etc were on this opinion. Faced with the European Council and an emerging unanimity, Finland was not going to be the one to block a decision from the big players. STO03: The idea of assisting one country was very bad idea. And at that point and this became more obvious later, but the only institution that we had for such purposes was the IMF. When there was a crisis with a country like that, Greece was a member of the IMF, we thought. Then there were political decisions. In Early 2010 30 billion was the number what was being discussed in principle. In early 2010, the idea was to calm markets. But as usually in the EU when governance is so terrible, there were not decisions, and things got worse, really escalated. And then we were in a situation that just as we agreed on package with

156 Greece, there was a risk of a meltdown of the system. And that’s what happened in May 2010. When all of these institutions were being created and the division to have the big bazooka of 750 million with the IMF partners. When there was no early solution we had to step in to the crisis management actions. I would say it was very close to 0. It was not zero because we didn’t want to exclude e ourselves. In the beginning, the initial position in Finland was close to 0-10. But it was a process where really careful decision making was taking place, but among civil servants, there was an idea that in principle idea that this was a bad idea. That this was not agreed when we entered the euro area. That’s also why the IMF solution would have been the easiest. We never wanted to become involved like this. Interviewee: The finance ministry prepares proposals, and the government and the parliament. That was the normal procedure of decision making. There was probably discussion at the time in parliament as well. That’s the normal parliamentary procedure as such. The finance ministry, the government, prime minster, and parliament. I think it works very well in this country. The role of the parliament generally is quire strong. In the beginning we thought that everyone should take care of their own business. Position: close to 0. STO04: It’s about my evaluation of the Finnish governments? I would say 35, so a bit less willing than the middle one. The commission and the IMF influenced the gov position. The biggest influence, I don’t know if they need but the European commission maybe. I think I have the commission as part of the troika. If I can change I would say the German government influenced the Finnish position the most, not so much the commission. The German advocated position 35 percent as well. STO05: It was a bigger number initially than later on. The government was maybe 50 initially, later it was less. The support was motivated with the fear on a second financial crisis. It was only one and a half from the collapse of the Leamans brothers. Finnish politicians could motivated some support by saying that they didn’t want a renewed crisis and some support is needed... I think that they used external opinions from the IMF and international opinion builders etc to motivate some willingness to meet Greece and the problems, but then again public opinion started to be quite critical already back then. Within Finland, certainly the Ministry of finance and then ECB, Bank of Finland when it comes to the banking sector. And then as an external actor its the commission that is listened to in Finland. Interviewee: Our position in short was that first of all we have to guarantee a functioning external environment for Finnish businesses. Save guard the eurozone and stabilize the internal market. And then may be ok some kind of support for Greece is needed. But then again, especially in the beginning, we were quite strict on the fact that it has to be conditional and that we have a very clear commitment to reforms in Greece and other member states (...). STO06: One is what people in question actually thought about would be the appropriate way to go. And second given the particularly constellation of opinions in Europe what is a feasible choice for Finland. And the answers are very different to these. I agree that Finland was category (position) zero. This, as I said, is something that goes through the political spectrum and doing that also reflects very widely held view among the population. I don’t think this was special interest, it was very deep seated feeling among the population. I don’t think its applicable to point out one actor who was most influential. The situation was more that the government realized that eventually it would probably have to go along. In formulating its positions it tried not to paint itself into a corner. It was forced into a corner and then there where decisions that resulted in successive very difficult government formations. In 2010 the government try to maintain some policy space for itself against the societal pressure, just to say no. From that point, a single actor would have been most influential, I don’t think its really applicable. Its not the right way of looking at it. This is tricky particularly if we talk about the underlying feelings. What the interest groups affected was more the final position which was more open to negotiations, for reasons that had nothing to do with Greece.

157 11.3.2 ESM: The size of the European Stability Mechanism

STO01: I cant remember what was the negotiation position of Finland. But I would say like 20 percent some flexibility but very much willing to stay by 500 billion. STO02: Position 0, is right. You can prove of that. It was a unanimous decision, 500bn and no more. The constitutional constraints were influentia. Getting it through parliament was very difficult. The constitution. STO03: When you talk about the 500. The first option was that the 500 would be 240, that is used from the EFSF, plus 260 which is is 500. That was the 500 we were going for in the beginning. But then, 240+500 and EFSF would be isolated from the ESM. So they are separate entities. So its 740. Then there was an option that it was 500 + 500, the ESM plus the existing 440+60+500, so these were the options, and we were first going for the first 500, so the total is 500. Its true that this decision was taken later, 2012 April. And in 2010 there were many issues on the ESM, that were much more difficult. How the decide of the ESM was made, the preferred credital status, decision making, and the capacity. Position: 0 STO04: It is position 0. The finance minister and public opinion were important. The most influential was the finance minister. He strongly in favour of not given any more. STO05: I I think that Finland’s position got 20 on this scale. More or less the same applies than in the previous question I don’t see a big shift. STO06: I was not really involved in that discussion.

11.3.3 FCO: The legal form of the debt brake

STO01: I agree, 50 position. I think the Finnish position was that Binding provisions was more into the position of 50. Finland was willing to set these rules, but the reasons behind was that Finland was always following the

158 rules, and the other countries were not. In Finland we thought that ”ok” we will be the ones who will in every case fulfil the criteria, not the others. That’s why more binding legislation was needed. The ministry of finance played a big role and the bank of Finland (the central bank). 30 position both. It doesn’t make sense to go though this list I was not there then. STO02: Interviewee: you are using categories that are not convertible. It doesn’t make sense; it would be in the 0-50. It was a fairly broad consensus that ”the rule” would never would be seriously applied. The EU has an poor record that obeying its own fiscal rules. This was more of a German domestic opinion. I have to insist that your 50-position does not really make sense. Interviewee: the political field was quit consensual. Something super legislative but less than constitutional. Constitutional was excluded from the beginning, because making it constitutional for a matter of 5-6 years. No it was never an option. But you are looking at the minority of the conservative party involved that this was a good idea. There was almost consensus here. And it was a question of credibility. The whole fiscal compact was never viewed than anything more than a fake leaf? Interviewee: the political field was pretty consensual, the pro federal part of the conservative. Constitutional was excluded from the beginning, (it takes six years in Finland). Your 50 position doesn’t make sense. STO03: Do you mean the medium term objective? The golden rule is very contested. Finland is close to zero, so ordinary legislation. We were fairly tried to get it as an ordinary legislation, if any. The actual position inside the ministry of finance to avoid any kind to legislation here would be good. But if we must have something it would be ordinary and not constitutional. Why do you have this questions about the debt brake rule? Because now it gives the signal that we were not in favour of tighter fiscal rules. But we were of tighter fiscal rules. But on this specific question on making it a constitutional issue, we had a loose position. So it doesn’t signify our position on the fiscal compact in general. Its one of the few questions that gives a completely different view on our position that any other question would. We were very much in favour of the MTO, so in general. This questions does not give the right view of the Finnish position. This questions reflects more of the legality of legal systems rather than position on the actual substance of the regulation. The ministry of finance. This was a very technical question. It is one of the few questions you could have picked for fiscal compact. We were very much in favour of tighter fiscal rules. But this issue about this specific issue does not really reflect what Finland really thought about tight fiscal rules it makes it seem that Fin did not favour tighter fiscal rules but it actually did. This position on this issue reflects not the political position but more the legal reality n countries STO04: Withholding EU Funds from Deficit Countries (SP2) Interviewee: yes it is correct position 100 ”Supports the withholding of EU funds when the member state breaches deficit limits”. Influential actors: Finance minister, SDP, in the shadow of the True Finns. Finance ministry and SDP they supported withholding EU-funds. I cannot give you the influence or the position of the other actors. STO05: Quite difficult in the sense that the constitution in Finland is different. We don’t have national supreme country that would examine the constitution, like Germany. Position of Finland: 70 It was after the elections in 2011. So the True Finns had grown very big with the anti-Europe agenda. And the main driving force of Finnish politics was public opinion. Growing populism reflected in the media and the short term tactical position that the parties took. So what was the most influential, maybe public opinion. STO06: I suspect that this refers to the fiscal compact. Why do you call it golden rule? I have seen several meanings to the word but not this particular one. I don’t necessarily agree that Finland preferred ordinary legislation. But I think its true that we considered that ordinary legislation was appropriate for Finland. But ordinary legislation is binding, in Finland. So its not q question on weather is binding. Is more a question on what was practical in this particular legal system. I think we would agree that each MS would use to most practical legal instrument to make it binding. This is more a product of the legal system of Finland and not politically. You would like to know more specifically there’s a handful of constitutional experts that the constitutional

159 committee interviews in these matters. And their opinion is the law of the land on these issues. Interviewee: the opinion of legal experts in Finland. Lets just put zero on everything (position and inﬂuence on the actors), because you did not have legal experts on that list. It was not political. Constitutional experts, that’s the correct term. These other actors (on the MSQ list) don’t form independent views on the constitutional constraints of the Finnish legal system. New additional: ”Constitutional experts” as an actor. Interviewee: your position 0 and 50, is basically the same thing in Finland. Ordinary legislation is binding. Ordinary legislation is binding provision, which is not constitutional in Finland, so there is no diﬀerence between that.

11.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

STO01: Position 100. Finnish politicians understood that you had to have some room for manuver. So I would say it was like 80/90 Percent. Influential actors: Ministry of finance and ministry of foreign affairs and ministry of EU affairs. STO02: No 100 is no. The correct number is the 20-40 scale. The feeling that withholding funds during these times would be contra productive. The parliament had the biggest position. The government at the time tented to side with the more extreme German, which was closer to position 100. The influence was pretty much on the economists. We had a lot of economist coming in at that time. STO03: NA STO04: Yes position 100. It’s the same as the previous question. SDP and finance ministry. They supported the introduction RVSP. They had position 100. I cannot give you the influence or the position of the other actors. STO05: Position 80. The public opinion had influence. STO06: Yes Finland supports the introduction of the RQMV, position 100. The head of government the minister of finance were the most important actors.

5In the pilot version of the MS questionnaire there was also a question about withholding EU funds from member states in breach of SGP criteria. Some answers may thus refer also to this question, although they are reported under SPA.

160 11.4 The stability of government positions and the role of Eurozone non-membership

11.4.1 GV1: The Change of Position and the change of Government

STO01: Yes I would say that the government changes played a role. The rise of the True finns played the biggest role. At 2010 already, but specially in 2011 election were very decisive on the policy of the government. There was a change in 2011, especially. In Vanhanen and Kiviniemi government we tried to keep the Finnish EU policy in line with the same as it been earlier, we were willing to cooperate, we are ready to negotiate. We are not so keen on negotiation questions that would make the EU more federal. But when that is needed, is OK, we want discuss the details. But this pro European stance was behind. But when the political situation (...) because of the Greece bailout package the whole atmosphere inside all the parties made it difficult for us leading politicians to continue of the old policy. But we still tried to do that until the 2011 election, but when the SDP came into power then there was a clear change in the policy. And that was also seen in the positions of that government. STO02: Changes in government did not have any effect at all, except that last years position was next years government. And a lot of MP had to make changes. EU counsel consensus. You can fight Germany ones, but not twice. Secondly there was the issue of having lost once virginity there was some sort of resigtion. After first bailout the second was more easy. ESM was a relieve for us, it fitted to our decision making structure. STO03: To me it seems as it there had not been a general change in position on how things would be done in euro area. Everyone should take care of their own business and their own debts and liability. We should avoid any kind of mutual responsibilities and liabilities. This is in that sense in a broad scope my persol view is that nothing has changed between the governments during that period. I would also say that that this was an evolving process, together with crisis magement, and the build of of institutions and mechanism. This has been going on in parallel. An example of a concrete change: about the principle of no bailout and limited choices responsibility. There was also pressure to enlarge, but our position never changed. The other issue is the private sector involvement. There were more possibilities to make it really happen and we were active about that. It happened in the Cypriot program. The basic strategy was always the same, but it was a learning process for the politicians and the other actors. Positions in the parliaments became more..they understood the issues better, which made decision making easier. STO04: We only had one change, and that was 2011. Yes. After 2011 the Finnish gov was more critical of supporting southern European countries. And took a more, empathized tiol interest more than before. The SDP fince minister and the true Finns was a mayor influence, through this period. It was also the rise of the true Finns, not only the change of the government. STO05: We can find changes, we ha many governments. The willingness to have joint liabilities was greater but in the beginning, early stages it was very limited in later stages in 2011-2014, when the TF had victory. And the political landscape was affected by the elections and changed very broadly. When it comes to the details, it was technical. And I was lacking the alytical discussion in the Finnish media or in the Finnish political sphere. The detailed questions motioned in this MSQ are to detailed that they were never domite din the discussion. So we had a swiftly debate on a vague, ”do we want to support southern Europe”: and that time type pf discussion. It lacked a vision. But I do see swifts in governments policies, it was because of the change of government and change of the Finnish political system. Previously we had three major parties in Finland, two of them always in government, and the third in opposition. And the victory of True Finns

161 broke that system apart. Now we have four parties. During these two mandate periods from 2011 onwards we have a totally different dymics interlly. That is a profound change, that influence Finnish policies and policy making. STO06: The 2011 government change clearly had an effect on our euro crisis policy. Not on the legislative part. I presume you are aware you the existence of this thing collateral. This was an invention of the new government part of the the new coalition agreement in 2011. And that was an embarrassment to link with. But that was clearly a consequence of the change of government. There is a change of position that I would say between 2011 and towards the present. This very hard line school master attitude to apply sanctions, strict enforcement of rules. I think it has melted away.it turned out to have been opportunistic. Related to the particular fiscal situation we were in. Now that we ourselves are in weaker fiscal situation, we are not nearly as vocal as we used to be. This is not a result of a change of government. This is a change of economic realities.

11.5 The role of parliament: governing and opposition parties

11.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview STO01 STO02 STO03 STO04 STO05 STO06 P. The inﬂuence of the majority in parliament na 0 + + + + .

STO01: Interviewee: Stronger. Because already during Vanhananen and Kiviniemi, but after the True Finns, especially after 2001 they were too big opposition parties. And especially the True ﬁnns were unwilling to

162 support any bailout packages. They were even flirting with the idea of getting out of the Eurozone. So that made the parliament more influential. Interviewee: In the Finnish case the parliament has always played a role in the EU policy because of the grand committee. That was always the case when I was participating at council meetings. I remember then that I had to call, and I wanted to call to the chair of the grand committee because of some decisions we made in the EUROPEAN Council. To clarify to the chairman the decisions we made and to convince him that they were in line with the mandate they gave to me and to the government. So constitutional and legally nothing changed. But the political power because it was difficult to get the support from the Parliament, to the government that had to do with the decisions of the bailout packages or decisions which had to do with new legislation. It made the parliament also involved. (Lisa it became weaker?). It was more positions of the politicians of the leading parties they were more influenced of the positions of other parties. In earlier times also when it came to some difficult decisions it was rather easy to get the support of the parliament. I would say very easy. But that was not any more the case. Also the supporters of the members of the governing parties, MPs, had to convince them. In that sense the became a bit more weaker. STO02: Interviewee: the crisis confirmed the strong system of the parliament. It became unchanged. Interviewee: the constitutional provisions was the same. STO03: Interviewee: The finance ministry could give informal views to the parliament, which in turn was better informed. Some observers said that we have the best informed MPs in the Eurozone. Interviewee: we could do this informally. The Bundestag in Germany has to do it formally. We can just go down there and confi- dentially tell them whats going on and give our views. Someone said we had the best informed parliament in the Eurozone. STO04: Interviewee: it became stronger. And the grand committee became greater and greater in setting the Finnish committee. So not just the government, but together with the government they had the biggest power. Inter- viewee: they could do so because they were given the mandate on EU affairs. Also as the true Finns became stronger the parliamentary groups saw it more as a treats, so by taking strong position, in parliament they try to limit their loses. STO05: Interviewee: the parliament has always been strong in Finland, the parliament has a strong say in European affairs. The parliament functioning where the grand parts are reflected and they get approved by the grand committee. Its has been no major change during these years. It stayed the same. But the issue that were on table were more critical, during these years than earlier. But since the accession of the EU we have always had this system were the grand committee has been given a strong role. I want to change, I would say that the role of the parliament has increased. Interviewee: In earlier years when Finland joined the EU the grand committee was very active but the issue at table was technical and minor. The future of Europe was not at stake in the same way. Most of the political establishment was committed. Finland was joining the Schengen agreement the euro, it was some debate, but we never went to a referendum it went though quit smoothly. But not these issue concerning the EU crisis began to tear apart the consensus we had. The role of parliament de facto became bigger, although it was not changing any legislation. Interviewee: I don’t think they had more time. Time frame was shorter due to the crisis. There was no improvement of information either. Media attention, yes. ..an overall focus on these issues that became bigger. STO06: Interviewee: it stayed the same. Its always strong. But during those years, the parliament, within the parliament there was a growing feeling of powerlessness, which did have an affect on government positions. The feeling of things moving on, in terms of integration, particular forms of integration that Finns are not been so enthusiastic about. That perception in the parliament, that this just moved on like a train, without us having any influence on the speed. The influence to governments position, probably grew stronger. The actual influence to European affairs is a different matter. But I would say today the parliament, though the grand committee supervises the actions of the government ministers. Even more closely than it used to

163 before. Stronger* other argument: Interviewee: The reason was because it grew more worried. Because it put more importance in the matters taken place in the EU.

11.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview STO01 STO02 STO03 STO04 STO05 STO06 P. Governing party inﬂuence na na 0 - 0 + .

STO01: NA STO02: Government parties. It doesn’t work that way. I cannot answer that question. What happened. those in government was forced to take part. The opposition knew that elections were due. The True Finns, the big breakthrough was 2011, they were very vocal, then 2010 was socialdemocrats and socialist parties. Parliamentary groups as such came more to the forefront because the government had to sell what ever they were going to do to their own people. STO03: They had the majority in the grand committee when they vote. Then the government normally wins. STO04: Weaker, because the grand committee assumed a greater role, via a vi the government and because populist rhetoric became more prominent than before. Because the rise of the True Finns. STO05: It is quite tricky to answer, since we had cabinet changes. They are diﬀerent in their structures, in terms of internal organization a fact that is talked about in Finland. Centre Party has very strong a grassroots organization. They have the most members, that are paying the member fees, very well established on the ground. Some of the Social democrats share some of these features While the National Coalition Party does not have it. People who are voting for them are not actively participating, and do not actually participate or pay membership fees. They don’t have local organizations. So I see a diﬀerence between parties on how their positions are shaped. I would say no change within every single party in this period 2010-2014. STO06: The parliament got more interested. That allies to both the coalition parties and the opposition parties. They were more involved.

11.5.3 PL3: The role of the opposition party

164 Figure 3: Change in the opposition party inﬂuence

Interview STO01 STO02 STO03 STO04 STO05 STO06 P. Opposition party inﬂuence + na + + + + .

STO01: 2010-2011, different oppositions’ parties. The SDP tried to be the leading opposition party but it was actually the populist party the True finns who were the leading one. Then it changed a bit when it changed after CP got to opposition with the True finns, in 2011-2014. When it comes to the end of the term the CP was the strongest opposition party. In the beginning after the elections still the True finns were the ones, but I would say that the situation changed during the term, quit quickly because the CP was more competent in discussing the decisions in detail. And making or argumenting against the governments proposals, so there was more competence inside the CP. The True finns were mostly only opposing everything without providing any alternative. Which was rather natural because they had so many new MPs but the CP had more experience and had former ministers, prime ministers. The opposition was better and more swiftly informed on the policy of the government than previously. Interviewee: I would say that everyone was interested. And also the ministers informed the committees and the parliament more. And these themes were discussed in the publicity and in the media more than usually when it comes to EU affairs. During the whole period the opposition was more informed. Everyone thought that was necessary. Also for the government in order to get support from the MPS of the government parties it was not obvious that they would get the support. There was many people that were very angry to support the policies of the government. The opposition raised public awareness of the issue with voters and the media. Interviewee: yes. STO02: this was not an opposition government issue. STO03: I think it came through the elections their influence. We have always had majority government. As long as they show up they will win. There has been an understanding in some opposition parties, like the social democrats, or the greens have been much more understanding about supporting Greece. True finns have always been very critical directly related to the impact of the opposition. They could not be ignored after their big victory. Now the main opposition parties are in the government. After 2011 elections the True finns got so many seats they dominated the general discussion on how to react on this issue, indirectly that influenced how the government also worked. The critical view got seats in the parliament so you could not

165 neglect that. Interviewee: they always complain about not having enough time, but they had the change to discuss. The opposition raised public awareness of the issue with voters and the media. Interviewee: this was exactly what happened with the True Finns. STO04: Interviewee: the opposition parties role became stronger because of the reasons I give before because of the greater role of the gran committee and the rise of True Finns. STO05: Interviewee: it became stronger because of the True Finns, big rising opinion pools from 2010 onwards. The major reason was because of the TF. First we had the Social democrats that were in opposition then the centre party in opposition. They were very different as parties and the centre party was very weak just after the elections in 2011. It was very difficult times. Only in 2013-2014 they started to rise. But the TF have been growing but not at the very first stage in 2010, but then they grew, before the election in 2011. Then their role was very prominent. STO06: 3.2.6) Could you please explain why? Interviewee: because this was a matter the handling of the EU crisis. It was a matter that was very useful in electoral terms. The pressure from the opposition made it more difficult for the government to just play a long in Europe.

11.6 The dominant views of economic policy

11.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview STO01 STO02 STO03 STO04 STO05 STO06 ID The state should provide signiﬁcant economic governance with state-led 3 3 3 3 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 1 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 2 2 2 2 2 .. management.

STO01: Interviewee: What is behind of ranking those three in that order was he recession in the 1990ies. When de debts were very heavy and it made Finland so vulnerable. So the lesson was learned: bring down the debt level was very important for Finland. STO02: NA STO03: NA

166 STO04: NA STO05: Interviewee: this view that everybody are responsible for their own debts. Anti federalist stance that went through the governments policies. The believe that we cannot be responsible for the thing that the Greeks have done. STO06: NA

11.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview STO01 STO02 STO03 STO04 STO05 STO06 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 3 3 2 ..

ID Growth and low unemployment 2 2 2 2 2 3 ..

ID Price stability 1 1 1 1 1 1 ..

STO01: Interviewee: In the Finnish case the lesson I learned from the 1990 crisis, it really inﬂuenced the economic thinking of Finland. So the prize stability was kind of the key and it that sense we were quit pleased of the fact that we belonged to the Eurozone. So it made it easier for us. But in those limits then number 2 (boosting the economy in the Keynesian sway) that was part of the policy, or one of the policy tools we had in our hands. But it was used inly to a certain extend. Because then we wanted to keep the debt level as low as possible. STO02: Interviewee: there was a strong commitment, secondly we have a strong historic of devaluation base policy that was not successful. The 1990 recession is very active in peoples memories. Kenyesism was the most, but the 1990 crisis in our republic. STO03: Interviewee: The government would have been reluctant to have a view on monetary policy. Interviewee: Respect central bank independence. STO04: Interviewee: the support for contra cyclical is not so strong now. (...) even if the interest rate is at zero, so its quite a German view we have in Finland. Trade union tended to favour more contra cyclical, but we don’t brake too much with the consensus. So if someone is advocating taking on a lot of debt to boost the economy, we would think that that would be something of a crazy person, or a leftist, even if we have japan or the US implementing this. We were strong for austerity policy along with the Germans and Dutch, and we were opposed to anything that might have a risk ﬁscal discipline. STO05: Interviewee: I would say that the Finnish government or governments in general have supported an independent Central Bank(...) although there have been some voices that. But more in general Finland has

167 been in line with Germany and some other MS in advocating an independent central bank. Central Bank is good for the economy so that means prize stability. Then again, your ﬁrst two options on the list are very close. Especially in Katainen’s government which was a rainbow coalition from the far left to the far right they were also voices more in favour of an activisms and monetary policy that have other goals besides price stability. But it was never the mainstream or oﬃcial policy of the government. Finland broadly backed up Germany and other member states. There was a views that everyone is responsible for their own debt (...) because of the push from the opposition. What we discussed earlier (...) Which is very close to populism. STO06: NA

11.7 The future course of EU integration

11.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Finish Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview STO01 STO02 STO03 STO04 STO05 STO06

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

STO01: Interviewee: We see what can be achieved in the framework of the current treaties, when it comes to the single market, so much would done in order to make the single market a real single market, which its not so far. There is so much to be done. In that sense there is no need for a treaty changes. Politically is impossible to even think about treaty changes after Brexit and after these bailout packages. I don’t think that anyone even dreams about it. STO02: Interviewee: generally people are sceptical about organs. Because of Brexit and undulated failure of the EU as a economic management something needs to be done.) has to be within the current treaty provisions. STO03: Interviewee: To me its have been a rule that until now work within current treaty provisions. It is difficult to say whether the debate about the relaunch of the treaty has any role. So many things have happened. Many in the European parliaments have been cautious and said that the speed of integration was too fast, and that it is out of the democratic process what is going on. The commission has been pushing too much. The speed has been too high. We should make the current system work. And then fix a treaty, what ever it takes in maybe 10 years if needed, if you see things you could improve. On the longer term, this should be done, but for now we should work with what we have. STO04: Interviewee: Is THE GENERAL view of Finland or the government view? (Lisa: more about the government position as reflecting the majority). Working within current treaty provisions. There is little appetite for treaty changes. Not much appetite for multi speed Europe. So we have wanted to keep the other Nordics and the UK with us. But brexit will change that. When it comes to depending integration we are much more in favour or deeper market single integration, that is a favour for us, digital/capital market, Finland I supportive of this. Finland has been supportive of the commission agenda in this regard. Support for

168 integration that guarantees national sovereignty. I prepared a paper on how to reform the euro-zone and what I found during that process was that it was strong support for Finland to strengthening the NO-BAIL- OUT-RULES? If that changes then the Finns would like more integration. Like a US model where the states have more power. Then we would bail out any other rules, and we wouldn’t have to bail out Greece. That would be the preferred option for Finland. This is the position SAK took, we are in favour of that. STO05: Interviewee: Difficult to put them against each other. And then secondly, maybe creating new organs. And thirdly relauch of treaty change. Interviewee: I’d say if you want to make some changes in a reasonable time frame, it has to be within the current treaties. In a long term vision, we would start with (...). Then again, in the current situation (brexit) the EU would have to quite fast to get on the table and find some way to come forward. Constitutional debate would take years and would be very uncertain. I would not say that one excludes the others. But now(...). STO06: Other (please describe): Interviewee: this is difficult because it’s a difficult future. Finland and the political establishment knows that we would like to be. But less sure what we can do to get us there. That’s the dilemma. In term of where we would like to be: its certainly not a federal vision. It’s a vision of, pretty close to Maastricht union, non bailout. Budgetary sovereignty in other states. Preference of far reaching economic policy sovereignty overall. Its not a federal vision. Its more a question weather the secondary legislation is useful and working as intent. Six pack, two pack.

11.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview STO01 STO02 STO03 STO04 STO05 STO06 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

STO01: The Vanhanen II-Cabinet (18 March 2007-2010 ,The Centre Party: When I have to choose by those alternatives you gave. I think that the position or view was more like Intergovernmental organisation, but into the direction of a federal organisation too. Some elements were accepted by the government. No willingness to go much more into the direction of a federal organisation. The Kiviniemi-Cabinet (22 June 2010-22 June 2011, The Centre Party): So intergovernmental Europe but also when it comes to Multi-speed. Vanhanen and my government at least some of the politicians were ready to accept that going to that direction was OK. We were already there because we were in the Eurozone, not all countries were part of that so this multi-speed was there so it was nothing new. But we didn’t think that it was really the best option, but he had to tolerate and this was needed because some countries are willing to deepen the cooperation and other countries are not. We had to deal with the status qou. In the beginning of the Vanhanen second term the situation was

169 so much different because the EU affairs were not so much on the agenda. But then towards the end of the Vanhanens term I started the whole atmosphere in the Finnish politics and the citizens was very much against deeper cooperation because many people felt that we are not taking care of other countries expenses, which they should have taken care of like Greece and Ireland and so on. So that made very people very, in the government and in the public opinion, very reluctant to accept the way forward to federal organisation. The Katainen-Cabinet (22 June 2011-24 June 2014, The National Coalition Party ”NCP”): They continued. And also those parties which had earlier had been more pro European, those became more against in that kind of legislation that would deepen the cooperation and also bring the EU more like a federal organisation. The Stubb-Cabinet (24 June 2014 -29 May 2015, National Coalition Party): There was a continuation and no big changes. Of course different politicians and different prime minister and ministers they have different views but because you have many parties in the government. And also the prime minister was not the only person in the government, so so much policy is not change only by changing the prime minister. It was difficult because of the political situation. So deep inside everybody knew We just had to take those steps there was no other option but because the citizens were so much against. In our hearts and what we think that is right all those steps made were needed, all those bailout packages were needed. But because we had difficulties to communicate that to citizen and the citizens had so much difficulties to understand why we had to clean up the mess in Greece and Ireland and in other countries because they had not done the right things in time. So it made if very difficult for us politicians to make those decisions. STO02: The Vanhanen II-Cabinet (18 March 2007-2010, The Centre Party): I think it would be dangerous to assume that any of our cabinets has actually decided these policies based on any sort of view of what the EU future should be, this would be highly reactive process things had to be decided ad hoc. And you notice that most of the more important policy decisions were taken in great haste and pretty much as a result of an agreement. (...2:34 minute) created by a German influence. Which perhaps is part of the (...) really. I doubt it there is any sort of federal view existed in Finland. Portion of the conservative party around Alexander Stubb identifies with a more figure of Europe but that is a very small minority. Lisa: Alright so during Stubb-government in 2014 to 2015 you would say that the government view of that you should be a federal state? Interviewee: Well the prime minister of before that, the finance minister thought so but it was never a cabinet view. Lisa: Ok, for the other cabinets would you also say that it doesn’t make too much sense to estimate some kind of kind of vision of the EU. Interviewee: No. (...) has not (...3:40) in many years. Interviewee: Has more a federal view of Europe, the prime minister and former finance minster thought so, but not the whole cabinet. The Kiviniemi-Cabinet (22 June 2010- 22 June 2011, The Centre Party), The Katainen-Cabinet (22 June 2011- 24 June 2014, The National Coalition Party ”NCP”), The Stubb-Cabinet (24 June 2014 -29 May 2015, National Coalition Party) STO03: The Vanhanen II-Cabinet (18 March 2007 -2010, The Centre Party) - Intergovernmental Institutions: You can definitely exclude federal union. On the euro area stability management, we try to get into the intergovernmental model, so that there is no decision making there is a budgetary issue there, and then everybody needs to go to the parliament and have a common view. Its always intergovernmental. That’s the way this has been in the ESM. But we have a strong commitment towards development of the internal market, and to stick with the rules that we have agreed. The new set of fiscal rules were being development as the crisis were managed in 2010. The Kiviniemi-Cabinet (22 June 2010- 22 June 2011, The Centre Party )- Intergovernmental Institutions: Excluding federal union applies to all cabinets, but the closer we come, the more distant are changes to federal structure. Perhaps the questions were not so accued in the beginning, but later... The multi speed you need to be practical and really locking at the benefits as a whole. The major parties have always been supportive of the idea f the Euro. Maybe not the True Finns, but even they are now in the parliament, supporting staying within current arrangements. If we should pick one I would take intergovernmental institution. The Katainen-Cabinet (22 June 2011-24 June 2014, The National Coalition Party ”NCP”) - Intergovernmental Institution: The closer to the present day we come the more distance is the idea of federalist changes in structures. The Stubb-Cabinet (24 June 2014 - 29 May 2015, National Coalition Party) - Intergovernmental Institution

170 STO04: The Vanhanen II-Cabinet 18 March 2007- 2010 The Centre Party - Intergovernmental Institution Intervie- wee: intergovernmental for sure. The Kiviniemi-Cabinet 22 June 2010 -22 June 2011 The Centre Party -Intergovernmental Institution Interviewee: all the cabinet since Vanhanen can be characterised as supporting intergovernmental. That hasn’t changed. The Katainen-Cabinet 22 June 2011 -24 June 2014 The National Coalition Party ”NCP” -Intergovernmental Institution Interviewee: all the cabinet since vanhanen can be characterised as supporting intergovernmental. That hasn’t changed. The Stubb-Cabinet 24 June 2014 -29 May 2015 National Coalition Party - Intergovernmental Institution Interviewee: all the cabinet since vanhanen can be characterised as supporting intergovernmental. That hasn’t changed. STO05: The Vanhanen II-Cabinet (18 March 2007 -2010, The Centre Party) -Multi-speed Europe (with a core and more flexible integration around it): In between an intergovernmental union and multi-speed union. Cer- tainly not a federal one, they were not ready to go that far. Generally, Finland as emphasised the role of the Commission and EU-bodies, in the functioning of Europe because we are a small MS. So it has been a long continues line in Finnish policies, that we emphasise the role of neutral decisions making. Work within the commission in that they really push through in intergovernmental processes. Its difficult to choose one category, we can se traces of all. I choose multi-speed Europe because Finland has been a member of the Eurozone. The Kiviniemi-Cabinet (22 June 2010 -22 June 2011, The Centre Party) - Multi-speed Europe (with a core and more flexible integration around it) Interviewee: Multi speed also applicable here because it was only an interim government, with no changes in policies, only a change of Pm. The Katainen-Cabinet (22 June 2011- 24 June 2014, The National Coalition Party ”NCP”) - No change (status quo) Interviewee: it was a multi party government with quit different opinions within the government. It was difficult to se the governments line, because it varied depending on the circumstances. So many different parties with no coherence. What categorized the parties was, that they were not the True Finns. If I start recalling some different events, the government was very tough in changes that would imply more solidarity between MS. Finland was the one who claimed the guarantees from Greece, so it was quit tough to not go into a more federal. And social democrats played quit tough within the government, as pushed though that policy. The status quo could symbolize the government, because they said ”lets stick to the old rules and not do anything new or else”, but without being explicitly anti Europe. They did not want many changes. They were not capable of pushing though reforms. The Stubb-Cabinet (24 June 2014- 29 May 2015, National Coalition Party) - No change (status quo) Interviewee: This was a continuation of the Katainen government. STO06: The Vanhanen II-Cabinet (18 March 2007 - 2010, The Centre Party) - Intergovernmental Institution Inter- viewee: I would say intergovernmental institution. I don’t ever was such a thing as a government position. There were coalition governments with many different parties. And different people in them had different ideas. To the extend that it was a vision it was not very clearly formulated, it was not necessarily complete. It was more a gut feeling of the direction we would like to move. The Kiviniemi-Cabinet (22 June 2010 -22 June 2011, The Centre Party) -Intergovernmental Institution Interviewee: intergovernmental it would come closest. The Katainen-Cabinet 22 June 2011 - 24 June 2014 The National Coalition Party ”NCP” -Intergovernmental Institution Interviewee: it was a tiny bit more open to integration than Vanhanen government. But this was very slight change. The Stubb-Cabinet (24 June 2014 -29 May 2015, National Coalition Party) Interviewee: there its more tricky because the prime minister himself was a federalist. But his government was definitely not. So its your choice. The position that the PM represented abroad was much more subdued than his personal opinions.

11.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why?

171 STO01: The Vanhanen II-Cabinet (18 March 2007-2010, The Centre Party) Interviewee: It was very difficult for Vanhanen gov to accept that kind of decisions in principle. But because the gov and also the governments afterwards knew that new legislation at the European level is needed in order to take care of the crisis, so that was one of the reasons to accept those decisions. And in the government I felt that it would be for the good for the country to accept that kind of new legislation. But the reasons behind was: The crisis was there, something had to be done in order to prevent new crisis in the future. It was inevitable to avoid that kind of legislation. The Kiviniemi-Cabinet (22 June 2010- 22 June 2011, The Centre Party) Interviewee: So it made made my gov stance difficult, also because we had we had different parties in the government. And especially in my party the situation was very very difficult because my party was originally already in 1995 the majority of the supporters of my party was against the membership of the EU. And the whole party, when we were in the opposition when the membership was accepted was against the Eurozone membership. That was still felt in my party and in my party some of the supporters were very very unwilling to accept bailout packages or what ever new legislation which would have increased the liability of Finland. So the political situation was very challenging. STO02: NA STO03: I would say yes if we have to pick yes or no. Yes. To give you an example, the banking union. The Finnish president in 1999 we initiated the work on the banking union. We started to work on crisis management. Discussion about key elements that later become the banking union. We chaired many working groups and wrote documents many years before the crisis started (by the way, with the Swedish colleagues were also closely involved). With the baking crisis history that we had in the Nordic countries for example, we knew this could cause problems because in the Euro area you need to have not domestic solutions but international solutions. We were fully aware of that we would need domestic and international institutions. It was a learning process. The European Commission did not know much about financial stability they just knew about the internal market, security market and there was not much organisation in that area, at all. Basically, my point is that we were very proactive in developing the intermarket and stability arrangement, from the time when we joined the EU. STO04: The more fedarlistic the proposal, the less support it has among finish governments. So there’s been a will to change the Eurozone into an intergovernmental project in the EU. Little willingness to strengthen federalist structures. The government didn’t want the EP too much say, making the fiscal compact. Minimizing the risk of federalism. Same thing had shaped other discussions. STO05: Or lack of vision. The government seems to lack a vision of what kind of Europe do we really want and on Finland’s position. They had a slogan that said ”lets not lend any more money to Greece” or ”if we lend we have to get guarantees”. So they put some limits to the policy. But I don’t think the government had a coherent single vision of Europe. But the governments complicated set up with political parties, certainly complicated their policies. More or less all the parties, but especially the Social democrats, that were in the government, was afraid of the TF, the populist party that was in opposition and that was getting more and more support because of their partly EU agenda. SD was afraid to loose voters to the TF, so they had to stay tough, and say that ”we are tough and we defend Finland’s interests in Europe”, ”we want to limit mutual responsibility”. So they were very critical of EFSM and all the mechanism with joint liabilities because of the opposition in Finland. And before, the SD have been pro Europe, traditionally. So because of the circumstances they steered away from their own traditional policies, and did not stick to the vision or to any bigger picture of Europe. They went on day by day politics. So Finland was tough and fully in line with Germany and in many cases tougher than Germany. And German politicians still had a vision of Europe. Of course everybody wanted the Greeks to stick to the rules. STO06: Yes. The thinking of terms of intergovernmental to federal union. There’s one thing that all the parties across

172 the spectrum, that its believe in no bailout, its believe in that the country should be held responsible for its own mistakes. And that’s not necessarily consistent with the federal visions that some others in Europe had. This basic vision ﬁrst dictated but then intergovernmental rather than EU solution. The second very clearly aﬀected the position vis a vi the broader euro area crisis. The Finnish positions were directed more towards creating better discipline, policy discipline, creating systems of bail-in, rather than bail-out. So yes it has had a big impact. And the basic philosophy that had held us to a certain corner of opinions within the EU, we are consistently on one side. Although we try to be less predictable, but we usually don’t succeed.

11.8 Negotiation strategy during the Euro crisis

11.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview STO01 STO02 STO03 STO04 STO05 STO06 S T Hard bargaining: tries to extract concessions from the other side, delays or R Rarely Never Very rarely Often Often Often blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Very rarely Never Never Often Often Often provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Often Rarely Very rarely Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

11.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Finish delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

STO01: Hard strategy Interviewee: I would say that it changed a little bit from 2011. Katainen government didn’t use that but before. Was slight change from Vanhanen and Kiviniemi because the situation was so much more difficult politically. When Vanhanen was PM I would say never ever. When Kiviniemi was PM we were moving into the direction of ”very rarely” but we were not there, it was not used but we were close, in, not block but delaying. The Katainen government used it, but not very often but sometimes, but in a very sensitive time, but I would not say often. Because they used in in a way that differed so much in the earlier positions of Finland. Its better to say rarely, but its also often, because they used it, not often, but in w way that made sense that everyone noticed it. But its better to say rarely. Threats Interviewee: It changes with different governments. I would say that never, when it comes to real threats. Maybe in Katainens government then very rarely. Soft strategy Lisa: Has this changed as well? Interviewee: Katainen government

173 still use it in some way as a strategy. this is the normal Finnish way. Lisa: why this change? Interviewee: 2007-2011, because of the SDP, they were in the opposition to 2007-2011. And then they made so many promises for the election. And then they because the government had they had to fulfil the promises. At least in the beginning of the term they were following that. They made promises to the citizens that they had to follow up. And because of the True finns, they were in the opposition. STO02: Interviewee: on these particular issues and in this particular time frame 2010-2015 I doubt that any of this apply. It was a matter of passive resistance. Something that we did not want but (...). This would be the dominant. Its hard to say, there were very few negotiation in the European council in the traditional sense, there was a French-German agreement. And then some untwisting of the small MS. Ultimately It was take it or leave it positions. Those things that were negotiable such as the fiscal compact, RQMV, Finland did not have much interest in the outcome. STO03: Interviewee: We always were on the tough side. But we always had constructive proposals. We never just said ”no” and left, we tried to find solutions that made sense. Writing papers and proposals so try to be constructive. So, our Finnish position should be better described as constructive, not soft. The crisis changed the negotiation strategy. We were always active but it was a more burden need to resolve and fins solutions. STO04: Hard strategy: Interviewee: often. I’m talking about the block of the Dutch, Germany and Finland. Inter- viewee: so it became harder. (Lisa: do you recall why?) Aleksi: the change of governments and the rise of the True Finns. And because of the hard German negotiation strategy. We extracted concession bilateral from Greece, our finance minister did, he demanded a guarantee, that was quit a major thing. They thought they had to become more like the true Finns to stay in power. They could have been more like Sweden; the mainstream parties could freeze out the Swedish democrats. But in Finland they choose to adopt their policy (true Finns). Lisa: Why? Interviewee: The rise of the true Finns happened to the expense of the SDP. And we had an SDP finance minister, who was leading our negotiation. It would have been more challenging to convince voters to say that integration is necessary and that a Greece bail out was needed, it would be more difficult to say that to the voters. SDP have become more pole driven, they don’t play the long game, the SDP have a statement, political, Pali Litonen, driven by short term. They did what they thought was best to keep the support, I think they chose the wrong strategy, it was very bad for us, after that period is impossible to argue for any international solution, now its more nationalistic. STO05: Interviewee: On a case-by-case basis. Some issues were more critical. As an example, I am still thinking about the agreement with Greece. This was such a hot topic (...) generally speaking, so we don’t want to cross. So we pushed really hard, and too hard. Finland was quite well-aligned with Germany. STO06: Interviewee: not that much no. Maybe some more towards softer, but I would not call it softer, I would call it strategic.

12 France

12.1 The list of interviews in France

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

174 Interview code Quality rating by interviewer GRE03 100 GRE09 100 GRE10 75 GRE12 50

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

175 12.2 The summary observation on country interviews

In France, the Treasury and the President of the Republic play the most important and central role in the formation of national preferences for any macro-economic issue. The Treasury is located within the ministry of ﬁnance but it is rather autonomous from the Minister and its cabinet. The PR has a lot of room of manoeuvre according to the constitution. Since 2002, France is a very strong presidential regime, hence parties, parliament and civil society do not play an important role. Also, strong personal connections exist between PR, Treasury and big banks because of the French elite’s education (ENA, Inspection des Finances). In conclusion, a very tiny number of people took the decision and matter in the formation of national positions, without any real check and balances logic.

The period 2010-2015 was marked by the election of Hollande (Socialist party in 2012). Hollande ran on an anti-austerity platform and on a renegotiation of the FC. Yet, he did not deliver on his campaign promises. Interestingly, itws from the Treasury told me that they played an important role in ?reminding? Hollande that France was already committed to previous agreements. The lack of policy shift had a cost however, part of the socialist party became oﬃcially dissident after this event.

It is well known among French researchers that the Treasury is as powerful as secretive. Yet I was surprised by the fact that I could have an rather easy access to the Treasury and frank discussions. One of the reasons is that itw had the feeling that the 2010-2015 was historical and they were eager to talk about it as they think that they accomplished great things and wanted to share this. However, it was impossible to record the itw and the itws were more eager to talk about negotiations in detail than providing precise inﬂuence and positions scores (this was also caused by the fact that, as only the PR and the treasury really matter, the itw did not feel the need to repeat it for all the issues, even though I insisted on this). When Pdfs are ?missing?, it just means that the itw told me that positions and inﬂuence scores are similar to the other issues, hence I did not scan an empty sheet.

The main research results that did not exist in the literature before are the following :

• French authorities’ ﬁrst priority during GRC was to protect their banks, which were heavily exposed to Greek debt. • There was no strong political willingness to change policies in 2012 despite campaign promises. • French negotiators are building their positions by taking into account the ’German constrain’. • Fiscal Compact was ’sold’ to the socialist party as part of a deal with ECB unconventional measures • The treasury is the more ’integrationist-federalist’ administrative body while Foreign Aﬀairs are more into an intergouvernemental logic • The economic ideas within French administration are very close to the EU-level (no particular desire of state-guidance).

12.3 Open answers to questions on 4 contested issues

12.3.1 GRC: Willingness to support Greece in early 2010

176 March 15, 2010 to make support available, if requested (Greek authorities made the request on May 2, 2010).

GRE03: Two players matter: Treasury and the Sherpa of Presidency (PR). Backing up Greece was an interministerial consensus. There was a willingness to show solidarity for Greece and a concern about financial stability. There was a sense of emergency among administrative and political players, therefore there no debate took place on that issue. GRE09: Only two players who matter: ministry of finance + trsor and PR cabinet. - decision taken only with French players - no need of banque de france because trsor has its own contacts with financial players - the contact group with banking sector dates from Argentinian crisis in the 1990’s. - In early 2010, Treasury made a deal with French banks (Vienna initiative): you keep the debt, we don’t restructure it and we give money to Greece so they can reimburse their coupons to you. GRE10: The Greek issues were followed closely by laguarde (ministry of finance) and elyse. The political decisions were taken following the technical assessment provided by treasury. There was a structuring role of Germany : French negotiator internalize the German constrains when building their positions- One of the main aims was to protect the French banks exposed to Greek debt. This is especially the case for BNP Paribas which should have been recapitalized if debt was restructured. GRE12: Trsor has the lead by far since they are present at Eurogroup, EFC EWG...homogeneity of positions between Trsor and PR. This was caused by the strength of the personal interlinks (caused by similar education and career path). Personal Links between PR Sherpa, National bank, Treasury director and Ministry of Finance Sherpa.

12.3.2 ESM: The size of the European Stability Mechanism

GRE03: There was a need to anticipate possible troubles on Italian and Spanish debt markets GRE09: We wanted to impose the idea of ”bazooka”. Yet, the debate was not on the size but on the instrumental uses of ESM. From 2010 to 2012, there was always more and more flexibility in the use of ESM instruments. This increased flexibility stemmed from French pressures and financial context. GRE10: debate was not on the size but use of instruments. GRE12:

177 Willingness to have a game changer, a bazooka to stop the contagion

12.3.3 FCO: The legal form of the debt brake

GRE03: Parliament comes back into play. The TSCG was a political issue that was very debated in the media and political parties. Public opinion mattered much. Parliamentary hearings were tough and MP worked on their issues more intensively than in usual times to corner the government. Yet, interest groups were weak on both sides (pro/against TSCG) There was more interministerial coordination (SGAE (interministerial coordination for EU issues linked with PM office) and PM came back into play). From 2009 to 2011, Finance ministry was working alone (no other ministries really matter) and other ministries had to willingness to come back into Eurozone politics with this issue. The treasury rallied back the presidential majority with the argument that FC was a counterparty to ECB measures GRE09: France was rather 70 than 60. The red line was : FC cannot be in the constitution, there was a political will to avoid constitutionnal revision. France built an alliance with Italy to avoid the all automatic logic. The decisive moment was the ECB measures. When the ECB announced LTRO, the implicit counterparty for these measures were the implementation of the fiscal compact. This is how it has been ”sold” to French MPs. Political parties, civil society, parliament were out of the picture. Same players than with other issues. GRE10: rather position 70. The FC was part of a German-French compromise (Germany agreed for Banking Union and France agreed for Fiscal compact). GRE12: France decided for an organic law so that one can keep rooms of margin within the Budget. Because it is a international treaty, there was an increased role of PM + Foreign affairs

12.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

178 GRE03: France reversed its position (from no to yes) because the triggering is still semi automatic. It was a very heavy decision because it gives a lot of power to the commission but they realized it only later on in the process. it was done under heavy pressure of the markets. GRE09: France wanted to avoid the all automatic logic. Commission and van rompuy tried to implement the reform in 2010 but during the Deauville deal, Germany accepted to drop RQMV under French pressure. Today, RQMV doesn’t work because Commission does not dare to do propositions : it is too political with too much at stake. GRE10: rather 70 than 80. France was against automatic rule. As the negotiation process put this automatic mechanism very far in the process of sanctions, France agreed with the reform. In the preventive phase, rmqv comes quite late. There was a willingness to preserve the importance of council in the EMU governance GRE12: It is close to the issue of withdrawing structural funds (if a country fails to implement reforms): it could trigger potential worsening eﬀects, so nobody does it. France agrees because commission warnings come late in the sanction process. On this issue Germany positions were important as well. There were very close contacts between FR-GER Sherpas and EFC members. The channels of communication are open in order to ﬁnd a proper balance between the logics of conditionality and debt mutualisation

12.4 The stability of government positions and the role of Eurozone non-membership

12.4.1 GV1: The Change of Position and the change of Government

GRE03: In the end, there was no major change. Even on TSCG, The treasury needed 3 months to convince Hollande to go back on his electoral promises (Growth Europe rather than austerity Europe, renegotiate TSCG). Shows the strength of French administration over political parties debates and the weakness of Parliament and group of interest GRE09: No. Even with Hollande electoral promises. France might talk more about growth but policies and strategies are exactly the same. GRE10: No. even on tscg, Hollande realized very fast that he could not open it again. Somehow growth issues are more present in Europe but is it because of new French government or conjuncture? GRE12: Since 2008, no real change of French eco policies and positions in regard with EMU. everything is in continuity of the ﬁrst answers to stabilize the banking system post Lehman. Discourse became a bit more growth focused in 2012 and some measures were taken (recapitalization of EIB). European council December 14 2012, contract of competitiveness and growth (point 12 of the conclusions) to show links between two no- tions. However, after the momentum fades away and it has never been implemented (maybe because of the whether it takes?)

179 12.5 The role of parliament: governing and opposition parties

12.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview GRE03 GRE09 GRE10 GRE12 P. The inﬂuence of the majority in parliament + 0 0 0 .

GRE03: Just a very tiny bit, maybe from score 0 to score 2 on a scale of 100. The parliement became stronger because both the Bundestag and the European Parliament became stronger and the French MP wanted to be like them. GRE09: Very weak. Only moment of slight contestation was ﬁscal compact but it did not last. GRE10: very weak. parliament is a bit more informed than before but that’s all. GRE12: Even though some ministers asked for ex ante hearings before the parliament, MP did not want them. Sug- gested explanations : does not ﬁt with the agenda, no technical knowledge....

12.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

180 Figure 2: Change in the governing party inﬂuence

Interview GRE03 GRE09 GRE10 GRE12 P. Governing party inﬂuence 0 0 0 0 .

GRE03: Very weak. The Treasury is more important than the governing party for defining French positions. Besides, since 2005, the French socialists do not want to engage in European issues GRE09: very weak. At the end, socialist party ratified tscg even they were against it GRE10: very weak GRE12: Had a tiny influence in 2012 when growth initiatives were brought back on the table by Hollande

12.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview GRE03 GRE09 GRE10 GRE12 P. Opposition party inﬂuence 0 0 0 0 .

GRE03: very weak. GRE09:

181 irrelevant GRE10: does not exist. Anyway, center right and center left hold the same macroeconomic positions GRE12: NA

12.6 The dominant views of economic policy

12.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview GRE03 GRE09 GRE10 GRE12 ID The state should provide signiﬁcant economic governance with state-led 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 2 2 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 1 1 1 1 .. management.

GRE03: state guidance is not relevant GRE09: NA GRE10: NA GRE12: NA

12.6.2 ID2: Dominant Monetary policy goals

182 Figure 5: The ranking of monetary policy goals

Interview GRE03 GRE09 GRE10 GRE12 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 ..

ID Growth and low unemployment 1 1 ..

ID Price stability 2 1 ..

GRE03: Exchange rate is not relevant. Unanimous back up of activist ECB monetary policies. France want the ECB to be more like Fed. GRE09: irrelevant. Very strong support of France vis-a-vis unconventional measures. GRE10: Not relevant GRE12: ECB unconventional measures are backed up until now. With negative rates, it might be more diﬃcult however. But treasury has no expertise anymore on monetary matters since the creation of the ECB, so no real opposition.

12.7 The future course of EU integration

12.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the French Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview GRE03 GRE09 GRE10 GRE12

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

GRE03: there is a interministerial debate. Treasury wants to change Treaties to deepen European integration (The treasury always push for more integration because all the Treasury competences are already negotiated at the EU level). But the Ministry of foreign aﬀairs is against it because it is more focused on sovereignty issues + the ministry at that time was Fabius who was one of the proponents of the ”No” campaign on the socialist side during the 2005 referendum GRE09: Tresor wants a new treaty but it knows that it is not possible politically. Foreign aﬀairs ministry is against a new treaty GRE10: If France wants to really have an European parliament and economic government of Eurozone, then it needs a new treaty. but with Brexit, urgency is to keep everybody onboard GRE12:

183 treaty change = treasury, current treaty =foreign aﬀairs

12.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview GRE03 GRE09 GRE10 GRE12 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

GRE03: Sarkozy was very intergovernmental. Hollande has no speciﬁc vision on the EU (2005 trauma) GRE09: NA GRE10: Under Sarkozy = intergovernmental logic. Under Hollande, nobody knows GRE12: Sarkozy intergovernmental, since then, blurry

12.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? GRE03: NA GRE09: NA GRE10: NA GRE12: NA

184 12.8 Negotiation strategy during the Euro crisis

12.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview GRE03 GRE09 GRE10 GRE12 S T Hard bargaining: tries to extract concessions from the other side, delays or R Often Very rarely Never blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Very rarely Never provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Very often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

12.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the French delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

185 13 Great Britain

13.1 The list of interviews in Great Britain

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer GBR01 100 GBR02 75 GBR03 75 GBR04 75 GBR05 75 GBR06 75

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

186 13.2 The summary observation on country interviews

The UK governments chose not to oppose EMU reforms as the UK economy benefited from the stabilization of the Eurozone. At the same time, as an increasingly militant Eurozone outsider, the UK became increasingly less interested in contributing positively to EMU policy, and concerned only to safeguard its position and to limit any potential liabilities to itself. The UK showed little interest in the more technical issues of fiscal compact (FCO) and SGP sanction (SPA3). The support for Greece was viewed as Eurozone problem and the UK was prepared to support it at the IMF and EU level as long as it gave raise to no liabilities to EU budget and non-Eurozone member states. The timing of the 2010 general elections in the UK produced a curious set of circumstances with regard to the ESM size issue (ESM): the decision needed to be taken over the weekend following the Labour Party’s defeat on the Thursday, but before the new government had taken office. The Labour Chancellor (Alasdair Darling) took the decision, having consulted the incoming Chancellor (George Osborne). Overall, the process of preference formation on EU fiscal matter is lead by the Treasury department that acted in close consultation with the Prime Minister via the Cabinet Office. A Conservative PM and Chancellor came under growing pressure from increasingly vocal Conservative (eurosceptic) backbenchers, which severely limited their freedom of action. Neither the City of London nor the Bank of England were especially influential. The total of five interviews with senior officials directly involved in the decision-making process were conducted.

13.3 Open answers to questions on 4 contested issues

13.3.1 GRC: Willingness to support Greece in early 2010

GBR01: Context: Greek statistics revised autumn 2009.didn’t appreciate at that point wd just spiral. Midst of financial crisis.at EFC meetings -main meeting of finance ministers. UK thought of it as Euro area issue. Gradually dawned on people that Greece would need support. Once became public, market took view and Greek funding costs spiralled. March -April 2010, Greece went to the IMF, which demanded European contribution. Euro area recognised that didn’t have a mechanism. Led to agreement that ensures Euro area would provide money under G7 +1. Wd be the Commission that administered. UK perception that arrangements untidy and since outside treaties would need a Bangladesh agreement to resolve the problem. 27 agreed that Cn cd act in ? and got agreement that Commission in charge but no liability to member states which outside Euro area. Commission had no money; UK didn’t want it to come back to the EU budget. We got an understanding on that front. Took us through to May. No contingent liability on budget of EU27 Key role played by HM Treasury and PM. FCO also involved. No meaningful influence from other actors. Bank of England speaks to Treasury, but has no executive role in the process GBR02: During financial crisis of 2008, periphery Europe got through that reasonably intact. One of reasons for that was statements made by former German Finance Minister, Herr Steinbruch, that wouldn’t allow Eurozone member to default. Then two things happened coincidentally in autumn 2009: 1. exposure of size of deficit in Greece and that problems with the statistics; and coincided with change in govt with Fin Mins-Grand

187 Coalition with Libs with Schauble who very deliberately doesn’t repeat Steinbruch dotrine =suddenly two things happen at same time. Puts Greece in the news: sell-offs and increasingly pressure of winter 2009-10 into spring 2010. I think our position was that this was something that the Eurogroup should sort out, but though wondered how since no instruments. Difficult for us, because we were in the run-up to an election, anticipated change of government and we were in a weak fiscal position about 10 per cent GDP deficit at the time – so we were not in strong position to be out there to tell others what to do. We were quite focused. Came to a head around April time. Before election, board meeting. Our position was that while programme wasn’t ideal and in ideal world would question whether debt sustainable, but where Greece feeling cash flow issue and realistic change of defaulting, and we took the view that we did not think that the Eurozone or global financial regime had mechanisms to deal with this. And we worried as we were not out of the woods ourselves. Our charts UK govt bond yields tracking those of Spain until 2010. Change in fiscal policy had decisive impact on that, but at that point we were thinking if Greece goes, then Portugal, then Ireland, then Spain, and where does that leave us? Sense that it was in our interests when coalition govt formed to play it up a bit in public, but reflected genuinely concern in HMT. For those two reasons: no firewall or mechanism to deal with Greece; and concern that we were a bit too close to the contagion chain for comfort meant that a lot of internal discussion but that in the end, despite views concerning long-term, in the end we would not cause difficulty at the IMF Board. Would have been difficult to take a position that contrary to rest of G7, rest of EU, and rest of IMF Board. [Brazilians!] Reason for initial support for Greece. Almost exclusively HMT and No 10. Bank too: Mervyn King increasingly hard-line, but wasn’t very influential. Parliament not involved. Can’t remember if sitting, but preoccupied with general election GBR03: 0 GBR04: ”HMT led on the Greece decision” GBR05: There was never any huge, any real momentum in British government towards UK support for a Greek bailout GBR06: Tail-end of Labour Government, political sensitivities high, and London took position that problem should be resolved by Eurozone countries

13.3.2 ESM: The size of the European Stability Mechanism

GBR01: Context: May 2010, Extraordinary Council. ECOFIN. Sunday after UK elections, with new govt not yet formed. Labour’s Alastair Darling still Chancellor. ECOFIN to agree EFSM -EU mechanisms with up to 60 bn euros. QMV under Article 122 (2). See Darling’s book. Key point that EFSM agreement by QMV, but key requirement of Darling that anything extra would have to be ring-fenced to Eurozone area. EFSF was morphed into ESM - 440bn, previously 500bn. UK position on EFS, Lab govt no liability on Euro area facility. Subsequently through 2010 German government realised that it could not agree to ESFS/ESM

188 unless Treaty change (article 136) to allow it to be set up. UK coalition govt (2010-15) agreed to Art 136 change to treaty, but had to go through UK parliament on understanding that EFSM -once ESM established -would not be used for bailouts. UK wanted Eurozone to get act together. important for UK policy that Eurozone did whatever [needed to do]. Didn’t want instability to be ongoing. Key role played by outgoing Chancellor, Alastair Darling. GBR02: The famous ECOFIN, which happened on Sunday 8/9 May. Genera; election on Thursday and new govt the following Tuesday, but only four days in post-war history where no govt and coincided with major economic problem. Clear that Europeans needed to build up firewall, but had no instruments to support Eurozone countries. Had balance of payments instrument, but that specifically prohibited from Euro area countries. Treaty constraints, though got past by Article 122 for events beyond control of country as basis for emergency decision (intended for floods, etc., rather than economic crisis). Problem for us. QMV treaty base and we couldn’t veto and we didn’t want to be in position where EU resources used to support Eurozone countries problem too difficult in UK. Not something we could ever access. Not involved in any decisions on macroeconomic zone, so no role in monitoring or surveillance of imbalances that led to imbalances in first place. So, it would be difficult to justify. Still more difficult to justify use of EU money. Commission came up with figure of 500bn euros, which looked about right when looked at scale of resources that might be needed for Greece, Portugal and potentially Spain. Ireland not necessarily in at that moment. Debate that weekend: First, Commission wanted to have it to be an EU budget facility, but we said ’Don’t be ridiculous’. They said OK. There was headroom in the EU budget ceilings which enabled the basically direct lending without changing existing budgetary provisions to be increased by 60 bn euros. Up to the 60 bn, so becomes a bit like the balance of payments rule, which like lending that can be guaranteed out of the EU budget, but only guaranteed if existing within overall budgetary ceiling. And they had about 60bn like balance of payments guarantee, direct lending from EU budget. First 60bn would be treated likely other macro anything above – the 440bn euros -would be guaranteed by Eurozone countries only. Our lawyers were not comfortable with that. Our view was that not very robust. What if Eurozone countries don’t have the capacity? Wd fall back onto the liability of the EU budget and we would be on the hook if not enough. Acrimonious and long meeting,12-14- hour meeting. Fairly late in the day, we’d been arguing for this and the in parallel Germans reached same conclusion. We will set up stand-alone mechanism, effectively a private company, incorporated in Luxembourg. Became EFSF, which 4040bn. EFSF because of guarantee structure, not particularly robust, so converted into ESM to make it look more like IMF two years later.. Real cash which can be borrowed against. ESM: very much a decision of Treasury and No. 10. Private actors, city no involvement, though at some point thought that they might come up with something clever. Bank no involvement, entirely a policy issue. Took place over w/e following election, so Alastair Darling had to attend. There was then a telephone conversation between Alastair Darling and George Osborne, since Darling did not think he could act on his own authority. Record somewhere, but George Osborne’s position was: you make the decision; I’m not in govt. and can’t be held accountable. GBR03: ”FCO ministers at sharp end of discussion with parliament - European Scrutiny Committee, which hawkish on EU issues” GBR04: HMT took lead- an intergovernmental agreement. Have to understand that UK govt have two objectives: want problem solved, but solved by others and without putting money up. Ireland the only exception on trade and history, and didn’t ruffle too many feathers. UK not putting in money to help sort out. Bank view on ESM that act on do what it takes to solve the problem; don’t take incremental small steps, which is what politicians tend to do. Don’t want to write big cheques. Bank at fundamental end of action. HMT can say: OK to advocate solution, but then not putting money up. Overarching political objective .... this doesn’t involve putting UK taxpayers at risk. GBR05: The Treasury was reluctant, but I can remember that when we came out of the Berlin summit ... only France and Germany thought it was a good idea. ’It was not something where we were ever going to die in a ditch

189 . .. provided that it was very clear that liabilities did not extend to us” GBR06: Decision taken during hiatus between defeat of Labour Government and installation of new coalition government - Conservative and Liberal Democrats.

13.3.3 FCO: The legal form of the debt brake

GBR01: Debt Brake Rule Fiscal compact is of the EU26 = treaty change that vetoed in December 2011 at EU level where sub. 28 provn of which observers outside of the treaty, therefore would not pay. PM blocked participation in European Council. HMT was the key actor, though the PM blocked UK participation in the European Council. Deputy PM (DPM) Nick Clegg was strongly in support-check veto provision -approved govt coalition policy GBR02: Not relevant to UK. Doesn’t apply to us because of the opt out. Protocol No 15 (TEU). While other countries are legally obliged to avoid a deficit, we are only obliged to endeavour to avoid a deficit, so no legal obligation to meet the fiscal requirements of the TEU, which fleshed out into SGP and then morphed into 2-pack and 6-pack. WG on this, but didn’t feel as though we had basis to convert into mechanism. Had been something earlier on when said that applied to all EU member states, but we said that Protocol No 15 is quite clear and that the obligation does not apply to us. You please go ahead. That point was established early in the process. We had other fish to fry. There was a working group, where I went to first one. Then I delegated it. We didn’t feel as though we thought it was our business to interfere with them. HMT with keeping No 10 informed. First two stressful moments, but this something that could deal with in a routine manner. GBR03: There was no answer to this question (interviewer had changed job) GBR04: Interviewee did/would not answer on positioning and influence, but offered this general observation: ”UK position fairly cautious. Never want to sign up to something hard when half an eye on the act you could be there. Given history of fiscal pacts since Maastricht. Language illustrative of history: theory would tell you that you should bind yourself by constitutional rule-based solutions, but never do that, since in political process transform them into weak institutional arrangements that are not binding and which can be broken relatively easily. History of SGP illustrates that. As more and more countries got the wrong side, any discipline there was which wasn’t very much disappeared pretty quickly. Political economy of that: leave yourself a way out. One of challenges in that world that once large countries on the wrong side, incentives even weaker.” GBR05: 0 GBR06: The UK has taken the view that it under the same obligations on fiscal policy on account of its opt-out. Its

190 main concern, therefore, was to limit UK’s liability, and to preserve ECOFIN’s leadership role, but also that the Eurozone should take whatever measures were necessary to establish stability

13.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

GBR01: Context: SGP sanctions. Because of opt-out, we cannot be sanctioned under SPG. UK position - ”It’s up to you”. Only countries that could be sanctioned for breaking excessive deficit. Euro arrangements -Article 126.8 no effective action. Given that it is was a decision for Euro area countries, it cd only be taken by Euro area countries. Not an issue for us/the UK. Got through 6 TFs on this an issue. Phenomenally complex, but UK clear: didn’t matter, cost not a party to it. Key footnote to van Rompuy report - structural and cohesion funds cd be suspended if in violation of excessive deficit procedure -footnote: apart from UK due to position in treaty. parliament: committees in HC and HL. press, not as much GBR02: Not relevant to UK GBR03: There was no answer to this question. Interviewee had left job. GBR04: As with previous question, interviewee did not answer directly, probably due to role that did not give him front-row view. GBR05: 0 GBR06: As with Fiscal Compact, the UK had three principal concerns: 1) protect the UK from liability; 2) ensure that effective solution reached; and 3) UK not to be at forefront of Euro area debate GBR01: 0

13.4 The stability of government positions and the role of Eurozone non-membership

13.4.1 GV1: The Change of Position and the change of Government

GBR02: Did position did evolve? Yes 2P/6P: straightforward. all within existing treaty. Does aﬀect us, leave them to

191 it. Fiscal compact more complicated, because did require treaty change. We on political side did not want to be taking decision, even if didn’t apply to us. we cd have got opt-outs from it if it had been part of a treaty. We did not want to take legislation through then House of Commons, where it would be open to all kinds of amendments, etc. and go off in all sorts of unpredictable directions. The position was difficult for us, which why they went for a Fiscal Compact. No 10 rather than HMT, since it was decided at political leader level. We fed into it. Started out as treaty, then fiscal compact stand-alone inter-governmental agreement. The contention there was whether Community resources, i.e. staff of the Commission, could be used to support the compact. Initially legal advice from the Legal Service of the Council that would require consent of all 27 MSs. UK took view that gave some negotiating leverage. Then Legal Service changed legal advice and decided cd go ahead with it. Meeting on Dec 2011 where veto that not a veto, since we didn’t need to take a decision. Wider context: a few things happened during this period:

1. Change in govt in 2010, which very significant. Led to a complete change in our stance on fiscal policy. Previously in European meetings, in G7 and in G20 leading advocate for fiscal activism. Suddenly, switched 180 degrees to become very consciously positioned as northern European liberal fiscally responsible state, like the Germany, the Dutch and the Finns. That was the company we wanted to be in rather than the French, the Spanish and the Italians. Never necessarily that explicit about it, but part of the reason why on 2P/6P/Fiscal Compact and other stuff which some people criticising as being too pro-austerity, but we were certainly never going to make that criticism, esp. since it didn’t apply to us. That was significant move. And the fact that then meant that we became a safe haven in markets terms and that gave us a bit more confidence that we wouldn’t be pulled into the contagion and could be more certain about how we were making our arguments. 2. Second thing that changed in this period was that for about the first year the govt able to do quite a lot on Europe. Supported bailout of Ireland in October 2010. EFSN – the new 60bn facility agreed May 2010, balance of payments support for members of the Euro area with lending guaranteed against EU budget and in Ireland offered bilateral loan too. Thinking that economically strongly in our interest that Ireland supported. Bank of Ireland runs the Post Office Bank, which unfortunately not as well known as it might been. Allied Irish Bank were bank note issuers in Northern Ireland. Do we provide our support through Irish banks or sovereign? We supported sovereign. We will be part of the IMF and the Euro assistance programme. To our surprise went through Parliament smoothly and able to present it as a friend in need. Not act of charity. Common interest in Ireland prospering, deep historical relationship between the two countries. All delicately presented. Where were able to do that in autumn 2010. I think it would have been a lot harder to have done this a year later, as opinion hardened up. 3. Third, Portuguese programme in spring 2011. We weren’t able to contemplate bilateral loan, though thought about it for a bit. We did allow use of the ESFN. The political situation in the UK. Europe not such toxic issue and government in honeymoon period. We were able to get that through. ESFN didn’t require vote; just had to go to European Scrutinys Committee. Ireland had required a vote and legislation. As we went through 2011 and crisis dragging on, with Eurosceptic voices in Parliament becoming more vocal and assertive, the govt started to come under more pressure.

In Summer 2011, Cameron was able to get political agreement that ESFN would not be used again. That was quite helpful when Cyprus got into trouble. He was able to say that that was a problem that he had inherited and that he’d ﬁxed it. Can’t remember what the deal was, but we traded something. It started to become harder. Move into 2011, which a bit of a wasted year in terms of Euro crisis. Things stabilised after the Portugal crisis, but bad summer and autumn in terms of markets. Spain increasingly in the ﬁring line. A general sense that whereas the US and to some extent the UK taken decisive action and recapitalised the bank, a lot of those issue brushed under the carpet in Europe. All the fault of market speculators, then the feckless Greeks, then the feckless Irish so forth. Debate 2011 that this was not a problem of individual countries, but something that was more systemic in the Eurozone. And therefore part of thinking that would

192 need to be a proper set of stress tests and recapitalization of the banking system, but too many fiscal constraints and couldn’t get taxpayers from one country to inject money into banks of another country. Then qn of whether to use ESM to support banks. The context of how debate about banking union is important, because it shows that we reversed into where we ended up. Started with what we needed to do to strengthen our banks. In the end, Germans and German camp in Eurogroup said would consider use of ESM to directly recapitalise the banks, but in return has to be a central mechanism for supervising the banking system that’s’ the qui pro quo. so, what we need is a banking union. Around in winter 2011/going into 2011 with Spain in trouble. For us on banking union, this is when started to become a tension between ins and outs. It was easy pre-crisis to separate what’s a banking issue and what’s a single market issue. Eurozone: monetary policy, exchange rate policy, macroeconomic aspects of fiscal policy; but the rest is for the other MSs and is a single market matter. Problem in 2011 was that when begin to look at financial stability issue it becomes a lot more blurred, because the contagion effects within single currency are that much greater. E.g. from Greece to Portugal, as part of the same union. What are your instruments? Might be how to use regulatory tools to address financial instability issues to stabilise Eurozone, but then instruments are instruments of the EU27. That’s where it becomes more complicated, esp. with importance of financial sector to us as part of our economy. Commission woke up quite late to opportunity. Once Germany said if going to have a single supervisory mechanism, Commission alighted on it as an integrating measure. Some people in the City said somewhat surprisingly that the UK should be part of the banking union, but we were always very clear that we could not be in a position where we were handing supervision over our banks to an entity that we were not in control of, so that was a non-starter, so it became a defensive issue for us. Then the question of whether it should be the EBA or the ECB, and for us it was fairly straightforward that would have to be ECB since that was a Eurozone problem that there were trying to solve and that the ECB is a Eurozone institution, it keeps us out of it, and there’s a treaty basis for the ECB being given supervisory powers. We were quite active once we’d clarified our position in trying to shape and influence the debate and to push for the ECB solution on banking union. When that legislation all went through quite quickly in autumn 2012, the issue for us/what we were worried about was that there would be Eurozone caucusing particularly within the EBA, esp. when standards underpinning the regulations had been agreed at Council and European Parliament level, when decided in the EBA there would be a majority for the Eurozone. We came up with the idea of a mechanism for the outs so that we are not consistently outvoted, so we came up with double majority decision making, which became part of banking union. On the whole, we were very happy with the way that that came. GBR03: No answer to this question GBR04: (Note that there was a change of government in 2010, so not during negotiation of issues identified below) GBR05: 0 GBR06: Change in 2010 from Labour to Conservative Party-Liberal Coalition: shift to variable geometry Change in 2015 from Conservative Party-Liberal Coalition to Conservative Party

13.4.2 GV2: The Impact of the Eurozone non-membership

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU?

193 Figure A: The Impact of the Eurozone non-membership

Interview GBR01 GBR02 GBR03 GBR04 GBR05 GBR06 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

GBR01: Yes. General approach speech by George Osborne: press release and speech. Remorseless logic of monetary union. Up to end 2010, UK govt worry about deepening of fiscal policies outside EU 28. Concern that ECOFIN losing influence to Euro area of 18/19 But Ireland, Portugal, etc. (bond yields) rising dramatically. Concern re sustainability and financial sustainability of what happening. Last govt changed UK policy: reworked by No 11. You have to do what’s necessary to underpin your currency, but safeguards for non-EU area member states. Either didn’t or written into law. PM that interests of non-Eurozone secured. Encouraged Eurozone to get on with it -ec governance/fiscal freedom Caucusing, since direct impact on non-Eurozone member states. Allow them to sort themselves out, but not to impose solution on us. GBR02: We were quite active once we’d clarified our position in trying to shape and influence the debate and to push for the ECB solution on banking union. When that legislation all went through quite quickly in autumn 2012, the issue for us/what we were worried about was that there would be Eurozone caucusing particularly within the EBA, esp. when standards underpinning the regulations had been agreed at Council and Euro- pean Parliament level, when decided in the EBA there would be a majority for the Eurozone. We came up with the idea of a mechanism for the outs so that we are not consistently outvoted, so we came up with double majority decision making, which became part of banking union. On the whole, we were very happy with the way that that came. Around this time, there was a much greater coordination between the outs, which we hadn’t had before at all. It was always a dilemma for us. Do we want at a time when the Eurozone is becoming more important and more stuff decided in the Eurozone, there’s a risk that ECOFIN becomes much less relevant, and position ourselves as the leader of the outs and provide a counterweight to that, or do we do what we would have done in the past and muscle our way into Franco-German axis and make it a trilateral, since when the three of us had worked together agreement can be quite quick. Certainly, what started off with very activist Polish finance minister who born and educated in the UK; academic and argumentative and Anders Bull, Swedish finance minister. Organized a dinner just before ECOFIN with George Osborne, Pole and Swede. Then later broadened out to include all of the outs. Used to have, once a month, the outs dinner. Quite an event. We didn’t want to institutionalise a split, but it was helpful, esp. in debates about banking union. Always a possibility that other outs would join the banking union, though here we are four years later and none of them have joined. Just one vignette. EBRD. There was a German President, Thomas Meyer. His term was due to expire in May 2012. His position became unsustainable because he came from the left in Germany and centre right coalition in Germany, and had President of IBD, so discussion of Eurozone only jobs chair of Eurogroup, VP at ECB, managing director of ESM, etc. To make that negotiation easier, Eurogroup wanted to throw. President of EBRD into the pot. We got wind of this and thought that this was a perfect opportunity to show that we won’t be pushed around by the Eurogroup. Raised with other outs and they disliked the idea, not least because EBRD had been a bank for the Central and Eastern Europeans. We ran a Brit as a candidate to contest it. An important institution and need a good individual to run it, and wanted to demonstrate to the Eurozone members that they couldn’t just assume the right to appoint. Turned into a row and got our Brit candidate appointed as President of EBRD. Also, still resentment among non-French members of the Eurogroup about the Deauville agreement and the Merkhozy stitch-up, and we could tap into that. Anything that looked like a Franco-German stitch

194 up, UK could take advantage of. GBR03: Points that made to ministers. Distn between Treaty-based opt-outs and those that ultimately saw themselves as in the Eurozone. Warsaw, Copenhagen, Stockholm, etc. shared concern about separating Eurozone and rest of the EU as well. Poles and countries of Central and Eastern Europe have commitment to join Eu- rozone in very different position. Danes sometimes on our side. No concerted attempt to lead non-Eurozone. Overall strategic rapprochement with Germany = strong concern. Very Berlin focused. Abandoned the French and V4 and others. At time, felt as though was bearing some fruit Cameron and Merkel at European Council. Was with DC at first European Council ’what a bore’, but over period got into job and become active player in European Council and forged relationship with Merkel, which culminated in budget deal great bit of British European diplomacy where formed and forged effective alliance more effectively than 2005 through good diplomacy and did so domestically too. FCO victory, which other departments didn’t want, thought we wouldn’t get anywhere, and would be sellable at home. Tension between federalising Eurozone and rest of Europe. Wanted to remain active player in EU, but reality that exiting ourselves from significant macro-economic policy. but logic of policy that supporting would lead to xxxx of policy making at EU-28 would become decision making at EU19. D-m by Eurozone members remain confined to those issues on which they had competences. If down this route, EMU would affect areas such as labour market policy, welfare spending, etc. That’s where policy logic would take you. HK: The government supported efforts on the part of the Eurozone to take the measures necessary to secure the currency, but at the same time wanted to safeguard the position of non-Eurozone member countries GBR04: Refers us to Mervyn King’s book; interview tails off around here. GBR05: The government took the view that the Eurozone countries should take whatever measures were necessary to restore the stability of the Eurozone, but should not impose liabilities on non-eurozone countries GBR06: No real attempt to caucus, though pleased for the opportunity to have dinner with the other outs. The UK would have followed other EU member states down path to Treaty change, but didn’t happen either with fiscal compact or Article 136

13.5 The role of parliament: governing and opposition parties

13.5.1 PL1: The role of the National Parliament

195 Figure 1: Change in the majority party inﬂuence

Interview GBR01 GBR02 GBR03 GBR04 GBR05 GBR06 P. The inﬂuence of the majority in parliament + + + 0 + + .

GBR01: Conservative Party backbenchers became increasingly mobilised and Eurosceptic GBR02: Parliament is clearly becoming much more important and much more Eurosceptic tone. G20 in London in April 2009 one of the agreements was that there would be an increase in size of quotas to the IMF and there would be bilateral loans from major countries to IMF. It had to be ratified in Parliament. There had always been a presumption that there was cross-party support for the IMF, the IMF an institution generally seen positively in the UK, and that IMF generally seen as supportive of British instincts on economic policy, and no budgetary implications- comes off the reserves and does not appear on the balance sheet. So we thought it would be uncontroversial, but there was a big rebellion in Parliament. First canary in the coalmine -John Redwood and others whipping it up. British taxpayers’ money used to bail out the Euro via the backdoor. Either early 2011 or late 2010. Labour Party: abstained or voted against, which was very odd given Gordon Brown’s great triumph in G20 in 2009. This was the first sign that there was concern in Parliament. So much so that when we got to the Cannes G20 summit in November 2011, there was another proposal to increase bilateral loans to IMF and we couldn’t support it. In the end, we came up with a mechanism that said we were doing it when in reality we weren’t. It became harder. It wasn’t until autumn 2012/2013 when big rebellion on EU budget. Very difficult to point to individual events and things that it had been possible to get through, such as the Irish bilateral loan in 2010/11, would’ve been very hard in 2012/13. GBR03: Whole period, 2010-15, relationship with parliament increasingly difficult. EU Scrutiny Committee Eu- rosceptic and Europhobic. Constantly looking for examples of where we could try to fudge the distinction between Europe and the EU. Knew that up to 100 Conservative MPs ready to rebel. Frankly, Lab Pty and Lib Dems less influential GBR04: 0 GBR05: Rising Euroscepticism on the Conservative backbenches, especially with electoral success of UKIP in the

196 2014 European elections GBR06: From 2010, Conservative backbench opinion grew more Eurosceptic and backbenchers became more activist, esp. since a key player – Bill Cash – became chair of the European Scrutiny Committee

13.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview GBR01 GBR02 GBR03 GBR04 GBR05 GBR06 P. Governing party inﬂuence + + 0 0 + + .

GBR01: More mobilised, more Eurosceptic. More concerned about impact of Eurozone performance on UK and of threat of regulation to competitiveness of City of London GBR02: More mobilised, more Eurosceptic. Opposed to use of money from UK taxpayers to bailout Eurozone countries GBR03:

1. Divide within coalition between Conservatives and Lib Dems: ”Clegg a force for good, but trying to smooth out and make policy less angular and recognise concern of European partners, and concern about drift away from centre of policy debate about causes of Eurozone crisis. Consideration and EU and policy more regular than would’ve been without his intervention.” 2. Majority party increasingly divided: ”Increasingly number of Conservative MPs ready to rebel” GBR04: 0 GBR05: Change from Conservative-Liberal Democrat coalition in 2015 to Conservative administration saw hardening of Eurosceptic attitudes and promise to hold in-or-out referendum GBR06: The Conservative Party after 2010 became more Eurosceptic. The PM increasingly made concessions to Eurosceptic backbenchers

13.5.3 PL3: The role of the opposition party

197 Figure 3: Change in the opposition party inﬂuence

Interview GBR01 GBR02 GBR03 GBR04 GBR05 GBR06 P. Opposition party inﬂuence - - - 0 0 0 .

GBR01: Little interest in campaigning on EU issues, except where could make common cause with Conserva- tive backbenchers to embarrass government GBR02: Little interest in campaigning on EU issues, except where could make common cause with Conserva- tive backbenchers to embarrass government. Labour Party: Ed Balls, a Eurosceptic voice and not in their interest to make life easy for the government in parliament, so took opportunities to embarrass and make life difficult for the government. And on an anti-austerity agenda, whereas govt prudent approach to fiscal policy. Key thing: govt had to be mindful of position that Oppn wd take in parliament GBR03: ”Labour Party and Lib Dems less influential” - Labour Party more concerned to exploit divisions within the governing coalition than to stake out its own position on an issue that was itself divisive within the Party. GBR04: 0 GBR05: 0 GBR06: The Labour Party in opposition after 2010 was somewhat muted on EU-related issues

198 13.6 The dominant views of economic policy

13.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview GBR01 GBR02 GBR03 GBR04 GBR05 GBR06 ID The state should provide signiﬁcant economic governance with state-led 0 0 0 0 0 0 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 0 0 0 0 0 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 0 0 0 0 0 0 .. management.

GBR01: Tight ﬁscal policy, loose monetary policy GBR02: ﬁscal hardliners GBR03: 0 GBR04: 0 GBR05: 0 GBR06: Austerity was the central macroeconomic ambition from 2010, following the change of government

13.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview GBR01 GBR02 GBR03 GBR04 GBR05 GBR06 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 0 0 0 3 ..

ID Growth and low unemployment 1 1 0 0 0 2 ..

ID Price stability 2 2 0 0 0 1 ..

199 GBR01: 0 GBR02: Activist monetary policy. Fiscally conservative, monetary activist. GBR03: 0 GBR04: 0 GBR05: 0 GBR06: No

13.7 The future course of EU integration

13.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the British Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview GBR01 GBR02 GBR03 GBR04 GBR05 GBR06

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

GBR01: UK moved to position where wanted a renegotiation of its relationship, followed by a referendum GBR02: Treaty change: A little bit conﬂicted, if had to get Treaty change through House of Commons, it would be problematic - but like anything that gives us a veto. By 2013, after Bloomberg speech, explicitly wanted treaty change. Much more on-board. In reality, biggest period of EU reform, though happened by accident rather than by deliberately. UK moved to position where wanted a renegotiation of its relationship, followed by a referendum GBR03: 1.Increasing divide between the UK and its EU partners 2. PM Cameron proposed a referendum in attempt to silence Eurosceptics in his party. GBR04: 0 GBR05: UK outside the EU GBR06: Path of renegotiation followed by in/out referendum

200 13.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview GBR01 GBR02 GBR03 GBR04 GBR05 GBR06 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

GBR01: Brown: Intergovernmental Institutions Cameron I and II: Multi-speed Europe with a core and more ﬂexible. integration around it GBR02: Brown: Intergovnermental Institution Cameron: Multi-speed Europe with a core and more ﬂexible Integration around it. GBR03: UK over to a position where it wanted a renegotiation of its relationship, followed by a referendum. GBR04: 0 GBR05: Prior to referendum, concern that non-Eurozone members should not be disadvantaged by decisions taken by members of the Eurozone. GBR06: 2013-2016: Variable geometry, with protections for Eurozone outs.

13.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? GBR01: Sense, esp after George Osborne’s speech, that Euro area needed to do whatever was necessary to shore up the Eurozone. GBR02: Sense, esp after George Osborne’s speech, that Euro area needed to do whatever was necessary to shore up the Eurozone. GBR03: The reverse: the government’s views about the decision that the Eurozone countries needed to take made the government’s EU policy more difficult. GBR04: 0 GBR05:

201 Yes GBR06: Yes

13.8 Negotiation strategy during the Euro crisis

13.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview GBR01 GBR02 GBR03 GBR04 GBR05 GBR06 S T Hard bargaining: tries to extract concessions from the other side, delays or R Rarely Often Very often Very often blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Rarely Very often Very often Often provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Rarely Often Rarely Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

13.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the British delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

GBR01: 0 GBR02: All three as necessary/relevant. Found opportunities to go on the offensive on financial regulation. More strict approach to financial regulation. Stricter here in UK post-crisis. Initial round of steps tests and recapitalisation of banks, much more rigorous than rest of Western Europe and saw benefits of that when Eurozone went into crisis 2011 and 2012. Also wanted correct misperception that City of London successful due to light regulation. We were very critical of Commission’s CRD IV and BIII, and critical of BIII and BIV, where hypocrisy of Commission and French Commissioner when it came to own MS. And we were doing Vickers domestically, so wanted to export. Hawkish on prudential issues: in EU, too soft on prudential issues, and misguided attempts to crack down on markets (com- modity, speculation). In the market for doing deals, horse-trading, etc. and we did a lot of that during that period. GBR03: Initial attempts to limit EU response, then recognition and acceptance that the Eurozone needed to take all necessary measures with insistence on guarantee that non-Eurozone countries would not face discrimination

202 GBR04: 0 GBR05: It became increasingly hardline GBR06: Major change with George Osborne’s adoption of ’remorseless logic’ - that the Eurozone countries should enact whatever measures necessary to ensure the resolution of the crisis and the future stability of the Eurozone

14 Greece

14.1 The list of interviews in Greece

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer HEL01 100 HEL02 75 HEL03 75 HEL04 75 HEL05 75

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

203 14.2 The summary observation on country interviews

The interviews, conducted in 2016, were based on a well-thought out questionnaire, but one has to take into account that a) questions referred to events which took place a long ago, e.g. the ﬁrst Memorandum signed between Greece and its creditors was formulated in 2010; and b) the interview required interviewees to have a good knowledge of legal, economic and political aspects of the issues of support to Greece, the ESM, the FC, etc etc. Not all interviewees had equal economic and legal skills. This was a demanding questionnaire. I am glad that I have succeded in asking all ﬁve Greek interviewees to answer most questions, with a few issues left unattended.

Issues where few actors have been involved (in the case of Greece under the crisis):

The questionnaire assumes that in each Member-State there is a plurality of domestic actors. This is partly true, as we investigate the formation of preferences in contemporary democracies. However, the mix and balance of domestic actors diﬀers a lot by country. In Greece, as it is explained below, many policy issues, particularly when decision-makers are pressed for time, are not debated in length or in a context of large-scale consultation with involved political and social actors.

On the institutional design of Greece under the crisis:

In my case, one has to understand that we talk about a very centralized political - administrative system in which most domestic actors simply react to decisions taken by the Prime Minister and a small circle of government ministers and aides or top advisors who happen to be close to him. In that sense, sometimes my interviewees were wondering why I insisted so much on sorting out and assessing the ?positions? and ’inﬂuence’ of a long series of domestic actors. But I guess that this too is an interesting ﬁnding of our research.

On political and social actors in Greece under the crisis:

Moreover, interviewees claimed that, as Greece was repeatedly at the brink of sovereign default in the period under study in this project, the role (let alone the position and influence) of most domestic political and social actors gradually decreased and became negligible. The reason for this development was that almost all decisions were at the hands of external actors. Decisions concerned the size of funding and conditionalities imposed on Greece. Conditionalities were couched in the form of very concrete policy measures, requiring from Greek state authorities to effect reforms in exchang for tranches of financial aid from the EC, the IMF an the ECB. Greek state authorities, including the Prime Minister’s Office and the Ministry of Finance (let alone other political and social actors), had very little room for manoeuvre. In brief, in this context, it was difficult for interviewees to assign very different values to the positions and influence of domestic political and social actors in the period under study. Assigning for instance the value of 100 to the position of actor X may have meant that actor X coincided with the Greek government’s position which in turn was dictated by Greece?s foreign lenders.

Rationale of interviewee selection:

In Greece during the crisis and even to this day, most policy choices, including decisions on minor management issues, are in the hands of the top-decision makers, such as competent ministers and their immediate entourage of top-advisors. For this reason, I approached and obtained interviews from three top economic policy advisors (HEL 1, 2 and 3), one former Minister of Finance (HEL 5) and one former alternate Minister of Finance (HEL4). The latter two did not serve for a long-time as Ministers, as there was government instability in Greece in 2009-2014 (three national elections, one

204 single party government and two coalition governments in 6 years). Government instability is another reason why assigning numerical values to the position and inﬂuence of political and social actors in the period under study proved to be an uncertain exercise.

14.3 Open answers to questions on 4 contested issues

14.3.1 GRC: Willingness to support Greece in early 2010

HEL01: The Greek government could not resist such a proposal for support, because itself had asked EU and the Eurozone to make the support available, in the first place. In early 2010 the Greek PM and his ministers had just won a landslide electoral victory (October 2009) and were powerful. They took all initiatives on this issue. HEL02: Greece was in the receiving end of policies. Primarily the Ministry of Finance, the Prime Minister’s Office (PMO) and the Bank of Greece had a role in asking for EU support. Parties of the Left wanted no agreement. The Conservatives (New Democracy) were unclear on whether they wanted EU support. Employers were favorable. Trade Unions were against. The (Far Right) LAOS party voted in favour of immediate aid. Many people did not grasp what was the financial package. Among the Eurozone countries, there were strong objections to helping Greece, as loans to Greece were based on inter-governmental agreements. HEL03: Greece was unprepared to discuss this issue, because of its sudden emergence and its very large dimensions, when the crisis struck. In 2010 in Greece no institution could say ”no” to the support towards Greece, because of the fear of bankruptcy (sovereign default). The Memorandum of Understanding (MoU) of 2010 was just announced to the Greek Parliament, as a piece of information, not as a bill to be debated in the plenum of the parliament. There was general embarrassment also in the EU. The EFSF was something unknown to all involved. The ”no bailout” clause was hindering all EU actors. HEL04: The most important person/institution on this and similar issues was the Minister of Finance. Often the Prime Minister depended on on him/her (on the Minister). We in Greece requested the special assistance, mentioned in this question (GRC). We convinced our EU partners to establish a special mechanism for financial assistance. HEL05: Only Slovakia actually was negative towards financial support to Greece. Greece was positive because in April 2010, when Greece applied for immediate assistance, the country was on the brink of sovereign default. Moreover, the incomplete architecture of the Eurozone impeded international actors to con- verge on and accelerate decisions on the economic crisis of Greece. Also an ad hoc group of country leaders within the European Council (Merkel, Sarkozy, Papandreou) pressed for immediate financial assistance to Greece,

205 14.3.2 ESM: The size of the European Stability Mechanism

On 29.10.2010, the European Council agreed on the need to set up a permanent (ﬁscal) crisis mechanism, the ESM, as a cornerstone of the permanent crisis management framework for the Euro area. It was planned to replace the already existing, but temporary European Financial Stability Facility, EFSF. The size of the ESM (its eﬀective lending capacity) was debated with reference to the size of the existing EFSF.

HEL01: Greece want the ESM to be much larger (than 500 billion Euro). It also wanted the ESM to obtain banking licence. Most importantly, it should be noted that when this issue was debated at the EU, Greece was already under Memorandum of Understanding (MoU) constraints.The issue of ESM was not really on the radar inside Greece. HEL02: The larger the amount of money, the stronger the firewall, in order to prevent any countries on the brink of sovereign default to affect the rest of Eurozone. HEL03: In October 2010 it was evident in the EU that, except for Greece, other South European countries could face sovereign default. The Greek government believed in the stability of the Eurozone, of course, accepting conditionality. But in Greece the debate centered on the continuing Greek crisis, not really on ESWM, the ”Golden Rule” or RQMV. HEL04: Greece wanted larger capacity for ESM, because bilateral loans would not be enough to cover the then emerging needs of Ireland, Portugal and possibly other countries. Thus, ESM had to be substantially larger than 500 billion Euro. HEL05: Greece did not give guarantees to EFSF. In that period, EFSF, not ESM, was constructed. The purpose was to construct a firewall, to avert further crisis and to balance market pressures. However, only the ECB was the real firewall.

14.3.3 FCO: The legal form of the debt brake

HEL01: Greece was a policy receiver. It did not really aﬀect EU policy on this issue. Greece, under the Papademos government, transposed this Rule onto its ordinary legislation. The Greek Constitution

206 does not change easily. Greece wanted, though, to ”go with the flow”, because it wanted to show to its EU partners that it now complemented for its earlier relaxed fiscal policy. HEL02: It is technically difficult to amend the Constitution of Greece. In Greece it is necessary to go through a risky process, if one wants to amend the Constitution. On the other hand, Greece could not have rejected this Rule, because Greece was in need. ”National binding provisions” (i.e. ’80’) were not available because there was no a two-thirds majority on this issue in the Greek parliament. HEL03: Fiscal discipline was a reaction to earlier fiscal relaxation, which dated back to the period of each country’s joining the Eurozone. Greece and the rest of EU Member-States, which agreed on the TSCG, were afraid of fiscal instability. So they chose the most convenient way to legislate the TSCG at that time, depending on the country in question. Greece did not want to make a constitutional amendment, to adopt the ”Golden Rule”, because all Greek institutions wanted to preserve some national sovereignty on fiscal policy. HEL04: Greece had constitutional impediments which did not allow it to pass anything more than an ordinary law on TSCG. There were binding constraints. Yet, the relevant law was approved by a vast majority of MPs in the Greek parliament. HEL05: Germany and its satellites -other EU Member States - pressed Greece to take position ”100” on this issue, but Greece was not able to do so, because of the Greek constitution and because such an amendment would provoke a high visibility of this issue.

14.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

HEL01: The interviewee does not remember the position of any Greek actor on this. HEL02: Greece realized that sanctions through RQMV could be huge. This was a difficult topic, as major countries have also been violators. It was unfortunate that earlier on, no sanctions had ever been imposed on Germany and France. The Syriza party rejected the whole SGP, thus did not take any issue with the details of SGP. Greece has only a few think tanks -except for Research Departments of private banks and the central bank (Bank of Greece). HEL03: No answer. The interviewee does not remeber the positions of different institutions on the RQMV issues, but wants to remark the following: on different occasions, Greece and other EU Member-States counted their votes, as participants in prospective alliances among Member-States, in order to use the RQMV. HEL04: The interviewee has no specific knowledge or memory of this issue, HEL05:

207 The purpose of RQMV was to serve Germany and other strong EU Member States to block actions of other Member States which would not be ﬁscally prudent. Greece had very little negotiating power, on this issue; moreover, Greece was preoccupied with its own economic problems. The interviewee cannot answer the rest of this question, he does not recall any positions or details on this issue.

14.4 The stability of government positions and the role of Eurozone non- membership

14.4.1 GV1: The Change of Position and the change of Government

According to your expertise, was there a major change in the position of this country in the reform negotiations on the two-/six-pack/ﬁscal compact and EFSF/ESM, or the banking union? If yes, were these position changes linked to changes of the government?

HEL01: The initial PM was Papandreou, The later PM was Samaras. Greece did not change its position. It was primarily concerned with its own crisis. HEL02: Initial PM was Papandreou. Later PM was Samaras. HEL03: Greece on all these issues ”a vigue a vue”, i.e., it has gone with the ﬂow or with the emerging consensus among the rest of EU Member-States. The initial PM was Papandreou the late PM was Samaras. HEL04: Greece was in favour of all the institutions and changes noted below (under 17.) and was in favour of their strengthening, as milestones towards a closer Union. Inititial PM was Papandreou. Later PM was Samaras. HEL05: The initial PM was Papandreou. Later PM was Samaras.

14.5 The role of parliament: governing and opposition parties

14.5.1 PL1: The role of the National Parliament

Could you tell us whether the national parliament’s (majority party) role in inﬂuencing the national government’s position became stronger, weaker or stayed the same in the EMU reform discussions from 2010 to 2015? Could you explain why?

208 Figure 1: Change in the majority party inﬂuence

Interview HEL01 HEL02 HEL03 HEL04 HEL05 P. The inﬂuence of the majority in parliament - - 0 - + .

HEL01: The parliament, because of the urgency of the Greek crisis in successive time points, was obliged to act quickly. HEL02: Decision-making was transferred to the government and the ”Troika”. The Greek parliament was rubber-stamping the Greek government’s decisions. HEL03: In Greece the parliament is always in a weak position vis-a-vis the government, because the Greek political system is very centripetal, i.e., dependent on the Prime Minister. HEL04: NA HEL05: MPs of Pasok (who formed the parliamentary majority) started defecting, pressed the government, and then government ministers started a ”political massage” of governing party MPs.

14.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview HEL01 HEL02 HEL03 HEL04 HEL05 P. Governing party inﬂuence - - - - - .

209 HEL01: Because of the urgency of the crisis in Greece, the governing party did not really play such a role. MPs. lacked time and expertise to influence the national government in EU affairs. HEL02: For the reasons mentioned in answering the previous question, on the weakened role of the Greek parliament. HEL03: Any political party which found itself in government in Greece became weaker, as party factions within the governing party resisted austerity measures. No party accepted austerity packages. There was no ”domestic ownership” of reforms by the governing parties which ruled in succession in 2010-2014. HEL04: The austerity measures and economic adaptation program weakened the governing parties. There was a large distance between the policy narrative of governing parties and their actual policy choices. The governing party in 2009-2011 (the Pasok party) lost a lot of support, after passing the Memorandum of Understanding (MoU). The New Democracy party also suffered defections among MPs and loss of influence in society, while it was in power in 2011-2014. HEL05: Being little informed about the issues, the governing parties (first Pasok and later New Democracy), while they were in power, could not really obstruct the government.

14.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview HEL01 HEL02 HEL03 HEL04 HEL05 P. Opposition party inﬂuence - 0 - + + .

210 HEL01: The opposition only rejected, did not influence policies. In Greece the opposition in parliament rarely converges with government positions. Anyhow, due to the crisis situation, the opposition became weaker inside the parliament. HEL02: Although exposing the fragility of the Greek government, opposition was irrelevant. Almost always legislation in Greece was shaped and passed by the government only. HEL03: Despite the fact that opposition parties, e.g., Syriza, became stronger in numbers (electoral influence), in practice they never gained policy-making strength. The opposition was only interested in rejecting government policy, not in influencing it. HEL04: The government realized that political and social consent, also by the opposition, was necessary for the implementation of Greece’s Economic Adjustment Programs. HEL05: Voicing populist opinion, the opposition parties gained strength in 2010-2014.

14.6 The dominant views of economic policy

14.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview HEL01 HEL02 HEL03 HEL04 HEL05 ID The state should provide signiﬁcant economic governance with state-led 3 3 1 2 2 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 2 2 3 3 3 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 1 1 2 1 1 .. management.

HEL01: NA HEL02: ”Etatisme” is dominant, still, in Greece. But public opinion may be changing. HEL03: NA HEL04: NA HEL05:

211 NA

14.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview HEL01 HEL02 HEL03 HEL04 HEL05 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 2 1 2 2 ..

ID Growth and low unemployment 1 1 1 1 ..

ID Price stability 3 3 3 3 ..

HEL01: NA HEL02: (the interviewee ranked the ﬁrst two as most important) HEL03: No answer for the following reason: in Greece we could not rank and still cannot rank these 3 monetary policy goals, because it has signed very detailed Memoranda of Understanding (MoUs) on monetary and other economic issues. Greece is bound by MoU policy goals. It does not have its own monetary policy goals. HEL04: NA HEL05: NA

14.7 The future course of EU integration

14.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Greek Government for reforming the EU? Multiple options are possible. Figure 6: Next integration steps

Interview HEL01 HEL02 HEL03 HEL04 HEL05

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

HEL01: It is too diﬃcult to relaunch Treaty change or create new institutions for multi-speed Europe.

212 HEL02: Radical treaty change is required, but we cannot adopt it, because of adverse political climate in the EU. The Treaty should be radically changed in the long term (not now). The Treaty should move the EU towards a common budget and a common state entity. HEL03: Greece used to understand European integration through the ”milking cow syndrome”. Another dominant theme in Greece was economic convergence with the rest of EU Member-States, regardless of whether structural changes in the Greek economy have been eﬀected; rather, economic convergence in Greece was understood in terms of convergence of incomes of Greeks with Europeans. Greece has been in favour of relaunching the Treaty, in order to achieve such convergence. HEL04: Within the current Treaty, most problems cannot be managed. Relaunch of Treaty, however, today is wishful thinking. Indeed, there is no support today for relaunching the Treaty. HEL05: However, Treaty change is not possible now and it is a risky option, although it would lead to better economic governance of the EU.

14.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview HEL01 HEL02 HEL03 HEL04 HEL05 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

HEL01: Traditionally Greece has been in favour of Federal Union, because of the country’s hope for solidarity among EU Member-States. HEL02: NA HEL03: NA HEL04: NA HEL05: NA

213 14.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? HEL01: No. Greece was under the constraints of the MoU. The national government’s position was influenced by the MoU, not by the said vision. HEL02: Prime Minister Papandreou was by instinct a federalist. Samaras was not instinctively a federalist but rather realistically was in favour of Federal Union. HEL03: Greece feared that in all other options, except for Federal Union, Germany and the countries which side with Germany, would be able to marginalise all other countries of the EU. HEL04: On all issues discussed above (in this questionnaire), supporting the Federal Union, contributed to Greece’s position on ESM and fiscal compact. Greece was in favour of completing EU’s institutional framework. This position was held by all Greek PMs in 2010-2014,

14.8 Negotiation strategy during the Euro crisis

14.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview HEL01 HEL02 HEL03 HEL04 HEL05 S T Hard bargaining: tries to extract concessions from the other side, delays or R Rarely Very often Often Never Very often blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Very rarely Never Very rarely Often Rarely provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Very often Very often Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

14.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Greek delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

HEL05: The Eurozone today is not stable; a Federal Union would enhance its stability. HEL01:

214 Greece did not really have a structured negotiation strategy. It faced objective constraints, because of its crisis, which aﬀected negatively its negotiating capacity. HEL02: The Greek delegation’s strategy did not change, except for a brief time when in 2011 Papandreou suddenly tried to launch a referendum. HEL03: There was no change in Greece’s negotiating strategy over time. HEL04: The same strategy was followed by successive Greek governments in 2010-2014. HEL05: After 2012 Greece’s negotiation strategy moved towards making concessions, in order to extract concessions from opposing sides, in various EU organs.

15 Croatia

15.1 The list of interviews in Croatia

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer CRO01 100 CRO02 100 CRO03 50 CRO04 100 CRO05 100 CRO06 100 CRO07 100

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

215 15.2 The summary observation on country interviews

Croatia is a non-Euro Area country and until July 2013 was not an EU member state. Consequently, answers to the four issues are to some extent hypothetical as Croatia was not involved as other EU/EA members.

The formation of the EU policy positions is centralized, with the PM and Ministry of Finance/EU aﬀairs as dominant actors. Parliamentary oversight is limited and in practical terms decreased since the powerful bipartisan committee overseeing enlargement negotiations was dismissed. Other stakeholders are not particularly involved and Croatia thus resembles other new member states.

However, Croatian economy is highly Euroized and maintaining stable exchange rate is a major policy goal. It also makes policy-makers more attentive to Eurozone development and potentially more open to cooperation in Eurozone matters (Croatia is considering close cooperation agreement with ECB to join banking union).

The EU accession of Croatia occurred in a very diﬃcult macroeconomic situation. The public debt rose from 28 percent of GDP in 2008 to 87 percent and GDP contracted in real terms by 7.4 percent in 2009 alone and continued to contract each year until 2015. In this context, the political situation in Croatia underwent a notable change. Traditional power relations in the Croatian Parliament were a balance between blocks dominated by the centre-right HDZ party and the centre-left SDP party, both of which view European integrations positively. However, in the November 2015 elections, openly euro-sceptical parties strengthened in the parliament and could challenge the traditional unquestioning acceptance of reforms from the EU level.

The seven interviews covered the former ministers, high-ranking public servants, central banker, independent researcher and respected journalist.

15.3 Open answers to questions on 4 contested issues

15.3.1 GRC: Willingness to support Greece in early 2010

CRO01: This question is not applicable to Croatia as it acceded to the EU in July 2013 and is not a Eurozone member. Also, no comparable situation can be discussed in lieu of the Greece support. In the years preceding the accession, Croatia was focused on ”hoop jumping” and satisfying the various criteria necessary to prepare Croatia for EU membership. While it could be said that Croatia was willing to cooperate with those countries which favored cohesion as a policy goal, and therefore was well disposed towards ideas of burden sharing, the Croatian accession also coincided with a change of atmosphere within the EU itself directed at a widespread shift toward favoring greater sovereignty of countries.

216 CRO02: Croatia joined the EU in 2013 and Eurozone membership is still in the future. In this sense, the question on the debate on Greek debt is not applicable to Croatia. CRO03: Croatia joined the EU in 2013. Therefore, the question is not applicable to Croatia. However, unofficial and hypothetical panels have been held and televised. A general atmosphere of resentment towards being forced to assist a country in such a position could be felt. Contrary to this, the position of the Prime Minister Milanovi (since late 2011) would have been in favor of helping. CRO04: While it is pointless to allot specific positions and influences (as Croatia is a member of EU since 2013), unofficial discussions were held and the general atmosphere was one of wondering why Croatia would not be the beneficiary of such a situation, rather than a country which is expected to fund more developed, but also more irresponsible economic systems. If pressed and in the position to do so, Croatia at the time would have probably taken a position between the ”Slovenian” (more solidarity oriented) and ”Slovakian” (more oriented towards individual MS responsibility) positions. CRO05: As Croatia entered the EU in 2013, the question on the debate on Greek debt is not applicable to Croatia. I am also unaware of an alogous instance in which Croatia would have provided funds for a loan to some other country. As far as the general atmosphere in Croatia is concerned, one could sense high levels of sympathies for Greece in unofficial discussions (possibly a general 80-85 position with respect to the question). However, if this question was actualized, one could expect lower levels of actual support for ad hoc bail out support. CRO06: This scenario is purely hypothetical for Croatia due to a later entry. Categorically speaking, Croatia would always be prepared to offer help to another EU state if prompted. This attitude would un- doubtedly be influenced by two circumstances. Firstly, there is an understanding that each member is responsible for union stability and secondly, our relatively small size and therefore relatively small contribution that would be required of us. On the other hand, Croatia would probably not be as involved in such a scerio to begin with, because it is not a Eurozone member, and the principal question was, of course, the stability of the EZ. CRO07: The question is not applicable to Croatia in this form. Hypothetically, if Bosnia and Herzegovina ever became a member of EU, and such help was required, this would be acceptable in Croatia. Otherwise, the public opinion in Croatia would probably not be directed towards solidarity.

15.3.2 ESM: The size of the European Stability Mechanism

CRO01: At the time, Croatia was negotiating for EU entry and viewed deeper integration initiatives as a positive objective. However, as it was not a member, it did not take part in the debate and only general

217 attitudes and influences on the Croatian political scene may be discussed. CRO02: Croatia joined the EU in 2013 and is still not a Eurozone member. The debate on the size of ESM was not something that would have directly resoted with the Croatian political scene. However, speaking on deeper fiscal integration in general, there was a widespread understanding that all types of integration will naturally follow the Croatian accession with strong voices such as the Croatian central bank (HNB) strongly promoting the Euro and an understanding that fiscal aspects are a necessary issue in this context. Experts were perhaps able to follow the debates that were still merely of technical interest to Croatia. The administration was also becoming gradually aware of the responsibilities Croatia would take on after joining in the context of the European semester. CRO03: Croatia joined the EU in 2013 and is still not a Eurozone member, so this question cannot be applied directly. However, we can discuss the positions and influences regarding lasting fiscal integration with other EU states at the relevant time, i.e. the Milanovi government (late 2011-early 2016) which is also the period in which Croatia became the member of EU. In this sense position of 100 is deeper fiscal integration. CRO04: The particular issue is not pertinent to Croatia as Croatia joined the EU in 2013 and is still not a Eurozone member. However, speaking in general about lasting fiscal integration with other EU states, the general mood in Croatia tends toward smaller degrees of integration as it is understood that the flow of resources is generally directed towards the more developed member states. CRO05: For reasons of a later entry in the union, this question is not applicable to Croatia and I am not aware of such a discussion in Croatia on any level. However, I can help plot the influences and positions during the Milanovi government pertaining to lasting fiscal integration with other EU states in general. CRO06: This particular discussion was something that predated the Croatian accession, and also a subject which would hold only a superficial interest to us. We can, however, discuss hypothetical positions towards lasting fiscal integration with other EU states, and attach relative political influence of relevant actors in Croatia with respect to generating a policy towards greater integration during the Milanovi government (2011-2016). The Ministry of finance would always be involved in such decisions and the prime minister Milanovi in particular was problematic and skeptical towards deeper integration due to political/populist reasons. CRO07: Again, the question is not applicable to Croatia in its present form, but we can complete the chart of influences and positions with respect towards lasting fiscal integration with other EU states (with 100 being a preference towards greater lasting fiscal integration) - with respect to the relevant Milanovi government.

15.3.3 FCO: The legal form of the debt brake

218 the negotiating position of the government, and what positions did they advocate?

CRO01: While the debate in Croatia (at the time not an EU member) was not as articulate, it did favor a softer approach to legislation. The political scene today would also find more active and generally anti-European political groups. A particular concern today would be directed at an intepretation that a harder approach to fiscal integration might represent an external pressure based in an approach within economic theory not well suited to specific conditions in Croatia. CRO02: By virtue of its date of accession, Croatia evaded this debate and the question is not really applicable. However, in addition to the open comments to the previous questions, it should be noted that there were voices not in favor of specific fiscal and economic governce restrictions even though there was a strong support for integration in general among the stronger political forces. CRO03: Croatia acceded to the EU after this debate, and we can only discuss general positions towards greater fiscal integration- these were already given for the last question. CRO04: Even though this was not the same issue as for older members of the EU, the debate on fiscal constraints did resonate in Croatia particularly in 2014, and there were voices arguing for a constitutional level of provisions, in particular articulated by Martina Dali (2010-11 Minister of Fince and Minister of Economy since October 2016). CRO05: In general, the general position towards fiscal responsibility provisions in Croatia tends towards the ordiry legislation. This is why 60 is the position for most of the relevant actors and the influence on policy articulation is mostly the same as in the past question. CRO06: In this respect, pressures toward greater fiscal responsibility were accepted by Croatia, as it was understood that closing the deficit is necessary and the pressure external to Croatia made it easier for the executive branch to push for this policy. The scores of 80 in the table below suggest the position towards more defined rules, rather then the specific level of provisions (although this is the closest to our political space). And of course this debate was also something preceding our EU entry. Croatia would be focused on accepting whichever level of commitment was decided on the EU level and this is reflected by the maximum and consistent domestic score of 80. The influence and positions still reflect the period of the Milanovi government. CRO07: Croatia entered the EU after this particular debate has run its course. Fiscal responsibility in Croatia in general is covered by ordinary legislation. We can therefore fill the chart with general influences (again, pertaining to the Milanovi government), but not necessarily positions.

15.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

219 CRO01: Again, Croatia only acceded to EU in 2013. However, a softer approach to integration is necessary if the EU in general is to survive. This is a problematic time in which widespread fears of an imposing and bureaucratic Brussels engender euroskepticism. This necesitates a softer approach to institutional integration focusing on subjects like science and education. CRO02: As for the previous three issues, the question is not directly applicable to Croatia. In addition to previous comments it should be stressed once more that the general atmosphere was in favor of European integrations and that there was an understanding that reform was not bad. However, specific issues (like RQMV) did engender hesitation. CRO03: NA CRO04: If such a debate were held during the Milanovi government (2011-16), SDP (position) would probably oppose the introduction of the RQMV, while HDZ (opposition) would be interested in the more euro- integrative option. CRO05: Again, this is in response to positions that might have been taken in the Croatian political space if confronted with such a dilemma. CRO06: The Milanovi government was symbolically in favor of reforms ebling a more fluid process, but the sanctions were not implemented as enthusiastically in practice with the government acting as the blocker. These influences reflect the outlook on the ability to generate sanctions. CRO07: Croatia would probably support the RQMV, but such a debate is very difficult to reconstruct hypothetically.

15.4 The stability of government positions and the role of Eurozone non- membership

15.4.1 GV1: The Change of Position and the change of Government

CRO01: The Milanovi government was in place late 2011 - early 2016., and Croatia joined the EU in 2013. In this context, no signiﬁcant changes can be discussed. CRO02: Again, the timing of these issues prevents direct application to Croatia, as the priority was accession along with all that is necessary. However, greater caution in general could be detected with the Mi- lanovi government than with his successors. CRO03: The Milanovi government is the only one which one can discuss in this context. The subsequent Orekovi government was too short-lived and unstable to form a distinct position. In general, Milanovi was in favor of integration (although most of these issues do not apply to Croatia) , but in the context of preparations for the upcoming elections in 2015, he took a more populist line accentuating sovereignty with respect to the right to intervene in the banking sector. CRO04:

220 Such debates are not applicable to Croatia, but a general approach from a more skeptical Milanovi to a more euro-optimistic Orekovi can be observed. CRO05: Even though Milanovi was in charge during the entry into the EU, he was somewhat cautious towards deeper integration. The Orekovi government was short lasting and unstable and did not truly take any ﬁrm positions. CRO06: Any position on such reforms was in general positive in both cases and depended heavily on the opinion of the Ministry of Fince. In this sense there were no changes. CRO07: In general, the positions show acceptance of whatever reforms are agreed upon in the EU, and this outlook does not change with the change of governments.

15.4.2 GV2: The Impact of the Eurozone non-membership

Interview CRO01 CRO02 CRO03 CRO04 CRO05 CRO06 CRO07 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

CRO01: NA CRO02: NA CRO03: Yes, everything we have discussed has been largely influenced by this context. Croatia is mostly not involved in these issues and can focus only on achieving the conditions of Euro-zone membership. CRO04: Of course, and even more so the fact that Croatia was not even an EU member until 2013. Also, while there is an interest in adopting the Euro there is little chance for an adoption soon. CRO05: Yes, absolutely. The general position of the government was a support for reforms in general without undertaking concrete initiatives. CRO06: Certainly, non-members always have specific demands and Croatia would have certainly supported them. CRO07: Yes and no. Firstly, the Euro as a currency dictates different monetary responses to crises - this also suggests different preferences of reforms that might be undertaken. However, Croatia was very focused on acceding to the EU, and this would take precedent over any tiol preferences that would stem from Eurozone non-membership.

221 15.5 The role of parliament: governing and opposition parties

15.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview CRO01 CRO02 CRO03 CRO04 CRO05 CRO06 CRO07 P. The inﬂuence of the majority in parliament 0 0 0 0 + - 0 .

CRO01: In the context of pre-accession negotiations, the parliament retained a certain amount of power via the tiol committee which had veto power in the context of negotiations. CRO02: NA CRO03: NA CRO04: It has decreased with a relatively powerful tiol Committee being dissolved in 2011, but increased by the constitution of a new European Aﬀairs Committee. So, over all, the role of Sabor (the parliament) stayed the same. CRO05: Taking a somewhat longer perspective, the political constellation in Croatia changed and the very recent Plenkovi government has taken a more transparent position towards the Parliament, deciding to inform it formally after each Council meeting - itself increasing the role of the parliament. CRO06: During the Milanovi government, the parliamentary role decreased due to a poor relationship with the prime minister, who tended to neglect transparency towards the parliament. CRO07:

222 NA

15.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview CRO01 CRO02 CRO03 CRO04 CRO05 CRO06 CRO07 P. Governing party inﬂuence 0 na 0 0 0 - + .

CRO01: NA CRO02: NA CRO03: NA CRO04: NA CRO05: NA CRO06: Needing to protect the government, SDP essentially lost strength. CRO07: Due to the need to prepare for the elections (2015), Milanovi did his best to become more active during the last two years of his mandate. This reﬂected on the position of SDP (his party) in the parliament.

15.5.3 PL3: The role of the opposition party

223 Figure 3: Change in the opposition party inﬂuence

Interview CRO01 CRO02 CRO03 CRO04 CRO05 CRO06 CRO07 P. Opposition party inﬂuence 0 na 0 - 0 + + .

CRO01: NA CRO02: NA CRO03: NA CRO04: The tiol Committee was always chaired by the member of the opposition and its dissolution in 2011 meant a decrease in the role the opposition party in any constellation. CRO05: NA CRO06: Due to SDP losing strength, HDZ was logically gaining it. CRO07: NA

15.6 The dominant views of economic policy

15.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three

224 macroeconomic and ﬁscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview CRO01 CRO02 CRO03 CRO04 CRO05 CRO06 CRO07 ID The state should provide signiﬁcant economic governance with state-led 1 3 2 1 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 3 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 3 2 3 2 2 2 .. management.

CRO01: NA CRO02: NA CRO03: NA CRO04: NA CRO05: NA CRO06: This would be the ranking of proclaimed goals, but these policies were very ineﬃcient. CRO07: NA

15.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview CRO01 CRO02 CRO03 CRO04 CRO05 CRO06 CRO07 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 1 1 3 3 3 2 3 ..

ID Growth and low unemployment 2 1 2 2 3 2 ..

ID Price stability 3 2 1 1 1 1 ..

CRO01: In Croatia, the exchange rate is considered to be important, which is why it is ranked n.1. However, the Central bank does not devalue the currency, but targets a speciﬁc exchange rate to Euro considered by many to be overvalued. CRO02: It should be understood that the monetary policy in Croatia is directed primarily towards a ﬁxed

225 (possibly overvalued) exchange rate to the Euro (rather than a competitive one). Exchange rate is at the forefront nevertheless. CRO03: The competitive exchange rate is ranked last because the central bank keeps a very stable and possibly quite overvalued exchange rate to the Euro as a priority. CRO04: The central bank is very interested in keeping a stable rather than competitive exchange rate CRO05: Competitive exchange rate is ranked last as the central bank keeps a stable exchange rate. CRO06: NA CRO07: The only real goal is price stability and this is connected to the need of keeping the exchange rate to the Euro stable.

15.7 The future course of EU integration

15.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Coratian Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview CRO01 CRO02 CRO03 CRO04 CRO05 CRO06 CRO07

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

CRO01: A multi-speed Europe must be avoided in order to preserve the EU. CRO02: NA CRO03: This is the next integration step favored by the interviewee, as a confederate model with a one-country- one vote principle of decision making as the preferred result. CRO04: While this is not a good situation for the EU, even the simultaneous existence of the Eurozone and the EU is a tacit acknowledgement of a multi-speed Europe. Even a euro-optimistic outlook should be directed at the least worst scerio - which is a functiol institutiol solution to the multi-speed challenge. CRO05: NA CRO06: EU must primarily ﬁnd a way to continue to exist by attracting new members, promoting stability and preventing exit of current members. CRO07: There are important regiol speciﬁcities and preferences and a functiol multi-speed Europe would make

226 these easier to recognize and easier to hear on the European level.

15.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview CRO01 CRO02 CRO03 CRO04 CRO05 CRO06 CRO07 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

CRO01: Further integration of the EU will have to focus on softer integration areas in order to prevent anti– European sentiments which are proving to be an important issue across the EU. CRO02: NA CRO03: NA CRO04: Persolly, the interviewee would prefer a Federal Union, but Croatia will not be instigating any particular redesigns, being content to accept whatever version of Europe manifests in the end. CRO05: NA CRO06: NA CRO07: Croatia in general accepts reforms and is not likely to try to instigate them.

15.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? CRO01: NA CRO02: NA CRO03: NA CRO04: NA

227 CRO05: Milanovi in particular was very clear on the need for each government to be heard, CRO06: NA CRO07: NA

15.8 Negotiation strategy during the Euro crisis

15.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview CRO01 CRO02 CRO03 CRO04 CRO05 CRO06 CRO07 S T Hard bargaining: tries to extract concessions from the other side, delays or R Very rarely Rarely Rarely Very rarely Never blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Very rarely Never Very rarely Very rarely Never provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Often Often Very often Very often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

15.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Croatian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

228 CRO05: There is not enough information to gauge this as Croatia has not been a member for long. CRO06: No, it remained stable. CRO07: It never changed.

16 Hungary

16.1 The list of interviews in Hungary

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer BUD03 75 BUD11 75 BUD12 100 BUD18 75

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

229 16.2 The summary observation on country interviews

Hungary is a non-Euro Area country, where the EA reform proposals were not discussed with the same attention as in the Eurozone. Nevertheless, the Hungarian government always had a strong interest in the stability of the Eurozone which was expressed on multiple occasions by government officials. Still, some of the answers provided by the interviewees lack position and/or influence scores. More attention was paid to EMU reforms during the Hungarian presidency (1H 2011), and Hungary was an active mediator in the passing of the Six Pack. However, beyond this, most of the time Hungarian officials only followed Eurozone reforms to make sure that they do not undermine the integrity of the single market and do not pose major obstacles for the future entry to common currency zone.

Overall, the formation of the EU policy positions seems strongly centralized, with the PM’s Oﬃce and Ministry of Finance as dominant actors. Other stakeholders are not particularly involved, even the Central Bank is mostly sidelined in the preference formation process. The parliament is eﬀectively under the control of the government party Fidesz which minimized any attempt of the legislation to control EU policy positions. All EU-related issues are in the hands of 2-3 policy advisors who form part of the PM?s closest circles.

As far as the interviewees were concerned, given their non-governmental positions at the time of the interview, they were rather outspoken about their past experiences within government.

16.3 Open answers to questions on 4 contested issues

16.3.1 GRC: Willingness to support Greece in early 2010

BUD03: It wasn’t really an issue for Hungary, and I believe we did not really articulate a strong, or any position, for that matter. The idea was, we did not participate in the bailout, so it was really not our business. On the other hand, we were always interested in the stability of the euro area, acknowledging that the Hungarian economy was also dependent on what was happening within the euro area. As for the decision-making, Hungary is a simple case, everything got decided at the highest political level by the prime minister. BUD11: We were not active in this question. I think none of us actually raised a voice in relation to this. There was an internally accepted position that the euro area needed saving, but we saw that the euro area were actually ﬁghting for themselves when they wanted to save GRE. During those times, exceptional ECOFIN meetings played an important role, but we did not really have to actively voice our position. We did not have internal domestic analysis on GRE, we accepted whatever came from the Commission at face value. We believed they were valid data, supported by facts. It was really the EWG that settled the positions of MS, there was no real debrief on who opposed it. Domestically, there were a handful of actors from the Finance Ministry, the Prime Minister’s Oﬃce and the Foreign

230 Ministry. BUD12: HU was supportive of the bailout. It did not consider HU taxpayer’s money, but there was a fear of contagion nevertheless. HU was not really an ’insider’ in this issue. It was mainly the EWG and the Eurogroup that ’pre-cooked’ decisions. Unfortunately, I came to the Finance Ministry after the decision, so I do not know who the most influential actors were in the domestic arena. BUD18: I do not think that we had a strong position on this issue. On the other hand, in general, decision- making is concentrated around the EFC mostly. Here, the Finance Ministry generally takes the lead, even though the National Bank might be present, its role is rather to give advice to the ministry. Also, one has to note that it was about taking up a fiscal responsibility within which the Central Bank did not really have to play a role. In the case of HU, it was also the PM who could not be excluded from any decisions. It could be said, that in general the PM always had a strategy and under him, there were technocratic ideas as well which had some professional legitimacy and therefore some influence on the PM.

16.3.2 ESM: The size of the European Stability Mechanism

BUD03: The non-position of the government was rather deliberate. The general idea was that Hungary was not affected by the ESM, the country would not be saved by the mechanism. Therefore, the situation was analogous with the previous (GRC) issue. It was considered to be not Hungary’s business by the decision-makers. Given the ”deliberate” non-position, the actual influence is hard to assess. BUD11: Internally many talked about the fact that the 500 bn cap was too small, but it was enough to calm the markets temporarily. On the other hand, it was not publicly voiced. Otherwise, there was no strong Hungarian position on this either. In general, the same actors were the most prominent as in the previous one. BUD12: We were not formally part of it but were allowed in to the negotiations as observers, simply to let us know what was taking place. We did not have a strong position but we were sympathetic to the idea of a stability fund. We discussed it at the technocratic level and we agreed that the measure should be considered credible by the markets so it should have enough ’fire power’. We have to reach a critical level which would calm markets. That was more of a common sensical position. We were more of ’outsider supporters’ (rather 90 as opposed to 100 as a position). As for the actors, the Finance Ministry was the owner of the issue, and the ECOFIN through COREPER. When things surpassed ECOFIN, they went to the European Council with the coordination of the Foreign Ministry. The Finance Ministry was rather the deliverer of technocratic information. Positions were probably 90 percent influenced by the Finance Mininstry. The Prime Minister’s Office generally accepted this position and only made an intervention when politically sensitive issues were on the table. At the

231 European level, the EFC was the most important technocratic forum where all the background information could be accessed and position were highly inﬂuenced by these. BUD18: I do not recall whether HUH had any position on this matter, probably not.

16.3.3 FCO: The legal form of the debt brake

BUD03: It was really not influenced by the European developments. The balanced budget rule ran in a different dimension in Hungary: it was rather a coincidence with the European developments. The government tried to ease the budgetary rules, and once it realized it could not be done, its major policy goal was to set a balanced budget objective which would allow the country more room for maneuver. It was a decision at the highest political level with very little influence from other actors. BUD11: What I can remember is that at the highest political level it was always emphasized, but once again, there was no strong position. Also, it was negotiated in a fast manner. Also, actors were the same once again. BUD12: I was not around during the TSCG so I could not comment on this. BUD18: There was an expectation from the troika that there should be institutional guarantees to fiscal discipline in the euro area and in the EU in general. Now, there are rules, but there isn’t a really strong commitment to these rules. The PM was the key actor in this, he did not want to be in a ’dependent’ position: he thought that imposing fiscal discipline on ourselves would get Brussels off our backs. The National Bank had some critique on substance which was not really taken into consideration. We wanted a more sophisticated wording of the constitutional reform on fiscal discipline. During that time, Finance Ministry officials were grateful for the National Bank’s involvement in this matter. We also shared the view with the Budgetary Council.

16.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

232 the negotiating position of the government, and what positions did they advocate?

BUD03: Here, the non-position was really deliberate on the side of the government. This was due to the fact that Hungary had the Council presidency at that time, and therefore our role was rather that of a mediator. The main objective was to have a deal at the end of the presidency (i.e. the Six Pack) and the country’s position was of second importance. In fact, the government would not support anything that would increase the role and competence of the Commission, yet it was not articulated by the government due to the presidency. BUD11: It was under the HUN Presidency. The PM’s position was that the government would enhance its tax income on multinationals so the RQMV would not really matter for us as we would be out of the EDP. There was a strong technical approach to the matter, and generally we supported the measure but beyond the Minister of Foreign Affairs did not believe that it could be used against HUN as well. Here, the emphasis of the roles was a bit different: 60 percent for the Finance Ministry, and 20-20 percent for the PM’s Office and the Foreign Ministry. BUD12: We thought that the original system was rather imbalanced it favoured big MS who could organize a coalition around their positions. We supported the measure, and we thought that it would not harm us, but it would still disturb us if the status quo wasn’t changed and big MS could still undermine the system. Foreign Ministry and the PMO was not that active once again. I don’t think that the Prime Minister really had a clear position on this. BUD18: Once again, I do not recall any firm position on this coming from the government which was probably due to the fact that we had the Presidency at the time and we did not want to take a position.

16.4 The stability of government positions and the role of Eurozone non- membership

16.4.1 GV1: The Change of Position and the change of Government

BUD03: There wasn’t really a change of government during the period. Orban’s centre-right government practically dominated this time, so there wasn’t really a change of the country’s position due to a change of government. BUD11: There was no real change given the fact that the Fidesz-led government did not change. The only thing that really changed was the Central Bank’s role: after Matolcsy had become governor, the Central Bank became more supportive of the economic policies of the government. BUD12: I did not really sense any major change which was probably inﬂuenced by the fact that there was eﬀectively one government. BUD18: There wasn’t really a change given the fact that it was the era of the Orban government. On the other hand, in the early stages of the banking union we were seriously considering of joining. When I was an EFC member, we also proposed a change on the margin or collateral policy of the ECB.

233 It was interesting as they did not accept government bonds from outside the euro area, but on the other hand the Commission evaluated some of these economies positively. The problem was that our suggestion with regards to banking union was perceived as a proposal coming from a country that was facing serious trouble.

16.4.2 GV2: The Impact of the Eurozone non-membership

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU?

Figure A: The Impact of the Eurozone non-membership

Interview BUD03 BUD11 BUD12 BUD18 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

BUD03: It had a huge impact: for once, our potential to actually influence decisions was rather weak, so alternatively our major goal was to have the euro area member states let us to the bargaining table. But it was a rather peculiar setup: we were trying to play poker without chips and any risks. Our second objective was to not let the euro area come up with a situation that would negatively impact on the internal market. Still, we wanted to ensure that at a later point when we might join the common currency, our situation should not deteriorate, the requirements should not change negatively for us. BUD11: It mattered a lot, simply from the fact that not being part of the euro area, it did not really concern us. Even accession was considered to be distant, and there was no attempt either. Our position was that the euro area knows best what it needs to recover so they should deal with it. The only thing that mattered was that there should be no extra requirements for the euro accession (e.g. we qualify, but then due to new banking union rules we cannot join the common currency). BUD12: The Prime Minister’s position was a rather political understanding: it is the problem of the euro area, it is their responsibility, but we strongly believe that they should put their household in order. Our position was not as strong as POL. We did not actively lobby for more participation of non-euro area MS. But generally it was ’odd’ when CEE countries tried to play a similar role as for instance Anders Borg. BUD18: Our approach as non-members were partly compromised by the fact that we held the presidency during the crisis. But in general, it should concern us, but it doesn’t as the government does not seriously consider joining the euro area. Formally we are aiming for accession, but substantively we aren’t. It is considered to be not our problem. The National Bank was even dealing with the long-term institutional preparation to the euro accession. Unfortunately, the general attitude is rather negative towards the euro area. I did not see any strong effort either on the side of the government to make sure that our future accession should not be made more difficult.

234 16.5 The role of parliament: governing and opposition parties

16.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview BUD03 BUD11 BUD12 BUD18 P. The inﬂuence of the majority in parliament 0 0 0 0 .

BUD03: The parliament did not really play any role in EMU reforms, so the question is a bit odd within the Hungarian context. BUD11: There was not much attention paid to the issue by the parliament and the EU aﬀairs committee. BUD12: Parliament had a subordinate role. BUD18: NA

16.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

235 Figure 2: Change in the governing party inﬂuence

Interview BUD03 BUD11 BUD12 BUD18 P. Governing party inﬂuence na 0 0 0 .

BUD03: NA BUD11: There wasn’t anybody really in the national parliament that showed too much interest, but in the EP there were a few who constantly informed governing party MPs as well. BUD12: There was only a few MPs who served also as MEPs, they had a better view of the topics. There were only a few who had links to Brussels, but in general, MPs were not really active. BUD18: NA

16.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview BUD03 BUD11 BUD12 BUD18 P. Opposition party inﬂuence - 0 0 0 .

BUD03: Beyond the fact that Parliament did not play an important role, the opposition got weaker out of

236 political reality: the governing party FIDESZ had a two-third majority in parliament, so the low level of representation negatively impacted on the opposition party’s role in general. Additionally, consultations with the opposition party was rather just a show-oﬀ. BUD11: They only raised their voice when it had some domestic political value. BUD12: Most of these issues did not have much domestic political added-value, so there wasn’t much attention paid by them. There was no political capital in this for them. BUD18: NA

16.6 The dominant views of economic policy

16.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview BUD03 BUD11 BUD12 BUD18

ID The state should provide signiﬁcant economic governance with state-led 2 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 3 2 .. management.

BUD03: NA BUD11: NA BUD12: I think all of them were important, but balanced budgets were a priority from spring 2011. The Prime Minister thought that if we put out budget in order, the Commission would leave HUN alone on many other issues such as media law, constitutional change, etc. Once again, tools shifted towards less market-friendly measures. Also nationalization was becoming dominant. BUD18: There was a strong push to balance the budget, the question was who should pay for this. The burden of consolidation was placed on foreign capital (IT, banking and multinational sectors). Now it is more about state-led industrial policies, about nationalization.

237 16.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview BUD03 BUD11 BUD12 BUD18 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 2 ..

ID Growth and low unemployment 3 ..

ID Price stability 1 1 ..

BUD03: I believe there is a hidden monetary policy goal in Hungary which is a competitive exchange rate. BUD11: The change of the governor changed preference from price stability to growth and low unemployment. BUD12: From 2008 price stability was also coupled with financial stability. Under Simor’s Central Bank, price stability was the most relevant. Now, growth and low unemployment are also strong targets. But officially it is communicated in a way that it does not endanger price stability. I would say that there was a change in tools, we returned to the first half of the 1990s where it is less normative and market friendly and rather more complex and one which intrudes into market mechanisms at different points. There is also a lot of moral pressure used now. BUD18: Before 2008 it was strictly price stability. The early stages of the crisis had an impact: the Central Bank understood that price stability was not enough, it was understood that long-term financial stability should be taken care of. Then around 2012 when new members of the governing board were appointed, they started to shift monetary policy towards supporting growth.

16.7 The future course of EU integration

16.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Hungarian Government for reforming the EU? Multiple options are possible.

238 Figure 6: Next integration steps

Interview BUD03 BUD11 BUD12 BUD18

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

BUD03: With time, the Orban government’s main objective became to change the institutional balance towards intergovernmental institutions: more power to the Council, less power to the Commission and the EP. BUD11: NA BUD12: NA BUD18: the existing institutional and procedural framework should be amended, should be made better; there should be more exchange of best practices, and the Commission sometimes acts with too much arro- gance which is counter-productive

16.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview BUD03 BUD11 BUD12 BUD18 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

BUD03: The vision of the government is rather blurry, it is as if it was sitting on the fence waiting to see in which direction the mainstream ideas would further develop. BUD11: The main idea is to support more Council and less Commission. BUD12: NA

239 BUD18: the government wants to decrease the role of the Commission.

16.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? BUD03: Not really, as argued before, Hungary did not really have positions on most of the EMU reform issues. BUD11: NA BUD12: NA BUD18: NA

16.8 Negotiation strategy during the Euro crisis

16.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview BUD03 BUD11 BUD12 BUD18 S T Hard bargaining: tries to extract concessions from the other side, delays or R Never Never Rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Very rarely Often Rarely provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Rarely Very rarely Rarely propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

16.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Austrian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

BUD03: The presidency clearly had an impact on the negotiation strategy, as argued before, the country hid

240 its position in exchange for a successful negotiation of the Six Pack. BUD11: As for threats it was only used it during negotiations on the EDP if the Commission wanted to have additional budgetary incomes, they should say so and the government would increase taxes on multinationals, and banks, etc. It was quasi a threat. BUD12: In those issues where we had some stake (e.g. pension funds), the government was rather uncoop- erative and used threats. We did not build on diplomatic channels and forums which wasn’t very constructive. BUD18: NA

17 Ireland

17.1 The list of interviews in Ireland

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer IRL01 75 IRL02 50 IRL03 75 IRL04 75 IRL05 75 IRL06 75 IRL07 100

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

241 17.2 The summary observation on country interviews

National preference formation on three fiscal issues (aid to Greece, size of ESM, and Fiscal Compact) was deeply shaped by Ireland’s own crisis. In May and October 2010, Ireland was already in terrible trouble and very fearful of going the way of Greece and finding itself excluded from the markets. This is exactly what happened in November 2010. So Ireland had a strong interest in having as strong a European safety-net as possible. In March 2012, Ireland was already under the constraint of the Troika loan programme and none of the major parties or interests believed the country had any real choice on this. It was experienced as a decision made under extreme duress. On the RQMV decision, the Irish position was deeply indifferent.

Ireland has a highly concentrated executive-dominated political system. The key decision-makers on all these issues were and continue to be the Taoiseach (PM), the Minister for Finance and (between 2011 and 2017) the Minister for Public Expenditure and Reform).

17.3 Open answers to questions on 4 contested issues

17.3.1 GRC: Willingness to support Greece in early 2010

IRL01: Vulnerability can be contagious. The government of the day (Fianna Fail and Greens) was weak. Labour and Fine Gael were very concerned. The EU had permitted the Greek crisis to escalate too far. It was now an existential threat to all. The broad Irish position was to support the aid. IRL02: The Irish position was to supported boosting market confidence in Greece. Ireland was already vulnerable. The need for official assistance was recognised as very important - and so too was the possibility that Ireland might need exactly such assistance before too long. The Taoiseach (PM) was weakened at this time, the (Fianna F‡il) govt was in disarray. The Minister for Finance and the Gov of the Central Bank were been the most important influences on shaping the govt’s position. Patrick Honohan (em- inent financial economist, specialist on banking crises) had been appointed Governor of the Central Bank in autumn 2009, at Lenihan’s instigation. He had key insights into what was happening in the ECB and in the official EU institutions. Official views were filtered directly into Irish policy-making circles (or the insider group anyway) IRL03: Reasons: natural disposition to support another small vulnerable country;A strong sense of systemic Irish vulnerability within the Eurozone; And a strong probability that Ireland could be running into trouble with the markets. IRL04: The Taoiseach was very aware for the risk of contagion, the problem of credibility Ireland was facing. The Dept may have started out a bit more Germanic (ie wary of supporting Greece), but events made it the best option. The Dept of Finance started out taking a hard line, following the ECB, Trichet. Secretary General Kevin Cardiff had to bring his officials round. sectors) was doing fine during 2010.

242 The worst of the property/ finance/ public finance issues had been dealt with during 2007/ 2008/2009. The first quarter of 2009 was the worst for business performance. The creation of NAMA, the special purpose vehicle to deal with bad bank debt, has been problematic. The manner in which it has dealt with purchase and disposal of distressed assets meant the Ireland missed the opportunity to build a strong recovery sooner. The Central Bank takes an orthodox approach, though is not dogmatic. Other influences: IBEC (Irish Business and Empoyers’ Confederation) held that Ireland needed to support Greece at this time, esp. to avoid contagion of the loss of confidence in Greek bonds/ debt. It had no input into policy though. Social partnership had been dissolved, there was no forum for economic and social interest input. And the Financial Times reporting helped influence govt views too. The FT was saying at this time that Greece needed to be saved, vs German orthodoxy. It was also pushing a line about Ireland being next, and the need to cut a deal. This was a kind of echo chamber back into Irish debates, as opposed to the official/ German view. Irish officials could see that Ireland was viewed as vulnerable, could be next in line. Trichet was lobbying hard against a deal, and against bailing in creditors. The interviewee wrote an op-ed in the FT around this time, saying that Ireland business had already recovered. This was just before Anglo Irish Bank was taken into public ownership. But he points out that he was right! IRL05: Social partnership (SP) was still in place for some of this time. SP was not formally structurally or formally involved in any of this. But the crisis was always discussed during the dialogue anyway. The unions were very much in solidarity with Greece but at odds with the method. The did not thing it appropriate to extend loads to pay off lenders. They favoured an early debt write-off and a ramped-up Cohesion strategy. SP (social partnership) ended in early 2009, though engagement still continued: April 2010 Croke Park agreement, ratified June 2010 (govt and public sector TUs); lots of contact during 2009 and 2010. The Irish govt was very aware of their own problems. It was not in a determining position. Min for Finance Lenihan was discuss freely what Germany and others thought, and where he saw problems with their positions. Feb-March 2009: the unions published A Better Fairer Way, a heterodox view of crisis management for Ireland. ICTU had a problem getting any public support the unions were being scapegoated by some sections of the popular press. Lenihan was in a weak bargaining position anyway. ICTU had had wider European links through ETUC; this reinforced their Keynesian approach to the crisis, as opposed to one-sided austerity. IRL06: The government was keen to stress that we are not Greece. But there was a lot of official sympathy for the situation they were in, and a sense that if governance of the Greek crisis were to unwind, the consequences would not be good for Ireland.The Central Bank’s position revolved round technical matters whether it was possible or not.Finance took a more political view IRL07: The Taoiseach (Briwn Cowen) deferred to Minister for Finance Brian Lenihan. Dept Finance/ Leni- han: position 100, influence 100. The Central Bank’s position also 100. Its ”influence” is not quite the right q to ask it offered its support; its view was aligned with that of the Minister. The NTMA (National Treasure Management Agency) was probably also asked its view it’s the first port of call on any matters relating to national assets and liabilities. Though the interviewee took a phonecall from Lenihan in May 2010 asking whether Ireland should contribute to the Greek loan. Interviewee responded ”yes”, there is no downside; it’s a loan not a gift; and besides, Ireland is definitely next in question. Lenihan did not believe it, though interviewee knew it. Interviewee: Is the loan programme helping Greece? Emphatically not. It is easier to owe to the market than to a hostile government. Greece is now caught. The EZ was supposed to have ”no bailout”, so these are all loans. The mistakes were made in early 2010. Greece could not repay. No-one did any serious analysis though incl. Ireland. The Germans called in the IMF everyone was over-optimistic. It was a no-brainer for Ireland though. Whatever arrangements were put in place, they would suit Ireland.

243 17.3.2 ESM: The size of the European Stability Mechanism

IRL01: The mechanism was pointless if it didn’t work. Draghi’s 2012 signalling should have been there from the start. It needed to be robust. There was a real problem over whether Greece could be trusted. But out of self-interest, Ireland wanted the scheme to be large enough to sustain all the periphery countries should they need it. A lot of pressure from ’other European government” Germany. IRL02: NA IRL03: Taoiseach and Department of Finace. But in this case, the Central Bank’s influence could also be scored at 100. The question of the sustainability of the banks and of the sovereign debt was coming into view for Ireland. IRL04: NA IRL05: ICTU view reflected ETUC not keen on this approach at all. R-wing press in creditor countries distinguished between providing and underwriting loans. ETUC preferred Eurobonds. That said, the fund was not adequate, and financial markets could play to the limits, which they did, until Draghi’s June 2012 whatever it takes. ICTU was on the Left side the argument, very in favour of the fund if this is what was needed. The participants in the social partnership process were all in favour of it. IRL06: Ireland was very much in favour of a sizeable ESM. It would have been shocking to think that a country could be ”cut adrift” if it was in too much trouble. So Ireland supported a larger ESM not least because ”we could need it too”. The Dept of the Taoiseach was pivotal to decision-making at 100; Finance was very influential, also 100. Also the Central Bank. In late 2009 and early 2010, the respondent had several discussions about bank nationalization. He was on the Board of the Central Bank (in his capacity as prominent trade union leader). He was one of very few public figures who gave evidence to the Banking Inquiry. But he had been kept out of the inner circles of influence in banking regulation policy IRL07: Ireland hadn’t much of a position. Irl preferred a higher ceiling and a lower credit rating. It would have taken a huge sum to fund rescue of Spain or Italy at AAA-rating interest rates. Could the ECB have provided loans to the EFSF? The real issue is whether critics thought there could have been an easy way out. Whose money/ risk is it after all? For the critics, it isnOt˜ their inflation pollution problem. Low inflation in the medium term is the best guarantee of stable employment. Now though, the ECB is buying lots of government paper. Is it making a difference? The ECB in 2012 committed to ”whatever it takes”. But Greece is at times definitely non-compliant sometimes unwilling, sometimes unable this is frustrating to the lenders. They are not in fact currently eligible for the current purchase scheme (not good enough collateral). Positions on size of the measure: The Irish govt was not very involved. Ireland was in big trouble by October 2010.

244 17.3.3 FCO: The legal form of the debt brake

IRL01: The Attorney General advised that a referendum would be required to give effect to the Fiscal Pact. The govt view (FG-Lab coalition, large majority), and esp the Cabinet’s Economic Management Coun- cil (four key Ministers) was that it would be very hard to achieve this: it was very risky. It would have preferred ordinary legislation. But since it was necessary, it went for it with gusto with hard campaigning. The appeal to the public was for trust, that it had to be done. Not a great way to change the constitution. But the amendment merely facilitates legislation, does not ’constitutionalize’ a ’debt brake’. IRL02: As noted by other interviewees from Ireland, the Irish case is complex. It was obliged to hold a constitutional referendum, not to constitutionalise a debt rule, but to permit ordinary legislation to be enacted on the subject (because this involved a material shift in competences away from the Irish parliament). Govt was very clear that Ireland had to have the referendum in order to be able to draw on the ESM. It was deeply unpopular but widely regarded as unavoidable across public opinion. The Irish govt know it was acting under duress from the European institutions IRL03: The Taoiseach, the Dept of Finance, and the Dept of Public Expenditure and Reform (estd Feb 2011) were very important here; Also the Attorney General’s Office. The main parliamentary parties (Fine Gael and Labour, in a coalition govt, and Fianna F‡il in opposition) had no involvement in the decisions, but were fundamental to making it happen. Smaller parties (Sinn Fin, Independents, leftist groups) opposed it but their strong opposition was important to getting the measure through, because it clarified the terms of the debate. Ireland’s govt would have preferred not to have to hold a referendum about this and to deal with it through primary legislation. The advice of the AG’s Office was that a referendum was required (following a Supreme Court decision arising from Article 29.4 of the Constitution in the case of Crotty, 1987) to change the terms of Irish sovereignty. The referendum was needed to insert a clause into the Constitution to enable the govt to introduce ordinary legislation on the matter. The need for a referendum was a fork in the road. If it had been defeated, Ireland would have had very real problems. Cf voters had run Lisbon twice and Nice twice. Fine Gael campaigned as if it was a general election, pulling out all the stops. Ireland gained a lot of political capital in the EU for doing this and for bringing it in no sign of ”reform fatigue”. The interviewee (Minister Paschal Donohoe) played a key role in all this. It came at a terrible time, just when austerity was harshest. The country emphatically did not need to have to do this. But it changed everything. The implicit question was ”If this goes down, what next?O”The˜ opposition argued for bringing the ultimatum to the Troika. The govt thought this would have been fatal. But it was a time of great uncertainty IRL04: The interviewee things the Irish government would have preferred to go for a hard and binding rule. But having to run a referendum was very difficult. Too hard to estimate their exact position on these matters. Ireland had no choice. But Ireland is in a trap now. The debt brake rules are too tight, too binding. The population dynamics are strong. Budget 2017 is too constrained for our challenges,

245 prospects. Danny McCoy wrote a paper on DOMAR debt dynamics while an academic economist at the ESRI. The EZ rule-based thinking was designed for Germany circa 1993, viz. Debt/GDP 60 percent, 3 percent deficit per annum, 5 percent annual nominal growth: stability. But this is time- inconsistent in changed circumstances. Credibility rules are dodgy. What we really need are capital rules. Ireland should be making massive new infrastructural investments, but govt has far too narrow a scope to be able to do this. It should then opt for the more expensive but ultimately still worthwhile route of Public-Private Partnerships. Instead, it is immobilized, losing the opportunity, afraid to take on risk. IRL05: This was debated at the ICTU Council NO debt brake in the Constitution. Ireland had to have a constitutional referendum to be able to enact legislation anyway. ICTU leaders set out to oppose this: they saw it as coordinated contraction. SIPTU took the same view (the interviewee’s union) in Jan 2012 But the interviewee changed his mind in Jan-Feb 2012 Because it was tied to the qualifying criteria for Troika support. He retreated from outright opposition. Sinn Fin and the Left groupings did not think the threat from the creditor swas real. They studied other options, sent it to the interviewee. SIPTU did not recommend in favour of the constitutional amendment without a fiscal stimulus to balance it; but interviewee would not campaign for the amendment either. It was a cop-out, but a compromise. Other ICTU Council members also backed away, due to interviewee’s argumetns. In- dividual unions took a variety of views. In the end, ICTU took no formal position. But the ”anti” strategy would not have worked anyway. interviewee fell out with Labour Party leader Eamon Gilmore over this Gilmore wanted unequivocal support from the unions. Merkel would not agree to a parallel stimulus package. She was probably right, from her own point of view, cf AfD; but it made life unduly difficult for Ireland IRL06: TheTaoiseach, Dept of Finance, probably Foreign Affairs, also Central Bank. But the government was not at all keen on this. The Irish govt had ”a gun put to its head” on this matter by Germany, in short. The ECB would have had indirect influence through technical pressures, information. From the Commission, Olli Rehn would have expressed strong views supporting the ECB. The Irish Congress of Trade Unions (ICTU), of which interviewee was involved, reluctantly took the view that Ireland had no choice but to support the constitutional referendum required to legislate on the matter. But they had zero influence and were not consulted at all. Social partnership had ended at end-2009. During the boom, the unions were not consulted on extending labour market access to Eastern Eu- rope, though this had huge consequences for work patterns and industrial relations. Interviewee was involved in think-tank research (tasc) on this (taken over then by James Wickham). Precarious working grew hugely, especialy in construction; zero-hours contracts became pervasive. Then again, no political party has sought to capitalize on immigration in Ireland (even if there are some tensions on the ground). Industrial disputes grew in intensity. The dispute in 2005 in Irish Ferries was over precisely this exploitation of non-union foreign workers. The unions pressed for better labour market regulation in the Toward 2016 social partnership deal in 2006. They secured an increase in the number of labour inspectors from 17 to 90, and a big increase in expertise. They won govt support for a 90-page compliance bill. But there was huge employer reaction. They took a challenge to the Supreme Court about Registered Agreements (low-pay protection, incl. in construction). So the bill was not enacted. But an Employment Rights Authority and a Workplace Commission were enacted. However, their powers were rolled back during the crisis and now have no real teeth. IRL07: Interviewee was worried about the fiscal rule thought it very constraining, too hard for Ireland to recover. The Central Bank did its own analysis which it shared with the Dept of Finance. Interviewee took the view in the end that there were enough loopholes; that it would not be unduly constraining. He thought it would be safe for Ireland to go ahead. But the govt was going to do this anyway (for interviewee to take a formal view would have exceeded his mandate). The rules are very unclear. We see this all the time the Irish Fiscal Advisory Council takes one view, the Dept of Finance another,

246 about what is tolerable within the rules. But Ireland was also trying hard to prove to Europe that it was sufficiently disciplined, so it had to support the Fiscal Pact. None of this is part of the ECB, so interviewee was not involved. The Central Bank doesn’t attend Eurogroup meetings, only ECOFIN, and then only in an informal capacity. In any case, Interviewee was not at the 2010 meeting (Iceland volcano disrupted flights). The Dept of Finance/ Minister Noonan would have taken position 60 (as in the q’aire schedule), but with 100 influence; possibly Foreign Affairs involvement; Central Bank position 60 too, maybe 30 for influence; they had to be consulted for political reasons, but wouldn’t have had any real influence. This was politics. NTMA again, 100 influence. NB the Economic Man- agement Cttee of cabinet, not just Noonon This comprised not just Taoiseach, Minster for Finance, Minister for Public Expenditure and Reform, and Min for Social Protection, but also advisers and senior officials to the key ministers. It was the war cabinet. Everything was thrashed out there. Individuals in Finance were not hardliners, and fearful of a move to constitutional rules. Key advisers were Andrew McDowell (for Kenny) and Colm O’Reardon (for Gilmore, but also more generally for Labour). Interviewee was no tin on any of these issues, only on money issues. Interviewee would offer advice; then they would withdraw and go into political mode

17.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

IRL01: No political party or institution in Ireland takes any view about changing the mechanisms inside the European institutions. Ireland is a tiny country. No point in using political capital in this way. Better to try to use influence than to change the mechanism. IRL02: The respondent had no view on this one, and didn’t think Irish policy-makers were particularly interested in trying to influence it anyway. IRL03: Ireland is more alert to voting procedures now. But when this one came up, Ireland took the view that the country was very vulnerable, and did not oppose introduction of ”automaticity”. It was all about messaging Ireland needed to ”get out of this mess” and was not going to stir up trouble. It wasn’t really about the sanctioning procedure itself. The Taoiseach and his office would have taken the lead on this European Affairs had been taken into the PM’s office (from the Dept of Foreign Affairs) with the change of govt after the Jan 2011 election IRL04: It’s probably a good idea; but Ireland with only 1 percent of EU population has very little real influence on internal decision-making within the EU, so it doesn’t really engage on these procedural issues. Irish govt and officials were completely preoccupied with the Troika and the loan programme anyway. The RQMV was totally off their radar IRL05: No particular views on this IRL06: Most would say that the intensification of disciplines represents the worst type of hypocrisy by Ger-

247 many they were the first to breach the SGP rules, along with France, in 2003/4. The whole experience lacked credibility. There was complete cynicism in government about this. Pre-2004, the convergence engine was experienced as quite benign. After 2004, the priorities became more Ordoliberal. Charlie McCreevy (while Commissioner) held that Germany would not prevail in European governance, so the Irish government was not all that bothered about rule-change. But Germany does not fundamentally care about Ireland. It does care about Italy, since Italy would benefit from devaluation, leaving. The European elite as over-liberalized the challenge of populist politics is dangerous. Interviewe takes the view that the lessons of the crisis are that we need greater integration. But there is no consensus on this. The project has lost credibility. The EU is no longer a buffer against but an agent of globaliza- tion. Can Merkel think creatively? The last time ”Social Europe” was debated in the EP was? 2006. IRL07: Don’t know.Some moves toward fiscal federalism might be a good thing, increase capacity to do things

17.4 The stability of government positions and the role of Eurozone non- membership

17.4.1 GV1: The Change of Position and the change of Government

IRL01: The ’thinking Left’ in Ireland understands the constraints; elsewhere (cf Greece), the learning curve was steep, with huge costs. But the lack of flexibility in the European institutions, the focus on rules, has been politically very damaging. Fiscal compact: the government would have preferred not to have to accept this. It was very hard to explain to a suffering electorate. Govt used a lot of political capital to get it through. EFSF/ESM: no change between govt Banking union: national view evolved, also after change of govt in 2011 (to FG-Labour). Labour did not favour a fiscal union if it involved a step toward federalism. All sides in Ireland were very aggrieved at the terms of the bank rescue. Trichet was held to blame. In retrospect, the financial crisis was allowed to become a political crisis, unnecessarily. Irish approach to fiscal discipline is now that it must be anchored in reality. IRL02: NA IRL03: No change of govt involved in the fiscal compact. On EFSF/ESM: no change with change of govt. There was some policy evolution in emphasis, but not a change of policy. On banking union: this is only taking shape now. Ireland is in favour of banking union, very much so, as a corollary to currency union. But in all this, Ireland had very little choice. Even Fianna Fail in opposition did not basically oppose (just as the incoming FG-Labour govt had taken over the FF-initiated policy) IRL04: No change of govt during fiscal compact. EFSF/ESM in 2010, probably the same after change of govt 2011.Also banking union IRL05: Circumstances changed, so govt views changed. Change of govt, early 2011: coalition partners FG and Labour took different views. FG: orthodox preferences, strongly biased toward spending cuts Lab: preferred longer timeframe, balanced cuts/ tax increases; Plus different priorities on public services, wage-setting institutions, privatizations. Labour got a lot of its priorities through within that govt. Fianna Fail’s national plan which the govt inherited had elements Labour disliked and got changed. FF had promoted them to reassure markets; FG and Labour were stuck with them. Labour modified

248 as it could. End-June 2012 on: things got easier for the coalition IRL06: On ﬁscal disciplines there was no real change between FF to 2011 and FG-Lab 2011-2016. There was little diﬀerence between FF and FG in general. The Dept of Finance had conservative views. Social partnership was viwed as an aberration IRL07: Fiscal: continuity of priorities EFSF/ESM: no change Banking union: no change, didn’t care. The incoming FG/Labour govt in Feb 2011 had to think hard about whether to topple existing priorities. They thought it would be important to stay the course; they held open the option of change; but things set into a path then. Labour’s preferences were changed for them by Greece. In June/July 2011, interest rates went down and the maturity date was extended.So they did get the better terms they had wanted. The spreads on Irish debt were on their way up and up then within hours, they were way down. Then in Feb 2013, they got a bit clawback on Anglo debt, which was very valuable.

17.5 The role of parliament: governing and opposition parties

17.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview IRL01 IRL02 IRL03 IRL04 IRL05 IRL06 IRL07 P. The inﬂuence of the majority in parliament 0 0 + + - 0 0 .

IRL01: Parliament in Ireland follows the government line. Government under the Troika meant there was very little choice. It was a fait accompli. In 2016, things are very diﬀerent: minority Fine Gael govt, cooperation agreement with a resurgent FF. Ireland had a general election in February 2016 which

249 produced an inconclusive result. Negotiations carried on until May 2016. They resulted in a minority government which was formed by Fine Gael and some independent deputies, supported externally by the next-largest party FF. This cooperation agreement is called a confidence and supply agreement. This has shifted the balance of power between the executive and the legislature. Ireland has an unusually strong executive, an inheritance from its Westminster origins. But it can no longer curtail debate, impose guillotines, decide on the order of business etc., on a unilateral basis. It must consult first with FF. So it cannot impose ist preferences on parliament through imposing the party whip to push through its legislative agenda, as has conventionally been the way of doing business in Ireland. IRL02: The Irish parliament is widely held to be weak. After Feb 2011, the former (FF/ Green) govt was trounced, and the incoming Fine Gael-Labour coalition had a huge majority. They had to enact very tough decisions. Despite promises to do parliamentary reform, they used the party whip to drive the terms of the loan programme. IRL03: National parliament got weaker 2010-2015 govt had to take a very strong lead. It had control over its own large majority. The former govt had lost massively. Now: Brexit threat is taking 25-33 percent of the respondent’s time. It’s a game-changer. The govt has to reach across the border to Northern Ireland. The respondentOs˜ corresponding minister in NI is a member of Sinn Fin (which is part of the more radical opposition in the Republic of Ireland). At the end of 2010, as the govt’s power and capacity waned, parliament gained more power and influence for a while. But from 2011, the large govt majority means parliamentary influence is very low. Yet the parliament has more resources there is more scrutiny and debate, and there are some signs of long-term change in the direction of other European countries’ experiences. Parliamentary committees are improving in quality. However, policy is the preserve of the institutions of government itself. The GE of spring 2016 resulted in a minority Fine Gael government, supported externally by FF a ”new politics” seemed likely, more like Denmark perhaps. It’s been positive, producing a new openness, a real possibility for getting opposition amendments included in government legislation. But we don’t know how it will work out. IRL04: ”Stronger” (surprisingly). By which he means more professionalism, more sophistication (rather than necessarily more policy influence). Also: The death of social partnership brought lobbying attention back to parliament. But the media is now dramatically weakened IRL05: Weaker, throughout this period. Even the executive lost power to the Economic Management Council, the inner cabinet committee (plus advisers) Remember too the huge majority the govt had IRL06: PL1: role of national parliament Parliament complained about social partnership and thought they were being deprived of influence while it lasted (till 2009). But executive power is highly concentrated in Ireland anyway. Parliament is hopeless on scrutiny of industrial relations issues IRL07: No change. It just isn’t very strong anyway. Even Cabinet in both govts was out of the loop, and decisions were made by an inner core in each case. Parl committees get a lot of information now. But govts simply push things through as long as they have a solid majority and are not fragmented. (the minority govt situation since summer 2016 is different).

17.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

250 Figure 2: Change in the governing party inﬂuence

Interview IRL01 IRL02 IRL03 IRL04 IRL05 IRL06 IRL07 P. Governing party inﬂuence 0 - + + + + - .

IRL01: The powers of govt were the same. But 2011-16, FG and Labour were co-equal partners in government. Labour got many policies of its own through, modified the influence of FG’s preferred policies. IRL02: The party as such tends to have relatively little influence, compared with the government itself (i.e. majoritarian-style govt vs parliament). Govt party backbenchers probably grew weaker in influence, because there was so little scope for any real disagreement about what had to happen under the loan programme. IRL03: No change. Managing your party while in the government is demanding, but between 2011 and 2015 the govt had a very high base to work with. The Minister makes a point of meting with the parliamentary FG party on Wednesdays it’s valuable to have the backbenchers support, to keep the sense of momentum. They are close to the ground and have super-sensitive political antennae, they know what’s going on among the voters, and can influence the public mood. A Minster has to have the backbenchers’ support. It gives him political space to act, to support what he can say and do. Cabinet discussions are good. Oireachtas (parliamentary) committees are getting better IRL04: Fine Gael grew stronger, not just because of numbers in parliament, but again because with the demise of social partnership, it felt more emboldened IRL05: Parties, TDs, have very little influence in Ireland IRL06: Ordinary politicians (TDs) have very little influence in a system with an extremely powerful executive esp the Cabinet committee, the Economic Management Council (the key ministers). Parliament as such: no real power. The Labour Party had real problems with the Troika. But they did not show it inside government. It held its tongue, of necessity. But this was the downfall of Labour. Interviewee takes the view that the Troika was a disaster. They had a serious empathy deficit. They had no understanding at all of the consequences of austerity policies. The IMF on their own were very different. ICTU had a different view about how the adjust should have been managed: More slowly, with heavier reliance on taxes, smaller cuts extended out to eg 2017. Then growth might have had a better chance to take the load off the adjustment pathway. Backloaded adjustment. This was the thrust of the ICTU document in 2007/8 (which DB authored). But govt opted for (had little choice but to go for) frontloaded adjustment. The TU movement had so few resources only one economist (Paul Sweeney). This is why DB pushed for the establishment of NERI, the Nevin Economic Research Institute, to inject a more left-wing perspective into public opinion. ICTU and the Labour Party didn’t really get on well together while Labour was in govt. ICTU has to deal with whatever govt is in power. The largest single union SIPTU has closer ties with Labour. Not so much ICTU as such IRL07: Weaker. A very weak Fianna F‡il since early 2011, but FG as such not strong. Backbenchers have been diminished since the crisis. The govt steered strongly to get things done

251 17.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview IRL01 IRL02 IRL03 IRL04 IRL05 IRL06 IRL07 P. Opposition party inﬂuence - - - + - - - .

IRL01: The governing parties had a large majority, and FF was flattened, marginalised, delegitimated. IRL02: Far fewer seats in parliament. The inverse of the preceding answer. That said, the govt had to do a very tough job in selling its programme to the citizens. There were many hard decisions to implement, more regulation to enact; better practices developed. The Economic Management Committee became the key part of govt - much of the govt work was done here, by the four key ministers (three ministers plus Taoiseach). Govt became more centralised, and the outcome was the collective view. This was very effective in doing what they had to do. IRL03: Weaker.The composition of the D‡il ensured this big govt majority 2011-2015. In general, the political class is pro-EU and pro-EZ. There has been no sign of any serious political grouping that will utter the word ”foreigner”. Since May 2016, FF has been much stronger, and the govt cannot control a majority. ItOs˜ proved itself very resilient, flexible. They got their kicking from the electorate and have been ”forgiven”. It was a small price to pay. Yet its support is still well below its historical averages. Getting Fine Gael back into power in 2016, after devastating electoral losses, was quite an achievement. Brexit is preoccupying everyone enormously IRL04: Stronger (again, surprisingly) IRL05: PL3: opposition weaker in both parliaments

252 IRL06: Weaker. FF was in disarray after they jettisoned Bertie (Ahern) as leader in 2009 until the 2016 election. Their conﬁdence was shattered. Even their current leader, Micheal Martin, is a throwback to older govts; he’s been around a long time IRL07: Weaker. FF was very weak after 2011. Sinn Fin should have been stronger, but lost out by taking an anti-EU and anti-euro, anti-austerity position that didn’t go down well beyond its core support

17.6 The dominant views of economic policy

17.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview IRL01 IRL02 IRL03 IRL04 IRL05 IRL06 IRL07

ID The state should provide signiﬁcant economic governance with state-led 2 3 3 1 2 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 2 2 3 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 3 1 1 2 3 .. management.

IRL01: 1. force majeure 2. would that we had more capacity in this area - Labour pushed its Jobs Strategy for sectoral and regional improvements 3. Ireland is seriously constrained on this front now, with fiscal disciplines IRL02: After 2011, the FG-Lab govt shifted priorities within the loan programme to do some more capital spending and target job activation. State ”guidance” to private industries and firms isn’t direct though, but works through tax incentives and the industrial development support agencies (for FDI and for domestic industry). IRL03: 1. The state should focus on public investments and counter-cyclical demand management.This is only now coming into focus, and is still something of an aspiration. It’s only since the crisis that the govt has had any scope to try to do this.2. Balanced budgets and stable debts. 3. The state should provide significant economic governance with state-led industrial policies IRL04: 1. The state should provide significant economic governance with state-led industrial policies and the

253 like ualified to mean that the state should act consistently with microeconomic endogenous growth theory, prioritizing education, increasing capital stock, going for intensive growth. Ireland is very good at this. 2. The state should focus on public investments and counter-cyclical demand management. 3. Balanced budgets and stable debts. - Ireland’s problem is that the standard view is disposed toward caution, prudence; restrictions in supply of public goods leads to over-heating, too much demand, as in the current housing crisis. These are self-imposed restrictions, internalizing SGP controls. Ireland should be targeting structural not cyclical problems, alleviating blockages in the system IRL05: 1. Balanced budgets and stable debts 2. Optional: The prevailing view tends to favour competi- tivensss, attracting FDI, dynamic private sector, facilitating wealth creators IRL06: 1. Balanced budget and stable debts this is the dominant policy regime we live in.2. State should provide significant economic governance but only if we understand this in terms of arm’s-length state incentives for FDI; there is very little direct support for or promotion of indigenous firms. 3. State should focus on public investments IRL07: These are the wrong questions! They reflect outmoded political positions: 1. is old-style French di- rigiste or current left/socialist views Corbyn 2. is a classic Christian Democrat view 3. is mainstream Social Democrat We could say 1. if we bracket off ”state-led” for Ireland. But where is the social dimension in any of this? 2. is simply a constraint, a fact of life 3. yes to ”public investments”, but not really demand management. The EZ needs to make huge investments in key infrastructure. The EZ also needs to be able to support social spending Ireland certainly wants to support public provision for health, education, etc.The Irish public also wants low taxes, so this is a problem. The EU has mismanaged priorities for six years. The EU since 1957 has been about much more than this narrow fiscal and monetary agenda.

17.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview IRL01 IRL02 IRL03 IRL04 IRL05 IRL06 IRL07 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 2 0 ..

ID Growth and low unemployment 1 1 1 1 1 2 ..

ID Price stability 2 2 1 2 1 ..

IRL01: Growth and low unemployment. No scope for devaluation or activist monetary policy. Deﬂation throughout this period. IRL02: Top priority: ”Growth and low unemployment”. Being in the EZ, Ireland had no control over exchange rate policy. Yet exchange rates were and are very important for the performance of Ireland’s

254 very open economy, highly exposed as it is to the fluctuation of the Euro relative to the US Dollar and to UK£. IRL03: 1 growth and low unemployment 2 price stability 3 is not relevant no-one wants to devalue/ leave the Euro IRL04: is not relevant because price stability is not an issue and not specifically targeted at this time IRL05: Optional: number 1 tends to be ”competitiveness”. This was interpreted solely as price competitiveness. Ireland’s aim is to remain in Europe while staying close to the USA. Irl has problems now in keeping its competitive taxation strategy it’s open season, everyone’s doing it; we don’t know what the US might do about it. ICTU follows the ETUC on the Common Consolidated Tax Base. SIPTU does so also, though conditionally Irl needs special tax policy because of its peripheral status. ICTU favours fiscal integration cf the utopian Five Presidents’ Report this was unrealistic, damaging even. But there would be scope for spending more from European Development Programme, into EU budgets: a slow but steady climb in percent of EU budget from 1 percent now to 3 percent over 10 years, with flexibility along the way that could be more politically acceptable. 50 percent could be held as a fiscal reserve fund, leveraged, increasing capacity. This would transform the markets’ view and increase the credibility of the ECB itself. SIPTU was not actively thinking about all this too few resources, too small compared with big European unions. ETUC was pro integration, but remote as a result. IRL06: 1. Competitive exchange rate this is now locked into policy priorities. The Euro was never contested. Irish public policy is committed to EMU, unless there is a big change (eg Italy leaving?) Brexit poses huge problems and challenges. FDI has a huge European focus, esp since the Single European Act. Indigenous industry is very troubled. Employment is about half-and-half in the foreign-owned and indigenous sectors but the value-added is heavily loaded, about 90:10 in favour of the foreign sector. In 1992 when the UK was kicked out of the ERM, then-ICTU-President Peter Cassells was very much in favour of a strong IR£. He got strong pushback within ICTU (esp from Dan Murphy, a public sector union leader), and also from indigenous industries worried about jobs, decline. So ICTU abandoned this policy. IRL07: These are the wrong questions. The law, the mandate of the ECB too, prioritizes price stability, with a secondary objective of growth and low unemployment. It’s different from the US, where the Fed ranks joint-first price stability and high employment, with low interest rates as a third. But in any case, growth and low unemployment, and price stability, are complementary. EZ has a failing monetary policy at present, well below 2percent The interviewee references CEPR Geneva Report No. 18, What Else Can Central Bankers Do, Sept 2016,

17.7 The future course of EU integration

17.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Irish Government for reforming the EU? Multiple options are possible.

255 Figure 6: Next integration steps

Interview IRL01 IRL02 IRL03 IRL04 IRL05 IRL06 IRL07

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

IRL01: No appetite in Ireland for any institutional innovation or diversiﬁcation of speed. Strong preference for working within existing provisions. IRL02: Ireland prefers to make its inputs through existing provisions rather than seek proactive change. There’s no appetite in Ireland for Treaty change as it would require a constitutional referendum. IRL03: 1. Work within current Treaty provisions (Ireland does not want any new referendum) 2. Creation of new institutions for multi-speed Europe - Relaunch of Treaty change/ constitutional debate emphatically no IRL04: Not moving toward ever-closer union. The future of the UK outside the EU is very problematic, with big implications for Ireland IRL05: 1. work within current Treaty proviosn 2. Other: ETUC and SD parties want a social clause in any new Treaty. ”Monti clause” would command widespread support among West European voters; see previous answer about steady but slow expansion of EU budgets. IRL06: Interviewee ranks as very important two other options: ”relaunch of Treaty change/ Constitutional debate” and ”creation of new institutions for multi-speed Europe” because of the scale of the imbalances within the existing EMU, and to counter the institutional weight of the ECB IRL07: Interviewee thinks: Relaunch Treaty change because we need ﬁscal federalism Create new institutions for multi-speed Europe if this could have been done, it might have kept the UK on board

17.7.2 ID5. The Vision of the European Union

256 Figure 7: The Vision of the European Union

Interview IRL01 IRL02 IRL03 IRL04 IRL05 IRL06 IRL07 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

IRL01: We need change to the way the Euro works, with more flexibility for vulnerable economies. The rules- based system is brewing further political crises. IRL02: Ireland favours intergovernmental ways of working. If needed, it would work with some form of multi- speed Europe, but in a union of states rather than a federal union. IRL03: 1. Multi-speed Europe with a core and more flexible integration around it. Ireland would like to be able to vary how this worked out by policy area; concentric circles. - 2. If this is not possible, then ”no change/ status quo” - 3. Intergovernmetnal institution this is not thought to be good for a small country such as Ireland - Emphatically not a Federal Union IRL04: NA IRL05: FG might favour a Federal Union. Labour might too but only with very different values and priorities. Fianna F‡il might prefer intergovt institution, or status quo. Sinn Fin would prefer less integration, more nationalist priorities. IRL06: Interviewee would prefer a Federal Union or a multi-speed Europe, as long as it could be run along Social Democratic lines. IRL07: NA

17.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? IRL01: Govt views are anchored in current realities. IRL02: NA IRL03: NA IRL04: NA IRL05: NA

257 IRL06: NA IRL07: NA

17.8 Negotiation strategy during the Euro crisis

17.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview IRL01 IRL02 IRL03 IRL04 IRL05 IRL06 IRL07 S T Hard bargaining: tries to extract concessions from the other side, delays or Very Very Very Very R Never Rarely Rarely blocks negotiations for its own benefit rarely rarely often often 1. .. S T Threatening: uses threats (for example opt-outs or long transitional Very Very Very R Never Never Never Never provisions) to influence other parties positions rarely often often 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to Very Very Very R Often Often Often Rarely propose an exchange of concessions for mutual benefit often often often 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

17.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Irish delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

258 IRL05: no. Steady, relatively successful IRL06: NA IRL07: NA

18 Italy

18.1 The list of interviews in Italy

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer ITA00 100 ITA01 75 ITA02 75 ITA03 50 ITA04 50

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

259 18.2 The summary observation on country interviews

In Italy, none of the contested issues were actually ”contested” at the domestic level. Support for Greece was a matter of course as Italy?s government as well as its public opinion were aware of the fact that Italy could be the next country experiencing ﬁnancial problems and that a joint response at the European level was indeed necessary. The remaining three issues were not extensively discussed by the parliament, and even the ”ﬁscal compact” was not contested during the preference formation phase as that phase was characterized by a sense of urgency and framed in terms of emergency by the Italian government.

The main ﬁnding of the interviews conducted was that the decisions were in fact taken by a restricted number of individuals. More precise information on technical issues such as RQMV as a rule for the imposition of SGP sanctions (a relevant reform yet one that has received relatively less attention as compared to others such as the introduction of a debt brake in the constitutions of the MS) was provided by interviewees who had taken part in the negotiations. Again, the involvement of the parliament was extremely limited mainly because most decisions were taken at a time when Italy was perceived to be at risk of default due to skyrocketing spread between Italian BoT and German Bunds 10-years yields.

The influence of the government was predominant. Especially when the Monti technocratic cabinet was in office (late 2011-2013) the primary objective pursued by the government was to avoid any direct involvement of the Troika in Italy. Thus the government strove to send the ”right” signals to financial markets and to Germany which was perceived as the most relevant actor on the EU scene. This, rather than commitment to further European integration, helps explaining why Italy?s stance was distinctively and overtly pro-austerity.

Domestically, controversy about austerity and strengthened ﬁscal discipline was greater after the worst moment of the crisis passed (ie after the winter 2011-2012) than before the introduction of the new measures.

Five interviews were conducted in Italy. Our interviewees are former top level officials from the Min- istry of European Affairs and of the Central Bank, a former negotiator from the Ministry of Economics and Finance, and two officials from the Parliament with specific competencies in European matters. The main difficulty encountered was to have the interviewees accept the scoring system adopted for the analysis of the four contested issues which constitute the first part of the member state questionnaire (MSQ). Overall the quality of the data collected is good. The interviews provided a number of insights on preference formation in Italy vis-‡-vis the Euro crisis negotiations.

18.3 Open answers to questions on 4 contested issues

18.3.1 GRC: Willingness to support Greece in early 2010

260 the negotiating position of the government, and what positions did they advocate?

ITA00: A general comment: it is quite difficult to distinguish and describe the preferences of each component of the government according to this approach. However, it is true that Italy supported the intervention in favour of Greece. ITA01: The Italian Government was in favour of a quick fix to Greek situation. This was due to the fact that it was not clear how severe the issue was, the Italian banks were not too exposed with Greek banks. Situation became more worrying after indications of German government that Greece might leave EMU ITA02: The interviewee attributed immediately to the Government and the Minister of Finance the biggest influence in shaping and defending the decision to support Greece. NB: It’s useful to remind that in Italy there’s a joint Economics and Financial Ministry, with one Minister sitting in the Ecofin. The interviewee states that in 2010 EP and Council had limited influence upon Italian public opinion because they hadn’t acquired prominence in domestic debate, while the Commission already had a greater authority. ITA03: The National government was the key actor involved in the decision-making process. The European Council was its most relevant counterpart in shaping the negotiating position of Italy. ITA04: NA

18.3.2 ESM: The size of the European Stability Mechanism

ITA00: NA ITA01: All Italian partners had the same view: lending capacity had to be increased. IMF stated that it would increase lending capacity by 250 million euros, so that 750 million appeared ok for Greece, Ireland, Portugal but then if you had to bail out Italy and Spain too, it would not be enough. The most extreme Italian parties were politicising the issue. Bank of Italy in favour, as the commercial banks to higher lending capacity ITA02: According to the interviewee, the debate reached its peak during 2011 in Italy. ITA03: As per GRC - Main actor: government ITA04: The interviewee stresses how the technical nature of the issue reduced the space of discussion mainly

261 to the institutional actors.

18.3.3 FCO: The legal form of the debt brake

ITA00: Due to its situation at the moment when the debt brake rule issue arose, it was important for Italy to show that it was ready to commit and comply with rules imposing greater austerity, which can in part explain the 100 position ITA01: Interviewer says that Italy had a position 100 and not 80 as indicated. He states that Italy thought it was more eﬀective to insert the debt brake rule in the Constitution, in order to avoid increase of public debt. The Bank of Italy was in favore of this, while at the political level there were diﬀerent positions: the right and the Northern Leagues were against it ITA02: According to the interviewee the position of ITALY was 100, that is there was no opposition to give to the Fiscal Compact provisions a constitutional force. ITA03: Slightly greater exchange of information with the national parliament (more competent government) ITA04: According to the interviewee, the Italian position was determined mainly by the need to re-gain credibility and legitimacy at EU level.

18.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

ITA00: Typically, Italy was contrary to the introduction of more stringent regulation ITA01: Interviewee says that ITA had a position 100 and not 0 as indicated in the questionnaire. Italy was more lenient towards the EU methods, if you leave the choice to the countries, then no use for the EU

262 institutions. Italy also wanted to take this out of the political game ITA02: According to the interviewee there was a shift in the Italian position, so that Italy ended to be in favor of RQMV. In the initial phase the position was against an eccessive tightening of automatic mechanisms. At the same time, Italy was trying to regain credibility in the eyes of the markets and EU countries. Some issues lost priority in comparison with more important ones (in this case the mechanism for financial stability). So, in this case, Italy made a concession in order to reach a final solution. ITA03: Government was the most influential actor. ITA04: NA

18.4 The stability of government positions and the role of Eurozone non- membership

18.4.1 GV1: The Change of Position and the change of Government

ITA00: There wasn’t a substantial change in the position connected with a change in the government composition. Rather there was a different attitude of greater or lesser availability vis-a-vis the European project (e.g. both Berlusconi and Renzi showed impatience in occasion of Council meetings). As far as the fiscal subject is concerned, there was a continuity until the Letta government (2013- until February 2014) in the sense that the minister of Economics and FiNAnces (and Treasury, which is a department within the ministry of Economics and FiNAnces) were committed to a containment of public expenditure. ITA01: In general, at the beginning there was favour towards the issues, but for the first issue, it appeared very complex to apply it, all the technical details. For the EFSF/ESM besides the amount, it was difficult to implement. For the third, in the end only 1 1/2 pillars out of 3 were implemented, so very disappointing ITA02: According to the interviewee it has to be noted that Italy changed 4 governments between 2010 and 2015 (Berlusconi, Monti, Letta and Renzi) and the technical government headed by Mario Monti had a crucial importance in the definition of Italian position on EU reform negotiations because it gave the Country the credibility to claim for more autonomy and flexibility in the future. ITA03: The element of continuity is represented by the prevailing influence of the government vis-a-vis the parliament ITA04: According to the interviewee, there was a clear and strong discontinuity in the General Italian Position with the changes of government (from Berlusconi to Renzi, with Monti’s technical executive in the middle). In particular, the change involved the issue of governance and the Banking Union.

263 18.5 The role of parliament: governing and opposition parties

18.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview ITA00 ITA01 ITA02 ITA03 ITA04 P. The inﬂuence of the majority in parliament + + + na na .

ITA00: The minister of European Affairs Moavero Milanesi pushed for the introduction of Law 234/2012 , widely approved by the Parliament. The law covers several aspects of the Italian participation to the process of European integration. More specifically, as far as the financial and monetary aspects are concerned, the law provides the Parliament with stronger tooks to control the cabinet, insomuch as, if the cabinet does not follow the guidelines provided by the parliament on financial and monetary issues, the President of the Council (prime minister) has the obligation to provide detailed explanations to the Chambers ITA01: There was a new Parliamentary Office so true 1 and 2. Parliaments are always complaining they don’t have enough but that is not true. This is not enough, nonetheless the link between national and EU Parliament should be strengthened. ITA02: The interviewee mentioned, with reference to new control instruments acquired by the parliament, the law 234/2012 (legge Moavero Milanesi), which introduced the obligation to provide information and to ask for Parliament’s consultation in the EU law making process. Furthermore, the interviewee stressed how the shift to a more political management of the country, after the economic crisis’ peak and the technical government, gave the Parliament the opportunity to regain power and autonomy. ITA03:

264 Diﬃcult to assess. On paper the role of the parliament was reinforced thanks to the ’Legge Moavero’ (Law 234/2012). But the engagement of the parliament very much dependent on the level of competence of MPs (overall low on EU matters apart from some exceptions). Overall the ﬂow of information between government and parliament was very poor. ITA04: According the interviewee, a new procedure has been gradually established, so that the Role of Par- liament actually got stronger. For instance, Letta’s government introduced a preliminary discussion in Parliament of European policies and government position about them.

18.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview ITA00 ITA01 ITA02 ITA03 ITA04 P. Governing party inﬂuence 0 - + 0 + .

ITA00: Diﬃcult to circumscribe the change in governing Party role vis-a-vis European matters. During the Monti government (which was technocratic, so there wasn’t a ’governing party’ proper ) the role of the government was crucial. Ever since, the constraints deriving from EU membership have been quite central in the parliamentary debates ITA01: After Berlusconi, the subsequent governments did not have the same majority, here the speaker refers to Monti, so not the same powers ITA02: Again, the interviewee stresses how with the technocrat executive headed by Mr. Monti there was a sort of a ”government of national unity” with competition among political parties suspended. After Monti’s government, the role of governing parties re-gained prominence. ITA03: No substantial change until 2013 elections (from then on, 5 star movement opposition somewhat weakened the governing party, but it is diﬃcult to assess the exact extent) ITA04: The crisis polarized the party positions and increased the role of EU issues in the domestic debate.

18.5.3 PL3: The role of the opposition party

265 Figure 3: Change in the opposition party inﬂuence

Interview ITA00 ITA01 ITA02 ITA03 ITA04 P. Opposition party inﬂuence 0 0 0 + + .

ITA00: Difficult to say. The 5 star movement for instance took up different positions (sometimes supporting, sometimes criticizing the government) on a case-by-case basis ITA01: As after Berlusconi we have coalition government, there was a blurring of distinction ITA02: NA ITA03: Especially after 2013 (electoral success of 5 star movement) . NB one of the ’five stars’ in the symbol of the party: development (as opposed to austerity) ITA04: With the crisis, Europe has become a relevant scape-goat for the economic problems (so Opposition Parties used European policy to shift blame and conduct anti-European campaigns).

18.6 The dominant views of economic policy

18.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

266 Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview ITA00 ITA01 ITA02 ITA03 ITA04

ID The state should provide signiﬁcant economic governance with state-led 1 3 2 2 2 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 3 1 3 3 3 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 1 1 1 1 .. management.

ITA00: The state should provide support to enterprises but not to the point of totally bearing all business risks (which of course causes moral hazard and losses as it happened in the case of the Cassa del Mezzogiorno). ITA01: Interviewee says that the second and third refer to difference states, the first applies to equilibrium, the second to crisis ITA02: NA ITA03: Italy has a problem of credibility and is too big to fail. The problem is not only whether or not flexibility can be achieved (eg to make public investments possible) but also how to monitor how flexibility is used and where deficit money goes ITA04: NA

18.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview ITA00 ITA01 ITA02 ITA03 ITA04 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 1 2 ..

ID Growth and low unemployment 1 2 1 2 1 ..

ID Price stability 2 1 2 3 3 ..

ITA00: The situation is a bit more complex than the options given above. In fact Italy has historically relied

267 on devaluations (e.g. in 1992), yet nowadays no one would probably argue in favour of devaluations, although there are a few voices advocating the return to the lira. On the other hand, there’s also the hope that the position of Germany, rigidly in favour of price stability, somewhat become more relaxed in the future ITA01: Initially the risk of recession was significantly underestimated, then in 2013/14 the monetary policy was significantly adjusted following the example of the US and Japan, there was major attention on the stability of the prices that must be symmetric to inflation ITA02: NA ITA03: The first was the traditional instrument used by Italy to stay competitive. NB the problem of inadequate access to credit for small and medium enterprises in Italy- inadequate banking sector ITA04: NA

18.7 The future course of EU integration

18.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Italian Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview ITA00 ITA01 ITA02 ITA03 ITA04

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

ITA00: A relaunch of Constitutional debate is very unlikely. There is a sort of schizophrenia when it comes to Italy and next integration steps. On the one hand Italy has generally (and abstractly) been in favour of ’more Europe’. On the other hand, when it has come (and it comes) to concrete decisions, Italy opposes resistence to further integration. Migration and Terrorism today are at the top of the agenda, so the future steps also depend on how these issues are tackled. On financial issues, the budget of the EU should be increased, possibly with the introduction of Eurobonds. However changes in this sense are very unlikely to occur before the forthcoming elections in France and Germany. ITA01: Not mutually exclusive. First you have to work with all the provisions you have. But also you need to give Europe new instruments, an anti-cycle policy, modify the fiscal compact, major attention to fiscal stands, you need to reform the EU budget, which will have to have its own resources. You need to strengthen the anti-Cycle role, the procedure to correct imbalances. The Bank of Italy advises the government, it attends ECB meetings, so BofI advises the government, but you need to implement other tools ITA02:

268 Relaunch of treaty change as a ﬁnal destination. A reform of current treaty provisions as an interme- diary step. ITA03: Any discourse about the relaunch of treaty change/constitutional debate is just lip service, and does not stand a real chance to happen in the near future. As for working within the current provisions, some (Interviewer quotes Timmermans ) seem to be working within them but to dismantle them rather than enhance them. Multi-speed Europe is already a reality but it seems that the intentions of the ’core’ are towards an institutionalization of the ’periphery’. More intergovernmentalism is likely. ITA04: It could be a two-step process: ﬁrst reforming actual Treaty provisions, then a broader Constitutional debate.

18.7.2 ID5. The Vision of the European Union

The positions of member states’ governments in the EMU reform negotiations may be inﬂuenced by the government’s general vision of what the EU should be. How would you describe the relevant government’s? preferred vision of the EU? For example, did it favour a development of the EU in the direction of federal union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]

Figure 7: The Vision of the European Union

Interview ITA00 ITA01 ITA02 ITA03 ITA04 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

ITA00: Italy still has a somewhat schizophrenic approach to the EU integration process. On the one hand, in general and in a more abstract sense, there’s a strong stance in favour of deeper EU integration. When it comes to concrete negotiations however Italy is reluctant to give up sovereignty and somewhat hostile towards change ITA01: NA ITA02: The interviewee thinks that it’s necessary to activate measures like the Unemployment Insurance Scheme, based on a principle of mutualization of resources on very sensitive topics (such as, in this case, unemployment). ITA03: Monti/Letta government favoured a more federalistic approach to integration. Renzi is definitely in favour of intergovernmentalism. Multi-Speed Europe is perceived by Italy as a negative (for instance in the case of the reinforced cooperation on patents Italian was excluded as an official language for the European Patent Office, thus multi speed Europe for Italy= exclusion) ITA04: There was a change in Italian governments’ position. Both Berlusconi and Renzi supported the vision

269 of EU development in terms of Intergovernmental Institution, while Monti’s government was more in favor of a multi-speed mechanism.

18.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? ITA00: Yes. For instance when negotiationg the fiscal compact the attitude of Italy was that it was a bitter yet necessary medicine, because the concrete position of Italy is against more stringent rules ITA01: There has been a change with the Governments. Berlusconi preferred an intergovernmental solution, while Monti and Letta preferred a Federal Union. Renzi is more critical of the European Project, and often refers to the funding values of Europe. Italy does not support a multi speed Europe as it feels it is part of the core of the EU. Yet it is very difficult to balance the budget. Italy wants to respect the rules, but says that there must be a European effort to keep inflation at 2 percent. ITA02: Yes, for example: ESM: Common instrument and relevant capacity; Bank Union: with the insertion of forms of Risk Mutuality (cfr Unemployment Insurance Scheme); Eurobond, promoted by all the Italian governments. ITA03: The problem is to clearly single out political will from skills and competence of the government. With the exception of Monti/Letta government (which lacked legitimacy as they were ’technocratic’) the political culture in Italy is still not very much developed in a ’European’ sense. So the positions were influenced not only by the political will of the government but also by the actual capability to fully comprehend the technicalities of the issues at stake. ITA04: NA

18.8 Negotiation strategy during the Euro crisis

18.8.1 ST1: Negotiation Strategy during the Euro Crisis

270 Figure 8: Negotiation strategy during the Euro crisis

Interview ITA00 ITA01 ITA02 ITA03 ITA04 S T Hard bargaining: tries to extract concessions from the other side, delays or R Often Often Rarely Rarely Rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Never Never Never Never provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Very often Often Rarely propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

18.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Italian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

ITA00: It depends on the cases. Sometimes Italy has used a ’hard strategy’ such as in the June 2012 EU Council on the Compact for Growth and Jobs, when Italy (supported formally by Spain and informally by France) was ready to veto the outcome of the Council (on growth and jobs) unless a decision was taken on the measures to stabilize short term ﬁnancial markets, sometimes it used a soft strategy (mainly because in order to take up a hard strategy a big eﬀort and a lot of preparation is necessary) ITA01: The initial positions changed during the crises, as some solutions were not adequate, for example the banking union, with only 1 1/2 pillars out of 3 working ITA02: Yes. With Berlusconi: soft strategy With Monti Italy tried to extract concession (once proved its reliability) with Renzi still an unclear position. ITA03: Soft strategy prevailed especially before Renzi (start of his mandate: 14 February 2014). ITA04: NA

19 Lithuania

19.1 The list of interviews in Lithuania

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

271 Interview code Quality rating by interviewer STO20 50 STO21 50 STO22 75 STO23 100

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

272 19.2 The summary observation on country interviews

• Few actors were involved because preference formation was top-down down and centered on actors inside the government, with limited roles for most other actors. Based on interviews, the impression is that preference formation in Lithuania was driven by Ministry of Finance and without much, if any, signiﬁcant debate in public or parliament. The country was a non- member and focused on its own economic turmoil. In other words, the main reason few actors are captured in the data is because few actors were involved in the preference formation process. After Lithuania’s accession to the Euro, politicization (and debate) has increased signiﬁcantly, but that happened after the period we are focusing on. • The decision-making generally followed the conventional process in Lithuania. • The most interesting observation is the degree of centralization of decision-making (as described by all interviewees) and, perhaps, that the country was very focused on its own domestic situation, which may have reduced debate about EU-level issues even further. • Rationale for interviewee selection: Previous to selecting interviews, I solicited advice from two senior researchers in Lithuania. They provided me with lists of names and a general characteriza- tion of the preference formation in the countries. Because of the top-down nature of preference formation, data-gathering focused on the Ministry of Finance, with interviews at the level of senior bureaucrats and cabinet-level politicians (the ex-Finance Minister). While this focus is motivated based on the central role played by MOF, a possible limitation is that the perspectives of minor actors is under-represented in the data.

19.3 Open answers to questions on 4 contested issues

19.3.1 GRC: Willingness to support Greece in early 2010

STO20: The process to arrive at a formal public position follows constitutionally prescribed rules. It was largely internal to the Ministry of Finance but the Central Bank and Parliamentary Commitee on Foreign Affairs was consulted or briefed as required. Ministry of Foreign Affairs might have been consulted too. Most these were merely information-sharing consultations. The real influence rested with the Ministry of Finance. Lithuania was not a member of the Eurozone at this time. Interviewee says he is less certain about the open political discussion about the topic, if there was any at all. The media had limited interest or ability to understand the issue. Foreign actors did not have any influence over the process. It was a short, internal process, so there were few if any opportunities for foreign actors to exercise any influence. The Head of Government relied on the Minister of Finance for this issue. STO21: The issue was not high on the domestic agenda in 2010. Lithuania was not a member of the Eurozone and all political focus was on its own crisis. Discussion on Euro matters started in 2013-2014, as Lithuania anticipated its own membership. Its accession to the Euro has spurred political debate but in the period of 2010-13, there was not much debate about these issues. STO22:

273 Little or no domestic debate. LIT was not formally asked because it was a non-member. Attention on its own crisis at this time. If LIT was asked, it probably would have leaned toward a stricter position. Its own approach to the crisis was characterized by fiscal discipline, as it underwent an internal devaluation that was very costly. While it was costly, this internal devaluation won Lithuania credibility. The process for most issues of EMU reform were prepared by an interministerial committee, which prepared proposals and draft legislation. If needed, legislation was presented to Cabinet meetings, and then presented to Parliamentary Commitee on European Affairs, which usually went along with the proposal. STO23: LIT not a Eurozone member, so there was no need to develop a common position on these issues, i.e., no need to consult with parliament. There was little or no public debate on this issue. This was a tough time for LIT, as the country was going through an economic crisis. If there had been a debate at this time, LIT would likely have had a heated debate. But at the end of the day, it is likely that LIT would have supported support for Greece (confirmation of 100 position). Both big parties are pro-European. The legislative procedure is that the Government [Ministry] position presented to the Cabinet, then to Parliamentary Committee on European Affairs to get discharge for position. As Finance Minister, I always consulted with Parliamentary Committee on European Affairs. Sometimes time was too short during negotiations in Brussels to actually consult with the Committee, and in such cases, I informed them afterwards, acting not under a specific mandate but under a general mandate that I had as Minister of Finance. (If there is time, you have the mandate from the cabinet and then from the Parliamentary Committee on European Affairs). No other major actors were influential. The President was also consulted. President had mainstream views on EU. The two major parties in LIT, Social Democrats and Homeland Union, are pro-European. Their position is more or less in line with the European idea.

19.3.2 ESM: The size of the European Stability Mechanism

274 LIT no strong position on this. LIT went with the flow. There was no big debate on this, neither in LIT nor really in the EU. It was ”absolutely clear” that Germany was in the driving seat and that its position would win out and that the size would be 500 billion at most. Maybe there were a few countries that wanted a larger sum, but no country really wanted to put in more money. There was no real question about the outcome. It was silly to fight it. On influence in LIT: same as previous question, i.e., the process was driven by MOF.

19.3.3 FCO: The legal form of the debt brake

STO20: The interviewee is not certain, but says that he believes that Lithuania supported consitutional level or constitutional law provisions, i.e., it should be coded as 80 or 100. The process was again similar. There may have been additional consultations with the Ministry of Justice. STO21: Lithuania had a very low debt level prior to the crisis and one of the lower ones even after it. Its public position has been that EU MS should maintain low debt levels. L currently has debt governance provisions in the consitution. [Suggests that it may have been open to binding or consitutional measures.] STO22: (Lithuania at 80 or 100 could possibly be inferred from answer.)But little or no domestic debate. Lithuania committed to ﬁscal discipline and clear rules. Lithuania was aligned with the German camp in its view on these matters. LIT implemented debt brake rule at the level of constitutional law (there are three levels of law in LIT: constitutional, constitutional law, and ordinary law). STO23: There was an internal debate in LIT relating to own crisis and regulation of debt discipline. Here it was decided to have a constitutional law, the second highest form of legislation after constitutional provisions. The same was appropriate for the debt brake rule. LIT was not keen on changing the constitution, because it is very complicated, so constitutional law was viewed as the appropriat level. This is higher than ordinary law. So our negotiation position in the high-level task force at the EU level was based our position on the domestic situation, i.e., to have the debt brake as constitutional law. There was not much debate on this issue. Politicians are practical. There may have been a very small number of euroskeptic fringe politicians (but no complete parties) who made some rhetorical statements, but there was no real debate. Some marginal guys using the microphone to get on TV. MOF was in the lead, consulting with MOJ on legal issues. Nobody opposed this idea. Central Bank was supportive. In the EU negotiations, there was a group of ”hawks”, Germany (Scheuble) and Sweden (Borg), mainly, and then a group of middle of the road countries, including the Baltics, and then the Southern group. France was also quite hawkish under Lagarde.

275 19.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

STO20: Lithuania not play a major role during the negotiations, as not a member of Eurozone at the time The issue was too technical for parliament. Parliament does not have the technical expertise to deal with this issue. The Central Bank thought it was a good reform, but this reaction was ex post, after it had been done. STO21: Can’t confirm non-position. It is more likely that LIT supported introduction of RQMV. Personal view is that RQMV is a good policy. Otherwise it would be difficult to impose sanctions. Under normal rules, sanctions would be a political ”mission impossible”. Countries will have friends who can support them with votes and larger countries are less likely to be targeted than smaller countries like LIT. With RQMV, the Commission is the guardian of the treaty. STO22: German/Nordic/Baltic alignment on fiscal discipline. STO23: LIT: 100 LIT strongly supportive of RQMV. The idea was that we need strong rules. There should be sanctions for not sticking to the rules. It should be difficult to avoid justified sanctions. RQMV was part of this because it made it more complicated to tell the Commission to withdraw their proposals, like Germany and France did earlier. Again, there was no big political debate on this question. Too technical. MOF in the lead.

19.4 The stability of government positions and the role of Eurozone non- membership

19.4.1 GV1: The Change of Position and the change of Government

STO20: There was no significant difference between governments. Under both governments, the process handled by specialists/bureaucrats. Also, since each process was finalized into law under each respective government, change was not even a question. The law exists so you live with it. However, on implementation there was change, but after the period under discussion STO21: No change between governments. The priority remained the same for both governments in the relevant period: ensuring financial discipline. Interviewee does not know details of positions on sub-issues. STO22: No change. Consistent policy orientation across both governments. Why? LIT’s response to its own

276 crisis (internal devaluation, fiscal discipline) proved effective and this shaped perceptions about how the crisis could be addressed. But LIT was already in the camp of Germany and other aligned countries. Now, in 2016, discussion about if low indebtedness and low interest rates is a ground for further borrowing. But this was not a discussion in 2010-12. STO23: There was no big change in any of these between the two governments. There may have been some changes in the rhetoric at home, but LIT’s position on these issues has not changed. Both governments have emphasized fiscal discipline.

19.4.2 GV2: The Impact of the Eurozone non-membership

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU?

Figure A: The Impact of the Eurozone non-membership

Interview STO20 STO21 STO22 STO23 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

STO20: The general attitude at MOF was that Lithuania should not interfere with stabilization of Europe. Lithuania can only gain if Eurozone countries find a way out of crisis. So Lithuania was ”mildly supportive” of most initiatives. Did not want to slow down the process. Tried to be constructive. Overall, during the EMU reforms, the general perspective in Lithuania was that the country would become a Euro member relatively soon. It was only a question of time. Lithuania still wanted a seat at the table. Lithuania was opposed to the establishment of the Eurogroup (earlier) and wanted all EU members to participate. STO21: Since LIT knew it would be joining the Euro, its approach was forward-looking. But still, political discussions in 2010-12 was focused on LIT’s own crisis, rather that the EU’s response to Greece and other Euro countries. So, becase LIT was not a member and had a crisis of its own to deal with, there was little focused discussion on these matters. Government pushed for reforms within treaties. Does not want to divide the EU. No reform outside of treaties. Naturally pushed for reforms that would not make it more difficult to join later. STO22: Generally, non-members had very little influence on these negotiations. STO23: It did not have a huge impact. There was a need to explain at home what the discussions were about. But LIT was a member of the high-level task force since that followed an EU28 format. And several of the proposals, such as 2-pack, were EU law. The debate would have been more heated if LIT had been a Euro member, on the ESM especially. There was a degree of frustration among non-EZ countries (including Poland) during negotiations, as some of the day-to-day negotiations were carried out among EZ countries and non-EZ countries felt left out, that they did not know what was going on.

277 Not briefed on all questions. Wanted more information. So this was a problem to some extent. Feeling that we don’t know what is going on. Bottom line: LIT knew it would accede to the EZ as soon as it met the Maastricht criteria, so it was only a question of time. Much of the debate on EMU reform was based on general reports. And most people knew that signiﬁcant changes would not happen. There was no appetite for dramatic reforms.

19.5 The role of parliament: governing and opposition parties

19.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview STO20 STO21 STO22 STO23 P. The inﬂuence of the majority in parliament 0 0 + 0 .

Aut02: The parliament was ill-informed on some reforms due to the time pressure in the speed of their introduction. The quick decision-making on the EU level did not allow for proper domestic negotiations. STO20: No change. Prior to EU accession in 2004, parliament was weak. It strengthened after accession, but has not changed in the period discussed here. Parliament always wants to inﬂuence, but these issues are not some of the issues they have prioritized. STO21: No change in parliamentary role during 2010-2014. In the process to arrive at a common position in LIT, relevant ministry presents proposal to parliamentary comittees. For these issues, the relevant committee is the European Aﬀairs Committee. While proposals are presented to the Committee, the interviewee can’t recall a single occasion when a MOF proposal has been rejected. These are technical

278 issues, so media has not been that interested. At least not in the 2010-14 period. Starting around 2014, media has been more attentive, due to LIT’s accession to the Euro. Same goes for parliament. Politicization of these issues have increased significantly since LIT’s Euro accession. E..g, there has been hot debates on ongoing efforts to help Greece. This involves intra-governmental discussions, with different parties in the ruling coalition pulling in different directions (see more on this later). STO22: There may have been a learning effect. Discussion on technical matters of EMU reform in the parliament has become more professional. But overall, these topics are very technical and hence difficult for parliamentarians to grasp. Parliamentarians tend to discuss the big issues or principles of EU and EMU, not the technical interventions. Parliament did not acquire new control instruments. STO23: No change. Roughly the same. The procedure is the same, and they have not created any new red lights that would limit the government in negotiations. But no real debate on the overarching issues. The Government’s proposals were usually adopted; don’t remember that Parliament had any red lines on any of these issues. Usually such red lines come from the government, because that is very the expertise lies. Parliamentarians have not become more educated on European affairs. Parliament usually looks at big picture and budgetary consequences. The government usually relies on the two largest parties, the social democrats and the conservatives, are pro-European (connections, expertise, and vision) and can be relied on to sell European integration to their respective coalition partners, who are both less interested and less knowledgeable on these matters. While smaller parties may want to play politics, they have no real influence.

19.5.2 PL2: The role of the governing party

Interview STO20 STO21 STO22 STO23 P. Governing party inﬂuence na 0 + 0 .

STO20: No response. (Interviewee signaled weak knowledge.) STO21: Possibly stronger role for minority parties in the ruling coalition (run by Social Democrats) that has been in power since 2012. Minority partners have increasingly voiced concerns over Euro accession and fiscal discipline, which has made it more difficult for government to agree internally. But interviewee stresses that this may be difficult to judge, because it is the game of politics. STO22: Stronger. With the government shift in 2012, the Chairman of the Committee on European Affairs has been a former PM, who has handled affairs in a very professional manner. STO23: No change. Same as PL1. Both governments have been coalition governments based on one major party and two smaller ones as satellites. The satellites have been a little less pro-European than the main party but this has not mattered, because for both governments, the main opposition party has been pro-European and has been willing to support the government on European issues. So the smaller parties have little influence on these matters.

279 19.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview STO20 STO21 STO22 STO23 P. Opposition party inﬂuence 0 0 + 0 .

STO20: NA STO21: NA STO22: Stronger. Better and more swiftly informed on the policy, because they were previously in government. The ex PM asks a lot of speciﬁc questions in parliament. The general sense is that the quality of discussion in the Committee on European Aﬀairs has improved, both technically and from a democratic standpoint. STO23: NA

19.6 The dominant views of economic policy

19.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

280 macroeconomic and ﬁscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and ﬁscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview STO20 STO21 STO22 STO23

ID The state should provide signiﬁcant economic governance with state-led 3 2 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 3 2 2 .. management.

STO20: NA STO21: No particular comments. But 2 and 3 seemed more or less equally ranked. STO22: NA STO23: NA

19.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview STO20 STO21 STO22 STO23 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 3 ..

ID Growth and low unemployment 2 2 1 2 ..

ID Price stability 1 1 2 1 ..

STO20: Lithuania had a currency board arrangement between 1994-2014. Exchange rate has been ﬁxed since 1994. Implication is that LIT has no independent monetary policy. LIT ”borrows” monetary policy from US (1994-2002) and EU (2002-). STO21:

281 Currency board system with peg to the Euro 2002-2014, so limited space for independent monetary policy. LIT’s commitment to non-devaluation was tested repeatedly during the crisis. IMF pressured LIT to devaluate during the crisis, but LIT opposed. It was a big relief when LIT joined the Euro, as that ended speculation about devaluation. STO22: Currency board arrangement. STO23: Currency board suggests that price stability is the primary concern but it operated in weird ways sometimes. Prior to the crisis in LIT, inﬂation was very high, for example, and the Central Bank did not do anything about it, did not use its instruments. So it did not always prioritize price stability.

19.7 The future course of EU integration 19.8 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Lithuanian Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview STO20 STO21 STO22 STO23

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

STO20: There is no debate on changing the treaties. So any change would be within the current treaties. STO21: Workin within current treaty provisions. After Brexit, LIT wants to avoid any initiativet hat may risk further disintegration of the EU. LIT did not support the creation of the Eurogroup. Prefers governance of EMU and discussions about its future to involve EU28. Treaty changes is not a preferred option. LIT wants clear and equitable rules for EMU governance, especially regarding sanctions. Wants to avoid having a discussion every time. The rules should be enforced and enforced in an equitable manner for all countries, no matter small or large. STO22: Relaunch of constitutional debate is not realistic under current circumstances. There is a lack of trust. Divergent views on matters that are foundational to the Union, mirrored in Brexit, Hungary, and so on. So a treaty change is not a desired way forward. Prior to joining the Eurozone, LIT did not want to see a multi-speed Europe, but now things have changed, so it remains to be seen. There is still space to go forward without new institutions or treaties. LIT does not want to see more bureaucracy (e.g., some of the institutions that have been proposed, such as a Council for competitiveness, seem unnecessary). LIT is a small country on the borders of Europe. Historical experience of Soviet Union. Therefore a proponent of deep integration (of itself) into the Union. Acceding to the Euro had a political dimension. It brought LIT closer to the other countries. Future integration initiatives need to be based on analysis of what is feasible and not. Some areas should probably be left at the national level. Within LIT, some parties have strong concerns about further delegation to Brussels, as in other

282 countries. STO23: Given the conditions in Europe currently, a treaty change debate would be unproductive. Several countries have a domestic situation that is not suitable for a treaty discussion. In several countries, parties that use European integration and European issues, such as migration, for domestic purposes. If you open up a debate under such conditions, unless you have a really strong package, it is a dead debate. You could even provoke nationalist sentiments. There is no prospects for far-reaching reform at the present junction. But there are other ways to improve the eﬃciency of the EU within the treaties. E.g., technical improvements, such as improving revenue collection.

19.8.1 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview STO20 STO21 STO22 STO23 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

STO20: NA STO21: Together with NATO, EU was always perceived as a priority for LIT. Achieved this in 2004. Visions for EU was not much of a discussion under the conservative government -2012 but has increased under the Social democratic government in power since 2012. Partly because of the diﬀerent perspectives of the member parties that make up the ruling coalition. In 2015-16, discussions. This makes clear that a Federal Union is not an option. Same with a multi-speed Europe. So the general attitude is to not propose any major changes at this time. The priority for LIT is to credibly implement what has been agreed. STO22: NA STO23: LIT’s view on the EU and EMU is not only economic, it is also relating to safety (geopolitics), like NATO, and identity. Political elites in LIT are pro-European. Wants connection to the West. LIT is keen on getting integrated into the EU. It wants to be part of it. Its relationship to the EU, including EMU, should be seen in this light. LIT does not want the project to fall apart. Naturally, things can change. Poland has gone from being very pro-EU to being much less so. At the same time as LIT wants integration, it does not want to see EU bureaucracy. It does not want to build an administrative behemoth, or a government somewhere that has no clue about conditions on the ground, like the

283 European parliament. It has a liberal view on integration.

19.8.2 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? STO20: Generally speaking, Social Democratic party (in power since 2012) more supportive of expanding EU competencies than the previous government. STO21: NA STO22: No strong views on the vision of the EU have been articulated. The government of Kubilius was focused on battling the domestic crisis. The second has not articulated a particular view. STO23: NA

19.9 Negotiation strategy during the Euro crisis

19.9.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview STO20 STO21 STO22 STO23 S T Hard bargaining: tries to extract concessions from the other side, delays or R Very rarely Very rarely Often Very rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Never Never Never provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Very often Often Often Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

19.9.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Lithuanian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

STO20:

284 No real change. Some personalities may have changed, but the main strategy remains the same. STO21: No change. But LIT held the EU Presidency in 2013, so was much more deeply involved in negotiations from mid-2012. Holding the Presidency gave a lot of experience and contacts. So after the Presidency, LIT has been much more eﬀective in EU negotiations. But there has been no change in the general negotiation strategies used by LIT. STO22: No change. LIT tends to follow constructive approach, seeking to ﬁnd like-minded countries. Presi- dency was important, strengthened position, especially because LIT managed to achieve good results, which gave credibility. STO23: No change.

20 Luxembourg

20.1 The list of interviews in Luxembourg

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer GRE08 75 GRE11 100 GRE15 50

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

285 20.2 The summary observation on country interviews

Luxembourg is a very small country. The formation of national preferences between 2010 and 2015 were mainly shaped by Junker who was finance ministry and Prime minister at the same time. Lux- embourg strategy of influence were the following: provide technical support to the creation of EMU instruments thanks to the accommodating laws on the creation of financial vehicles in Lux. Also, they played a mediating role between France and Germany and ”soften” their fiscal conservative stance at home because Junker wanted to give ”compromise” signals in view of his election as Commission president.

20.3 Open answers to questions on 4 contested issues

20.3.1 GRC: Willingness to support Greece in early 2010

GRE08: Main players were: PM (Juncker), Finance Ministry and Treasury. In general, Treasury director was very influential because he occupies the presidency of EFC and EWG during the fall of 2011. (note1 : the treasury director is GRE 11) (note 2: BEL and NL used similar tactics to ”influence” EU affairs by occupying keep positions). Consensus among all Lux parties on the need to help Greece -very pro European -they got the money for it GRE11: Shared feeling among Lux authorities that the help for Greece was compulsory. Moreover the PM was the Eurogroup PR, so it led to more europeanized national positions. Finance ministry sets the initial position thanks to the interviewee participation to the EFC, then he goes to the PM (Juncker) who does not have very different positions. Inform Parliament. For Greek help, no need of a specific law. No internal dissensus on this kind of issues. Mersch (governor of Lux CB and then at the ECB council transmitted the info about financial institutions to the ministry but it was not compulsory : ministry of finance has very good info about banks because it owns most of them. the ministry of EU affairs was only tying to attract media attention, no influence on policy issues GRE15: Luxembourg (Junker) was one of the first countries to back up Greece on the technical and political fronts (note : for these interviewees Luxembourg and Junker positions are almost similar). Involved players : PM, Ministry of Finance and its technical DGs. Played a central role in coordination. Rea- sons for this: Luxembourg is a financial and business center : very flexible legislation for setting up firms and investment companies + specialized lawyers + positive public opinion on European issues. There fore Lux could provide technical infrastructure for the loans to Greece. Juncker was very involved : double hat PM + Treasury head so he was sitting at the Ecofin + European council

286 20.3.2 ESM: The size of the European Stability Mechanism

GRE08: There was a need to explain the amount of the Lux contribution to the Parliament in order to pursue with Lux participation to the ESM. Not very hard, quota were satisfying and Parliament agreed with it. MES and FESF were created in Luxembourg because very easy to do. Treasury director went to a lawyer, payed 3000 euros for juridical statute of the ﬁnancial vehicle and advance an initial capitalization of 15000 euros. Then other countries found a agreement and added their parts. GRE11: Similar process than GRC GRE15: Score is rather 50 : Lux participation was a substantial amount for Lux (however, GRE 8 and 11 disagree with this). General consideration: Lux facilitates dialog Paris-Berlin because Lux is an AAA country but less strict than Germany. In between them. + Lux was chair of EWG at that time (GRE 11 was chair).

20.3.3 FCO: The legal form of the debt brake

GRE08: Lux position is 60 but it is the SAME paradox than with NL. It is more binding to agree to a international agreement than to change the constitution. Because European and international law are much higher than constitution in norm hierarchy. Also, they agree with the conditionality part of the TSCG but they felt it was a democratic problem that they had to commit every political parties, even the ones not in government, with a golden rule enshrined within the Constitution. This consideration on democrat also play a role for the Lux not to modify its constitution GRE11: Norms hierarchy : the constitution is short and only includes grand principles. So international agreement is as binding as a constitution change. Yet ﬁnance ministry was not against changing the constitution but PM (Junker) disagreed for political reasons (il would be politically costly to reach an

287 agreement between all political parties for a change of constitution). Therefore, ordinary legislation. Then, what really mattered was the law for the national transposition of the SGP. The ministry of finance and himself wanted a maximalist transposition but PM and Finance general inspection did not. Evolution of PM because anticipation of the next steps of his political career (note : what the interviewee hinted was that Juncker wanted to send favorable signals to left wing political parties in order to reach a bipartisan consensus for his nomination at the head of the Commission 1 year later). GRE15: Deal ECB - countries : FC against LTRO and OMT (ECB instruments). On the SGP : the consensus was that it was not enough respected, need to straighten it out. Lux was not in favor of constitution change because it would need a referendum. Norms hierarchy with strong position of international law was sufficient. Argument accepted by the Commission. Council of state plays the role of second chamber : it does constitutional analysis but is in politics as well. Try to gain more influence with TSCG but it is disregarded by other players.

20.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

GRE08: Benelux agreement, cf. Bel et NL. They went to see the judicial council of the EU council to enquire about possibility of RQMV. They tried to put RQMV everywhere where it was possible, including MIP. France did not want but European parliament was decisive for the diffusion of RQMV voting GRE11: In 2004, the SGP sanctions against France and Germany were actually blocked by the Luxembourg (Junker wanted to send political favor to big countries). So, the itw finds it a bit ironical that Lux was a promoter for RQMV. Not aware of the agreement btw Lux, BEL and NL. Did not know much about this specific issue. GRE15: Benelux agreement confirmed

20.4 The stability of government positions and the role of Eurozone non- membership

20.4.1 GV1: The Change of Position and the change of Government

GRE08: NA GRE11:

288 NA GRE15: NA

20.5 The role of parliament: governing and opposition parties

20.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview GRE08 GRE11 GRE15 P. The inﬂuence of the majority in parliament 0 0 0 .

GRE08: very supportive of EU integration whatever happens GRE11: Never been very important. A bit more during the ﬁscal compact but not much. modus vivendi : pre agreement that need to go fast. so only ex post control GRE15: weak

20.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

289 Figure 2: Change in the governing party inﬂuence

Interview GRE08 GRE11 GRE15 P. Governing party inﬂuence 0 0 0 .

GRE08: same than for parliament : very supportive GRE11: Consensus on European issues. Socialist party is close to big trade unions. Sometimes managed to change slightly the positions of center right wing because PM is listening to them (before 2013). (Note : what the itw hint was that Junker was sensible to trade union positions because he did not want worker’s conﬂicts in Lux. so the trade union used the socialist party as a Trojan horse to change Junker positions). Now, socialist party is a junior member of the gov. GRE15: weak

20.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview GRE08 GRE11 GRE15 P. Opposition party inﬂuence 0 0 0 .

GRE08: same than previous answers : very supportive.

290 GRE11: NA GRE15: extremist parties are a bit stronger but they still do not matter

20.6 The dominant views of economic policy

20.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview GRE08 GRE11 GRE15

ID The state should provide signiﬁcant economic governance with state-led 3 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 1 2 .. management.

GRE08: virtuous triangle of the EC once again + support of ECB unconventional measures GRE11: Debate between Junker and Frieden (Ministry of finance), Lux position is between the two, eg. Junker more growth orientated, Friedan, more price stability. Depends of international situation also + support of ECB unconventionnal measures GRE15: Stability and predictability + Lux is more and more influenced by Germany position on ECB measures : afraid of low interest rates, weakens financial institutions

20.6.2 ID2: Dominant Monetary policy goals

291 Figure 5: The ranking of monetary policy goals

Interview GRE08 GRE11 GRE15 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 ..

ID Growth and low unemployment 2 3 3 ..

ID Price stability 1 1 1 ..

GRE08: NA GRE11: NA GRE15: NA

20.7 The future course of EU integration

20.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Luxembourgian Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview GRE08 GRE11 GRE15

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

GRE08: ﬁrst work within treaty provisions, then when it will be politically feasible, change treaty GRE11: NA GRE15: Foreign aﬀairs was talking about treaty change but because of Brexit, no link with EMU

20.7.2 ID5. The Vision of the European Union

292 direction of federal union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]

Figure 7: The Vision of the European Union

Interview GRE08 GRE11 GRE15 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

GRE08: Use ”centralization” instead of federal word because it include subsidiarity principle... GRE11: federal until mid 2000 then multi speed Europe. GRE15: NA

20.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? GRE08: NA GRE11: NA GRE15: NA

20.8 Negotiation strategy during the Euro crisis

20.8.1 ST1: Negotiation Strategy during the Euro Crisis

293 Figure 8: Negotiation strategy during the Euro crisis

Interview GRE08 GRE11 GRE15 S T Hard bargaining: tries to extract concessions from the other side, delays or R Never Never Never blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Never Never provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Very often Very often Very often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

20.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Luxembourgian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

GRE08: NA GRE11: NA GRE15: NA

21 Latvia

21.1 The list of interviews in Latvia

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer STO15 25 STO16 75 STO17 50 STO18 25 STO19 100

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

294 21.2 The summary observation on country interviews

There were five different government formations during the 2010-2015 period. They were all very pro-European, single-market and single-currency oriented, choosing to maintain the currency peg to Euro despite deep crisis and austerity. Latvia was provided by the EU and IMF funded stabilization program and maintained its commitment to Euro adoption in 2014. The economic policy decisions were made primarily by the prime minister and minister of finance and were aligned with the framework of the stabilization program. As other Baltic countries, Latvia shares the concern about the influence of Russia; therefore, tends to maintain mainstream pro-European outlook. Although most EMU reform decision were made prior to 2014, there was general support for austerity and strong fiscal rules, which reflected Latvia’s own experience during the crisis and belief that richer countries should also accept painful reforms. Five interviews were conducted in Latvia. Since the four policy issues were not particularly salient in the domestic politics, interviewees were not prepared to provide full list of position and influence scores.

21.3 Open answers to questions on 4 contested issues

21.3.1 GRC: Willingness to support Greece in early 2010

STO15: They were discussions and I think our governments position was very clear that they were ”neutral”. Because we were in a position of asking for assistance as well. It was not as severe as in Greece but we were getting assistance from monetary fund, from (?) and from the EC (European commission). So we were in a position of receiving this assistance already at that time. So I think that our government, did not say ”yes or no” but they were supporting the decision of (?). There was no clear left or right position from or government. I would choose the position 50. The public opinion was that all governments decision were influenced by our goal of joining the Eurozone. So our government did not want to do anything that would make it difficult. If we would have had the euro earlier, then we would not have as big crisis as we had. It was a political decision and there was no other institution that could influence. STO16: We were not in that process. We did not participate in the status of the ESM so the lending capacity was not a subject we discussed. STO17: I remember the public discussion, and they were not very happy about Greece needs and that they had to support them. At the same time, we were one of the MS that had recieved some financial support. So we understood the part of the deal. So our government they were afraid that it would be more countries like Greece asking for the support from the mechanism and what impact that would have on other EU-policies, on structural funds, on cohesion policies, agricultural policy, those two were very important for us. And afterwards the discussion was ”why is Greece in a better position that Latvia are on fulfilment of requirements of the fiscal policy”. In the beginning our government was

295 more supportive towards Greece. Position 70. Influential actors: They had the feeling that they are already receiving the support and from an economic perspective if one country is falling down and it could take others with it as well. The idea was to give some help to Greece with a hope that it will help them to stabilize the situation and that it wont have any impact in the countries around Greece or EU. That was the main idea to put it in a box and not to let it spread around Europe. STO18: I would say 70 or 80. There was some skepticism and opposition and we (Latvia) basically went though the same process just three years ago. So I think it was hard for someone to claim that now we don’t have to help other countries. Nationally then both ministries of finance and foreign affairs, the ministers at that time, was also pretty strongly supporting this course affection. STO19: Our ambassador in France now was then in charge of the European affairs committee in the parliament. I would believe that generally was to not give the immediate assistance. Because we have always been the supporters of more austerity and less a system of stimulus. We have always been more towards less assistance then more. Position, I would say 60-70. And at that time we were just exiting the crisis ourselves, so obviously we had received financial assistance ourselves from IMF. The governments position was partly influenced by the public opinion and also partly the position prepared by the ministry of finance. Because the position of the Latvian government is usually prepared by the ministries. That was probably the position of the finance ministry. And generally our public opinion has always been rather negative towards any special matters for the Greek economy. Last year we were discussing the third financial package for Greece and it was a very difficult discussion where a lot of people felt that Greece as a country has not done enough to reform itself. We have to remember that in 2010, Latvia had just, or was in the middle of a huge (?), huge budget cuts, huge internal devaluation as we called it at that time. Obviously the public opinion was against giving any special measures to anyone, given that everyone are seeing that we are suffering. Germany had more influence than other EU countries. And to some extent also the the Scandinavian governments, but not to the same extent. Sweden definitely more than Finland.

21.3.2 ESM: The size of the European Stability Mechanism

STO15: I don’t recall because I was not working with ﬁnancial issues at that time. STO16: We did not participate in the status of the ESM so the lending capacity was not a subject we discussed. STO17: N.A. STO18: N.A. STO19: N.A.

296 21.3.3 FCO: The legal form of the debt brake

STO15: NA STO16: Interviewee: We were close to Germany in that sense. Because there is little sense to have a regular regulation which you can override by new coalitions made by governments. We should have a constitutional or similar status. So we were fully supportive of that view. Position, I’m not saying constitutional level exclusively but similar. Position 75. Our own experience that if we have something in ”ordinary law” then any parliamentarian could change that rule. (?). It should have a higher legal status. STO17: This is about the ﬁscal discipline rule of Latvia. Our ﬁscal law. I don’t think we wanted it more constitutional. STO18: N.A. STO19: N.A.

21.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

STO15: I think our government did not agree with that. Position, I would say around 10-20 percent not lower. Because we were opposing. We had deﬁcit as well but we were working towards this euro goal very

6In the pilot version of the MS questionnaire there was also a question about withholding EU funds from member states in breach of SGP criteria. Some answers may thus refer also to this question, although they are reported under SPA.

297 hard, but at the same moment we knew how hard it was and we needed all types of assistance including EU-funds to stabilize the growth. We look at EU funds as investments, so you withdraw that its very bad. Government, industries, business, everybody supported this. Q: The adoption of SGP sanctions: Reversed Qualified Majority. Interviewee: I remember I know what you mean but I don’t remember any discussions taking place here. I don’t remember the governments position. It was never a big discussion about that, because they are very specific EU governments issues. They did not raise big political debate here. STO16: N.A. STO17: Taking in account that the investment level of the EU funds in Latvian economy: Our positon always has been not to touch them. This funding has always been an important part on why we are in the EU. Position: 0. We had the feeling that we could be the country with a budget deficit. Everyone is taking with the government. Because for the government at that time there was no any other any public investment. The only line for public and private investments were from the EU funds. So all parties were very interested to keep them ongoing. STO18: N.A.

21.4 The stability of government positions and the role of Eurozone non- membership

21.4.1 GV1: The Change of Position and the change of Government

STO15: Interviewee: The crisis hit us very hard. So the government tried to do these structural reforms and introduce all these measures. There was a change in the government in 2009, our previous government had fallen and then Dombrowskis took over and changed the policy towards structural changes and public expenditure cuts and everything. They took very hard measures on people. The salaries dropped, and public expenditure were cut and the unemployment raised. Keeping in mind that the GDP have not reached the level of 2008, still now. So now we are not sure that the measures our government took were the right thing. Maybe it was too hard. Maybe we had to do less devaluation of currency. The government only listened to the IMF and the recommendations because they used their assistance and we had the to use the stability program. We had to obey the IMF. I think it stopped our growth and the fall of GDP was almost 25 percent. If we look at other countries, looking at Lithuania or Poland, we are not sure that our government did the right thing. Dombrowski was very popular in the EU, as a good example of using all these programs and doing the structural reforms but he was not popular here. STO16: Interviewee: In 2014 it was already in the history in those times. It didn’t change our views. Because the sick-pack was just approved in 2011, and two-pack was introduced in 2013. The time period you are asking is just the time when all these instruments were prepared. I see the six-pack and the two-pack as a response of the EU in the crisis. Not our crisis. From that point of view, they were just drafted during the time of the crisis and they reﬂect the perceptions of how the crisis can be overcomed. In that time there was no time to revise our attitude towards the six-pack, two-pack, ESM (?). Therefore, I don’t think there are some pieces of legislation (?). But if you look at the older pieces of legislation

298 it choose that these roles don’t work (the older ones). And maybe that is linked to the question to what extend MS should follow the rules. Because the reason to why the crisis came was because all the countries, including Germany, didn’t follow the rules. They didn’t fulﬁl the Maastricht criteria. And the aim of the sick-pack and two-pack was to say ”Yes, that was bad that was history now let’s open a new page, lets now follow and comply with the rules and let’s make these rules more explicit”. That’s why the sick-pack and two-pack legislation arrived. I’m comparison to the older times, there was a new awareness that the rules should be followed. STO17: It was the same. They did not change position because we were negotiating for the Eurozone so we were straight minded. We were ready to do everything. To be more involved. STO18: Interviewee: No. STO19: : We were generally open to the adoption of them. There might be position changes in the working level in the way it reﬂected our position in coreper. Im sure they were slight changes of positions. Generally in the top political level I cannot comment if we changed the position. From the beginning we were exposed to adopt them and supportive.

21.4.2 GV2: The Impact of the Eurozone non-membership

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU?

Figure A: The Impact of the Eurozone non-membership

Interview STO15 STO16 STO17 STO18 STO19 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

STO15: Since our goal was to join the euro everything that the government did and the governments position was very strong towards a united monetary and economic union. I know that it was supportive. STO16: In 2010 we were a non EAMS, all countries that are not in the euro, except Denmark and the UK are treated, like a temporal event. It was a clear objective to join the euro already before the crisis, before 2008. The crisis became an obstacle because we did not fulﬁl the Maastricht criteria. So we were not eligible for that. To a big extent, the way that we decided to manage the crisis was with the EU, that we had to join the EA. That’s why we decided to keep the (?) between our national currency and the euro stable, even in the crisis period. The other option would be that we could devaluate our national currency and other things that would be easier economically. But instead of that Dombrowski decided to go this internal devaluation that we just cut salaries, pensions, but we kept the exchange rate. The reason for that was just the aim to accept the euro. Philosophically we are close to Germany. In the sense that we support austerity measures, because that made success in the way how we went through the crises. We recovered relatively soon. That’s why all basic ideas in the six-pack and two pack was a

299 natural way to do the things. The crisis made a positive impact on the way we prepared our positons regarding (?). STO17: Our previous currency was already together with the euro. We were already operating in the Eurozone. We only had the physical currency. I don’t think that it was very hard for the businesses because most of them were operating in the Eurozone with the euro already. When it comes to the fiscal policy and fiscal discipline it was more a government decision to decrease spending’s. It had some impact on the salaries and tax rates. The value of the tax was (?). We were ready to do that to be partners in the Eurozone and to sit in the EAMS table. Because we understood at the political level that there is difference in which table you sit, where all MS are sitting or where the EAMS are sitting. The first day the EAMS sit in the table and decide and only the next day the rest MS are there. Q: The government pushed for reforms within the Treaties? Interviewee: We had some credit loan from the EU and IMF and they were strong in reforms. In that time we were ongoing on that. Now they stopped. Q: The government supported mechanisms that ensure participation of non-members of the Eurozone in the new governance structures? Interviewee: We had the feeling that the EAMS are setting the rules and the others are just following. STO18: Lets put it this way. I think that Latvian candidacy status was certainly affected by what has happened before 2011. So in 2008 because I Latvia, as you know, the basically the financial crisis hit very early. So at the end of 2008, a lager commercial bank goes under water. And government has to rescue it. Plus budgets starts running sever deficits and we end up with a program international borrowing from IMF and European Commission and the World Bank and initially also the Nordic countries. And the strategy agreed then was to exit from this crisis and return to stable fiscal parameters (...) with a aim to join the Eurozone. To fulfill Maastricht criteria to join the Eurozone. And also the pact to Europe was preserved with resist objective in mind so in 2011 when the negotiation started it was more or less set course no one was too much discussing any more the government, because all the bargain work was done, so it would be very inconsistent if we would start reviewing this strategy. It coincided with the moment that the crises started in the Eurozone. And there were some discussions in the media about how we are joining a very troubled economic area. But there was also pretty push backs and after all we have worked very hard with the government do get to this objective of joining euro and Eurozone. And it is still the largest monetary, or an extremely large market next to us, and even if it runs problems it temporary. The assumption was that the monetary union will remain there. STO19: For us it was very clear that we would have to adopt all the proposals and all the economic coordination laws, because of our goal to join the Eurozone. And that stands for the fact that we had a very deep economic crisis in 2009, and there were (?) that we would go bankrupt as a country. So this whole pass of joining the Eurozone was very important for us to restore the credibility of our country and our capability to manage our economic policy. For that reason we went along adoption of the economic coordination laws. I would not say that there always were a very firm consensus in the parliament. But it was very clear that it was a necessary pain, for us to be able to join. Which was the ultimate goal. (?) Q: The government pushed for reforms within the Treaties? Interviewee: there are some inter-state solutions that are not treaty solutions. Obviously that was necessary and I think this as a whole is the logic or lack of logic for the EU integration. That given some specific countries its very hard to achieve a treaty change although the euro project is clearly calling for more coordination of economic and fiscal policy. So those solutions were ad hoc solutions that were at hand. But I don’t see that there was a possibility to achieve a treaty change for that. The government never pushed for a new treaty because Latvia, in that respect, Latvia, much before many others EUMS, who had experienced referendums, we were (?) of the consequences. The Lisbon treaty and the constitution of the EU, we know how local policies can go, they can deliver consequences that are completely unforeseen. So for us it was clear that pushing for treaty change would be unreasonable at that point in time. Q: The government supported mechanisms that ensure participation of non-members of the

300 Eurozone in the new governance structures? Interviewee: Its diﬃcult to say. If the needs and interests of nonEAMS were. Of course they complained that they haven’t. I was not the head of the European Aﬀairs committee at that time, it was someone else.

21.5 The role of parliament: governing and opposition parties

21.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview STO15 STO16 STO17 STO18 STO19 P. The inﬂuence of the majority in parliament 0 + 0 0 0 .

STO15: Stayed the same because the government was a coalition government and the same as the parliament. STO16: They became more influential because their role (?). We have a committee of EU affairs in parliament, and that committee, reviews and approves all our position papers. So each economic council meeting has their own agenda and the committee has to approve it. If we take a look at how it worked, there knowledge about the issues increased. And by that the influence changed. So my answer is yeas they became more influential because their knowledge about the issues also increased and their contributions. Q: Other argument? Interviewee: It depends on the question. If there is an important question about refugees, then the media is there. If there’s a question about fiscal compact, who knows about structural balance and automatic correction mechanism, that its not in peoples minds in the streets. STO17: The parliament, they are not very involved in the process to the EU. The process is that ministries are developing positons of Latvia. Then they are discussed in the government, ministers. Then they

301 send them to the parliament. And the first two steps take 1-2 months, and then in the parliament it takes 2 weeks. So all the decisions are already made in the section of ministries, and afterwards in the government. So the parliament is just putting the sealing ”we adopt it and take to governments position”. Its rare that the parliament changes positions. We don’t even follow it. The parliaments role in EU matters are weak. STO18: N.A. STO19: We should start from the institutional arrangement that out parliament is rather influential in the preparation of the government position to the councils. So the parliament has a lot to say. And if the European Affairs Committee, which has a delegated power to make a decision on behalf of the government on all EU matters, if they decide to (?) on the government positons, we can easily do. But we have to consider that during the timeframe of 2010-2014 we had just recovered from the economic crisis and also we had the goal to join the Eurozone. I would rather say that a lot of doubts were probably, I don’t want to say pushed a side, but they were subdued, by the fact that we had these two big policy goals. So the government was influential, it had debates, discussions, specifically when we had to adopt changes in our legislation, but the parliament never rallied against decisions of the government. This is also due to the fact that we always have majority coalitions. So there is a coalition that is agreed upon, there’s is usually 51+ vote in the parliament. So even if they were voices from the opposition against some of the mechanisms and some of the laws that we adopted, (?), these larger considerations prevailed. So what if we wouldn’t have that goal of joining the Eurozone. It was something that made us aligned more with the proposals from the European Commission. No change, because the mechanism stayed the same. the parliament could have used its potential to play a stronger role. But generally since we have the governing coalitions with the majority of the parliament there was no wish to in any way conflict or contradict the policy of the government. Q: Other argument? Interviewee: I would say that the parliament grew more supportive of the government positon. At least the governing coalition.

21.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview STO15 STO16 STO17 STO18 STO19 P. Governing party inﬂuence + na 0 0 + .

STO15: The Unity Party became stronger. STO16: N.A. STO17: The government in the leading party has not changed. The PM did not change. Everything was the same. STO18: N.A. STO19:

302 Yes, the governing party of Dombrovski (Unity), was very influential. So we became more influential than other coalition partners. Because the general fiscal consolidation, the economic coordination, fiscal responsibility was a part of our parties policy choice. That would be the Unity Party, that was our policy choice, where the rest of the coalition parties just aligned themselves. With us (the Unity party) growing more influential their ideas (of the other governing parties) were more subdued.

21.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview STO15 STO16 STO17 STO18 STO19 P. Opposition party inﬂuence 0 0 0 0 0 .

STO15: Because they are in opposition and they did not(?). Maybe they became stronger in parliament because they got more places after elections in 2012, I think. But not in government. They were not invited to form the government. STO16: No, they had and they used them. STO17: Status quo. STO18: N.A. STO19: They had inﬂuence, so of course they used it. They always been using it. I would not say that it grew stronger but it would be silly from the opposition to not use it. No change but they deﬁnitely used their possibilities. Q: Nothing important in the power relation between the opposition and the

303 government changed? Interviewee: No, I don’t agree. There was more barging and more demands. Q: The opposition got new control instruments for involvement, but did not use them? Interviewee: No not true. They used them. Weather they had more instruments, the ﬁnance and budget committee have role now, it has always been chaired by the governing members so I wouldn’t say that the got more instruments, but they used what they had.

21.6 The dominant views of economic policy

21.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview STO15 STO16 STO17 STO18 STO19

ID The state should provide signiﬁcant economic governance with state-led 3 3 3 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 2 2 2 2 .. management.

STO15: N.A. STO16: N.A. STO17: N.A. STO18: N.A. STO19: N.A.

21.6.2 ID2: Dominant Monetary policy goals

304 Figure 5: The ranking of monetary policy goals

Interview STO15 STO16 STO17 STO18 STO19 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 3 ..

ID Growth and low unemployment 2 2 2 2 ..

ID Price stability 1 1 1 1 ..

STO15: N.A. STO16: N.A. STO17: N.A. STO18: Interviewee: Not applicable question. STO19: There has not been any independent monetary policy in term of really playing with the monetary policies since 1995. For us this question is not that relevant. Q: Prioritize price stability over other macroeconomic goals? Interviewee: Prize stability was hurting our export but it was providing prize stability.

21.7 The future course of EU integration

21.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Latvian Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview STO15 STO16 STO17 STO18 STO19

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

STO15: N.A. STO16: The current monetary union is not that eﬃcient. And if we want to change something we need a treaty change. We cannot do it by minor adjustments. That’s why legally speaking its treaty change. Then the question is what exactly we want to change in the treaty? But if you really want to improve and solve the challenges. All that can be done has already been done. There is very little space for

305 improving. And all this beaurocracy; why is the fiscal compact and international agreement? Just because we didn’t want to open a new treaty. Also in the banking sector they couldn’t be in the European treaty. That’s why. And we see huge problems that we should solve, not hide and postpone. STO17: At this stage and with our weak position in the EU. Our country is too weak now in EU politics. STO18: N.A. STO19: If we are thinking about different policy areas, then its creation of new organs for multi-speed Europe. But it we talk about new institutions then we need to see what kind of. So I choose between Work within current Treaty provisions and Creation of new organs for multi-speed Europe. There is a need to coordinate certain policies better. For instance, we created the Schengen zone but haven’t coordinated boarder protection policy. And in that we are already moving towards the European border guard agency and its just necessary. Similar I think that Europe in some point quite soon face the necessity of more coordination of defense policy and security policy. And it is obvious that these are the policies that we need to coordinate more. So weather it will be the multi speed Europe with now the UK exiting, maybe not. Maybe there is a possibility of the current MS to unite around these policies. But I’m sure that there will be some MS that want to be left out. So to me it looks like its much more useful to talk about policy coordination, and not about specific agencies or institutions. Because they just come at a later stage. The fact that we need to coordinate the policies more is (?).

21.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview STO15 STO16 STO17 STO18 STO19 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

STO15: Dombrovskis II-Cabinet 3 November 2010 - 25 October 2011. Unity Party (former New Era Party). Coalition: Unity/New Era Party; Society for Other Politics; Civic Union; Union Greens and Farmers. Interviewee: Our government was looking to EU and the EC (European Commission) because they were using this ﬁnancial assistance. I don’t think that it was any change in political view about the EU. And the same goes to after the election 2011. Straujuma I-Cabinet 22 January 2014 - 5 November 2014 Unity. (Unity, RP, NA, ZZS). Coalition: Unity, Union of greens and Farmers, Reform Party, National Alliance, independent. Interviewee: It was the same party and same coalition so here there was no change. Maybe it was towards that it was going to have multi-speed Europe. But in principle

306 it was the same political view looking towards united EU because our goal was to join the Eurozone. We did all reforms necessary for joining the Eurozone. We were hoping we were not talking about multi-speed Europe, we were hoping to get into that Eurozone. STO16: Dombrovskis II-Cabinet 3 November 2010 - 25 October 2011. Unity Party (former New Era Party) - Coalition: Unity/New Era Party; Society for Other Politics; Civic Union; Union Greens and Farmers? Interviewee: First of all we should point out that Latvia was in the process of joining the euro later. So we were not part of the EFSF, ESM, so its quite different from Estonia which from the beginning was in the ESM. Our crisis started a little bit earlier in the EU, in 2008 and. We were in the Balance- of-Payment-Program, which is a crisis management program for the EU. So for ESFS we did not have any views on those matters. Because the EFSF was for the EAMS, and later ESM. But I will try to respond. I would sat that the crises did not change our view to the EU. For us the EU is not only economical but geopolitical question. We never never (?) though that the crises came because of the EU. It was the way how we conducted our fiscal policies. So it was a totally domestic issue. There was no reason to see the crises as a way to change the attitude towards the EU. The way the crises was managed is also focused on the IMF:s part. The contributions from the Balance-of-Payment-Program was more significant then from the IMF. The IMF was mostly vocal. The IMF had significantly bigger experience in the crisis-management then the EC (European Commission) had in those time. In those times there were no ESM etc. The EC gave money, biggest money, but at the experts they came from IMF. I’m trying to compare. If I compare with Greece where the crisis said that they TROIKA is persona non grata in Greece, and the attitude toward the EU dictate to the Greek people. If I throw such parallels, I could say that the where no parallels in that sense in our country. Because we never saw the commission or the IMF or somebody outside who was just dictating what we should do. In that sense maybe the people would change the attitude. There was a big sense of ownership that we have to do all the reforms, its because we need it and not because somebody from the EU or Brussels say that we should this and that. So from that point of view I could say that the crisis itself did not change the attitude to the main principles. And from the opposite side, we could not say that the crises could say that we need more federalism or a bigger EU budget because that crisis come from time to time. That’s why we need stronger foundations for the crises management. Later we see that the ESM was created just for these reasons. It was always regarded as sufficient from our public. In that sense we should not say that we need stronger Brussels or stronger federalism or things like that. The crises and the evolution of the attitude of the EU, (?) we are net recipients and the economic union is the economic wealth for us because we receive more than we pay in. with the perceptions from those parts we arrive to nowadays when we see that we also should contribute, by accepting refugees or by ruling the programs to Greece or agreeing on something that relates to Portugal and Spain. And from that point of view, the mind set of people changed because then they say, why, why do we need steps in the solidarity, because these countries are not implementing their reforms in such a strict way that we did. Now, in the mind of people they have the question about solidarity. In the beginning the EU only gave economic benefits to us. Now we see that the EU itself has a problem and we should contribute ourselves. Straujuma I-Cabinet 22 January 2014 - 5 November 2014 Unity. (Unity, RP, NA, ZZS) - Coalition: Unity, Union of greens and Farmers, Reform Party, National Alliance, independent? Interviewee: No, there was no difference between Dombrowski and Straujuma. And we are lucky. If we look back in our history, it did not change our political stance. More or less we always have a central leader in our government. There was not any shift of policy. Its more about what is in the top of the political agenda. They attitude on how we see the EU has not changed. ” STO17: Dombrovskis II-Cabinet 3 November 2010 - 25 October 2011. Unity Party (former New Era Party) - Coalition: Unity/New Era Party; Society for Other Politics; Civic Union; Union Greens and Farmers? Interviewee: He was working for two terms. During that time, we were not in the euro. So that time was very hard, it was the economic and financial crisis, and also the negotiations to accept Latvia in the Eurozone. And all the criteria for the Eurozone had to be fulfilled. Godmanis is a different

307 politician in comparison from Dombrowski. Dombrowski and Straujuma are from the same political party. I think their vision and the way their politics was made was very close, it was the same. with the political party they come from (Unity), it’s an interesting party, because the leader of the party, she’s a lady, and she was the speaker of the parliament during that time. And at that time around Europe, the leader of the party served as a PM. Mr Solvita Albotinja. So the structure of the party was interesting. The cabinet of ministers were working very closely in all aspects. And when Straujuma came in after Dombrowskis, she was working as he did before. Everything was the same. but the differences between Straujuma and Dombrowski is that Straujuma used to be the state secretary in a few ministries, and then she came into politics. Dombrowskis he came in from the financial sector in politics, then he was a MEP in EP, then became PM, and now he’s a commissioner. They had different backgrounds. Maybe that changed their working style, but not in the political thinking and tools. there has been no discussion about a federal union. Generally, Latvia would not agree on that. I would say that Latvia would pick a multi-speed Europe, because in our media the discussion is always about ”old countries” and ”new countries”. And then the old countries have a better economic situation and we need to speed up to reach that level. All the processes are going a bit different, because in Latvia we don’t have such experience in EU politics. And that’s a problem for us. I cannot say that there is an open discussion on this, on what kind of Europe or changes there’s need to be in the EU. In Latvia we have problems in our internal political situation so we are not keen on discussing the things in EU-level. We are self focused and forget that there are other processes around. STO18: Dombrovskis II-Cabinet 3 November 2010 - 25 October 2011. Unity Party (former New Era Party) - Coalition: Unity/New Era Party; Society for Other Politics; Civic Union; Union Greens and Farmers? Interviewee: I think that probably it did not change the government. The decision makers attitude towards the European union, too much. So its probably would be status quo. And it didn’t change, well governments changed that probably the particular of the Latvian politics. The leading coalition more less the core political stance main and the centre right leading coalition is pro European. In that perspective I don’t think that was much of a discussion. There was probably more discussion on public/media and sometimes also politicians expressing some views on that that Europe might go in different speeds but probably, partially because of more like Greek crisis Or southern European crisis there was some speculation so more and more leaning towards two types of Europe. The southern and the northern part. I think there was never part of the government officials stance. I would say intergovernmental institution for both Dombrovskis and Straujuma. STO19: Dombrovskis II-Cabinet 3 November 2010 - 25 October 2011. Unity Party (former New Era Party) - Coalition: Unity/New Era Party; Society for Other Politics; Civic Union; Union Greens and Farmers? Interviewee: Its still an intergovernmental institution. But we were supporters of more coordination of the economic and fiscal policy. So I would say its something in between the intergovernmental institution and federal union. But definitely not federal, politically. Straujuma I-Cabinet 22 January 2014 - 5 November 2014 Unity. (Unity, RP, NA, ZZS) - Coalition: Unity, Union of greens and Farm- ers, Reform Party, National Alliance, independent? Interviewee: Straujuma was never so exposed or knowledgeable of the European policy, so she to a large extent carried over. The major differences between Dombrovski and Straujuma was the difference in personalities and the interest that they two took in the EU matters.

21.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? STO15: N.A.

308 STO16: N.A. STO17: I remember that the last year before entering the euro was very intense, for the preparation phase. And before that the discussion was more political and less practical. and we as a chamber were more involved in the practical part. There was no change of mind that we need to be in the Eurozone. We would join the Eurozone that was very accepted from all sides. The discussions were: Do we need it now or do it later for 2015-2016, because the economic situation was very hard. And everybody said we need to reduce our deﬁcit budget more. The political part was that we need to join the Eurozone and we do all that is needed. The people in Latvia we don’t say no to what the government is doing. Like ”ok maybe this is not the right way to do this but we wont say no to that”. We just keep it to ourselves. STO18: N.A. STO19: N.A.

21.8 Negotiation strategy during the Euro crisis

21.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview STO15 STO16 STO17 STO18 STO19 S T Hard bargaining: tries to extract concessions from the other side, delays or R Never Never Never Never Very rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Never Very rarely Never Rarely provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Often Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

21.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Latvian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

STO15: N.A. STO16:

309 At least in the economic policies there were no decisions that were so ”unacceptable” for us that we used some extreme ways. STO17: I think we are now looking for partners. Maybe we are in the second category. But during that time we were soft. We can see that in other policies. In other areas the decisions made have not been very friendly for Latvia. Our experience in 2010-2011 was weak. I hope we are stronger now after the presidency in 2015. STO18: N.A. STO19: Generally we do not use the hard negotiation strategy apart from some times.

22 Malta

22.1 The list of interviews in Malta

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer MLT01 75 MLT02 50 MLT03 100 MLT04 75 MLT05 50

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

310 22.2 The summary observation on country interviews

Malta as the smallest Member state changed its tactics during the EMU crisis. While it often followed the proposals of the Commission or the Central Bank in the beginning it started to be more critical during the crisis. It became clear that Malta could not trust the large Member states to offer secure and clear proposals, hence Malta started to speak up more during the Euro Crisis. This was especially salient during the ESM negotiations. Domestically the government dominated the preference formation. The parliament did not have much influence. The parties lacked the resources to discuss the proposals therefore the government could impose its decisions on the parliament and almost everything got accepted without changes. However, the government was very responsive to public opinion, which allowed national media to play an important role in government?s preference formation. The majority of interviewees of Malta held official positions during the negotiations. Some of them worked in the private sector but were informed about the EMU negotiations and government’s preference formation. Therefore we are not aware of any limitations regarding the data collection process.

22.3 Open answers to questions on 4 contested issues

22.3.1 GRC: Willingness to support Greece in early 2010

MLT01: The interviewee did not agree on how the member states were divided in the upper part of this part of the question. At the time all the governments were aware of the gravity of the situation, all were aware of the available options, they were aware of the problems which Greece faced and what the cascading effects would be on the other member states and the euro-zone, and at the end the decision was taken to offer Greece a package to help it out of the crisis. In these discussions there was a lot of coming and going and the positions kept changing all the time. Hence I tend to regard the division here between the Member States as a bit fictitious. Prior to the decision of the 15th March 2010, there were several discussions but in the end it boiled down to the agreement on the gravity of the situation. Differences existed over the method by which to help Greece. That someone should indicate that Malta was ready to help outright is not true to fact. The main actors who took part in shaping the government’s negotiation positions were the Ministry of Finance, the Office of the Prime Minister which were directly involved, the Permanent Representative in Brussels, the Malta Financial Services Authority and the Central Bank of Malta. These were the key actors and intensive discussions took place between them. At the start of the crisis we were looking at the implications of a Greek default, how the crisis could impact the local financial services and the banking sector. We were engaged in hour-by-hour monitoring of the situation. The situation was very dynamic and the pressure was great. We discussed many options available, all of which had serious ramifications and a cascading effect on the rest of the member states. Finally when we turned to the discussion of the help which was to be given to Greece we discussed the method involved, the type of aid to be given. Civil society and business organizations such as the Malta Chamber of Commerce, Business and Enterprise were not involved but later on in the crisis we did consult the Malta Council for Economic and Social De-

311 velopment (MCESD) which is made up of representatives of business, trade unions and civil society. [Note R. Pace: the first discussion that I have traced at MCESD level on the Euro crisis was when the Minister of Finance Tonio Fenech addressed one of its meetings on 22 February 2012. No minutes of the meeting on line could be traced.] He added that when the Greek crisis arose Malta had (just) joined the Euro two years before. Hence this was a big problem for the government (R.Pace also for its chances of re-election) which was confronted by the highest offices in the country, namely the Prime Minister and the Ministry of Finance. Clarification by interviewer: The euro was introduced in 2008 following a strong and often divisive debate in Malta between government and Opposition. Malta also had an election in 2008 where the government was returned by the narrowest of majorities and a one seat advantage in parliament. So, when the Greek crisis began this was taken very seriously by the Maltese authorities because it threatened to destabilize the government whose majority was slim and which had been so vocal in taking Malta into the euro-area. The government was not confronting itself but the euro crisis. Since there was such a political risk from the domestic politics view point the PM and highest officials of the state actually took a very strong leadership role on the issue. from the start. This is also in line with what happens in small states where the highest offices normally become involved in all major issues which arise. (interviewer) But whose was the decisive influence? One cannot state. When the crisis was first discussed at the level of the heads of government, there was just the Prime Minister and myself as a technical aid, the only time that the prime ministers and heads of government were allowed to be accompanied by a technical aid. Then I recall the meeting convened by Mr Sarkozy on a Sunday afternoon when there was a fear of a real banking collapse. Decisions taken on our side were more or less collective ones involving several persons. As far as I can recall there were no serious gaps between the Office of the Prime Minister, the Ministry of Finance and the Central Bank. Did you have any representation from the banks? MFSA kept involved because of the possible repercussions of the crisis on the Banking Sector and the Malta financial services. Business organizations were not really consulted and the MCESD came into the picture very late. I reiterate the main decision-makers were the ones mentioned at the top. MLT02: Interviewee: I agree with the position of Malta (some immediate support for Greece is necessary). I can only reflect the positions presented to the Foreign and European Affairs Committee (which I used to chair). The way it was certainly presented to the Foreign and European Affairs Committee emphasizes the need to save the euro as a currency. So it wasn’t simply a question of helping Greece, and solidarity with Greece. Ultimately, if you get a default by a country like Greece, this would obviously have a kind of domino effect. In a sense, and I am sure that was also the prevailing idea also in other EU countries, that was what eventually led to the grant of aids requested. The inclination was certainly to help, the inclination was always for solidarity and also definitely to save Euro. MLT03: I agree in this case [with the position of Malta]. The position of Malta has always been to support as much as possible Greece. There is a political dimension and reality justifying this decision. Greece is not only a partner in a number of areas with Malta, but is also an important player in the Mediter- ranean region. The stability of Greece was a priority for us. We could see from very early in the process that the instability of Greece would endanger the stability of the whole Eurozone, which is something that Malta was against. The position we took from the very beginning, and I must say throughout the whole crisis, so even when events seem to be getting worse over time, Malta’s position never wavered. We continued to argue that it was in everyone’s best interest to support Greece. MLT04: I do not recall the positions being so absolute, especially at the beginning. Clearly there was reluctance by everybody to provide funds. From what I remember, there was an understanding that Greece definitely needed assistance. Particularly within the Eurozone, there was an understanding that some form of assistance has to be made available. But there was a bit of a difference between countries that were in the Eurozone and the countries that were not, which is not adequately indicated here. There was agreement that Greece had to request assistance. In other words, Greece had to express

312 a commitment. We were, as Malta, particularly conscious of providing funding which would be lost. Initially there was a sensation that some of the problems that Greece faced, were actually created by Greece. I was present in council when the Greek minister of finance said that the figures provided by hi country were not reliable. And that was the second time that I heard that in council. He made a statement that the Greek statistics office and central banks figures were not reliable. That was in 2007/2008. That created obviously a total sense of insecurity but it also meant that everything that Greece from that day on presented, was looked upon with suspicion. I have no idea why the minister of finance made that statement. I imagined it was true. There was a sensation of irresponsibility, as if basically Greece would like to continue being irresponsible, with somebody else paying the bill. The difficulty was that when Greece decided to make cuts, they made percentage cuts across the board. Which meant that they cut the pension of the old ladies by as much as they cut the salary of someone who should never have been employed in the first place. People who were relatively close to the poverty line in Greece, in particular pensioners, were squeezed instead of being protected. Politically it was easier to decide: we will make a 10 percent cut and blame the EU. If you tell me that all the statistics are unreliable, you are creating, for the people from whom you want money, a situation where? how am I going to judge what you say? It was up to Greece to decide where to cut. The exposure to Greek banks was not equal across the member states. There was hesitation from the banks to make the transfer. There was also an impact here. There was also some exposure in Malta like GO (telephone company), because they owned a Greek telecom company. What the Eurozone did was to make it cheap to borrow money. Mainly because the interest rate came down. Obviously this helped to encourage member states to borrow because the cost of borrowing was low. Then when you have a crisis, you have to provide funds, and you have to find a way to providing those funds in such a way that you also introduced a major sense of responsibility into the Greek structures. This was particularly important for Malta, the country that is more exposed in the bailout than Germany as a share of GDP, Malta. When you read in the papers how much it’s costing Germany, there is a failure to understand that the smaller the country, the larger the share as a percentage of GDP. So, in political terms, yes Germany faces the bigger share of its cash being put on the table, but in terms of GDP it was us (Malta). In reality, there were countries that say no, but I am not sure if this German position is not an exaggeration. Malta’s position became public when the decision was adopted. And when the decision was adopted, it was basically supported by everybody. MLT05: I have to say what I recall. I do remember that at that time, when Greece was facing problems, it was 2010, Malta was already part of the Euro system. It was very important that being in the same currency, one had to support those countries which were members of the Euro area. So I think most countries immediately understood that assistance for Greece was needed. Our idea, when we joined the Euro area, was that there was going to be support among the members. In fact, I think that one of the problems of Greece was that they probably overestimated the assistance that other countries would give them. Some of the members which were so keen to join the Euro area, to have the currency, thought that they could benefit from the stability of the currency, the low interest rate, but what they did not realize is that you couldn’t overdo and overestimate this. This means that you have to stick to certain rules. You couldn’t have a large fiscal deficit, spend as much as you like because you can borrow at a low interest rate and that since you are part of the euro currency you are not going to have any negative repercussions for the currency. This was the situation at the time. Here in Malta, if I remember right, we were a bit ”disgusted” by the kind of attitude of the Greeks. [Greece did not appear committed and responsible]. We had the impression that Greece was spending beyond its means; they did not implement those kind of reforms to get the country on track to reaching the level of the others. Other countries, especially like Malta, which was doing its best, as much as possible to follow the policies which are prudent, mostly on the fiscal side. And you see another country which seems to be going the other way? So even though we knew that we had to support Greece, because Greece is a part of the euro area and we didn’t want to have any repercussion on the euro area and on the currency we were still very critical. I therefore agree with the position 100. I think that in

313 Malta very few were really interested or involved in expressing their views about assistance to Greece. Here, unfortunately, even in the media you don’t really get constructive debate and knowledgeable discussion. As a country, constructing debate on economic topics is still lacking a lot. Especially at that time, more than ever. It was very much head of government, the Prime Minister, who had a position and a strong influence. At that time, the head of government and the Ministry of Finance were for sure having a major influence. In those days, those were the most influential people on financial matters.

22.3.2 ESM: The size of the European Stability Mechanism

MLT01: The interviewee said that he was not comfortable with the division of the member states as indicated above. I am not sure about this division. What I can recall is that there was a discussion and a generally held attitude within the Council that the ESM should have real power, a figure to awe, there were various scenarios but in the case of these funds the Ministry of Finance was always in the forefront. The contribution key was established by the Euro Group in accordance with our contribution key in the ECB. We negotiated a transitional arrangement on how to stagger our contribution. The ESM treaty was negotiated and agreed by unanimity. At the same time there was the pressure for an agreement and therefore despite our smallness and with the help of unanimity we could insert certain favorable terms which I do not think would happen again now should this treaty be renegotiated. Perhaps we can look directly on the table of actors and focus on what would be different from the answer to the first question (GRC: Willingness to support Greece). The position score between 0 and 100 is again defined in the policy space above and influence score ranges from 0 (no influence on this issue) to 100 (the decisive influence on this issue). MLT02: You place me in doubt here, because the argument for flexibility I remember, so that’s why I suppose the position assigned is 100. But I wouldn’t know for sure [the interviewee is not sure whether the score 100 is appropriate for Malta - ESM lending capacity should be substantively larger than 500 billion Euro.]. But I certainly remember the argument for flexibility. MLT03: I agree with this position [Malta 100]. It was a debated position. Again, we were talking about the intention to try and avoid the contagion of what was happening with Greece. The situation in 2010 was becoming worse and worse and a major intervention was required. At the time, there was already a talk about the possible breakup of the Eurozone. Something big needed to be announced in order to settle the market and remove all the fears that there were at the time. And therefore, there was a debate. In Malta we debated very much on the exposure that this would put us in, with our economy. The end result brought us to the conclusion that it was in our best interest that EU would have this bazooka, this very strong tool that would settle the uncertainty that had grown in the market. I would say that there was no choice. We had to support this. It’s a sort of like a very nasty medicine, which you would have to swallow, but you know that it was necessary. The positions and influences below,

314 are the same like before. Identical. There is no variation. This issue happened just a few months after the issue mentioned before. This is the reason why the answers are the same. MLT04: From my memory, it is absolutely untrue to suggest that Germany and the Netherlands were at one extreme and the others were at the other regarding the size of the ESM. First of all, the largest chunk of money was going to come from Germany. The position certainly of Malta and of anybody involved was that the ESM has to be as large as necessary. What does it mean necessary? There was a discussion on that. What was considered to be necessary guided the discussion. If you remove the countries that were directly impacted, the point was how much money they would put on the table and how safe that money is. From what I remember, the discussion was about ascertaining what this magic number was and obviously writing the rules. In the way this discussion went, the advantage we had (because of our size) was that the principle technical individual, who was Alfred Camilleri, had a complete picture of the impact of what we would decide across the economy. In the discussion with people from other member states, particularly the larger member states, there was a complication that they tended to be experts on particular areas. More than once we were able to identify something that would have had a major impact and would have not been picked up by other member states. One particular decision was whether the funds that were going to be made available would add to the national debt leading countries to lose their triple A ratings. There was one instance where each member state would have probably lost it. There were a number of instances like that. We learnt to speak up more. Initially we tended to follow what the commission or the central bank thought and then we became more critical. Clarification from interviewer: Malta noticed that this was going to create problems for all the member states. If the lending that were going to be given to Greece, was going to be added to the national debt, only a few member states would have been able to retain the triple A rating. From that point onwards, the Maltese government realised that it could not blindly trust the larger member states in advancing clear and secure proposals. The reason for this is that while small state representatives have a holistic overview of policies and implications of decisions, larger states tend to work with specialists who at time find themselves detached in different silos. For the EU to function properly, the representatives of the member states must know their member state absolutely. The value to the discussion is that they are able to assess the impact on their member states. The impact of a member state must be absolute in terms of understanding. At that stage, in the discussion, certainly the views of each member state are listened to. I have to confess to having been shocked more than once when we realized that certain draft proposals would have led to completely different conclusions to those envisaged by the proponents. Our position therefore was that the funds are to be as large as necessary. To provide a number 0/100, is difficult. It was not a political decision as to what was necessary. It was a financial one. Malta position would have been 50. Nobody would have wanted to put more funds then necessary. The influence element of the decision ? I cannot do them one by one. MLT05: I agree that we wanted it to be large (referring to the ESM size). We started seeing, first of all that the problems of Greece were of a higher magnitude than at the beginning of the crisis. And also, the ESM was going to be made available to all the countries. Even Malta could benefit from it in the future in case of a crisis. One of its aims was lending to banks. I think there was a positive response in general. We were in favour so I agree with the position assigned to Malta. Our position was always ”we want to follow the rules; we want to abide by them”. The Prime Minister at the time clearly stated that he didn’t want to be popular, but he wanted to follow and implement the right policies, prudent policies. That meant macro-economic prudence. They were making great efforts to keep things under control. This is like an extension of the Greek crisis, so the answers [below] are not very different from the previous ones.

315 22.3.3 FCO: The legal form of the debt brake

MLT01: The interviewee rejected the division of member states as above and placed Malta in position 80. The negotiating position was made by the Office of the Prime Minister, Ministry of Finance with the involvement of the Permanent Representative. N/A= I don’t know MLT02: I disagree with the position of Malta. We were pretty close to position 80 (TSCG - Binding provisions - not necessarily constitutional). Certainly 80. At one point, we were even close to position 100. As far as I know [referring to the position and influence of international actors on domestic debate], these all went for flexibility in the end. I have been asked questions which relate to memories pertaining to matters that (?) the players would know what happened, but I can say what happened in my committee. And a lot of this did not come up to my committee. MLT03: Malta had a position. It was a position between 60 and 80. We agreed that there should be a legislation, and the opinion differs between ordinary legislation or binding provisions, which did not exclude constitutional, but not necessarily. At one stage we thought that constitutional is a bit too much. MLT04: First of all, one of the interesting thing about the debate is that we went into the discussion assuming that what was contained in the fiscal compact could one day be applied to us. And then there were other countries, that went into the discussion and they knew that what was decided would apply to them as well and a third group (including the Finnish, Dutch and German), who thought that whatever was decided, would never apply to them. Which meant that certain countries kept on pushing for certain stronger definitions and rules within the compact. Others, while they wanted a compact which was strong, understood that some of the effects of being caught up in the decision of the compact, could go too far. The third group mentioned before, assumed that these were punishments that would apply to other countries. Sometimes, at EU level, you ignore the fact that these rules may one day apply to you. And in that stage they can, instead of helping towards reaching a solution, become a bit more of the problem. Our position was 80: Binding provisions - not necessarily constitutional. the top players are 80, the others follow. MLT05: I am not so sure. I think that the Prime Minister was in favor of the binding provision, but not necessarily constitutional. If I remember right, position 80. The international actors didn’t have much of an influence. I would add the very same answer I gave when discussing the issue of Greece. The positions are the same as suggested in the definition of the policy space.

316 22.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

MLT01: The interviewee said that Malta’s position is correct. N/A = Unknown data MLT02: This is correct. We had no position on the Reverse Qualified Majority Voting. I believe we were also part of the countries that moved to the position 100, eventually. That was the outcome. But certainly not initially. The position which was advocated was not communicated to my Ministry. So it could have been an internal government issue. With regards to influence, I would obviously go for the usual classification below.I am speaking on the influence only. Because I cannot give the position of third party of which I was not informed. About this particular issue, I was not informed [where there is no position (-), it is because the interviewee was not able to assign a score] MLT03: We started off with a position 0. But then, it was obviously necessary for a compromise to be reached. Eventually we came on board with position 100. If the question refers to our initial position, then it was against, but it changed over time. My answer here is a bit confusing. If you are going to take the starting position, then the starting position would be 0, and it became 100. Influence, again, same as the other answers. The influence is the same like in the previous answers. MLT04: We remained in favor of the status quo. But it was not 0 (Opposes the introduction of the RQMV). Our position was basically 40. Again of the key players. And then is the same. When coming to the international MLT05: I would believe though that the Maltese approach was more in favour of position 0 (opposes the introduction of the RQMV). I believe they don’t like to give the Commission a carte blanche. I doubt we did even have a proper discussion about this. This is a political question, and since I was in the central bank, this is my honest opinion. I don’t think any of the international actors had an influence on the domestic debate.

22.4 The stability of government positions and the role of Eurozone non- membership

22.4.1 GV1: The Change of Position and the change of Government

MLT01: NA MLT02:

317 No, there was no major change. Negotiating position remained largely the same. The same applies for all the tables. MLT03: I have not been in the center of things since 2013. My impression overall is that there has not been a change in the general position taken by the Maltese government with respect to all three, except for one issue, I think. With respect to the Banking union, I sense that there is a slight diﬀerence between the position that my government took and the position that the Muscat government is taking. I remember arguing strongly the fact that Malta was a small economy but with a very strong banking track record. We were not exposed to loans which were taken from foreign countries, but our exposure was to a very large extent an exposure towards Maltese citizens. It was a local exposure. We always argued within the EU that a small economy like Malta, with a very strong track record, needed to be distinguished from the situation of the larger countries. Therefore, we were always very conscious, especially when we started to talk about the single supervisory mechanism and the role of national regulators, whether a small country like Malta should be subjected to the same module that would apply to a larger country, with a much larger exposure. We always argued that in a small country like Malta, our regulator knew very well, was very familiar with the actors, with the main actors in our economy. Two major banks in Malta were dealing with our business people and they knew them personally, they knew their family, they knew exactly who their client was. And therefore, our position was that although we did agree that there should be a single supervisory mechanism, in order to make sure that things are moving forward, but in our case it should be considered the small economy, the exposure, ? so we insisted that the local regulator should have a little more freedom of action, considering that the exposure at the end of the day is for a small country. We were not going to break the Eurozone down. This was our position. We did not manage to achieve this. Eventually the decision was that there would be no exception. But this was our position. I sense that this government has backtracked from this position and surrender itself to the reality that now there is this situation. MLT04: NA MLT05: No changes.

22.5 The role of parliament: governing and opposition parties

22.5.1 PL1: The role of the National Parliament

318 Figure 1: Change in the majority party inﬂuence

Interview MLT01 MLT02 MLT03 MLT04 MLT05 P. The inﬂuence of the majority in parliament 0 + + 0 0 .

MLT01: as long as the majoritarian system remains the same and the government of the day enjoys a parliamentary majority, the position of the parliament is not going to change but government will employ its majority in support of its policies and decisions. This means that since there has been no shifts between the governments of Gonzi (2008-2013) and Muscat (2013-) Parliament’s influence remains unchanged. MLT02: I would say, definitely stronger. We did acquire new control instruments, that is correct. Information is flowing more swiftly. The third box [The parliament had sufficient time and resources for discussing the policy of the government], I would tick half of it. We still don’t have sufficient time. We have been equipped with a bit more of infrastructure. Infrastructure and the employment of a number of research analysts who are informing us better, and giving us a critical analysis of various European instruments. MLT03: (The national parliamentOs˜ role in influencing the national governmentOs˜ position became stronger). There was some change, for the better, so I would say a little bit stronger. I say this because in 2013 in parliament we introduced the economic and financial affair committee. Again, this was the result of the introduction of legislative measures to make sure that we were implementing all our six-pack obligations. And we introduced this committee which therefore provided new opportunities for our members of parliament, both on the majority and on the minority, to be able to analyse better, to be able to listen, to be able to criticise. The reform discussion in the EU eventually translated into a marginally stronger parliament. The best example I can give is the introduction of the standing committee on economic and financial affairs in 2013. MLT04: NA MLT05: The only addition since 2010 (which happened in 2013) is the new Parliamentary committee on Eco-

319 nomic and Financial Aﬀairs. But whether the parliament gives more information, I doubt it, especially now more than ever. In fact, there is even a lack of information

22.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview MLT01 MLT02 MLT03 MLT04 MLT05 P. Governing party inﬂuence 0 0 - 0 0 .

MLT01: NA MLT02: If I have to give a very frank opinion, I would say ”no change” in the the role of the MPs of the most important governing party in influencing the national government in EU affairs from 2010 and 2015. And I think that the reason for that is that the trend is for the government MPs to rely on briefing notes provided by the government. That does not mean that we [MPs] don’t question, we don’t get involved. But, at best we have become more reactive, in a positive sense, more participative. Certainly we became more participative, but not participative to the extent of becoming highly pro-active. So, the relying on the government briefing papers is due to the fact that they are simply excellently drawn. This is a structure that, the former Permanent Representative to the EU in particular had put in place. You get briefing notes which explain, for instance, a new instrument of the EU, a proposed directive, the impact on Malta, the position of different departments, how it impacts even civil society, recommended actions. At the parliamentary level, we do now have at least what I would call ”independent analysis”. So, the parliament has independent research analysts. And they would tell their opinion independently of the government analysis. But government MPs, I think instinctively, irrespectively of whom is in government, would give strong weighting to the government position papers. Also because of the excellence with which those position papers used to be produced, and structurally created by Richard, and which have been maintained even by the present government. So, no change. MLT03: I had a majority of one sit. This government has a much wider majority. The role of MPs was stronger in my time, not because of the EU reform process, but because of the numbers in parliament. The real answer, the role of the MPs of the most important governing party in influencing the national government in EU affairs from 2010 and 2015 became weaker, but because the numbers changed. The government has a larger majority and therefore has more freedom of action. It has nothing to do with the reform process or the event that took place in the EU. in reality, if I forget the national scenario, the answer would be no change. But the political reality, on the ground, means that today the MPs are weaker. MLT04: It is a single party government as well. As long as it has a majority in parliament. [Interviewer’s comment the Muscat Government has a much stronger parliamentary majority and hence command of parliament]. MLT05: This is a question of influencing national government in EU affairs. I have the impression that the government takes the lead. It already decides on a course of action and I don’t think that any member

320 of parliament, whether on the government side or even on the other side, is going to make a change. They are mostly led rather than leading.

22.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview MLT01 MLT02 MLT03 MLT04 MLT05 P. Opposition party inﬂuence 0 0 - 0 0 .

MLT01: NA MLT02: I think no change again would be the objective answer. I would say, maybe because we involve ourselves quite a lot. From that point of view, you have two former ministers who make a point to get involved as much as possible. We do not have new control instruments, but we question more and sometimes we ask the research analysts to give us more information, or to acquire more information from the government. Anything important in the power relation between the opposition and the government. Foreign and European Aﬀairs Committee, would never contest anything. And there is one major exception to this, and that is when the European Foreign Aﬀairs Committee was asked to investigate the allegations that have been made against our Permanent Representative at the EU commission. MLT03: I may be wrong; this is my perception. And my perception is that there is lack of consultation between the government and the opposition. I think that the distance between the government and the opposition has grown in the past three years. The government seems to be reducing the level of consultation with the opposition. The gravity of the situation has reduced. Prior 2013, the situation

321 was very serious. It was incumbent upon me to consult the opposition and to get them on board. And we did that. Now, post 2013, things have settled down. The economies of the EU are now starting to show an element of growth and stability. There is less pressure. Which probably explains why there is less consultation. MLT04: NA MLT05: NA

22.6 The dominant views of economic policy

22.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview MLT01 MLT02 MLT03 MLT04 MLT05

ID The state should provide signiﬁcant economic governance with state-led 3 2 1 1 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 2 2 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 3 3 3 2 .. management.

MLT01: The interviewee mentioned Macro economic stability to maintain ﬁscal balance and hold down prices- government deﬁcit, public debt and prices. MLT02: I have always believed more in free, but more social, market economy. This would be the description of my own policy. To create the condition for economic growth, and all the necessary incentives for economic growth, pertaining to the free market concept. To balance that growth with social market mechanism to make sure that there are no segments of society left behind. Growth-oriented. So I would be against austerity. A lot of what is being said in the UK at the moment makes sense to me (not the Brexit). MLT03: The comment I gave to the previous question relating to the type of economy that we have, indicates clearly the above rank. Here I am talking about the services industry. If with state-led industrial policies we mean a policy that encourages the services industry, and it makes it competitive, using the tax structure as a mean of making the country competitive, that is the top priority.

322 MLT04: No MLT05: Perhaps increased focus for the private sector. Widen the ability of the private sector to play a stronger role in the economy

22.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview MLT01 MLT02 MLT03 MLT04 MLT05 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 3 3 ..

ID Growth and low unemployment 1 1 1 1 2 ..

ID Price stability 2 2 2 2 1 ..

MLT01: Interviewer: ”we do not have a problem in growth and unemployment but have a problem in price stability? we are saying what should Malta’s preferred monetary policy in the EU be?” The interviewee remarked that whenever Malta devalued its currency before the introduction its beneﬁts were quickly eroded. So he could not agree with a competitive exchange rate (with reference to the euro zone). MLT02: Growth and low unemployment would remain the leading objectives. MLT03: I must explain that Malta’s economy is an open economy. Our economy, to be successful and to create jobs needs to look beyond our shores. Therefore, we must be an economy that focuses a lot on the services industry, on technology, on fast communication. We have, and we give a lot of importance to manufacturing and to the industry on the island, but of course we are competing against giants in the rest of the world. We are very much focused on the services industry, which again explains why we focus on growth and low unemployment, but growth in the services sector more than anything else. MLT04: No MLT05: No

22.7 The future course of EU integration

22.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Government of Malta for reforming the EU? Multiple options are

323 possible.

Figure 6: Next integration steps

Interview MLT01 MLT02 MLT03 MLT04 MLT05

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

MLT01: For the time being we must work in the current treaty context. Cannot envisage any changes without the risk of bring down the whole ediﬁce. MLT02: NA MLT03: The worst thing that could happen now is for our electorate to start hearing their leaders speaking about constitutional debate and Treaty change (which doesn’t interest our electorate at all). I think the reality is that we have to work within the current Treaty provisions, in order to address a number of challenges that exist all around us. I would not agree either with the creation of institutions for multi-speed Europe. In fact, I am worried with the fact that Europe is formalizing this speed. We are no longer a Union. We are a disunion now. And that’s a disaster, which goes against the founding fa- thers of the EU. I would recommend strongly that we use the existing Treaty provisions, which provide enough ﬂexibility for us to move forward. And also, accept the political reality. Our electorate, across the whole EU are showing that they do not want our leaders to end up talking about constitution, provisions and all that. They want us to talk about creating jobs, about guarantying our pensions, about our security. MLT04: Work within current Treaty provisions: very strong. If they want to destroy Europe they chose the other options. MLT05: NA

22.7.2 ID5. The Vision of the European Union

324 Figure 7: The Vision of the European Union

Interview MLT01 MLT02 MLT03 MLT04 MLT05 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

MLT01: NA MLT02: I think that Malta government’s position has always been a mix between Intergovernmental Institu- tion, because at the end of the day that’s how the EU has been built up now. No government of Malta would go for option 1 (Federal Union). And obviously that links to no change (status quo). Intergovernmental Institution, which in any way, as far as I know, reﬂects very much the status quo. MLT03: NA MLT04: I would add that that the Gonzi government, has a traditional position in favor of a federal union, but with full respect for the member states. MLT05: NA

22.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? MLT01: Interviewee: Malta does not favor a federal union, and nor does it want a multi-speed Europe. At the moment the biggest problem is between those who think they are in the core and those who think that they are outside the core. If we go for a multi-speed Europe, then we will have more tensions and more exits or attempts at exits. When Euro Group discusses something and then we go to discuss in ECOFIN for decisions, big tensions and problems arise with those member states which are not members of the Euro Group. One of them is the UK. By ”no change” I mean the present state of the EU already involves a strong inter-governmental approach. MLT02: Certainly it did influence the government’s stance on the reform discussions. In Malta that would happen on fiscal packages. MLT03: Yes, it did. This was our vision. There are members within my government who were very open to a concept of moving the Union towards a federal union. But the overall majority I would say, until 2013, was more towards an Intergovernmental Institution, working together, finding the common ground. The argument I used to make was: ”this is a formula of success, both in economic terms, in political terms, in stability, quality of life”. MLT04:

325 NA MLT05: The governmentOs˜ general vision of what the EU should be: strengthening the status quo. So yes it did, strengthening the existing frameworks, improving it.

22.8 Negotiation strategy during the Euro crisis

22.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview MLT01 MLT02 MLT03 MLT04 MLT05 S T Hard bargaining: tries to extract concessions from the other side, delays or R Never Rarely Never Very rarely Very rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Rarely Never Never Very rarely provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Very often Often Rarely propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

22.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the delegation of Malta changed during the Euro crisis negotiations? If yes, please explain how and why?

MLT01: There was no change. When we were negotiating the ESM we used to make the point that we are in it together, proportionally we were forking out the same amount of money and for that reasons we would want to stick to unanimity. When we came to help Greece as a proportion of GDP our contribution was the highest. I remember other member states arguing on the need for collaterals for their lending to Greece. We never asked for that.Last Comment The interviewee’s last comment was that he remembers one instance in which Malta stopped negotiations in Council and this happened when the ESMF was being debated and the EU was proposing to use the fund as leverage to borrow on the international market. Malta opposed this on the grounds that this could endanger the triple AAA rating of the EU and increase the costs of borrowing? MLT02: I don’t think that the negotiation strategy of the Malta delegation changed during the Euro crisis negotiations. Comments: Hard strategy - the interviewee replied ”sometimes” (not rarely) MLT03: I wouldn’t say that the negotiation strategy has changed.

326 MLT04: Not that I know MLT05: Soft Strategy (sometimes). Has the negotiation strategy changed during the Euro crisis? If yes, how. Not really.

23 Netherlands

23.1 The list of interviews in Netherlands

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer GRE01 50 GRE06 75 GRE07 100 GRE17 100

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

327 23.2 The summary observation on country interviews

Netherlands positions were mainly shaped by the PM and the Ministry of finance. Between 2010 and 2012, Netherlands official position in the media was very conservative as they asked even more conditionality than Germany. However, this should just be seen as a double game because, at the same time, NL representatives at the EFC were seeking solutions for the EU level and making sure NL would go along. For example, the EFSF statute (financial vehicle) was a NL idea. The NL team between 2009 and 2012 worked in a very closed and secretive way to be sure that no information would be leaked. However, this was problematic, notably for the relations with the parliament. Hence, change of style in 2012 when the NL EFC representative team was more open and shared more information with other ministries. In 2010, Netherlands mainly wanted to protect its banks because of exposure to Greek debt. NL also often play a pivotal role between France and Germany. They were supportive of agreements at a national level because they believed that it would strengthen Di- jsselbloem influence at the EU level and hence, NL influence. There are very strong parliamentarian controls: ex ante (definition of the negotiation mandate) and ex-post (interviews of officials live on tv).

23.3 Open answers to questions on 4 contested issues

23.3.1 GRC: Willingness to support Greece in early 2010

GRE01: Ministry of Finance and PM had the lead. Foreign affairs and economy ministry were involved but to a lesser extent. European institutions had a strong influence because NL committed to their an- nouncements. -No idea about Parliament except that both ruling political parties agreed on ministry of finance positions. - The two parties in coalition also agreed. GRE06: Context: Dutch negotiators were angry at the breach of the SGP in 2005. They wanted a good mechanism to respect incentives. They are against the idea of a transfer union. So, the Dutch finance minister (Jan Kees de Jager) adopted a tough stance. This strategy was in coordination with Ger- many (Dutch was tougher and Schauble looked more open-minded). Dutch positions were constructed between its EFC representative who was more pro EU (e.g. the EFC representative in question is GRE7) and its finance minister (Jan Kees de Jager) who adopted a tough stance (e.g. he wanted stricter conditionnality for the Greek loan). The secretary general of the ministry of finance tried to buffer the two positions. In NL negotiations, the important players are special teams made of members of ministry of finance, central bankers and the PM cabinet. this strategy is efficient: In eurogroupe, most member states don’t speak except, big countries, Netherlands and Belgium. Netherlands wanted to bring IMF in the Greek rescue because it distrusts the Commission. Mediation between French and German positions. GRE07: Netherlands played a double game. On the one hand, the finance minister Jan Kees de Jager who arrived in march 2010 has a very tough stance, tougher than Germany. (Nb: Tough means hard

328 conditionality/economic rigor. Soft means more favorable to sharing of fiscal resources). On the other hand, since spring 2009, the Dutch EFC team was the first to think about the possibility of potential Eurozone bond markets troubles linked to fiscal difficulty. They realize the exposure of their own banks to Greek’s (and other periphery countries) debts as well as the expositions of others big core EU banks. The conclusion was that some form of help would be needed. So Greek help was not altruist, it is selfish, it is for the good of the national banks. In this mechanism, there would be a need for conditionality, IMF style. NL played a pivotal role in bringing the IMF. At first, German did not want IMF and then, the Dutch PM (Mark Rutte) convinced Merkel and then, Schauble had to agree. IMF was here because lack of expertise at the Commission + financial burden sharing. it would have been hard to have NL Parliament’s approval without it. The financial structure of the Greek loans had been elaborated at the EFC (task force on coordinated action) with Luxembourg representative and EFC chairman. In general, within NL, there was a ”triangle of cooperation” (PM office + finance minister + Central bank) on EMU financial issues that started in late 08. Mediation between French and German positions. GRE14: Netherlands public discourse against Greek help but the administration was already working for solutions. Therefore, score 50. PM and finance minister had the lead in a coordinated fashion (administration was doing the glue despite lack of affinities within political personnel). At first, it was a very small group, mainly within finance ministry because of the possible financial repercussions in case of leaks. Mediation between French and German positions.

23.3.2 ESM: The size of the European Stability Mechanism

GRE01: Ministry of finance and PM have the lead. Finance obvious because the EFC member ( chairman of eurogroup working group, eg. GRE7) proposed the architecture of EFSF (which was the predecessor of the ESM). So the topic was much discussed. No idea about Parliament, except that parliamentary committee on Finance is the only one that matters GRE06: Same influence, except that it was a more technical issue and min fin even had more the policy lead GRE07: Not the most sensitive issue. Size did not matter much, it was more about the activation of the program. ESM had a bail in mechanism so it would be costly for countries to activate it. Therefore it complies with NL wishes, it was not free money. GRE14: Same than before

329 23.3.3 FCO: The legal form of the debt brake

GRE01: Same than GRC but Eco and foreign affairs had a bit more influence. No idea about Parliament, GRE06: The score is 60 because it would have been less efficient to reform the constitution but Dutch negotiators wanted it to be strict. International law is binding NL law anyway. In NL, there is no constitutionality review or supreme court. The Parliament takes this role. The argument at the Parliament was this one : Fiscal Compact was not restricting Netherlands’ autonomy because NL already had this sort of compliance to economic rigor (e.g. culture of economic stability) but Fiscal Compact was going to constrain other countries. Therefore, there was a consensus on Fiscal compact in Netherlands GRE07: No big deal for Netherlands. It had these rules before fiscal compact. Willingness to take away as much discretion from other Member States as possible. it was already in the 6 pack, constitutional matters do not apply for NL. It was more a issue for the French German power struggle GRE14: Change of constitution was a no way. It would require a 2/3 majority and a different legal system (no constitutional court in the Netherlands). Long deliberation with the legal team of the commission to explain their viewpoint. Yet, NL was backing fiscal compact very early. In July 11, administrative team at ministry of finance changed (and therefore at the EFC). Decision to open up the negotiations to other players. In September 2011, the government Rutte I sent a letter to the parliament proposing fiscal compact as well as the deposit insurance scheme of the banking union. Fiscal compact was not a an important issue. It was fitting with Dutch system as it exists. More a German/French thing. NL were pushing the commission to focus more on competitiveness issues.

23.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

GRE01: exactly the same than FCO. Still don’t know about Parliament.

330 GRE06: The European parliament role was important for 2pack 6pack because it is ordinary legislation. It was the only issue on which they weighted on NL positions GRE07: Dutch pushed very hard for this. The European Parliament was influential on this issue. The rappor- teur of the 6pack was from the same political party than Rutte (the Dutch PM) (CdA), he managed to exploit this political connection to weight on RQMV. GRE14: Benelux meeting. Common view of the commission’s role is that Commission is the guardian of treaty. Bad experience with 2005, need to fix this. Dutch position was already claimed with this letter to the parliament in September 2011. Foreign affairs played a equal role with min fin on this issue

23.4 The stability of government positions and the role of Eurozone non- membership

23.4.1 GV1: The Change of Position and the change of Government

GRE01: NA GRE06: NA GRE07: NA GRE14: NA

23.5 The role of parliament: governing and opposition parties

23.5.1 PL1: The role of the National Parliament

331 Figure 1: Change in the majority party inﬂuence

Interview GRE01 GRE06 GRE07 GRE14 P. The inﬂuence of the majority in parliament - + + - .

GRE01: The first government was a minority government and was thus weaker in face of the Parliament than the second government. Yet, the Parliament follows closely EU issues because minister of finance has to stand there before each Ecofin (ex ante control) GRE06: Parliament exercised a stronger control under Rutte II than under Rutte I because Rutte II has no majority in the senate. GRE07: Parliament played a strong control role. There were investigations that were aired live on TV. Some political players lost their careers there. The Parliament was always informed and knew everything. When the banking crisis erupted in 08, recapitalization happened very fast and the parliament was angry about being sidelined. So they put up ex ante and ex post formal and informal sessions with the finance ministry. Division of tasks : civil servants and politicians aimed at fast action, Parliament played its control role. GRE14: Rutte I was a minority government, Rutte II not anymore, so leverage from Parliament decreased.

23.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

332 Figure 2: Change in the governing party inﬂuence

Interview GRE01 GRE06 GRE07 GRE14 P. Governing party inﬂuence 0 + - + .

GRE01: In between no change and stronger. The government position became weaker vis a vis parliament (and governing party) because of the Greek rescue in 2015 whereas the PM made the promise no to during his 2012 campaign. Conversely, the governing party also became weaker but put more pressure on the government GRE06: Governing parties exercised more control under Rutte II than under Rutte I. djisbloem (minister of finance under Rutte II) had more difficulties to sell reforms to senior government party in Rutte II than in Rutte I. GRE07: The most turbulent period was Rutte I when finance minister was very vocal. The association with the PVV was problematic as well. But it did not damage Rutte much because Greece was not high on the political agenda, even during electoral campaign of 2010. It was different in 2015, very high political pressure for not signing Greek agreement but Rutte managed to get support. GRE14: Pressure from other governing parties internalized. There was a need to find compromise with social democrats under Rutte I. So, easier under Rutte II but political context was more difficult (send help for Greece)

23.5.3 PL3: The role of the opposition party

333 Figure 3: Change in the opposition party inﬂuence

Interview GRE01 GRE06 GRE07 GRE14 P. Opposition party inﬂuence + + + - .

GRE01: Rutte 2 has no majority in the Senate, so the opposition can use it for leverage on the EMU topics that have to go through the senate. GRE06: It is not about EU but in general. More social contestation, extreme left and right rise and becomes more vocal. GRE07: far left and far right pol. parties are stronger and are more vocal about EU integration. Yet, mainstream parties are all aligned on the same positions. GRE14: Under Rutte I, it was not guaranteed that they would ﬁnd a majority within parliament for EU issues (Pvv had freedom to say no under the agreement for this issue). Social democrats were helping but PVV was setting the limits. Dutch negotiators were internalizing these limits. Not so much for ﬁscal compact but for other reforms (2nd plan for Greece...). For example in June 15, two motions at the parliament, one for Greece, the other one against. none had a majority so gvt went on with Greek agreement. Pvv was strong during Rutte I, not during Rutte II anymore, so the government did not care about their positions anymore.

23.6 The dominant views of economic policy

23.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

334 macroeconomic and ﬁscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and ﬁscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview GRE01 GRE06 GRE07 GRE14

ID The state should provide signiﬁcant economic governance with state-led 3 3 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 2 2 1 .. management.

GRE01: Its a mix between 1 and 2. Automatic stabilizers are part of the budget framework in Netherlands. GRE06: NA GRE07: NA GRE14: Timing. House of order and then, structural reforms, investments and growth. Inspired by IMF and World bank. Netherlands also bring World bank on board for Greece. NL was feeling that they could have done better with Greece. PSI came too late.

23.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview GRE01 GRE06 GRE07 GRE14 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 3 ..

ID Growth and low unemployment 2 2 2 3 ..

ID Price stability 1 1 1 1 ..

GRE01: price stability leads to growth with structural reforms (ECB discourse also). ECB unconventional

335 measures were criticized in front of Parliament by conservative MP because fear of inflation and speculative bubbles. GRE06: ECB QE was very criticized because of impact on pension funds and buying time for France which is not doing reforms. GRE07: Conservative critics about ECB QE (inflation and speculative bubbles. ). GRE14: ECB unconventional measures. New angst, Draghi helped to stabilize the Eurozone but bubbles, fiscal prolificacy.

23.7 The future course of EU integration

23.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Dutch Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview GRE01 GRE06 GRE07 GRE14

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

GRE01: No further integration (eg. no the part 2 of 5 presidents reports). Not necessary for a monetary union. ”Finish what we started”. GRE06: more and more Eurosceptic. Political suicide to sell reforms by saying they are good for the EU. NL focused. Time matters. NL could agree with Eurobonds but not now.... GRE07: NA GRE14: NA

23.7.2 ID5. The Vision of the European Union

336 Figure 7: The Vision of the European Union

Interview GRE01 GRE06 GRE07 GRE14 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

GRE01: Same than before. Finish what we started : ”pragmatic approach” GRE06: Both Rutte governments were rather Eurosceptic in NL perspective . NL works for better (i.e. less) regulation GRE07: no clear vision of Rutte I and II. GRE14: NA

23.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? GRE01: Yes a bit. The rule ”stick to the rules ” applies to Netherlands as well. GRE06: NA GRE07: NA GRE14: NA

23.8 Negotiation strategy during the Euro crisis

23.8.1 ST1: Negotiation Strategy during the Euro Crisis

337 Figure 8: Negotiation strategy during the Euro crisis

Interview GRE01 GRE06 GRE07 GRE14 S T Hard bargaining: tries to extract concessions from the other side, delays or R Very rarely Often Never Never blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Never Never Never provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Very often Often Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

23.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Dutch delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

GRE01: No. More inﬂuence since dijsselbloem GRE06: hard strategy is just blocking, not delaying merkel style GRE07: NA GRE14: Rutte I more aligned on Germany, Rutte II, more aligned on France. (NB. Maybe because Rutte I was in favor of more austerity and Rutte II in favor of less austerity)

24 Poland

24.1 The list of interviews in Poland

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer BUD05 75 BUD06 50 BUD08 50 BUD13 75 BUD14 100

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

338 24.2 The summary observation on country interviews

Poland is a non-Euro Area country, where the EA reform proposals were not discussed with the same attention as in the Eurozone, although there was a great interest within the country to be part of the reform discussions, especially under the Polish presidency. Poland wanted to demonstrate that letting them be part of the negotiations does not in any way slow decisions down, and that non-EAMS could also have interesting and valuable input in reform negotiations. Still, their proposal was turned down, and given their lack of information on reform proposals, some of the answers lack position and/or influence scores. At the same time, the official policy of the pre-2015 government was to assess EMU reforms by their impact on Poland, had it joined immediately. Hence, euro area decisions were followed more closely and with greater involvement than in Hungary or the Czech Republic, which was also initiated by the personality of then Finance Minister, Rostowski. Overall, the formation of the EU policy positions seems strongly centralized, with the Ministry of Finance as dominant actors, although in some cases the Foreign Ministry exerted some influence as well (e.g. Fiscal Compact). Other stakeholders are not particularly involved, interviewees from civil society ranks confirmed that there were very little input on their side to EMU reform debates within government ranks. In terms of future reforms, Poland was also in favour of more transparency which corresponds with their quest to get more involved in EMU decision-making.

24.3 Open answers to questions on 4 contested issues

24.3.1 GRC: Willingness to support Greece in early 2010

BUD05: There is a formal adoption process that leads to government position which involves consultations among four main actors: the finance ministry, the economics ministry, the foreign affairs ministry and the national bank. That was the standard decision-making process throughout the crisis with differing emphasis on different actors. Nevertheless, nobody really contested the position of the finance ministry on this matter. BUD06: There is a tradition of high-level government officials working together on this topic. The finance minister at the time (Rostowski) was internationally well connected, whereas the economics minister not so much so it created a difference in their influencing capacity. To what extent the PM was involved that is up for question, it was hard to determine. On the other hand, the link between Tusk and Merkel was very strong, so Germany could have exercised some influence [although their position actually differed - RC]. The EFC probably had a position as it made a lot of preparation on most issues. BUD08: This was not such a hot topic. There was a lot of interest in the situation in GRE and we supported a rapid type of support, not to destroy the GRE economy. The most influential actors were the Minister

339 of Finance and the Head of the National Bank as much as I can remember. The Minister of Finance was more critical towards GRE. The national parliament did not have an interest in this. We, as a think tank, participated in public discussion, but have not published a paper on this. As far as media was concerned, it was a topic for the economic journalists, but they did not play a major role either in influencing government positions. It has been discussed, but the dominating position within the media was rather critical to the GRE problem. I would say that only 1/3 was more soft on the issue. There wasn’t a strong influence, but rather cognitive thinking at European level. BUD13: I would shift the position from 100 to 30. Civic Platform looked at public opinion and polls. This is after the financial crisis, and people thought GRE people were richer than us, but then you had the government position. Rostowski dealt with the crisis in a smooth way, no negative growth. We were sympathetic to the idea of joining the club, but this was a rather hidden agenda. We were open to support them, but not necessarily financially. Also, one has to note that it was 2010, a specific year when the plane crashed with lots of government officials, and people talked more about this than the GRE bailout. Tusk delegated all economic power to Rostowski. BUD14: From the very beginning it was the Minister of Finance (Rostowski) who had a strong personality, and he was quite active. POL was not a key actor, but Rostowski was one of the most active among non-euro MS. POL position was not formalized, it was more of an ad-hoc position which was also due to the fact that Rostowski did not have all the information on the situation; there was a clear asymmetry of information. As a response to this asymmetry non-euro area MS decided to meet as well over working lunch or dinner. Foreign Ministry and the National Bank did not really have a position on these matters at this stage. Public awareness was not high of the issue.

24.3.2 ESM: The size of the European Stability Mechanism

BUD05: POL actually got involved in ESM negotiations quite a bit. We sent in comments regarding the most contested issues, and we wanted to get the ball rolling, we did not want to block the process. It was important for POL negotiations in the future as it showed that letting us participate in discussions can be beneficial for others as we provided with some added value. On the other hand, most of the discussion focused on whether ESM should be done within treaties, and not much talk was about its actual capacity. Our position was nevertheless that it should be open both in terms of its capacity and the group of countries it should involve (therefore also non-euro area MS). As for actors influencing decision: as compared to the GRE bailout, here the role of the finance ministry was even more dominant as it was really a technical matter. BUD06: I cannot recall much talk about the ESM within Poland, but I imagine this issue was delivered through the same procedures as the previous one with the side-note that probably the Finance Ministry was most influential on this matter.

340 BUD08: I would say POL also supported a more flexible solution. There was a lot of fear from contagion, so they wanted a shield. The head of the economic council of the PM was probably quite influential on this. The inner circle of advisors of Prime Minister also, some went with Tusk. The Finance Minister himself was also influential naturally. Parliament was rather weak again. Germany was one of the leaders on this issue, but I imagine there had to be some influential dynamics at ECOFIN as well. Also, among economists who focused on this issue, I believe, their views have been largely dominated by GER. As for the IMF, I do not think, it was highly regarded at that time. BUD13: There wasn’t any discussion on this in the media, so there was not much public awareness on this. Otherwise, it followed the same model, Rostowski was the lead actor on this. BUD14: POL position was a 100. Rostowski was quite determined to argue in favor of as high as possible of a backstop. The argument was: the higher the better. The idea was to have it, but not necessarily use it, it was to calm the markets. Tusk trusted Rostowski, so the scores should be similar, Foreign Ministry was slightly more influential on this.

24.3.3 FCO: The legal form of the debt brake

BUD05: It is true that we wanted binding rules but not at the constitutional level as it is very complicated to reach in the Polish context. The POL position in this case was more split between the finance and foreign affairs ministries. The latter actually led the process, but there was a certain debate between us: foreign affairs only saw the benefits at the EU level that such a subscription to balanced budget rule would involve, whereas finance looked at the costs at the national level as well. BUD06: It was an interesting issue given the fact that a similar and in fact more strict rule was already in place in Poland. We actually felt like the ”golden boy” having the golden rule in place. There was a general consensus on the issue. Also, it followed the traditional decision-making, possibly the finance ministry being the most dominant as compared to other actors. BUD08: At the time, the Finance Ministry and the Minister himself was supportive of the issue, while our think tank was very critical. The reason for government support was that the Finance Minister introduced similar measures just recently. The rule was operating, so they were supportive of the matter at the EU level as well. Maybe if it was in the treaty, it would have been stronger. Tusk did not really openly express anything, very rarely said he something openly. Foreign ministry under Sikorski was a strong ministry, they were active at the EU level, and also influenced the PM in close collaboration with the Finance Ministry. They were politically supporting each other. Finance and Foreign Affairs were around 50-50 percent influential, but the latter did not dominate issues as expert knowledge came

341 from the Finance Ministry. But there was no need to inﬂuence Sikorski to act. Otherwise, media was not very active, it was only mentioned mostly in relation to the ESM, and in terms of how much we have to pay. BUD13: We would strongly support it, even stronger than GER. We already had it in the constitution. It was also in public opinion. In this issue, the Central Bank did not play a role. Otherwise, it was the same setup. BUD14: The Fiscal Compact has an article which states that POL is not bound by it until euro accession derogation ends. We already had a debt limit in our constitution so it would not mean additional ’costs’ for us. We supported because it was argued that it was not binding for us.

24.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

BUD05: Cannot really recall a position on this. Rather, we always said that first we should exempt all possible measures that already exist. BUD06: Poland’s position was supportive of the introduction of the RQMV. The only difference compared to the previous issues is the greater involvement and influence of the foreign affairs ministry. It was more of a political issue, so there was more coordination on the side of Sikorski. BUD08: I don’t remember the issue being discussed at all. BUD13: Technical support came from the Ministry of Foreign Affairs, advice came from the Central Bank, but it is mainly the Finance Ministry again negotiating the issue at ECOFIN. I do not know what the POL position was on this. BUD14: Polish position was probably something like ’80’.

24.4 The stability of government positions and the role of Eurozone non- membership

24.4.1 GV1: The Change of Position and the change of Government

BUD05:

342 There was no real change in position exactly due to the fact that there was no government change over this period of time. BUD06: Does not really apply, given that there were no government change. BUD08: There wasn’t really a shift of position, since there was no real change of government. Effectively, the Finance Ministry and Foreign Affairs Ministry saw no changes. Rather, the crisis of the Eurozone shifted the position of POL towards the accession to the Eurozone. There was then a discussion about euro area reform. BUD13: There was no change of government during this time; Rostowski dominated all the issues. BUD14: There was no real change of government within this period, and no real position change with regards to these issues. It wasn’t really a difference between governments, rather within government: from the very beginning we were not convinced about joining the banking union. Foreign Ministry was in favor, Finance Ministry was hesitant about it.

24.4.2 GV2: The Impact of the Eurozone non-membership

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU?

Figure A: The Impact of the Eurozone non-membership

Interview BUD05 BUD06 BUD08 BUD13 BUD14 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

BUD05: We always think of ourselves as a country that will be bound by the rules of the euro area in the future. Therefore we always approach issues saying: how would it affect us if we introduced the euro tomorrow. We always consider whether reforms would make it harder for us to join the euro some day. All in all, our non-euro area membership strongly influences our position. BUD06: Even though we were not part of the euro area, we wanted to increase Poland’s position. As the UK’s position was diminishing we wanted to take their place, which was partially successful. There was also a consensus among political actors that we should be allowed to participate and be listened to within the euro area. Unfortunately it failed, which then was later used by the different parties (i.e. current government as opposition blamed the previous government for being left out of discussions on the euro area). In general, the government always wants to ensure that euro area membership shall be beneficial at any point. Also, there was also a close alliance on many issues with GER as most issues were supported but framed as euro area matters BUD08:

343 Not being a member of euro area, we do not have detailed position on most issues. It is a major problem, as non-membership means no involvement, therefore not much resource engagement on issues. This translates into a deficit in internal economic debate as well. Hypothetically, if we had become a member, it would have changed. On the other hand, Poland tried to actively access euro area decision- making insisting every time on greater involvement of non-euro area countries into discussions on the future of the euro area. BUD13: The entire agenda set by Tusk was to strengthen our position in the EU and he believed that euro area membership would do that. But then they saw the effects of the financial crisis and the mess that followed, and additionally there were data coming out critical about accession. The Central Bank also issued a paper on this. Otherwise we had a ’wait and see’ approach: we would join if it benefits the country, but it is understood as a political issue. BUD14: It wasn’t really about the position, but rather about the influence. It had a huge impact on our influence on EMU reforms. We wanted to be part of discussions, we were committed to have positions, but we were not very influential.

24.5 The role of parliament: governing and opposition parties

24.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview BUD05 BUD06 BUD08 BUD13 BUD14 P. The inﬂuence of the majority in parliament + 0 0 0 + .

BUD05:

344 They increasingly demanded more information. Also, there was more and more political scrutiny with time. BUD06: Party majority was held strong and controlled by Tusk BUD08: There were no new control mechanisms. Generally, Parliament is weak, and the reason if the structure of the parties: they can secure positions. Unless party is losing support which weakens position of leader. BUD13: Parliament would adopt what the government says. BUD14: Only slightly stronger.

24.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview BUD05 BUD06 BUD08 BUD13 BUD14 P. Governing party inﬂuence + 0 0 0 0 .

BUD05: It was mainly through MEPs who made things more politicized. They kept their links to Poland, and could also participate in parliamentary committee meetings where they even guided discussions. This in turn made MPs at home stronger and more involved. BUD06: There was a strong triumvirate: Tusk-Rostowski-Sikorski, the latter two nevertheless had not as much support as Tusk, there was a clear dominance of Tusk, and no other MPs exercised really strong influence. BUD08: Most important MPs were government officials. They were dominant. BUD13: Only Dariusz Rosati, MEP, previous finance minister, former MP. He was also head of the financial committee. BUD14: It was more about EU-linked people, such as Mr Lewandowski, Ms H?bner, and Mr Sargusz-Wolski.

24.5.3 PL3: The role of the opposition party

345 Figure 3: Change in the opposition party inﬂuence

Interview BUD05 BUD06 BUD08 BUD13 BUD14 P. Opposition party inﬂuence + 0 + + + .

BUD05: NA BUD06: Post-communist party followed the same position as the Civic Platform, there was no need for any change. Also, current government as opposition party used the crisis to strengthen its position (always pointing out that we were not part of the major discussions within the euro area) BUD08: Only one thread of narrative BUD13: they managed to redirect public opinion against euro accession BUD14: Only slightly stronger.

24.6 The dominant views of economic policy

24.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

346 Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview BUD05 BUD06 BUD08 BUD13 BUD14

ID The state should provide signiﬁcant economic governance with state-led 3 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 2 2 1 2 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 1 1 2 1 .. management.

BUD05: Not necessarily balanced budgets, but consolidated ones. BUD06: NA BUD08: I would say it changed over time. At ﬁrst, it was neither really. State-led industrial policies were not really relevant, I would say that balanced budget was in lead, and public investment came second. Now, the ﬁrst one dominates: also note that the Minister of Development is also Minister of Finance now. BUD13: NA BUD14: NA

24.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview BUD05 BUD06 BUD08 BUD13 BUD14 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 2 3 3 ..

ID Growth and low unemployment 2 2 1 2 2 ..

ID Price stability 1 1 2 1 1 ..

BUD05: NA BUD06: Also an increasingly important issue is the banking supervision.

347 BUD08: NA BUD13: NA BUD14: NA

24.7 The future course of EU integration

24.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Polish Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview BUD05 BUD06 BUD08 BUD13 BUD14

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

BUD05: Long-term constitutional debate, short-term status quo. When it comes to EMU issues, we want simpler rules and a deeper change of economic governance that would ensure greater democratic control and a stronger role for the Council. BUD06: It is in the oﬃcial communication but government does not do anything. BUD08: Try to make it more attractive for those outside the EMU. BUD13: Governing party wants to launch discussion on EU, but has no real ideas on it. BUD14: Rules for ﬁscal transfers. Also follow the footsteps of the Five Presidents’ Report.

24.7.2 ID5. The Vision of the European Union

The positions of member states governments in the EMU reform negotiations may be inﬂuenced by the government’s general vision of what the EU should be. How would you describe the relevant government’s preferred vision of the EU? For example, did it favour a development of the EU in the direction of federal union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]

348 Figure 7: The Vision of the European Union

Interview BUD05 BUD06 BUD08 BUD13 BUD14 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

BUD05: Recourse to basics of EU integration now. Under Tusk it was more about more integration. BUD06: Under Tusk: more integration but not federal union, but rather a step-by-step integration. Current government: less integration, less things imposed by Commission, more role to national governments, not necessarily to the European Council. BUD08: Simply because Tusk was good at this. He managed to balance POL inﬂuence with other countries’ support in the interest of POL. BUD13: Tusk was more in favour of a federal union, but now there is more talk about intergovernmental institution. Civic Platform was ’more EU integration’, Law and Justice is more ’EU of nation states’ BUD14: A mixture of the ﬁrst two: they should not forget about national parliaments, but at the same time there is a need for better European governance

24.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? BUD05: NA BUD06: NA BUD08: NA BUD13: Tusk influenced Rostowski and Sikorski to strengthen the position of POL in the EU. The idea was to place POL at the core of EU institutions. BUD14: NA

349 24.8 Negotiation strategy during the Euro crisis

24.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview BUD05 BUD06 BUD08 BUD13 BUD14 S T Hard bargaining: tries to extract concessions from the other side, delays or R Often Rarely Often blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Often Very rarely Rarely provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Very rarely Often Often Often Rarely propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

24.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Polish delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

BUD05: NA BUD06: NA BUD08: Civic Platform is a rather ’trading party’. They did not have clear positions on a lot of issues, they were postponing things, but at the end of the day when focusing on something (e.g. structural funds) they were ready to trade advantages. Also, keep in mind that public admin is not so eﬃcient and experienced. Many things are overlooked and suddenly realized. During Tusk it was still a learning process. BUD13: Civic Platform was always more about consensus, while the current government about threats. BUD14: NA

350 25 Portugal

25.1 The list of interviews in Portugal

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer POR01 50 POR02 50 POR03 50 POR04 50 POR05 50 POR06 100 POR07 50 POR08 50

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

351 25.2 The summary observation on country interviews

The main challenge for collecting data on the Portuguese case was that the 4 issues included in the EMU Formation dataset were dealt with by different governments. While the first two issues (Greek support and ESM size) were discussed and approved by a socialist minority government (in office between 2009 and 2011), the third one (Fiscal Compact) was managed by a completely new government formed by the two right-wing parties (the liberal PSD and the conservative CDS-PP). As for the fourth topic, it was not relevant in terms of government preference and public opinion for two reasons. First, at the very beginning of the debate the socialist government (supported also by the main opposition parties) was clearly against the adoption of SGP sanctions. Second, when the debate on the subject evolved (under the new centre-right government) Portugal had to apply the Memorandum of Under- standing (MoU), therefore, the issue of sanctions was not relevant. Regardless of the government position (most of interviewees agreed with the score assigned by the team), the Portuguese executive was committed to do everything that the Troika asked (and even more, as some of the interviewees refer, they want to ?go beyond the troika?).

The financial assistance for Greece was highly consensual, all the main parties and actors support the intervention of European institutions and the solidarity of state members. The issue of ESM lending capacity was also uncontroversial, as all the main actors supported a higher lending capacity to manage the crisis. The most intense debate was around the Fiscal Compact and this reflects the data we collected. Interviewees disagree with regard to the ?true? government preference on the subject. While apparently the main domestic actors agree that the legal nature of the commitments should not have gone beyond ordinary legislation, some informants believe that both the PM and the leader of the coalition partner (as well as the minister of finance) supported to ascribe these rules constitutional recognition. However, this position was not publicly defended because it was rather unpopular at that time and there were no chances to be approved (a two-third majority was needed, and the government could not reach this threshold).

All the main issues decided during the crisis were driven by the government. According to our interviews, the Prime Minister and the Minister of Finance concentrate a lot of power in the main issues at the stake and sometimes even other members of the government were not aware of the position or negotiation of the executive. This was also an important factor that trigger the crisis of the centre-right coalition in 2013 (among other things, the leader of the coalition partner, CDS, was not kept informed on the main decisions taken at the EU level and had very little inﬂuence on the subject of European economic governance). As in ?normal? periods, the Parliament (including the parties supporting the government) has not enough information or power to monitor government?s decisions. Besides this, opposition parties experienced a deep internal crisis (especially after the 2011 legislative elections) and were not relevant actors for inﬂuencing the formation of government preferences.

Some interviewees refer to the important role European institutions and some member states (Ger- many and, to a lesser extent, France) play in government formation. Given the power asymmetries within the EU and the subordinate position of Portugal under the MoU (see above), ?real? government preferences sometimes diverged from what the prime minister or other ministers say in public (as happened during the socialist government between 2010 and 2011). There is no evidence that actors from civil society (including, for example, interest groups, the media or public opinion) had some inﬂuence in the decision taken by the government.

We conducted eight interviews with the aim to capture the variety of opinions and to include pol- icymakers with a distinct background and a different experience. Some of the interviewees are top politicians, with relevant governmental positions at the time of the crisis. Other figures are expert (Bank of Portugal) or top officials working at European institutions with responsibility for economic

352 and financial policies. Most of the interviewees were very critical to the methodological approach adopted by the study, in particular the use of scaling to tap the position of different actors. They present multiple reasons for this. First, it was difficult to attribute a specific score to an institution when there were different opinions and points of view inside the body. Second, very often the debate evolved and there was a change in the preferences over time. In other words, actors adapted their views (at least publicly) according to exogenous circumstances (for example, the evolution of the Greek case, and the way European actors dealt with it, was particular relevant for Portugal). Last but not least, it was difficult to attribute a position to the Portuguese government as a whole because more often than not the four issues (especially the more ?technical? ones, such as the reverse qualified majority voting?) were not discussed within the government, they were treated only by the Prime minister and his closest collaborators at the European level. This means that the issues were not very much discussed at the domestic level, neither within the government not in the public opinion.

As a ﬁnal note, we should report that in general the interviews were conducted smoothly, with no time constraints, while the interviewees displayed openness to answer to the questionnaire even if sometimes they lack information on speciﬁc topics.

25.3 Open answers to questions on 4 contested issues

25.3.1 GRC: Willingness to support Greece in early 2010

POR01: The interviewee agreed with the position assigned to Portugal. The interviewee was not member of the government when the Eurogoup decided to support Greece. However, in his opinion the government is the most important actor in influencing the position defended during the negotiation. In particular, the prime minister and the minister of finance seem to be the most important actors. POR02: The interviewee agreed with the position assigned to Portugal. There was convergence between the government and the main parties. I do not have information if within the government the positions were aligned. There was some political noise in the Parliament. It was also the main issue discussed in public opinion. POR03: Agrees with position. The most important actors were the Minister of Finance, and probably the Prime Minister also. Major political parties in opposition (PSD and CDS) were also in favour of Greece assistance. Maybe the banks had a role too, not sure what kind of pressure they did, but some had an important part of their assets in Greek debt. But the government and main political parties had the main role. POR04: Says that in early 2010 Portugal didn’t had any opinion about Greek assistance and neither in favour (100) or against it (0). Later Portugal was initially against it, due to the financial effort that would had to make to contribute to the loan. A position quickly changed given the threat of a similar crisis on its

353 own country. Portugal would become favourable to Greek assistance (100), because of these changes in the economic context, and not due to any specific influence or lobby, neither due to ideology. At this point, support for Greece was basically unanimous in Portugal. As it was such a quick change, there was no time for particular influence from any actor. POR05: According to the interviewee financial support to Greece was inevitable, the problem was the conditions that surround it. The interviewee did not agree with this division between countries that were opposed or favoured support to Greece. The crisis developed very fast and there was no time to create more sophisticated mechanisms. The main problem was the amount of the money needed to lend to the Greek government and the guarantees that Greek authorities gave to the European partners (especially Finland). POR06: The interviewee agreed with the position assigned to Portugal. According to the interviewee there were two tendencies within the government. One aimed to support Greece for political reasons (emphasis on the political dimension of the European integration), while the other supported special assistance to Greece on technical criteria (which reflected the position adopted by other European countries). There was consensus on special assistance to Greece, but the degree of conviction varied. POR07: The interviewee agreed with the position assigned to Portugal. It was a consensual decision, which originated from the solidarity of European States (especially in the Southern European context). It was not an option, it was an obligation. POR08: The interviewee agreed with the position assigned to Portugal. The interviewee was not in government and gave his/her opinion on the narratives about the crisis. It was a political issue and parties were split according to their ideology (more liberal or more leftist), showing a different view on the economic governance at the European (and national) level. The debate was not on the decision to intervene in Greece but on the explanations and the origins of the economic crisis. There was consensus on special assistance to Greece, but the narrative behind it was different. The interviewee said that it is impossible to give scores to the influence of distinct actors on the issues considered in this research. They were complex and dynamics matters, thus a qualitative approach would be more appropriate.

25.3.2 ESM: The size of the European Stability Mechanism

POR01: The interviewee agreed with the position assigned to Portugal. The interviewee was not member of the government when the European Council decided to establish the ESM. However, in his opinion the government was the most important actor in inﬂuencing the position defended during the negotiation. In particular, the prime minister and the minister of ﬁnance seem to be the most important actors. POR02: The interviewee agreed with the position assigned to Portugal. That threshold was the possible at

354 that time. The final solution was a compromise. The Portuguese government was not in the position to ask for a larger size of the ESM. POR03: Agrees with position. Answered that it’s the same actors. Finance ministry and Prime ministry were the most important. POR04: Portugal was certainly in the group that preferred the biggest amount possible, but can’t give more details on that. Considers that even if Portugal enters the debate from an intellectual point of view, in the end it will align its position with the one of Germany. Internal actors can only have an impact on internal noise/buzz but not on the actual outcome, so they all have no influence. POR05: The interviewee agreed with the position assigned to Portugal. The problem was that the amount of the ESM was the only one politically acceptable, even if from the economic point of view was not enough. The impact of the crisis was highly underestimated. If the amount was higher, probably it would be unnecessary to use it, but there was not political conditions to take such a decision. POR06: The interviewee agreed with the position assigned to Portugal. This was a very technical issue, he did not follow the decision-making process on this topic. POR07: The interviewee agreed with the position assigned to Portugal. There was no awareness of the real financial problems of the European periphery. The interviewee did not follow the national debate POR08: The interviewee agreed with the position assigned to Portugal. The Portuguese government supported a higher lending capacity. The government was completely aligned on this issue.

25.3.3 FCO: The legal form of the debt brake

POR01: The interviewee believes that the position attributed to the Portuguese government is wrong, should be positioned in category 80 (Binding provisions-not necessarily constitutional). This was the position of the right-wing government, which was different from the opposition advocated by the main opposition party (Socialist party). Again, the prime minister and the minister of finance had the biggest influence in shaping the negotiation positions. POR02: The interviewee preferred not to answer to this question. However, he/she agrees with the position given to the Portuguese government. POR03: Says it would put Portuguese position more towards 80. 70 would be perfect, because it’s not completely binding, but it’s not really the ordinary legislation. There was some debate around if it should

355 be constitutional PSD was in favour of this. PS was more in favour of ordinary legislation but with a more binding effect and as it ended, on the ”budgetary framework law”, which has some binding provisions. This were the dominant party positions but there were divergent views inside the parties and especially on PSD. POR04: Says the choice was between position 80 and 100, and basically that depended on the constitutional traditions in each country and their facility to change the constitution. Portugal for some reason didn’t want to put this law into the constitution. Can’t say who argued for or against it. Speculates that as it was an imposition from Germany, it maked sense to choose the easiest way which was not to change the constitution. There weren’t fundamental divergences between parties or within the government. Can’t precise internal positions. POR05: The interviewee believes that the position attributed to the Portuguese government is correct. In Por- tugal it is difficult to change the Constitution. When the Fiscal Compact emerged there was not the hypothesis to adopt this through a constitutional revision. Again, the prime minister and the minister of finance had the biggest influence in shaping the negotiation positions. But also the Minister of foreign affairs was involved in the negotiation. POR06: The interviewee believes that the position attributed to the Portuguese government is correct. How- ever, he said that right-wing parties were not opposed to introduce the Fiscal compact at the constitutional level and also some individuals within the main opposition party (PS) favoured this solution. But he was not member of the government at that time, so he has a limited knowledge on this issue. POR07: The interviewee agreed with the position given to Portugal. POR08: The interviewee believes that the position attributed to the Portuguese government is NOT correct (should be 100). The PM defended the constitutional-type of commitment, and so did the leader of the second party in the PSD/CDS-PP Coalition. However, the Governmentbut he could not have the two-thirds majority needed to change the constitution.

25.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

POR01: The interviewee agreed with the position assigned to Portugal. The interviewee was not member of the government when the RQMV was adopted. However, in his opinion the government was the most important actor in influencing the position defended during the negotiation. In particular, the prime minister and the minister of finance seem to be the most important actors. POR02: The interviewee agreed with the position assigned to Portugal. POR03: Refuses to answer because doesn’t feel that has sufficient knowledge about this particular issue.

356 POR04: Position is not accurate. Since RQMV was a result of a change in treaties, ratified by all countries, Portugal had to support this voting mechanism. Also there was a general idea that it was necessary to give more power to European Commission, making Portugal go more towards the position 100 because of that reason. Given this two arguments, the right position is 100. That was the position for the Government, but doesn’t know what the other actors wanted. Only head of government, financial minister and EU affairs minister have influence. POR05: The interviewee agreed with the position assigned to Portugal. The rules gave considerable powers to the Commission. POR06: The interviewee agreed with the position assigned to Portugal. The interviewee said that this issue was not relevant within the government. It was not an issue that was debated and needed political coordination within the government. POR07: The interviewee agreed with the position assigned to Portugal but he was not aware of the positions and negotiations of the main political actors. The interviewee did not follow this debate but it was a technical issue and it was not debated in the public opinion. POR08: NA

25.4 The stability of government positions and the role of Eurozone non- membership

25.4.1 GV1: The Change of Position and the change of Government

POR01: No, there was no major change in the position of Portugal. The only change took place in 2014, with the end of the external economic assistance. This gave more leeway to the Portuguese government to defend the reform of some rules, mechanisms or institutions (for example regarding the Banking Union). POR02: The most important issue was the banking union. The other two issues were not very important. The PS and the PSD have remained aligned on these themes at least until 2014. POR03: In general, the two governments have the same position. It’s very similar between governments in Por- tugal, these positions regarding Europe usually don’t change much from PS to PSD. There is almost a common agreed position in Portugal in what concerns these themes. Due to euro crisis, Portugal became even more supportive of the completion of economic and monetary union, including going forward on banking union, and joining some mechanisms of macroeconomic stabilization. POR04: Changes in positions are related to changes in circumstances and not to government changes. Theo- retical positions are the same, but when they are applied to Portuguese concrete cases positions can change and e.g. positions about bail in. In ﬁscal issues there were changes between governments. POR05: NA

357 POR06: The socialist government (2009-2011) and the right-wing coalition (2011-2015) did not display significant divergences on these topics POR07: All the mainstream parties share the same view on these issues. The only divergence is with the radical left. Banking union was (and is) a work in progress, but there were no major changes POR08: NA

25.5 The role of parliament: governing and opposition parties

25.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview POR01 POR02 POR03 POR04 POR05 POR06 POR07 POR08 P. The inﬂuence of the majority in parliament 0 0 0 0 0 0 0 + .

POR01: The role of the Parliament has always remained rather marginal to the process. POR02: Even if there was no change, some external actors (UTAO, Conselho econ’-mico e ﬁscal, these are special bodies that aim to oversight the state buget) have been empowered during the application of the Programme of Adjustment. POR03: NA POR04:

358 There were some specific moments of crisis where the debate in parliament gained more importance but at the end it is at government level that the most important issues are decided and not in the parliament. POR05: NA POR06: Nothing important in the power relation between the government and parliament changed. However, the rhetoric was different. During the socialist government the opposition aimed to attack the government and to deny the international dimension of the crisis. During the right-wing government international issues became increasingly important and the Parliament was more aware of the negotiation between the Portuguese government and other European partners and institutions. But this had nothing to do with the power of the Parliament. The political conditions were different. In the socialist government there was not a majority and the Parliament had more power to control and block the government, whereas the right had a solid absolute majority. POR07: The Parliament received more information on these issues, but the distribution of power remained the same. There is also a higher level of transparency. POR08: However, the Parliament was not more effective, it did not interfere in the recommendations made by the Troika. It became more aware and had more information, but this did not imply to have more power.

25.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview POR01 POR02 POR03 POR04 POR05 POR06 POR07 POR08 P. Governing party inﬂuence 0 0 0 0 0 0 0 0 .

POR01: The internal distribution of power within the right-wing coalition (PSD and CDS-PP) remained unchanged. This is true even with the major government reshuﬄe that took place in the summer 2013 POR02: Overall there was no change, but there has been some volatility and tensions between the minister of Finance and the sectoral ministers. As the Minister of Finance was an independent, the role of the main governing party was somewhat reduced. However, after the government reshuﬄe that occurred in 2013 coordination mechanisms have strengthened. POR03: The same reason as before, parliament maintained the same composition, nothing important in the power relation changed. POR04: As there were no changes in governing parties, the power stayed the same. POR05: The Ministers of Finance (both from the PSD, larger governing party) have always been the dominant actors. There was no great divergence between the majority and the minor partner.

359 POR06: The Prime Minister and the Minister of Finance (both from the PSD, larger governing party) have always been the dominant actors. Their vision on how to deal with the crisis has always prevailed above other governing actors. There have been changes in terms of how this vision was presented towards the public opinion. POR07: Despite the government reshuﬄe that took place in 2013, the policies remained the same. This also applies to the role of the MPs of the most governing party, there was a substantial continuity. POR08: They always supported the government but they were very useful in terms of propaganda.

25.5.3 PL3: The role of the opposition party

Figure 3: Change in the opposition party inﬂuence

Interview POR01 POR02 POR03 POR04 POR05 POR06 POR07 POR08 P. Opposition party inﬂuence - 0 0 - 0 0 na - .

POR01: The inﬂuence of the main opposition party became weaker because a change of party leadership took place in june 2014 and the new socialist leader rejected any cooperation with the government. That was a political choice, a change in party strategy. POR02: The opposition party did not have strong instruments to intervene and to oppose the Programme. POR03: NA POR04:

360 Since PS stopped cooperating with EU policies, the party lost power in the parliament. POR05: The PS at that time had a lot of internal problems and could not follow and influence the negotiations of the government on European issues. On the other hand, public opinion was not really concerned with these (technical) issues. POR06: the politics defended by the PS did not change over the period, nor its way to oppose the government. The leadership change that took place in 2014 gave more credibility to the socialist strategy but it did not affect the power relations between the government and the opposition. POR07: There were important commitments at the European level and the PS agreed with these. After 2014 the PS became more critical POR08: The influence of the main opposition party became weaker because it was accused to be responsible for the bailout. The Ps was considered guilty for the situation.

25.6 The dominant views of economic policy

25.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview POR01 POR02 POR03 POR04 POR05 POR06 POR07 POR08

ID The state should provide signiﬁcant economic governance with state-led 2 1 3 3 2 2 2 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 1 1 1 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 1 2 2 3 3 3 3 .. management.

POR01: There is not one dominant economic principle. However, compared to other European states, Por- tuguese governments have tried to find an equilibrium between the 2nd and 3rd issues (balanced budget and public investments). The first issue (economic governance) has always ranked lower than the other two. POR02: Linked to macroeconomic and fiscal policies there is the need to implement structural reforms (education, labour market, etc..)

361 POR03: NA POR04: NA POR05: Government did not have enough money to make investments. There was not choice, it was not a strategic option, it was a short-term constraint. POR06: The strategy of the socialist government was diﬀerent: 1-3-2 POR07: NA POR08: Some options were not available at that time because the government could not do anything (in particular options 1 and 3)

25.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview POR01 POR02 POR03 POR04 POR05 POR06 POR07 POR08 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 2 3 3 3 2 2 ..

ID Growth and low unemployment 1 2 2 2 1 1 ..

ID Price stability 3 1 1 1 3 3 ..

POR01: price stability was not under control of the Portuguese government POR02: Even if it was not a goal, ﬁnancial stability was a key aspect of dominant monetary policy ideas. POR03: NA POR04: Financial stability, was also a priority, side by side with price stability (which National Banco must prioritize by obligation, but wasn’t a problem at the time), and growth. POR05: monetary policy is established by the BCE and its main goal is price stability. The monetary policy was always pro-cyclical, and the Portuguese government wanted a counter-cyclical policy, but the BCE supported German interests. The BCE has autonomy on these issues. POR06: the priority of the PSD-CDS government was austerity politics. None of these issues were under complete control of the government. They wanted to implement austerity policies fast in order to achieve the same results of the devaluation of the currency. Actually none of these instruments reﬂected the

362 dominant monetary policy goals of the Portuguese government between 2011 and 2015. The strategy of the socialist government was diﬀerent: it aimed to apply some austerity measures required by Eu- ropean institutions in order to contain the ﬁnancial problem and the rates of the public debt. This would allow the government to foster economic growth. POR07: None of the selected options applied to the Portuguese case. Financial stability was the main monetary policy goals (banking sector) POR08: The options above does not apply

25.7 The future course of EU integration

25.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Portuguese Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview POR01 POR02 POR03 POR04 POR05 POR06 POR07 POR08

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

POR01: Banking Union, enhance budget capacity, reinforce own resources, reform the euro governance, introduction of mechanisms to mitigate asymmetric shock in the euro area. POR02: It is not clear what is the position of the new socialist government elected in 2015 on the next integration steps. Traditionally, both main parties (PS and PSD) have tried to avoid a multi-speed Europe, because this would produce more fragmentation and would destroy the Union. They also agree with a stronger banking union and the revision of existing mechanisms. POR03: For the majority of aspects Portugal would work within current treaty provisions. Nevertheless, in some aspects a treaty change would be needed. An example of this would be the creation of a mechanism for macroeconomic stabilization for the euro area which it’s not clear if it could be created within the current treaty provisions. POR04: There were some small treaty changes and some new institutions created (such as ESM) and with the Portuguese government support and but Portugal worked mainly within the current treaty provisions. POR05: At that time the Portuguese government had no choice, he had to accept Treaty provisions POR06: In 2010 the idea was that there was a democratic deﬁcit, that the Eurogroup was excessively strong and that the European Central Bank did not have the necessary instruments to intervene into the economy. But the socialist government, as it was in a weak position, never voiced these concerns and

363 these issues at the European level. On the other hand, there were different tendencies within the government. The right-wing government was aligned to the status quo as interpreted by the German government (and other Nordic governments). POR07: The interviewee was not familiar with this issue. S/he does not have information on this item. The Troika absorbed everything in the political debate. POR08: The right-wing government was comfortable with the status quo and the existing Treaty. At the end of their mandate they started asking for fiscal capacity of the eurozone, with some divergences within the majority party. But the opposition had another vision, namely to complete economic integration (monetary, fiscal and banking union).

25.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview POR01 POR02 POR03 POR04 POR05 POR06 POR07 POR08 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

POR01: Traditionally Portugal is a defender of the community method, rejecting both federalism and intergovernmentalism. The priority is to reform the euro governance. This applies to both main parties (PS and PSD). POR02: More federal union POR03: Something between no change and a federal union, but more towards maintaining status quo. Portugal would work within the treaties in most cases, with no substantial changes, but in some aspects (such as the mechanism for macroeconomic stabilization) Portugal would be closer from things we are used to see in federal unions. The vision was similar between governments, but in Socrates’ government wasn’t as pending to status quo as in Passos Coelho’s government. POR04: In fundamental aspects, both governments wanted ”no change”. There was no interest in losing power through a process of centralization or federalisation of EU. POR05: Portuguese governments are, in general, in favour of more European integration. Intergovernmental method has always been prejudicial to Portugal. We have a very active diplomacy and we participate

364 in a pro-active way in every issue. In this way Portugal can have more influence compared to its political importance. POR06: This applies to both main parties (PS and PSD), but for different reasons. The socialist party has a political vision of the Europe based on a stronger political and financial integration, while the PSD has a more instrumental view, more utilitarian, which means to extract the highest concessions in the short term and adapting to the current distribution of powers within the EU. POR07: More solidarity between states. POR08: NA

25.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? POR01: yes, but this vision was conditioned by the economic situation of the country during and after the bailout. The need to reform the EMU became more visible only when the external intervention fin- ished. POR02: To some extent, but the government was not in the position to impose its view. POR03: Yes. For instance, the idea of having a full macroeconomic coordination, the goal of two pack and six pack, works within the current treaty provisions, while going a little forward, to the federal union. POR04: Yes, for Passos Coelho’s government. Passos Coelho had a concrete idea regarding what should be the relation between member states and Europe, namely regarding financial aspects, which had some impact in his positions and his way to manage the crisis. This was much more the case for Passos Coelho than for Socrates government. POR05: no. There was a substantial shift between the PEC IV (last austerity package negotiated by the socialist government in March 2010) and the next right-wing government, which completely aligned to the austerity policies imposed by European institutions. POR06: Do not know POR07: No POR08: NA

25.8 Negotiation strategy during the Euro crisis

25.8.1 ST1: Negotiation Strategy during the Euro Crisis

365 Figure 8: Negotiation strategy during the Euro crisis

Interview POR01 POR02 POR03 POR04 POR05 POR06 POR07 POR08 S T Hard bargaining: tries to extract concessions from the other side, delays or Very Very Very R Rarely Often Rarely Often Often blocks negotiations for its own benefit often rarely rarely 1. .. S T Threatening: uses threats (for example opt-outs or long transitional Very Very R Rarely Never Never Never Never Rarely provisions) to influence other parties positions rarely rarely 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to Very R Often Often Often Often Often Often Often propose an exchange of concessions for mutual benefit often 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

25.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Portuguese delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

Aut02: Austria negotiated hard on the ESM as it provided strategic advantage at the beginning. In some other cases, such as the 2nd Greek program, the Austrian government preferred hard strategy, but since other countries such as Germany and Finland played the hardball, it could take more conciliatory approach. POR01: no POR02: No POR03: No. POR04: Until the formal request for external help the preferred strategy was ”to make concessions”. Between 2011 and 2014, due to the ﬁnancial circumstances, it become a mix of making concessions and trying to extract concessions (but by discussion and argumentation, and not with delays or blocks). POR05: No. We were more pragmatic in the negotiation process with European partners, but we did not substantially change our strategy. POR06: There was a substantial shift between the PEC IV (last austerity package negotiated by the socialist government in March 2010) and the next right-wing government, which completely aligned to the austerity policies imposed by European institutions. POR07: No POR08: no

366 26 Romania

26.1 The list of interviews in Romania

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer BUD19 100 BUD20 50 BUD21 50 BUD22 75

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

367 26.2 The summary observation on country interviews

In general, it could be argued that in ROU the Prime Minister and the finance ministry are the most relevant actors in preference formation. Nevertheless, the President, and the National Bank, which has quite a legitimacy and institutional memory, are also influential. From among the European institutions, the Commission and the EFC seems most relevant for preference formation in ROU. Parties do not seem to play a role, as there seems to be a consensus among them to be pro-European, which dis- torts to some extent the available options from which to choose when it comes to preference formation. Interviewees involved former government officials and members of academia to get both an insider and outsider view of the reform process in ROU. It was the most difficult country to find interviewees.

26.3 Open answers to questions on 4 contested issues

26.3.1 GRC: Willingness to support Greece in early 2010

BUD19: ROM was one of the biggest supporters of measures undertaken by the EU, including but not confined to the GRE bailout. The ROM government felt generally comfortable with the fiscal and macroeconomic structure and measures that had been initiated. As for the most important actors, two stand out: the Finance Ministry, and the National Bank. Both used the GRE case as a bad example which needed to be avoided in ROM so all necessary measures had to be taken. These two actors managed to influence the main decision-makers, the PM and the President. The (newly created) Fiscal Council was also very active in public debate, and so were some independent fiscal and economic expert voices. As for the PM and the President, there was generally a convergence of views between them, and they both played an important role in final decisions. BUD20: ROM was not really interested in these issues as I can recall. We thought we were not very much influenced by the crisis, the only thing that was given some consideration was the exposure to foreign economies, but the general attitude was: ’We did not have high debts, so we should not be involved in these issues’. As far as decision-makers are concerned, I would say that the Finance Ministry and the National Bank were the most active on most if not all of the EMU reform measures. The PM and the Presidency also played some role but at a more marginal level, I would say. BUD21: The most relevant actors have been the President, the Prime Minister and the Finance Ministry. Oth- erwise, the most important institutional actor I think was the National Bank. There is a continuity at the head of the national bank since the 1990s. Also, the Administrative Board of National Bank is very well qualified, they have very good specialists. Even though they did not make public policy, they supervised it and corrected mistakes on the side of decision-makers. Other than that, there were research institutes, under the Academy of Sciences, which prepared analysis ordered by government and different ministries. Universities were not favoured, but there could have been important members, academic members could have been more neutral and more objective on the issues. Civil Society

368 was not so much involved, but some were very pro-active, asking government and other stakeholders to position themselves along different positions papers. BUD22: Between 2009 and 2014 Romania had a President, Traian Basescu, who was very active and influential in shaping external policy. This was particularly true until the summer of 2014, when the Government belonged to PDL, the party supporting the President. Afterwards, with the PSD forming the Gov- ernment, the Presidentêsposition was weakened, as was his influence upon foreign policy. Between 2009 and 2014 Romania had three post-crisis agreements with the Troika of IMF, World Bank and European Commission. The leverage of the three institutions on Romaniaêspolicies was higher in the beginning and diminished towards the end of the period, as the economy stabilized.

26.3.2 ESM: The size of the European Stability Mechanism

BUD19: I don’t remember any debate on this within the government. There might have been some discussion within the Finance Ministry and the Foreign Ministry, which provided informative notes and recommendations for the Presidency taking part in EUCO decisions. Otherwise, I would say that the same procedures applied, and the same actors have been the most influential, with the possible exception of the parliament. It is a general process: the Finance Ministry and the National Bank influence decision-makers. BUD20: I do not recall any discussion on this topic. BUD21: The government was in favor of greater capacities of rescue funds, and the decision-making followed the previous pattern as far as influence is concerned. Otherwise actors were more in favor of this. BUD22: Romania advocated for a larger EFSF, in the hope that it would benefit from it, given the fact that it was under a Program with the Troika.

26.3.3 FCO: The legal form of the debt brake

Our assumption is that domestic and international actors shape a government’s negotiating position.

369 Which actors - ministries, institutions, parties, or interest groups - were most inﬂuential in shaping the negotiating position of the government, and what positions did they advocate?

BUD19: We tried to go forward with the constitutional change, but there was no political opportunity for that, so we settled for ordinary legislation. Once again, the actors are the same. BUD20: It was not politically feasible to go through with a constitutional change so the government settled for an ordinary piece of legislation. Otherwise there was quite a consensus on this issue, neither party actually contested the matter, although the leftist parties wanted more flexibility reserved, but as it was something pushed forward from within the EU, it was not really contested. BUD21: The debt brake rule was widely accepted within the society. But there was a technical problem with it. You could not simply change this element in the constitution, it would have required multiple changes. The acting government passed it fast. BUD22: The negotiation happened very quickly in Romania, under the PDL Government (supportive of the Fiscal Compact). The implementation came under the PSD Government, not very supportive. So, the table should be split into two sub-periods, to reflect this change of attitude. We will only give points to the first sub-period.

26.3.4 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

BUD19: ROM was in favor of the RQMV. As for actors and decision-making process, it was the same, once again, with the side-note that the parliament did not play such an important role in this, it was quite technical. BUD20: It was a highly technical matter, so I imagine there wasn’t much talk about this at the political level. For sure, there was no public debate on this. BUD21: This was such a technical issue I do not recall any position given by the ROM government on it. BUD22: Romania had an ambiguous line, generally following the lead of Germany, with the exception of the cases when France had a contrarian position, whence Romania preferred to align with the latter

370 26.4 The stability of government positions and the role of Eurozone non- membership

26.4.1 GV1: The Change of Position and the change of Government

BUD19: There isn’t really a change of position given that there is a consensus across mainstream political parties about EU affairs. Even if there was a slight difference in discourse between the opposition and government, it changed once the power shifted from one party to the other. BUD20: There is no real change in the position of the ROM despite the different colors of government before and after 2012. The reason is simple: both sides try to have international support to legitimize their positions, so all parties will always be in favor of international organizations. It could be argued that all parties are pro-European across the board. BUD21: There was a general change around 2014. The new government was more critical about EU developments. BUD22: There was a clear change in 2014, from the PDL Government (favourable) to the PSD Government (less favourable).

26.4.2 GV2: The Impact of the Eurozone non-membership

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU?

Figure A: The Impact of the Eurozone non-membership

Interview BUD19 BUD20 BUD21 BUD22 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

BUD19: Romania has an ambivalent approach to this: on the one hand the government always wants to ensure that ROM is part of the discussions, yet it does not actively promote this. On the other hand there is no real critical approach to EU decisions, so it questions the necessity of actively engaging in discussions. BUD20: There is some eﬀect I would say. Oﬃcials would always say: ’we need to be at the negotiating tables!’ At the technocratic level they would even want to know technicalities, however, at the operational level

371 it is acknowledged that we cannot be at the table. We are not the real players which is acknowledged within the government, I would say. Also, there is a lack of compatibility between the national and EU levels which makes it more diﬃcult to actually get engaged with the discussions and negotiations. But, nevertheless, the government always wanted to ensure, although quite passively, that non-euro area members participate in negotiations on the structure of economic governance. BUD21: NA BUD22: Romania has tried to retain participation in the EMU decisions even as an outsider to the Eurozone

26.5 The role of parliament: governing and opposition parties

26.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview BUD19 BUD20 BUD21 BUD22 P. The inﬂuence of the majority in parliament - 0 na na .

BUD19: It is important to diﬀerentiate between the period of 2010-12 and 2012-2014. BUD20: No change, no role. BUD21: Parliament in ROM is rather weak in general. Even President Basescu contributed to the decreased role of the parliament. BUD22:

372 NA

26.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview BUD19 BUD20 BUD21 BUD22 P. Governing party inﬂuence 0 na na + .

BUD19: NA BUD20: NA BUD21: NA BUD22: After the Parliamentary elections of 2012, the Parliament was better informed on the policy of the Government.

26.5.3 PL3: The role of the opposition party

373 Figure 3: Change in the opposition party inﬂuence

Interview BUD19 BUD20 BUD21 BUD22 P. Opposition party inﬂuence - 0 na - .

BUD19: NA BUD20: No change, no role BUD21: NA BUD22: NA

26.6 The dominant views of economic policy

26.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

374 Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview STO24 STO25 STO26 STO27

ID The state should provide signiﬁcant economic governance with state-led 3 3 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 2 2 2 .. management.

BUD19: NA BUD20: State guidance is not applicable. BUD21: NA BUD22: NA

26.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview BUD19 BUD20 BUD21 BUD22 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 2 3 3 ..

ID Growth and low unemployment 3 2 2 ..

ID Price stability 1 1 1 ..

BUD19: NA BUD20: Price stability and competitive exchange rate are both used it seems, deﬁnitely growth and low unemployment comes third. BUD21: NA BUD22: NA

375 26.7 The future course of EU integration

26.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Romanian Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview BUD19 BUD20 BUD21 BUD22

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

BUD19: EU agency on competitiveness is needed. BUD20: There should be a clear assessment of current status and feasible goals set for the future. BUD21: NA BUD22: Fiscal union (i.e. a larger budget and ﬁscal transfers) should be envisaged, as well as a common diplomatic and defence policies.

26.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview BUD19 BUD20 BUD21 BUD22 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

BUD19: ROM is rather passive so an intergovernmental setup does not work in favor of the country.

376 BUD20: NA BUD21: NA BUD22: NA

26.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? BUD19: NA BUD20: NA BUD21: NA BUD22: Small, incremental steps, driven more by the internal agenda.

26.8 Negotiation strategy during the Euro crisis

26.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview BUD19 BUD20 BUD21 BUD22 S T Hard bargaining: tries to extract concessions from the other side, delays or R Rarely Very rarely Rarely Very often blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Very rarely Very rarely Rarely Very rarely provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Rarely Very rarely Rarely Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

26.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Romanian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

377 BUD19: NA BUD20: NA BUD21: NA BUD22: NA

27 Slovakia

27.1 The list of interviews in Slovakia

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer BUD01 100 BUD02 50 BUD04 50 BUD09 75 BUD 17 75

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

378 27.2 The summary observation on country interviews

Slovakia, unlike most of its immediate neighbours, is a Eurozone member state. Yet, it shares with Poland, Hungary and the Czech Republic the technocratic approach to the formation of the national negotiating position. In the domain of ﬁscal integration, the formation process seems to be dominated by the Ministry of Finance. At the same time, this technocratic position is more inﬂuenced by the Eurogroup, EFC/EWG and/or Commission than is the case of non-EA neighbours. Also, compared to other CEE countries, given Slovakia’s participation in the Eurozone, all reform issues had a greater chance to be politicized (see below).

On the other hand, this technocratic position seems to influence and challenge domestic political decision-making. Such an influence can be traced by the ’changing’ position of the SK government with regards to the Greek support program. While the center-right government of Radicova opposed the first GRE bailout, it came to support the establishment of the EFSF despite initial opposition during the 2011 campaign. Later the political conflict over the extension of the EFSF capacity resulted in the fall of the government. However, the initial proposal was supported by the opposition, which indicates some cross-party support for consensus emerging from among EU-level technocratic actors.

27.3 Open answers to questions on 4 contested issues

27.3.1 GRC: Willingness to support Greece in early 2010

BUD01: The position is correct inasmuch as we talk about the period after the June elections. Before, Fico’s government had a rather ”wait and see” approach, they could not openly support the bailout process, given also the fact that the opposition was fiercely against it. Given these circumstances a lot of actors were quite influential starting with the head of government and the finance ministry. BUD02: Since it was a political decision, it was mainly orchestrated by the head of the government. Addi- tionally, the Slovakian people got very much involved through the media which gave the issue of a lot of headlines given the sensitivity of the topic. This, in turn had a huge impact on the political decision-making as well which could not ignore such a pressure. BUD04: It was really the finance ministry that was most vocal and influential about this. The media also exerted some influence given the fact that Fico was always sensitive to public opinion and always wanted to know the general feeling within society. He never really dared to go against it, which made him rather cautious in this case. BUD09: It was an interesting situation as Slovakia supported the measure, yet internally it was not in favor of it. Rather, we were hesitant supporters of Greece. It was a hot political issue, and the Social Democrats lost because of this issue. From the outside point of view, public perception did effect

379 the position of government, even though there was no strong opposition. People did not really know back then. As for the most relevant actors, the Prime Minister was probably involved along with the Finance Minister, but not really other ministries. Slota’s party and the former party of Meciar did not have a strong position any more, so Fico was left alone in this battle. BUD17: It was the government which was most important. The Ministry of Finance was supporting lukewarmly a common EU position, kind of establishing EFSF and ESM. One governing party was opposing it and also the general public was against it. This was considered as inverse solidarity (the poor supporting the richer). The Central Bank was more conservative and warned about dangers, we were more in line with the euro argument, nevertheless. The coalition-government had a more split decision-making along the whole government.

27.3.2 ESM: The size of the European Stability Mechanism

BUD01: Here, the debate in Slovakia was not really about the size of the ”firepower” of the ESM, rather about the actual contribution of Slovakia. I would re-evaluate the positions: ’0’ is the original proposal on the GDP and capita based computation of deposits, and ’100’ as a smaller contribution from Slovakia. The debate was mainly influenced by the Finance Ministry. BUD02: It’s pretty much the same as GRC. Media played less a prominent role, and the Ministry of Finance played a more important role. BUD04: Here again, the Finance Ministry was most influential and active, although it was necessary to communicate this with the Prime Minister’s Office as well. I would say that the Prime Minister was also more pragmatic about this issue. As for the Parliament, once again, it was Mr Sulik who was most outspoken about this issue but also was not very influential. BUD09: The European level exerted a great level of pressure on decision-makers. Media was also very attentive as well. Significant influence on the side of the European political machinery. Ivan Miklos, Finance Minister back then, also believed it was not the best solution, but it was a European decision and one had to live with it and make the best out of it. Also informally, there was a definitely strong influence of the European level. BUD17: There was more discussion on rule-based fiscal policy, but I do not recall a strong position on this in SK. Probably, decision-making followed the general method giving most power to the Finance Ministry.

380 27.3.3 FCO: The legal form of the debt brake

Our assumption is that domestic and international actors shape a government’s negotiating position. Which actors - ministries, institutions, parties, or interest groups - were most influential in shaping the negotiating position of the government, and what positions did they advocate? textbfBUD01: This wasn’t really an issue in Slovakia, although the position is correctly assessed. We did not participate in the European debates really, as there was a national consensus built around the need for strict fiscal and budgetary rules. It was really considered as a small technical issue. BUD02: Part of the normal ordinary law, it has some supremacy because of its international nature, so position is correct. Decision was more technocratic: budgetary council had the biggest role and the ministry of finance. Politicians also perceived the issue as something that must be complied with. Most actors were in favor of strict rules. BUD04: There is a certain discrepancy between the national debt brake rule and the European one. It was introduced into the national legal system before the TSCG was adopted. As for the actors it was practically the same as in the previous case with the side-note that nobody really understood the technical details of the TSCG so it was really taken care of by the technocratic level. Also, it has to be noted that in Slovakia, there were more debates about the budget agencies and not really about the transposition of the golden rule. BUD09: In Slovakia there is a more important fiscal law which is a constitutional limit on debt, which was passed in 2011 or 2012 after the early elections. There was a cross-party consensus on this. It is similar to the debt brake rule in GER, and is quite strict. Media paid attention to the matter also financial council. It was more prominent than the transposition of the TSCG. There wasn’t a big disagreement among parliamentary parties. At the same time, it was a way for Social Democrats internationally and domestically to show that they are fiscally responsible. Otherwise it was also dominated by the Finance Ministry. BUD17: We established a fiscal council before the TSCG. We already had a fiscal council in our constitution before the compact was agreed on. It was in the constitutional law, but part of the requirements are simple ordinary legislation. It was more a personal initiative (Michal Horvath and Odor), and the Central Bank was also supportive of the initiative.

27.3.4 SPA: The blocking of SGP sanctions by reversed qualied majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

381 Our assumption is that domestic and international actors shape a government’s negotiating position. Which actors - ministries, institutions, parties, or interest groups - were most inﬂuential in shaping the negotiating position of the government, and what positions did they advocate?

BUD01: Once again, there was rather a national consensus on the issue of automaticity - everybody was in favor. In this issue, the Eurogroup and the EFC/EWG was probably most influential, and through this, the finance ministry. BUD02: It also relates to the fact that strict fiscal rules are favored in Slovakia. Definitely more technocratic issue as well. Changing to automatic sanctions practically escaped the media, and was even more technocratic than the previous issue. It is also more political, whether you want to approve somebody’s fine or not, but at that time it might have been thought differently by the different actors. But basically it involved the same actors with the exception of the Commission from where the proposal came, so it is probably the Commission and the Eurogroup which played a more important role in this. ECB not really playing a role in the policy-making. BUD04: This was probably the most technical of all issues, consequently, there wasn’t much involvement of the head of government. It was really the Finance Ministry that worked out the position. There wasn’t any involvement of the national parliament on this. BUD09: I cannot really recall the issue. BUD17: We felt that the rules should be stronger, we were looking for stricter rules. Again, decision-making followed the general rule on this issue.

27.4 The stability of government positions and the role of Eurozone non- membership

27.4.1 GV1: The Change of Position and the change of Government

BUD02: Big change was about EFSF / ESM from Radicova to Fico, but it wasn’t really a change of position given that Fico also supported from opposition. Also similar change in banking union (we are not much in favor of risk sharing and risk reduction). Finance Ministry pushed the issue through the parliament simply telling them it had to be done. What changed now is that government is trying to find exceptions for investments under fiscal rules. Position did not really change, still supporting strict rules. Government respects European rules which are less strict, but budgetary council and government are trying to harmonize the different rules. BUD04: There has been a little change in terms of our approach to the fiscal rules, namely we increasingly believe that fiscal rules are not so ’intelligent’ therefore they are not really respectable and to make them work, one needs to introduce a certain level of flexibility into the system. As for the banking union, there is also some change, we supported the SSM, we are in favor (in principle) of the SRM but also we support the idea that banking union should not be rushed through.

382 BUD09: NA BUD17: There was a change with regards to EFSF/ESM going from no support to support. Otherwise, SK usually went with the mainstream position.

27.5 The role of parliament: governing and opposition parties

27.5.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview BUD01 BUD02 BUD04 BUD09 BUD17 P. The inﬂuence of the majority in parliament 0 0 0 - - .

BUD01: With the exceptional period of the coalition government which made parliamentary actors more visible BUD02: NA BUD04: They can only be vocal through media really. Legally, formally they don’t really have a competence. Even though they can mandate, but it’s only a standard procedure. BUD09: Government had a comfortable position with a majority. Parliamentary scrutiny and inﬂuence was much weaker in 2012-2016 than before and since. Before there was greater plurality of opinions, afterwards everything was decided by the Social Democrats, Parliament was simply a rubber-stamper. All decisions were made somewhere else (before they got to parliamentary stage).

383 BUD17: Especially compared to 2010 there was much more discussion in parliament later. But with a government with disciplined MPs, there was not much inﬂuence.

27.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview BUD01 BUD02 BUD04 BUD09 BUD17 P. Governing party inﬂuence 0 0 0 - na .

BUD01: Fico had a majority in parliament. Under the Radicova government, however, one could argue that there was a weakening of the governing party given the fact that a small coalition partner, the SaS could make the government collapse. BUD02: In general, no change, but in the cases of bailout, or in more exceptional cases, they were more inﬂu- ential. BUD04: NA BUD09: They did not want to bother line ministers. They trusted them. They did not want to oﬀer or provide the opposition room for discussion on these issues. If they had dissenting views they would try to express them informally within the party ranks, but it was not done in public. BUD17: NA

27.5.3 PL3: The role of the opposition party

384 Figure 3: Change in the opposition party inﬂuence

Interview BUD01 BUD02 BUD04 BUD09 BUD17 P. Opposition party inﬂuence - - 0 - 0 .

BUD01: In general, EU related issues are seldom discussed. BUD02: We moved into the ’saving of the Eurozone’ mode. It was common interest so it made hard for opposition parties to counter this evolution of public opinion. BUD04: Opposition is scattered so their position and the change thereof is hard to assess. Some got more important some got weaker. BUD09: It is the only time when Slovakia had a one-party government (2012-2016). BUD17: today public is not as much concerned as before

27.6 The dominant views of economic policy

27.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

385 Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview BUD01 BUD02 BUD04 BUD09 BUD17

ID The state should provide signiﬁcant economic governance with state-led 3 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 2 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 2 1 1 .. management.

BUD01: There is a slow move away from balanced budgets to public investments, although counter-cyclical management is not present. BUD02: Rightist government more about balanced budget, they slashed on expenditure side, then by Smer it was about income side, now more about public investment. Not much about counter-cyclical measures though. BUD04: It has been changing over time. Also, generally there has been a diﬀerence of opinion between the PMO and the Finance Ministry, the former more in favor of industrial policies, the latter in balanced budgets with the side-note that it has to be more ﬂexible. BUD09: balanced budgets at the national level, public investments at the EU level BUD17: NA

27.6.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview BUD01 BUD02 BUD04 BUD09 BUD17 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 ..

ID Growth and low unemployment 2 2 2 1 2 ..

ID Price stability 1 1 1 1 1 ..

BUD01: Competitive exchange rate not really an option here.

386 BUD02: NA BUD04: NA BUD09: growth and price stability equally important BUD17: NA

27.7 The future course of EU integration

27.7.1 ID4: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Slovakian Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview BUD01 BUD02 BUD04 BUD09 BUD17

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

BUD01: The main idea is to follow the EU mainstream on institutional development. BUD02: Now in favor of new intergovernmental mechanisms. Like fiscal capacity building and tools for dealing with asymmetric shocks, also tax collaboration. More deepening of the EMU. We want to keep all countries in, so not in favor of multi-speed Europe, we would prefer to work within current treaty provisions. BUD04: The Prime Minister is in favor of a strong Europe and would not mind more integration, yet admits that it is often not politically feasible. As an alternative to this he also supports greater role given to the member states. Also there is a difference of views between the Foreign and Finance Ministries. BUD09: The current government is pro-integration, but undecided in what way (also we see that it is not possible to do things through treaty change). Also, we have to add that the Minister of Finance is also interested in more thorough reform of the EMU (fiscal and economic policies), although acknowledging that there is hardly an appetite for this either (one has to wait for GER and FRA elections as well). BUD17: longtime perspective: new treaty; we would need a mandate from the population that would support this. In short-medium term we are set to have either multispeed EU or more along the line of intergovernmental institutions.

387 27.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview BUD01 BUD02 BUD04 BUD09 BUD17 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

BUD01: In the beginning there was a strong support for stronger EU institutions, but it slowly moved towards more MS centered decision-making. BUD02: NA BUD04: Intergovernmental institutions as only a last resort as it is not really considered to be good for small countries. Status quo, on the other hand, is not considered to be sustainable and defendeble. BUD09: Finance Minister is more open to more EU, the PM is not certain where the EU should go and takes decisions on a rather ad hoc way, not in a principled manner. The prism of the ’migration issue’ blurs the preferred vision of the PM. It depends on the actual policy questions as well. BUD17: the government would go a little further than status quo, maybe a little more fiscal centralization, but not a fully-fledged fiscal union.

27.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? BUD01: It did not play a major role in the positions of Slovakia, in general Slovakia agrees with what is proposed. BUD02: It is very much the guideline for decisions. It changed with the leftist party gaining support. It wasn’t really a big change though. BUD04: The political elite is really pro-EU given the connections to the euro area. BUD09:

388 NA BUD17: NA

27.8 Negotiation strategy during the Euro crisis

27.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview BUD01 BUD02 BUD04 BUD09 BUD17 S T Hard bargaining: tries to extract concessions from the other side, delays or R Rarely Rarely Very rarely Very rarely Very rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Rarely Never Never Never provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Very often Rarely Often Often Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

27.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Slovakian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

Aut02: Austria negotiated hard on the ESM as it provided strategic advantage at the beginning. In some other cases, such as the 2nd Greek program, the Austrian government preferred hard strategy, but since other countries such as Germany and Finland played the hardball, it could take more conciliatory approach. BUD01: It changed inasmuch as diplomatic exchanges got more professional. There is much more strategic thinking behind decisions now, and considerations how influence over final outputs could be increased. BUD02: Role of ministry of finance gained more self-esteem over the crisis. BUD04: NA BUD09: We were only tough in cases where we were not the only one against the rest. On banking union we also managed to form a coalition around it although not with the most influential ones. If we have allies, we are not afraid of confrontations. We were fairly constructive in most cases. A good example

389 was the EFSF extension: selﬂess political decisions. BUD17: In most cases we did not really have strong negotiators, we always tried to push for stronger rules. When it was about costs, we tried to negotiate beneﬁts.

28 Slovenia

28.1 The list of interviews in Slovenia

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer SLO01 50 SLO02 75 SLO03 100 SLO04 75 SLO05 50

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

390 28.2 The summary observation on country interviews

Slovenia is a Eurozone member that got under severe pressure from the banking crisis. Consequently, the Eurozone reform agenda is followed closely and - unlike most other new EU member state - not only by the Head of State and technocratic actors, but also by the parliament and its committees. At the same time, the parliamentary involvement seems related to instability of coalitions and limited discipline of coalition party MPs.

Although four diﬀerent governments ruled in Slovenia during the 2010 to 2015, there were no major changes in its policy towards the EU. While Slovenia started with strong support for solidarity within the euro zone, worsening banking crisis at home and persistent problems in Greece, contributed towards more cautious support for further ﬁscal integration.

The ﬁve interviews included a former minister of ﬁnance, state secretary, chief economist at a ministry and two academics involved in policy-making.

28.3 Open answers to questions on 4 contested issues

28.3.1 GRC: Willingness to support Greece in early 2010

SLO01: Slovenia strongly supported the Greece assistance, Proposals came from the EU level but Slovenia was one of the first member states willing to show solidarity and financially support Greece, Most influential in the governmental debate was the finance minister, however in strong cooperation with the prime minister. No position can be taken without the consent of the prime minister. There was no big discussion in the media and also no strong opposition in the parliament (only one right wing representative came to her mind). Interest groups played a minor role as the focus lied on the government parties and the respective parliamentary committees. SLO02: The interviewee highlighted as the most influential actor Finance Ministry and minister himself. His role was crucial and he has in fact shaped the position of Slovenia, while the head of the government supported it. National parliament has role in the decision-making process, but not much influence on the formatting of position (interviewee mentioned differences between coalition, which was very pro and opposition, which was at the beginning a bit skeptical but no major problems can be exposed). The only interest group interviewee mentioned was left oriented -at the beginning it was against supporting Greece, but later it became more supportive. However, it doesn’t have any influence. Among international actors interviewee described Eurogroup as the crucial player, as it ”really does the thing”. Beside this, interviewee also mentioned European Council, EFC and IMF (it showed the way forward and informed national representatives about possibilities). SLO03: Interviewee explained that Slovenia has supported Greece, since this was not just the issue of one

391 country but also the issue of whole system in its existence. The predictions and expectations were that also other countries would follow Greece, among them also Slovenia. The suggestion of Slovenian standpoint was put forward by the Ministry of Finance, especially minister personally, finance minister was then supported by the PM, Minister of foreign affairs and Minister for EU affairs. Proposal was then supported also in the parliament, both from coalition parties and also opposition partiers. Opposition did not use any serious mechanisms against the proposal, as it was under the influence of EPP. There was strong influence on the proposal also from external factors, especially Eurogroup. SLO04: Interviewee stated, that key and most influential player was prime minister, in 2010 this was Borut Pahor, and beside him also financial minister Krizanic. Both have supported willingness to financially support Greece, especially in public debates. Prime minister Pahor emphasized some conditions that Greece must comply with (some criteria that Greece should reach, implementation of needed reforms). As important actor interviewee stated also minister of foreign affair and minister of EU affairs. Both have supported financial support to Greece. Interviewee has also emphasized national assembly and inside it, committee on public finances, where some MPs were not in favour of financial assistance towards Greece, mostly because of the domestic financial crisis. Interviewee has added, that also domestic media have reported on the issue, mostly have supported financial help for Greece, he also added, that there were no important foreign actors that have had influence on Slovenian official positions. SLO05: Interviewee states that main actor was government, and Prime Minister, Minister of Finance and Min- ister of EU Affairs. Interviewee explains, that Slovenia offered help to Greece because of the tradition, solidarity. It is at the same time true, that Slovenian delegation at the time did not know what would be extend of help and how much money would be needed, so help towards Greece was offered before anybody knew the details. Beside the government interviewee mentioned also national parliament, that had less influence, but has also supported offering help towards Greece, with the exception of one small opposition party (Slovenian national party - SNS). Committee on EU affairs and committee on finances debated on the issue, public opinion was, at least in the beginning, in favour of offering help to Greece. Among external actors, interviewee mentioned EU institutions, above all Commission and Parliament, and Germany.

28.3.2 ESM: The size of the European Stability Mechanism

SLO01: The interviewee wasn’t part of the government at that point in time, however she is quite sure that the influence of the different actors was the same as in the case of Greece assistance. SLO02: Regarding European Stability Mechanism interviewee exposed minister of finance as the most important actor and his ministry, also head of the government had big influence. The interviewee described that banks were not actor at all, since this mechanism was perceived as a mechanism for helping coun-

392 tries in deep crisis and at this time Slovenia was not perceived as one of them. That is why banks were not pay any attention and were not involved into discussion. Among international actors interviewee put importance to European Council and Eurogroup. They were crucial, since the solution had to be adopted rapidly. However, the position was mostly formulated/shaped at the level of government almost without involvement of any other domestic/internal or external influences. SLO03: Interviewee explained, that Slovenia extensively supported ESM, because Slovenia was sure that this mechanism would contribute to the normal economic growth. Minister of finance has expressed the concern that Slovenia would have to bear the biggest share according to the GDP per capita, but at the meeting of the finance ministers he was then promised that the formula will be further adjusted and Slovenian share would not be the biggest, so he supported the ESM proposal. Main actor was therefor Ministry of the Finance with the cooperation with the Ministry of EU affairs, also the National As- sembly did not oppose to the mechanism, same as parliamentary committee on public finances. Public opinion polls have showed support of the public, but they had no big influence on the final decision. Slovenian delegation has in the meantime under the influence on the EU policy, especially under the influence of the EFC that reported and prepared the mechanism, also IMF was heavily included. SLO04: Interviewee stated, that Prime Minister was very much in favour of ESM, but has always questioned formula used for calculation. Prime Minister argued that Slovenia should contribute smaller share, as EU should take into account also domestic financial situation in Slovenia and Slovenian level of economic development. Prime Minister also succeeded that payments were carried out in five tranches, once per year. Very influential was also Minister of Finance. Interviewee has exposed no other actors as influential. Interviewee added that in Slovenia there was no wider debate on the issue, media have not reported on the issue a lot, external influences were not detected. S/He described ESM as decision of two men, Prime Minister and Minister of Finance. SLO05: Most influential actor was Minister of Finance, beside him also Prime Minister and some coalition parties (SD, Zares, LDS). Committee on economy and Committee on finances organized debates on the issue. There was no broad public debate on the issue, as the debate was mostly limited to the political elites, interviewee mentioned only one daily newspaper (Finance) that had any reports on the issue. There was almost no influence from external actors (beside the EU Commission), as this debate was only conducted inside the national context.

28.3.3 FCO: The legal form of the debt brake

SLO01: In Slovenia the debt break rule is part the constitution and therefore they were in favor. SLO02: Interviewee exposed that Slovenia has took quite extreme position and put the ﬁscal compact in the

393 constitution. S/He said that this was totally governmental decision, with finance minister and head of government in the front line. The national parliament supported the governmental position but no influence, since the government has already shaped the position. S/He mentioned two political parties -Slovenian democratic party (SDS) as leading party of the coalition in that time, and Positive Slovenia as opposition party, which was against the placement of the fiscal compact into constitution. Since this was political decision no interest group expressed the opinion and also media were not (very) active. The interviewee remembered only one journalist who has reported about it in newspaper Delo. The influence was marginal. S/He also mentioned Germany as external actor but only in sense of political debate, and not as role model that Slovenia would follow. SLO03: Interviewee explained, that in the time that Fiscal Compact was prepared for the adoption, in Slovenia there was a change of the government in power (Pahor –¿ Jansa). Basic idea was suggested by the Minister of the Finance from the Pahor’s government (Kriani), but idea was further developed (but didn’t change a lot) by the Minister of Finance from JJansa’s government (Sustersic) and later by the Minister of Finance of the Bratusek’s government. Final implementation of the Fiscal Compact was done only in first months of the Cerar’s government in autumn 2014. Fiscal Compact was supported also by some parliamentary parties from both coalition and opposition. Some experts (Keynesians) were opposing to this suggestion with arguments that were later (2014 –¿) adopted by the opposition party United Left. Public opinion polls on the issue were very much divided. From external actors IMF was very much restrained towards this issue. SLO04: There was a change of government in Slovenia (Pahor - Jansa). Most important and most influential actor was again Prime Minister Jansa, and minister of finance Sustersic. Minister of Foreign Affairs was more reserved about this thematic because of possible influence on his political party (Democratic party of pensioners). Important actor was also national parliament, as for fiscal compact two-third majority was needed, active were mostly coalition parties, SDS, Civic List and NSi, and also opposition did not oppose to the solution presented. Most debate was about possible articles that would enable the state not to respect FC. As interest group interviewee highlighted academia, that was very divided on the issue, one part of the academia strongly opposed and managed to get some public and media support. Also trade unions opposed, but did not have much influence on the issue. Institute for macroeconomic analysis and development strongly supported the FC. There was no external influence detected. SLO05: Slovenia was in that time in so bad economic condition, that inclusion of Fiscal Compact to the Constitution was necessary obligation towards EU partners. Idea on FC was constructed by Pahor government, but implemented by Jansa government, the most influential actor in Jansa government was Prime Minister Jansa and his financial minister -Sustersic. There was quite a lot of debate on the FC in the Slovenian Parliament, as two-third majority was needed, so government at the time invested quite a lot of efforts towards the convincing the MPs and to gain enough support. Some members of previous Pahor government coalition (now in opposition) were opposing the proposal they actually supported just months before (before the change in Government). Strong interest groups were also academics, and they were mostly opposing the proposal. Interviewee added, that strong external influence was coming from European Council, European Commission and European Parliament (not always influence, but sometimes even demands from Brussels).

28.3.4 SPA: The blocking of SGP sanctions by reversed qualied majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by quali- ﬁed majority. Qthers favoured sanctions imposed by the Commission, unless the Council blocks them

394 by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

SLO01: The interviewee was not part of the government at that time and that this question was no issue as far as she can remember. SLO02: The adoption of SGP sanctions was under competencies of Ministry of Development, which has the most influence in shaping Slovenian position, also head of government and finance minister were involved but with much less influence. The parliamentary committee on EU affairs discussed about the sanctions but it has no influence. As far as interviewee remembered, there was no public debate on this issue and media were quite passive. Among international actors interviewee highlighted EFC, since it was influential in the decision-making process. EFC provided information for discussions at EU level. SLO03: Slovenia has supported SGP sanctions, as they were presented as logical and rational solution that would enable European integration would be capable of normal functioning also in the times of crisis. Main actor was again Minister of Finance, government as a whole, with support of the parliament and some political parties (SDS, SD, NSi, PS and later also SMC). Parliamentary committees for finance and EU affairs also exerted the influence. Big influence on the Slovenian position had also external actors, such as European Central bank, Council and Commission, Eurogroup, EFC and IMF. SLO04: Very supportive were Prime Minister Pahor and Minister of Finance Krizanic-. In Slovenia there was no extensive debate, interviewee said, that domestic public was not even informed about Reversed Qualified Majority Voting, debate was limited only to the governmental circles. Interviewee added that there were tips coming from European Commission, despite that those tips had no bigger influence on the Slovenian position. SLO05: Main and the most influential actors were Prime Minister and Minister of Finance, there was extensive debate on the issue at the Committee on EU affairs. There was no public debate, as debate was limited to the governmental actors only. Interviewee could not recall any external influences and pressures.

28.4 The stability of government positions and the role of Eurozone non- membership

28.4.1 GV1: The Change of Position and the change of Government

SLO01: The Government has changed 4 times within our research period, but there was no major change concerning any of the relevant positions. They all followed the same path and were very consistent. SLO02: Interviewee assessed that it has been continuation and governments followed the planned path. From Pahor to Jansa government was the continuation for two-/six-pack/ﬁscal compact, until Bratusek

395 government. Cerar government changed the position in the respect on structural balance. The same continuation was mentioned regarding EFSF/ESM (it ended during Jansa government). Concerning banking union, Bratusek government was the only government that deals with this issue, and within the government finance ministry. Quite active was also Bank of Slovenia and National Parliament. SLO03: Governments has followed outlined plan, there was continuity between successive governments, no major changes in official position. Interviewee explained, that this was due to the big interest of Slovenia towards the common market. SLO04: Pahor government supported common European solutions during all term of office (reforms: two/six- pack/fiscal-compact) and later also mechanisms EFSF and ESM. In the time of Jansa government Slovenia was under heavy influence of financial crisis, so because of that Jansa supported stated mechanisms even more, as he realized that Slovenia could use them quite soon for itself. Beside that, Jansa government was more conservative in fiscal policy compared to Pahor government. Bratusek’s government was busier with solving internal banking crisis and re-capitalization of banks. In her time also Bad bank was established, so Bratusek supported banking union even more intensively. Cerar’s government was appointed in time of economic recovery. Interviewee added that all government have showed continuity and there was no drastic change in policy. SLO05: Slovenian position has not changed with changes of Governments, all four governments have supported the instruments, among Governments there were only very minor differences in the implementation of the instruments. Governments were unified about the instruments, as Slovenia was at the same time in deep economic crisis that needed to be addressed with priority. From 2010 until today we can see the continuity in Government implementation.

28.5 The role of parliament: governing and opposition parties

28.5.1 PL1: The role of the National Parliament

396 Figure 1: Change in the majority party inﬂuence

Interview SLO01 SLO02 SLO03 SLO04 SLO05 P. The inﬂuence of the majority in parliament + 0 0 + 0 .

SLO01: Parliament has a strong voice. Although they didn’t refuse any governmental proposals (as the government coalition has the majority), but there are much more discussions than before the crisis. Every three months the finance ministry must report on the programs (EFSF, ESM). As the government consists now of different parties (”colourful coalition”) there are different interests and opinions and although they try to find the government’s position before they go to the parliament there is still a lot of discussion within the respective committees. So the government is forced to go more often to the parliament and to answer much more questions than before the crisis. SLO02: The interviewee assessed that national parliament stayed the same between 2010 and 2014. SLO03: Interviewee evaluated, that the role of the national parliament has not changed, parliament did not get any new mechanism. He thinks, that parliament is quite strong and influential, mostly because of the control mechanism towards the government (interpellation). He believes that in Slovenian parliament there are mostly pro-EU parties. SLO04: National parliament gained power between 2010-2014, and became more equal partner to the government, as governments have lost some degree of influence in stated period, since coalition MPs have not show lot of discipline in terms of voting. National parliament has more media attention in comparison to the government. SLO05: The role of the national parliament has not changes according to the evaluation of the interviewee, as parliament did not get any new control mechanisms, and nothing important changed in the relationship between the parliament and government.

397 28.5.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview SLO01 SLO02 SLO03 SLO04 SLO05 P. Governing party inﬂuence 0 0 + - - .

SLO01: Interviewee talked about a stronger parliament as such and not especially stronger governing parties. SLO02: Governing parties stayed the same - no changes. SLO03: Governing parties can get more information. SLO04: Coalitions are becoming weaker and weaker, mostly because of the numbers of coalition parties, po- larisation of the Slovenian politics, diﬀerences in ideologies, and sometimes also opposing interest of coalition member parties. SLO05: Coalitions are weaker and weaker in Slovenia, also because of the political parties that are established just couple of days before elections. There are more and more newly established parties in the coalitions, so that why the decision-making is less and less of quality. On the other side there are some actors that are for years members of ruling coalitions (DeSUS), know the written and non-written rules and therefore often blackmail other, less experienced coalition partners.

28.5.3 PL3: The role of the opposition party

398 Figure 3: Change in the opposition party inﬂuence

Interview SLO01 SLO02 SLO03 SLO04 SLO05 P. Opposition party inﬂuence 0 0 - 0 + .

SLO01: Interviewee talked about a stronger parliament as such and not especially stronger opposition parties.Although the opposition has the chairmanship in the powerful committee on the budget they don’t use that power so much to go against the government’s EU policy. SLO02: The interviewee assessed that the role of opposition (party) stayed the same - they got some new tools but never use them. It remains to be seen if they will use new control instruments in the future. SLO03: The role of the opposition interviewee evaluates as weaker, as opposition has no information and the capacity. Opposition is not capable to exert influence on crucial policies. SLO04: Interviewee evaluated, that influence levels of opposition political parties did not changed. The number of presidents of opposition parties in parliamentary working bodies remains the same, opposition has not gained new instruments. Also governments have not collapse because of the opposition influence, but because of other influences (as it Commission for the prevention of corruption etc.). SLO05: Opposition was from 2010 until 2015 becoming stronger, as opposition parties became more aware what are competencies of the opposition, which mechanisms are available and how to use those mechanisms. Opposition has become more and more aware of their powers, they have more and more resources and have more public awareness.

399 28.6 The dominant views of economic policy

28.6.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview SLO01 SLO02 SLO03 SLO04 SLO05

ID The state should provide signiﬁcant economic governance with state-led 3 3 1 2 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 3 3 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 2 2 1 2 .. management.

SLO01: NA SLO02: State should refrain involvement in enterprises and banks daily operations. SLO03: NA SLO04: No. SLO05: No.

28.6.2 ID2: Dominant Monetary policy goals

400 Figure 5: The ranking of monetary policy goals

Interview SLO01 SLO02 SLO03 SLO04 SLO05 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 1 3 3 ..

ID Growth and low unemployment 1 2 1 1 ..

ID Price stability 2 3 2 2 ..

SLO01: As the monetary policy is decided within the ESCB Slovenia has no clear position or even debate about dominant monetary policy ideas SLO02: NA SLO03: NA SLO04: Slovenian politicians deal mostly with growth and low unemployment. SLO05: No.

28.7 The future course of EU integration

28.7.1 ID4: Next Integration Steps

Figure 6: Next integration steps

Interview SLO01 SLO02 SLO03 SLO04 SLO05

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

SLO01: Although the situation could be changed through discussions about the impact the BREXIT and the French/Dutch/German elections, Slovenia would rather like to improve the European Union within the given treaties. SLO02: The EU should try to make provisions sustainable. They should steer behaviors but not become obstacles for the unitary and the EU. They should complete the union and its ﬁscal capacity. SLO03:

401 Interviewee evaluates that next integration steps are possible within current treaty provisions, as according to his/her opinion stabilisation experiments have generated so much doubt and distrust, that federal union is actually not the possibility. Interests are too important for the life in the community, so EU cannot fell apart, except in the case of outside interference. S/He also thinks that member states are still independent with their own politics and policies. S/He also talked about three reforms that would be needed: a) fiscal policy is currently ineffective, should be supported by the monetary policy and development policy, that is very good and effective, b) European social model should be upgraded and EU should follow the model of welfare state, c) coordinated defense policy, EU should set up common defense structures, the need for that is clearly seen in recent crisis situations. SLO04: Interviewee stated that now is not good time for re-opening Lisbon Treaty due to instability and especially Brexit. This could bring even more division in the EU. Also multi-speed Europe could causes future increase the rift between old and new members, or North and South, or urban parts and peripheries. The interviewee assessed that strong resistance to new institutions exist among member states, since supranational entities have already too much power according to some evaluations. Sev- eral regimes bring greater differences between members. Interviewee stated that the most appropriate option is work within current Treaty provisions, since some reforms are quite good (i.e. banking union, banking supervision, common instruments, single banking resolution, single capital market union etc.), also fiscal issues are successfully resolved (two-six-pack, Euro+). S/He exposed immigration policy as the major problem, which needs common solution (Germany has a lot of influence on this field). SLO05: Interviewee thinks, that the best solution is to work within current treaty provisions, from the viewpoint of respecting all already-implemented reforms, and some reform should still be implemented (welfare, heath, pension). S/He accesses that re-launch of treaty is not good solution in this instable times, as this are demanding political question, that EU is unable to address at the moment. Slovenia also is not supporting multi-speed Europe, as this would mean joining less-developed country group.

28.7.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview SLO01 SLO02 SLO03 SLO04 SLO05 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

SLO01: Although the President (who has just representative role) is in favor of a Federal Union, the government prefers no change but is strictly against a two-speed Europe. They support improving the EU

402 and the decreasing of bureaucracy and the inclusion of the people and their wishes, so that Europe is closer to the ”people on the streets”. Furthermore s/he relied on the initial idea of the EU as a key factor for stability and peace. Coming events will show how the EU will develop. SLO02: In the way towards federal union (Pahor, Jansa, Cerar governments), with less abiding rules and more autonomy –¿ more saying at economic handling, in the economic policy making (not only implementing), more maneuver, more role, more space. But, this can be very complicated in the reality. Rules can be brutal sometimes but for the common good. If there is external supervision, certain rules can not be broken. SLO03: Interviewee assess that Slovenian governments have followed the model of inter-governmental institution, where monetary and ﬁscal policies are coordinated and united. Federal union in his/her opinion is not possible anymore because of the historical facts. According to the expectation confederation would be more realistic goal to follow. The strengthening of the EU parliament can led towards the inclusion of more federal elements, such as common army or common foreign policy. SLO04: The interviewee stated that Pahor was in favour of the EU as Federal union with more common policies and more competencies to the EU. Jansa was more conservative concerning federal union and more supportive towards intergovernmental institution. Cerar is also much in favour of intergovernmental institution, since it is seen that this is only possibility to implement reforms on the EU level. None Slovenian government from 2010 since today did not support multi-speed Europe (only Pahor talked about possibility of EU members withdrawal). SLO05: Federal union was supported only by Borut Pahor among Slovenian Prime Ministers, Jansa, Bratusek and now Cerar are supporters of intergovernmental institution.

28.7.3 ID6: The inﬂuence of the vision on government positions [ID5.3]

Did this vision inﬂuence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the diﬀerent reform packages? If not, why? SLO01: Yes. SLO02: Maybe, in some extent. SLO03: No. All governments were very pro-european. SLO04: The interviewee answer was ”yes” in relation to EU actors and other member states. Pahor supported federal union and he acted in that way. Cerar is more in favour of consensus achieving within intergovernmental institution. Bratusek and Jansa have resolved more internal (domestic) problems that is why their external position is not so clear. SLO05: Yes, by all means. How do we see European Community, is the key question. Is this the union of several states, or does the individual state has to denounce its sovereignty and transfer this sovereignty to the EU level. Because of the consequences of economic crisis, Slovenian government have started to support inter-governmental institution even more than before.

403 28.8 Negotiation strategy during the Euro crisis

28.8.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview SLO01 SLO02 SLO03 SLO04 SLO05 S T Hard bargaining: tries to extract concessions from the other side, delays or R Rarely Often Never Never Rarely blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Never Rarely Never Never Very rarely provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Often Often Very often Rarely Often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

28.8.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Austrian delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

SLO01: Yes, it has changed due to the development of the policies (on the European and on the domestic level) as for example concerning Greece, where Slovenia is now much stricter and clearly against any further reduction of the interest rates or against any extension of loan maturities. Furthermore they have a strict position against the given methodology of the output debt calculation, because the this methodology is adversely affecting small countries like Slovenia. SLO02: Yes, it changed, from supportive to more conservative. There were no major changes between Pahor and Jansa governments (except rules of fiscal pact - it became harder under Jansa government as it was in the constitution). Bratusek government was interested in looking for other issues - monetary union was quite appreciated at this time due to severe crisis. Also Cerar government deal with other issues like fiscal capacity. The continuation is in the way of thinking towards more fiscal union - engagement future ties. SLO03: Interviewee explained, that Slovenian delegation have changed their negotiations strategies, cleavage was in February 2012, when Pahor government was succeeded by Jansa government. In period from 2010 to 2012 Slovenia had good strategic position in the EU, that was lost later (Jansa, Bratusek and Cerar government), as Slovenian viewpoints were totally adjusted towards the EU consultants. Lobbies have taken advantages of internal issues in Slovenia, so Slovenia lost important role also in foreign politics. SLO04:

404 The interviewee thinks that Slovenian delegation position changed quite extensively. In 2010 Slove- nia was much more self-confident and supported strict reforms in the countries that were already hit by economic crisis. Later Slovenian delegation rhetoric was softer, as Slovenia searched protection within EU community. Negotiating position was changed, also tactics - particularly when Slovenian public debt was the biggest. Jansa and Bratusek acted very carefully and ensured that Slovenia will implement reforms. They often repeated that Slovenia is obliged to respect the rules etc. Interviewee assessed that break was when Pahor’s government collapsed –¿ change of governments + domestic crisis (financial debt). Also current government is still very cautious. SLO05: Yes. When Slovenia started to feel the consequences of economic crisis, the Slovenian negotiation position changes drastically. We can say that Slovenian economic instability influenced on the negotiation strategy of Slovenia in the international community. This could especially be observed in the times of Jansa government and Bratusek government, that had difficulties to conduct any kind of negotiations. Now Slovenia is slowly recovering and is slowly gaining better negotiating position in the EU community.

29 Sweden

29.1 The list of interviews in Sweden

All interviews were conducted in accordance with the Consortium’s interview manual. Each interviewer also assigned a quality rating to the data gathered during the interview.

Interview code Quality rating by interviewer STO24 75 STO25 100 STO26 50 STO27 50

Interview quality rating: 100 = best in the given member state; 75 = very good ; 50: standard ; 25 = acceptable; 0 = failed (not included in the EMU Formation dataset).

405 29.2 The summary observation on country interviews

Sweden’s preferences on the reform of the Eurozone were very much shaped by its position as a non- Eurozone country.

Generally, Sweden wished for the Eurozone to reform in such a way that it became more stable and sustainable, since this is in the interest of Sweden regardless of whether it is a member or not. This meant that Sweden was supportive of more ambitious proposals presented: immediate support to Greece, a large lending capacity for ESM, and reversed QMV to trigger sanctions. In view of its domestic legal traditions, Sweden found ordinary legislation the most appropriate for the commitment to ﬁscal stability.

At the same time, Sweden wanted to make sure that the new structures - to the extent possible - would not drive a wedge between eurozone and non-eurozone members. In particular, Sweden was anxious to make sure that issues concerning EU27 were dealt with among the 27 and not the eurozone members exclusively.

Domestically, there was a high level of consensus on the Swedish position vis-a-vis Eurozone reform, with the center-right government and the main opposition party, the Social Democrats, taking very similar positions. Within the government, the Prime Minister’s Oﬃce and the Ministry of Finance were very dominant. However, the relative standing of the government relative to the parliament shifted in the fall of 2010, as the center-right majority government transformed into a center-right minority government. This is not deemed to have aﬀected policy positions on Eurozone reform to any noticeable extent, but it does feature as an aspect of the domestic political situation as reported in the questionnaire.

As a detail, both of the interviewed state secretaries emphasized a growing disillusionment with the Eurozone over the years. This was a personal experience, but it also reﬂects a general shift in Swedish public opinion in the direction of a declining share of the electorate supporting Swedish participation in the Eurozone.

Since Sweden is a non-Eurozone country, these were issues on which only a very limited set of important actors had positions. They were not issues of general discussion among political and societal actors. This explains the select list of actors with position and inﬂuence scores.

Some interviewees were comfortable assigning scores on (select) actor positions on all issues in focus, while others were less comfortable about some issues and therefore left those blank.

The rationale for interview selection was as follows: two interviewees served in top-level political positions (state secretary) in the Ministry of Finance during the period in question, and two interviewees served in positions as senior oﬃcials with responsibility for these issues, one at the Ministry of Finance and one at the Swedish Representation to the EU.

29.3 Open answers to questions on 4 contested issues

29.3.1 GRC: Willingness to support Greece in early 2010

Greece was nearing a sovereign default. As the EU and Eurozone searched for solutions, some member states expressed preparedness to support Greece, while others resisted such proposals. The EuroGroup

406 agreed to on March 15, 2010 to make support available, if requested (Greek authorities made the request on May 2, 2010).

STO24: Very high degree of domestic political consensus on this issue in Sweden. - Majority government, so parliament and opposition of little importance, if they had had a different view. - Central for SWE that IMF was involved. STO25: SWE correctly identified in policy space (NOTE: this applies to STO24 as well, but never noted in open comments). - High level of domestic consensus. - IMF involvement central for SWE STO26: SWE position correctly identified. - No extensive domestic debate on the issue. - The positions of the ECB and IMF very important for SWE, position of COM somewhat. - Sweden joined in bilateral aid as well (Ireland). STO27: SWE position correctly identified. - But the support would not come from SWE.

29.4 ESM: The size of the European Stability Mechanism

STO24: Same pattern and comments as Greek package. STO25: - SWE position correctly identified. Easy for SWE to advocate large fund, since not Swedish money. - High degree of domestic consensus - IMF central STO26: SWE position correctly identified. - No real domestic debate. - Change from majority to minority government meant greater role for opposition and national parliament compared to Greece. STO27: SWE position correctly identified. - But support would not come from SWE. - No real discussion in SWE about the issue; no real interest in the Swedish political environment.

29.4.1 FCO: The legal form of the debt brake

407 on the constitutional-type of commitment and yet others were reluctant to accept such a hard provision. The early drafts proposed ”national binding provisions of a constitutional or equivalent nature”, whereas the adopted text refers to ”provisions of binding force and permanent character, preferably constitutional”.

29.4.2 SPA: The blocking of SGP sanctions by reversed qualiﬁed majority

The triggering mechanism for SGP sanctions became a contested issue. Some member states supported the status quo, when the Commission recommends sanctions and the Council approves them by qualified majority. Others favoured sanctions imposed by the Commission, unless the Council blocks them by qualified majority. The final compromise introduced the reverse qualified majority voting (RQMV).

STO24: - High degree of domestic consensus. - New parliamentary situation after October 2010 with government in minority position; however, mattered little on this issue, since consensus. STO25: - Swedish position correctly identified. - Cannot assess influence of domestic and international actors on government’s position. STO26: - SWE position correctly identified. - High level of domestic consensus, to the extent the issue was discussed at all. - Generally for all four issues: SWE officials often listened very carefully to the ECB, given the overall objective of making sure the Eurozone would go strengthened out of this. - Generally for all four issues: there was very little consultation with the social partners on these issues. - Generally for the four issues: there was essentially no domestic public debate and opinion on these issues. STO27: Swedish position correctly identified.

408 29.5 The stability of government positions and the role of Eurozone non- membership

29.5.1 GV1: The Change of Position and the change of Government

STO24: - Sweden had the same center-right coalition in government throughout the entire period. However, they were in a majority position before October 2010 and in a minority position after. This had implications for the government’s need to gain agreement with the opposition in the Committee on EU Affairs. However, it did not lead to a change in the position on specific issues; rather, some issues (Fiscal Compact) were somewhat contested, others not. STO25: - Change from majority to minority government for center-right coalition in October 2010 affected its need to secure support from the opposition and in parliament, but did not lead to shift in specific issues on the agenda. - Sweden consistently pursued four objectives: (a) orderly finances, (b) the Eurozone must work, (c) national ownership of central economic decision-making, and (d) democratic accountability through national parliament. Not always easily combinable, thus leading to some am- bivalence. - Over time, the government’s view of the Eurozone changed from ”something we might join in the future” to ”not something for us”. Increasingly pessimistic and disillusioned. STO26: NA STO27: - There was no change over time in a specific issue. - The issues on the agenda varied over time, which meant that different perspectives from the same government came in play. When more institutional issues (e.g., presidents’ report), SWE became more skeptical. - SWE understanding of the issues at stake broadened: from fiscal discipline to financial markets.

29.5.2 GV2: The Impact of the Eurozone non-membership

In your view, did the fact that this country is not a member of the Eurozone inﬂuence the position that the government took in discussions on reforms of EMU?

Figure A: The Impact of the Eurozone non-membership

Interview STO24 STO25 STO26 STO27 G. Within Treaties

G. Outside of Treaties

G. Non-Eurozone participation

G. Eurozone-only rules

G. Prevent EA hurdles

G. Worry about Euro deepening

G. Other strategy

STO24: - SWE sought to protect its interests in the Eurozone system. - SWE sought particular formulations

409 in the texts, even if it were not a member. - SWE sought to avoid a development toward multi-speed Europe. - SWE sought to make sure that decisions relevant for EU28 were taken by all MS/the Coun- cil. - However, there was also respect for the need for the Eurozone to solve its own problems and move ahead with mechanisms to do that. - The consequence was less influence for SWE. STO25: - Eurozone must function; do not want an economic crisis among our (trading) partners. - Not our money, so easy to support greater funds. - Protective of right of all MS to participate in decision- making of concern to EU28. - Non-Eurozone countries have increasingly lost out in influence, while the Eurogroup has gained. There is now little sympathy for the non-Eurozone interests, mainly because the Eurozone is busy on its own. STO26: - Sweden could duck in discussions about money, since not Swedish money after all. - However, the thresholds for joining have increased, not least financially given all the funds to back up the Eurozone. STO27: SWE did not have to adopt specific positions unless it wanted to. - SWE did not have to pay.

29.6 The role of parliament: governing and opposition parties

29.6.1 PL1: The role of the National Parliament

Figure 1: Change in the majority party inﬂuence

Interview STO24 STO25 STO26 STO27 P. The inﬂuence of the majority in parliament + + 0 + .

STO24: Shift from majority to minority government for the center-right coalition in October 2010 meant more

410 power for the parliament. STO25: Shift from majority to minority government for the center-right coalition strengthened the role of the national parliament. STO26: In a situation of crisis management like this one, the role of the national parliament is generally reduced. STO27: Change from majority to minority government for the center-right coalition in October 2010 strengthened the national parliament.

29.6.2 PL2: The role of the governing party

Could you tell us whether the role of the MPs of the governing party in inﬂuencing the national government in EU aﬀairs became stronger, weaker or stayed the same from 2010 and 2015?

Figure 2: Change in the governing party inﬂuence

Interview STO24 STO25 STO26 STO27 P. Governing party inﬂuence - 0 0 - .

STO24: Shift from majority to minority government for the center-right coalition in October 2010 meant less power for the governing parties. STO25: MPs from the government parties controlled by the government (party discipline). STO26: In a situation of crisis management like this one, the executive dominates and there is no real point in seeking the support from the governing parties’ party groups in the parliament. STO27: Change from majority to minority government for the center-right coalition in October 2010 weakened the governing parties.

29.6.3 PL3: The role of the opposition party

411 Figure 3: Change in the opposition party inﬂuence

Interview STO24 STO25 STO26 STO27 P. Opposition party inﬂuence + + 0 + .

STO24: Shift from majority to minority government for the center-right coalition in October 2010 meant more power for the main opposition party (Socialdemocrats). STO25: Shift from majority to minority government for the center-right coalition in October 2010 strengthened the role of the opposition (socialdemocrats). STO26: In a situation of crisis management like this one, the role of the opposition is generally reduced. STO27: Change from majority to minority government for the center-right coalition in October 2010 strengthened the opposition.

29.7 The dominant views of economic policy

29.7.1 ID1: Dominant Macroeconomic and ﬁscal policy principles

We would like to ask you more broadly about the dominant economic ideas in this country. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy. We would like to explicitly ask you how you see your country in the that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3).

412 Figure 4: The ranking of macroeconomic and ﬁscal policy principles

Interview STO24 STO25 STO26 STO27

ID The state should provide signiﬁcant economic governance with state-led 3 3 3 3 .. industrial policies and the like.

ID Balanced budgets and stable debts are the macroeconomic and ﬁscal 1 1 1 1 .. priorities.

ID The state should focus on public investments and counter-cyclical demand 2 2 2 2 .. management.

STO24: Strange question: government has to act counter-cyclically. STO25: Note: questions assumes static view; in practice, the exercise of economic government is to act counter- cyclically. STO26: NA STO27: NA

29.7.2 ID2: Dominant Monetary policy goals

Figure 5: The ranking of monetary policy goals

Interview STO24 STO25 STO26 STO27 ID A competitive exchange rate (i.e., devalue the currency, if necessary) 3 3 3 3 ..

ID Growth and low unemployment 2 1 2 2 ..

ID Price stability 1 2 1 1 ..

STO24: Strange question: price stability is a means toward growth. STO25: Note: since price stability is a means toward an end - growth and low employment. STO26: NA STO27: NA

413 29.8 The future course of EU integration

29.8.1 ID5: Next Integration Steps

We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the Swedish Government for reforming the EU? Multiple options are possible.

Figure 6: Next integration steps

Interview STO24 STO25 STO26 STO27

I.. Relaunch of Treaty change / Constitutional debate

I.. Work within current Treaty provisions

I.. Creation of new institutions for multi-speed Europe

I.. Other (see below)

STO24: NA STO25: NA STO26: NA STO27: NA

29.8.2 ID5. The Vision of the European Union

Figure 7: The Vision of the European Union

Interview STO24 STO25 STO26 STO27 I.. Federal Union

I.. Intergovernmental Institution

I.. Multi-speed Europe with a core and more ﬂexible integration around it

I.. No change (status quo)

I.. No preference

I.. Other (see below)

STO24: NA

414 STO25: NA STO26: NA STO27: NA

29.8.3 ID6: The infuence of the vision on government positions [ID5.3]

Did this vision influence the government’s stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why? STO24: NA STO25: They Eurozone has to put its house in order, and SWE realistically won’t be part of it (at least for a long time). Currently three forms of conflicts in the EU: (a) north-south (e.g., government debt); (b) Eurozone–non-Eurozone; (c) supranational institutions - member states. COM is no longer the small states’ best friend. Very politicized and responsive to great power demands. STO26: - Main objective was to make sure the Eurozone survived/worked, since important for SWE as well. - Multi-speed, since SWE does not aspire to be a part of the core anymore, if that means the Eurozone. STO27: Mattered especially when more political proposals were presented, such as the presidents’ report in 2012.

29.9 Negotiation strategy during the Euro crisis

29.9.1 ST1: Negotiation Strategy during the Euro Crisis

Figure 8: Negotiation strategy during the Euro crisis

Interview STO24 STO25 STO26 STO27 S T Hard bargaining: tries to extract concessions from the other side, delays or R Rarely Never Never blocks negotiations for its own benefit 1. .. S T Threatening: uses threats (for example opt-outs or long transitional R Very rarely Never Never provisions) to influence other parties positions 1. .. S T Soft bargaining: is prepared to make concessions to opposing states or to R Very often Very often Very often propose an exchange of concessions for mutual benefit 1. ..

Scale: Very often - Often - Rarely - Very rarely - Never - Do not know

415 29.9.2 ST2: Negotiation Strategy during the Euro crisis

Has the negotiation strategy of the Swedish delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

STO24: Used don’t know option for the questions, as these were found strange as alternatives. STO25: NA STO26: NA STO27: NA

END

416 ATTACHMENTS

MEMBER STATE QUESTIONNAIRE

SEPTEMBER 1, 2016

DRAFT OF THE POST-PILOT MSQ

Interview code: _____ Interviewee: ______Interviewer: ______Time: ______Venue: ______

Opening section: Information sheet for interviewees

The Choice for Europe Since Maastricht:

Member States Preferences for Economic and Financial Integration

The aim of the research is to understand the preferences of EU member states and EU institutions regarding the reform of fiscal and economic governance over the last 5 years. A first step is to map cleavages and common ground at the EU level and within each member state. To this end we are conducting around 180 expert interviews across the EU. The data will help us not only to examine national perspectives, but to assess the political feasibility of EMU reform proposals. The project is funded by the EU’s Horizon 2020 program and carried out by a consortium of 8 universities from across the European Union.

Voluntary participation: Interviewee participation in this interview is voluntary and consent can be withdrawn at any time.

Confidentiality: All interviews are conducted on the basis of strict confidentiality. We are committed to protecting the anonymity of our interviewees. We may cite comments in the published work that results from the research, but they will never be attributed to a particular individual.

Recording of interview: If you consent, we should like to record the interview for the purposes of analysis by the research team. The recording will be used solely for the purpose of this research project and destroyed once the analysis is complete. We’re happy to turn it off at any time during the interview at your request. Is that ok with you?

Further information: www.EMUchoices.eu/info Declaration of Consent

I hereby confirm that I have read and understood the information on the research project. The interviewer has responded to any further queries to my satisfaction.

I understand that my participation is voluntary and that I can withdraw my consent at any time without any obligation on my part to provide further justification

I have received a copy of this declaration and am willing to participate in this study.

Place/Date ______

Name of

Participant ______

Signature of

Participant ______

Contact: Professor Sonja Puntscher Riekmann, Salzburg Center of European Union Studies, Universität Salzburg, Mönchsberg 2, A-5020 Salzburg, +43 662 8044 7601, sonja.puntscher- [email protected]

Ethics clearance: The study has been considered and approved by the Ethics Committee of the University of Salzburg. Mag. Siegrid Leitner, Büro des Senats und Universitätsrats, Kapitelgasse 4, A-5020 Salzburg

------Please scan and email the above section separately to preserve confidentiality ------

Interview code: ______

Part I Explaining the Government’s Policy Position on Four Contested Issues during the Euro crisis (2010-2015)

Part I asks about the influence of key domestic actors on the 4 contested policy issues that serve as empirical proxies for the two underlying dimensions:

1. Fiscal integration (some form of sharing fiscal resources among EU countries): i. GRC: Initial willingness to support Greece (First Program) ii. ESM: The size of the ESM

2. Fiscal governance (legalization and supranationalization of fiscal policy in the EU) iii. FCO: The legal form of the debt brake1 iv. SPA: The blocking of SGP sanctions by reversed qualified majority GRC: Initial willingness to support Greece (First Program)

The definition of the contested issue:

Greece was nearing a sovereign default in early 2010. As the EU and Eurozone searched for solutions, some member states expressed preparedness to support Greece, while others resisted such proposals. The EuroGroup agreed on March 15, 2010 to make support available upon request (the Greek authorities officially requested support on May 2, 2010).

The definition of the policy space:

Position 0: Position 100:

No immediate Some immediate special assistance to support for Greece is Greece necessary

GER NED SLK FRA FIN ITA ESP CZE UK AUT BEL SWE LUX EST FIN POR CYP LAT LIT IRL POL SLO GRE MLT DNK ROM HUN COM ECB EP

Outcome

Unknown positions of member states and/or institutions:

BUL

GRC.1: Our assumption is that domestic and international actors shape a government's negotiating position. Which actors – ministries, institutions, parties, or interest groups – were most influential in shaping the negotiating position of the [COUNTRY] government, and what positions did they advocate?

______GRC.2: Please, help me to systematize your answer into the table below, where the position score between 0 and 100 is defined in the policy space above and influence score ranges from 0 (no influence on this issue) to 100 (the decisive influence on this issue).

Position Influence Comments (0 to 100) (0 to 100)

The position and influence of domestic actors on domestic debate

Head of government

Economics ministry

Finance ministry

Ministry of EU affairs

Other ministry? If yes, which one: ______

National parliament (majority of MPs)

Party [Name]: ______

Parliamentary committee on [Name]:

National Supreme Court

National Central Bank

Bank [Name or type]: ______

Interest Group [Name or type]: ______

Media [Name or type]: ______

Public opinion/polls:

The position and influence of international actors on domestic debate

European Central Bank

European Council

European Commission

European Parliament

Eurogroup

EFC / Eurogroup Working Group

IMF

Other supranational or international actor? If yes, which one: ______

Other EU government? If yes, which one ______

Non-EU government? If yes, which one: ______

Position Influence Comments (0 to 100) (0 to 100)

The position and influence of domestic actors on domestic debate

Head of government

Economics ministry

Finance ministry

Ministry of EU affairs

Other ministry? If yes, which one: ______

National parliament (majority of MPs)

Party [Name]: ______

Parliamentary committee on [Name]:

National Supreme Court

National Central Bank

Bank [Name or type]: ______

Interest Group [Name or type]: ______Interest Group [Name or type]: ______

Interest Group [Name or type]: ______

Media [Name or type]: ______

Public opinion/polls:

The position and influence of international actors on domestic debate

European Central Bank

European Council

European Commission

European Parliament

Eurogroup

EFC / Eurogroup Working Group

IMF

Other supranational or international actor: ______

Other EU government? If yes, which one: ______

Non-EU government? If yes, which one: ______

ESM: The size of the ESM

The definition of the contested issue:

On 29.10.2010, the European Council agreed on the need to set up a permanent (fiscal) crisis mechanism, the ESM, as a cornerstone of the crisis management framework for the Euro area. The ESM would replace the existing, but temporary, European Financial Stability Facility, EFSF. The size of the ESM (its effective lending capacity) relative to the existing EFSF was an important issue

The definition of the policy space:

Position 0: Position 100:

ESM lending ESM lending capacity capacity should be should be 500 billion Euro; substantively larger same as EFSF and than 500 billion Euro. EFSM combined.

FRA ITA ESP BEL GER FIN SLK NED LUX CYP EST IRL AUT POR SLO GRE MLT COM ECB SWE UK

Outcome

No positions of member states and/or institutions:

CZE DNK LAT POL ROM BUL LIT HUN EP

ESM.1: Which actors – ministries, institutions, parties, or interest groups – were most influential in shaping the negotiating position of the [COUNTRY] government, and what positions did they advocate?

Perhaps we can look directly on the table of actors and focus on what would be different from the answer to the first question (GRC: Willingness to support Greece). The position score between 0 and 100 is again defined in the policy space above and influence score ranges from 0 (no influence on this issue) to 100 (the decisive influence on this issue).

FCO: The legal form of the debt brake

The definition of the contested issue:

This was a debate about the legal nature of the commitment to the stability and fiscal discipline contained in the Fiscal Compact (TSCG). Some member states rejected the TSCG, while others insisted on the constitutional-type of commitment and yet others were reluctant to accept such a hard provision. The early drafts proposed "national binding provisions of a constitutional or equivalent nature”, whereas the adopted text refers to "provisions of binding force and permanent character, preferably constitutional".

The definition of the policy space:

Position 0: Position 60: Position 80: Position 100: Reject fiscal Ordinary Binding compact in legislation provisions - not Constitutional total necessarily level constitutional

UK CZE FIN NED AUT FRA ITA SLK GER ESP BEL SWE LUX EST POL COM SLO HUN POR CYP IRL ECB Outcome GRE DNK LAT ROM BUL

No positions of member states and/or institutions:

LIT MLT EP

FCO.1: Which actors – ministries, institutions, parties, or interest groups – were most influential in shaping the negotiating position of the [COUNTRY] government, and what positions did they advocate?

Perhaps, we can once again compare the table with your answer to the first question (GRC: Willingness to support Greece). The position score between 0 and 100 is again defined in the policy space above and influence score ranges from 0 (no influence on this issue) to 100 (the decisive influence on this issue).

Position Influence Comments (0 to 100) (0 to 100)

The position and influence of domestic actors on domestic debate

Head of government

Economics ministry

Finance ministry

Ministry of EU affairs

Other ministry? If yes, which one: ______

National parliament (majority of MPs)

Party [Name]: ______

Parliamentary committee on [Name]: ______

Parliamentary committee on [Name]:

______

National Supreme Court

National Central Bank

Bank [Name or type]: ______Bank [Name or type]: ______

Interest Group [Name or type]: ______

Media [Name or type]: ______

Public opinion/polls:

______

The position and influence of international actors on domestic debate

European Central Bank

European Council

European Commission

European Parliament

Eurogroup

EFC / Eurogroup Working Group

IMF

Other supranational or international actor: ______

Other EU government? If yes, which one: ______Non-EU government? If yes, which one: ______

SPA: The blocking of SGP sanctions by reversed qualified majority

The definition of the contested issue:

The trigger mechanism for SGP sanctions became a contested issue during 2010. Some member states supported the existing arrangement, whereby the Commission recommended sanctions, but the Council needed to approve them by qualified majority in order for them to apply. Others wanted sanctions to be applied by the Commission, unless blocked by the Council acting by qualified majority. The final compromise introduced reverse qualified majority voting (RQMV).

The definition of the policy space:

Position 0: Position 100:

Opposes the Supports the introduction of the introduction of the RQMV RQMV.

FRA ITA ESP BEL GER FIN NED SWE POR CYP GRE SLK AUT LUX SLO EST LAT COM ECB

Outcome

No positions of member states and/or institutions:

IRL MLT BUL LIT CZE POL UK DNK ROM HUN

SPA.1: Which actors – ministries, institutions, parties, or interest groups – were most influential in shaping the negotiating position of the [COUNTRY] government, and what positions did they advocate?

Position Influence Comments (0 to 100) (0 to 100)

The position and influence of domestic actors on domestic debate

Head of government

Economics ministry

Finance ministry

Ministry of EU affairs

Other ministry? If yes, which one: ______

National parliament (majority of MPs)

Party [Name]: ______

Parliamentary committee on [Name]: ______

National Supreme Court

National Central Bank

Bank [Name or type]: ______Bank [Name or type]: ______

Interest Group [Name or type]: ______

Media [Name or type]: ______

Public opinion/polls:

The position and influence of international actors on domestic debate

European Central Bank

European Council

European Commission

European Parliament

Eurogroup

EFC / Eurogroup Working Group

IMF

Other supranational or international actor: ______

Other EU government? If yes, which one: ______

Non-EU government? If yes, which one:

Part II General Questions about Domestic Euro Crisis Politics

We would now like to ask your views more generally about the Euro crisis politics in [COUNTRY] between 2010 and 2015.

GV1: The Change of Position and the change of Government

GV1: Thinking back, was there a significant change in the position of [COUNTRY] in the reform negotiations on the two-/six-pack/fiscal compact and EFSF/ESM, or the banking union? If yes, were these position changes linked to the government change from [initial PM]’s to [later PM(s)]’s government?

Standardize the open answer into the following table, if possible.

[Initial PM’s] government [Later PM’s] government

Two-/six- pack/fiscal compact

EFSF/ESM

Banking union

GV2: The Impact of the Eurozone non-membership [delete for Eurozone countries]

GV2: In your view, did the fact that [COUNTRY] is not a member of the Eurozone influence the position that the government took in discussions on reforms of EMU?

______

After the open formulation, check with the interviewee the following prompts and add, if necessary, further general arguments:

❑ The government pushed for reforms ❑ The government pushed for reforms within the current treaties. outside the current treaties.

❑ The government supported ❑ The government supported mechanisms that ensure participation of mechanisms exclusively designed for Eurozone non-members in the new members of the Eurozone. governance structures.

❑ The government pushed for reforms ❑ The government was not worried that will not make it more difficult to about further integration within the adopt the euro later. Eurozone, as there is little interest in adopting the Euro in the foreseeable future.

Other argument: Other argument: ______

––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––

PL1: The role of the National Parliament

PL1: We are also interested in the role played by the national parliament in shaping the government’s position in discussions of EMU reform between 2010 and 2015. Could you tell us whether parliament’s influence increased, decreased or stayed the same between 2010 and 2015, and, if so, why?

❑ weaker ❑ The parliament lacked new control instruments.

❑ The parliament lacked information on the policy of the government.

❑ The parliament did not have sufficient time and resources for discussing the policy of the government.

❑ The parliament received less media attention.

❑ Other argument/observation:

❑ no change ❑ Nothing important in the power relation between the government and parliament changed.

❑ The parliament got new control instruments for involvement, but did not use them.

❑ Other argument/observation:

❑ stronger ❑ The parliament acquired new control instruments.

❑ The parliament was better and more swiftly informed on the policy of the government than previously.

❑ The parliament had sufficient time and resources for discussing the policy of the government.

❑ The parliament got more media attention.

❑ Other argument/observation:

PL2: The Role of the Governing Party [delete if not relevant – see Manual]

PL2: We would now like to look at the role played by political parties in the formation of the government’s EU preferences. To what extent did the influence of MPs belonging to the most important governing party increase, decrease or stay the same from 2010 and 2015?

❑ weaker Could you explain why?

❑ no change Could you explain why?

❑ stronger Could you explain why?

PL3: The role of the opposition party

PL3: And did the influence of MPs belonging to the most important opposition party increase, decrease or stay the same from 2010 and 2015?

❑ weaker ❑ The opposition lacked new control instruments.

❑ The opposition lacked information on the policy of the government.

❑ The opposition did not have sufficient time and resources for discussing the policy of the government.

❑ The opposition did not manage to raise public awareness of the issue with voters and the media.

❑ Other argument:

❑ no change ❑ Nothing important in the power relation between the opposition and the government changed.

❑ The opposition got new control instruments for involvement, but did not use them.

v Other argument:

❑ stronger ❑ The opposition acquired new control instruments.

❑ The opposition was better and more swiftly informed on the policy of the government than previously.

❑ The opposition had sufficient time and resources for discussing the policy of the government.

❑ The opposition raised public awareness of the issue with voters and the media.

❑ Other argument:

ID2: Dominant Monetary Policy Goals (Ranking Question)

ID2: Monetary policy decisions often involve a trade-off between setting a competitive exchange rate, boosting the economy or prioritizing price stability. How would you rank the following three monetary policy goals from most to least important for [COUNTRY]?

Monetary policy goals prioritized by [COUNTRY] Rank #

– A competitive exchange rate (i.e., devalue the currency, if necessary) ___

– Growth and low unemployment ___

– Price stability ___

Optional: In case the interviewee comes up with a monetary policy option that better describes the dominant guiding principle, list it here:

______

ID1: Dominant Macroeconomic and Fiscal Policy Principles (Ranking Question)

ID1: We are also interested in the dominant economic ideas in [COUNTRY]. Views among experts and policy makers differ as to how states should regulate and intervene in the economy. Specific fiscal and macroeconomic policy actions depend on circumstance, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy

We would like to ask your views on your country compared to other EU member states. How would you rank the following three macroeconomic and fiscal policy principles) from most to least important for [COUNTRY].

Macroeconomic and fiscal policy principles prioritized by Rank [COUNTRY] #

– The state should provide significant economic governance with state-led ___ industrial policies and the like.

– Balanced budgets and stable debts are the macroeconomic and fiscal ___ priorities.

– The state should focus on public investments and counter-cyclical ___ demand management.

Optional: In case the interviewee comes up with a macroeconomic and fiscal policy option that better describes the dominant guiding principle in macroeconomic and fiscal policy making, list it here:

______

ID4: Next Integration Steps

ID4.1: Looking to the future, what path of action should the [COUNTRY] support for reforming the EU? Multiple options are possible

❑ Relaunch of Treaty change / Constitutional debate

❑ Work within current Treaty provisions

❑ Creation of new institutions for multi-speed Europe

❑❑ Other (please describe): ______

And what specifically should it aim to change, constitutionally or institutionally? [e.g., how the Treaty should be changed, which Treaty provisions should be activated or what organs should be created or abolished]?

______

ID5: The Vision of the European Union

ID5.1: The positions of member states’ governments in the EMU reform negotiations may be influenced by the government’s general vision of what the EU should be. How would you describe the [… List governments since 2010 by PM’s surname…] government's’ preferred vision of the EU? For example, did it favour a development of the EU in the direction of federal union, a union of states, a multi-speed Europe, or persistence of the status quo? [indicate which of the following comes closest]:

❑ Federal Union

❑ Intergovernmental Institution

❑ Multi-speed Europe with a core and more flexible integration around it

❑ No change (status quo)

❑ No preference

❑ Other (please describe): ______

ID5.2: To what extent did this vision influence the government's stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why?

______

ST1: Negotiation Strategy during the Euro crisis

ST1: Finally, we are interested in the negotiating strategies that national delegation choose to achieve the goals determined by their governments. According to the academic literature, three strategies are usually pursued in international bargaining situations.

How often in your view does the [COUNTRY] delegation use a strategy that:

❑ Very often

tries to extract concessions from the other side, delays or ❑ Often blocks negotiations for its own benefit? ❑ Rarely

❑ Very rarely

❑ Never

❑ Don’t know

❑ Very often

uses threats (for example opt-outs or long transitional ❑ Often provisions) to influence other parties' positions? ❑ Rarely

❑ Very rarely

❑ Never

❑ Don’t know

❑ Very often

is prepared to make concessions to opposing states or to ❑ Often propose an exchange of concessions for mutual benefit? ❑ Rarely

❑ Very rarely

❑ Never

❑ Don’t know

ST1.2: To what extent did the negotiation strategy of the [COUNTRY] delegation change during the negotiations on how to respond to the Euro crisis? If yes, please explain how and why?

______

Notes after Interview

How knowledgeable did the interviewee appear?

❑ Not very much

❑ Average

❑ Excellent

Length of the interview in minutes: _____

General impression of interview atmosphere and any other observation:

______

Did you sense any kind of bias or strong agenda in the answers of the interviewee?

______

Interview manual

Final version September 12, 2016

This document needs to be studied and mastered by each interviewer conducting member state interviews on behalf of the EMU_SCEUS research consortium. It explains the complete interview process and the efficient way of conducting interviews on the basis of the Member State Questionnaire (MSQ), which has been tested during the pilot phase.

The purpose of the MSQ interviews is to: a) collect the positions and influence score of actors involved in the formation of national positions about the four issues contested on the EU level (the Part I of the MSQ); b) collect data on general influence and strategies of national actors pursuing their policy agenda on the EU level (The Part II of the MSQ); c) validate and complete data gathered through the document analysis (charts in Part I).

Responsibilities. Each interviewer is responsible to the consortium partner that has contracted her/him to carry the MSQ interviews. Each consortium partner is responsible for conducting the interview, entering the collected data to the database and archiving the audio and written records in accordance with this Manual. In each assigned Member State (see Table 1), the consortium partner has to conduct enough MSQ interviews to compile at least four complete sets of answers. Since not all interviews may be successful, this may require conducting (and combining results of) more than 4 interviews.

Timing. All interviews need to be completed by October 30, 2016. Please, keep SAL team informed about any potential delays and complications. The results will be discussed at the Executive Committee meeting in Vienna on November 14, 2016.

Key links. The MSQ template: http://goo.gl/xP5OhK. The MSQoutput form: http://goo.gl/V33V3H. The MSQ manual: http://goo.gl/9HE28i. The MSQ intranet at Basecamp: http://goo.gl/k8aHya. The example of MSQ customization: http://goo.gl/QHYyaD

Table of contents:

A. Tasks to complete before travelling for interview

1. The selection of interviewees and keeping their identity confidential

2. The customization of the template for each member states

3. Understand the questionnaire and practice for the interview

B. Tasks to be completed on location for the interview

4. Get ready for the interview (the day before)

5. Conduct the interview

C. Tasks to be completed after the interview

6. Complete your notes immediately after the interview

7. Enter all interview data to MSQoutput template

D. Tasks for the completion of the full four sets of answers for each member state

List of Appendices:

Table 1: The distribution of member states for interviewing

Partner Member states

Konstanz No MS (original plan was to interview EUCO, ECOFIN and EUROGROUP)

Stockholm SWE, FIN, DNK, LAT, LIT and EST

Basel GER (original plan was to interview also COM)

Rome ITA, GRE, MLT, CYP, ESP, and POR

Budapest POL, HUN, SLK, ROM and BUL

Norwich UK and IRL

Grenoble FRA, BEL NED and LUX

Salzburg AUT, CZE, SLO, CRO (original plan was to interview also ECB)

Note: Since we have collected positions of EU institutions through the document analysis and, consequently, focused the MSQ on national preference formation process, institutional interviews cannot be done within the MSQ framework. Whether to drop them completely or redesign them should be discussed at the Executive Committee meeting on Nov 14, 2016.

A. Tasks to complete before travelling for interview

1. The selection of interviewees and keeping their personal information confidential

The starting list of prospective interviewees suggested by consortium partners is available here. This list should not be updated, since the list of people we have actually interviewed needs to be kept confidential due to privacy protection.

Appendix A below provides some template for the email to use when approaching the prospective interviewee and requesting the interview. Ideally, all interviewers should try to avoid completely ‘cold calls’ and try to approach prospective interviewees on the basis of some recommendation and/or existing connection. Therefore, the email form Appendix A should always be personalized accordingly.

All interviews need to be conducted in person, because it allows better interaction and discussion. It is preferable to conduct interviews with a single interviewee in order to avoid potential biases and methodological complications arising from group interviews. However, if potential interviewees insist on other people being present, it is acceptable. However, the interviewer should add observations on the group dynamics that could have distorted results somehow (see the Part C).

2. The customization of the template for each member states

The interview is based on a template that contains all questions to be asked. However, the lists of relevant actors and several other features need to be customized for each country, where the member state interview is to be conducted. When customizing it, follow this procedure:

1. Sign up for the project intranet at Basecamp.com, where the SAL team maintains FAQs, project-wide deadlines, links to useful files and other resources. Feel free to use the Message Board to ask questions and comment on issues noted by others.

2. Download the MSQ template from here (Go to File > Download as > Microsoft Word (.docx) to get the template and adapt it in MS Word)

3. Do the research on the given member state in order to fill in bits of text indicated by the red font. It consists of filling in the name of the country, the names of recent Prime Ministers and finding out whether the country is Euro Area member or not. However, there are also more complex customizations, which require some research:

a. Relevant actors: parliamentary committees, parties, banks, interest groups, media outlets and international organization. These are not to be filled in slavishly, but intelligently. Avoid just adding as many of these actors as possible, because it could make MSQ too long. If the research on MS circumstances suggests that any of these actors are highly unlikely to be relevant, then replace these rows by open-ended formulation (‘Was any party/bank/group/media/IO particularly influential?’) that does not pre-specify any actor, but give interviewee a chance to highlight their role. It is a good idea to consult the customized list of actors with other people in your team or ask 2 people to make these choices, compare them and make the final decision after some discussion. b. The most important opposition and governing parties: in some MS it makes sense to distinguish between parliamentary majority (PL1) and governing party (PL2). If this is the case, keep the PL2 in, otherwise delete it. For example, in Germany the PRL2 should be kept in, because the CDU/CSU as the governing party was more influential (by being more critical and insisting on more information) on EMU reforms than the whole parliamentary majority of CDU/CSU and SPD.

4. Enter all customized information into the template. Customized tables in G1, ESM2, FC3 and SP3 should be identical so just copy-paste it in the right places. An example of a well customized template for Austria is here.

5. Print a sufficient number of customized templates. Have extra copies ready as it is advisable to induce interviewees to fill-in tables on their own, if they like to do so. Add several clean sheets for notes and scribbles during the interview into the package.

6. Before travelling for interviews gather the usual interview equipment including reserve printouts of the questionnaire, recording device/phone, extra batteries/powerpack, pens, business cards etc. Since we are conducting elite interviews we need to observe appropriate dress code and pack for it.

3. Understand the questionnaire and practice for the interview

Each interview should follow standardized procedure covering the following four steps (Opening, Part I on four specific issues, Part II on general issues, Conclusion). Make yourself familiar with the procedure and content of each question to be able to conduct interviews in a professional manner. Since the MSQ is rather long, it is essential to be well prepared in order to complete it in reasonable time (50 to 80 minutes). Make sure that you have a reasonable grasp of the substance and use various time-saving tips suggested below.

As you read on, note any questions and share them with all other interviewers through the project intranet at Basecamp.com. SAL team will keep the list of Frequently Asked Questions (FAQ) updated and is prepared to discuss any issues over Skype to clarify various aspects of the MSQ.

The goal of the interview is to collect a lot of highly structured data. However, the style of the interview should remain conversational. Do not feel obliged to read questions verbatim, if you can summarize them well. Yet, make sure that you collect all data, i.e. fill in all tables and check all prompts. The combination of conversation and data collection requires some interview skills and good preparations. Mere reading of the MSQ is unlikely to work and may result in failed interview that needs to be repeated with another interviewee.

The next four subsections go through the MSQ design and provide explanations as well as tips that proved useful during the MSQ pilots.

Get a print out of the MSQ to refer to while reading on. Opening section

1. Welcoming and thanking for participation

2. Introducing yourself and noting the consortium partner you represent at the interview

3. Background information and the purpose of interview

Read or summarize the information sheet and explain that the participation can be withdrawn at any time and personal data will be kept confidential.

4. Permission to record the interview

Explain that we need the audio recording. If the interviewee is not at all OK with the recording, you will have to take very good notes, which you complement and transcribe directly after the interview (see part C.6).

5. Get the signature for the ‘Declaration of Consent’

Explain that this is a standard procedure for an EU funded project to ensure that all data is obtained in ethical manner.

Part I. Actor’s influence: four contested issues

For getting a deeper understanding of the domestic politics of government’s preference formation, Part I of the questionnaire asks about the positions and influence of various domestic, international and supranational actors for the selected four policy issues out of the 40 that we investigate in our project.

Each of the four issues is to be introduced with the graphical depiction, which serves the purpose of quickly establishing mutual agreement on the definition of policy issue, its policy space and the position of the member state in question. The interviewee should:

• either validate the position of ‘his/her’ MS or

• suggest some other position within the given policy space.

If the interviewee does not accept the position suggested in the template, explain that it is based on analysis of media reports that may not be perfectly accurate so it is OK to suggest changes.

GRC: Initial willingness to support Greece (First Program)

After the interviewer has explained the policy issue and space of the GRC, he/she asks the GRC.1, which is an open question. You do not have to read each question word-by-word, but make sure they are posed clearly. Encourage the interviewee to look into the template and later even scribble into the table of GRC.2.

Ask: GRC.1: Domestic and international actors shape the government's’ negotiation positions shown above. Which actors, such as ministries, institutions, parties, or interest groups, had in your view the biggest influence in the formation of the negotiation positions of the [COUNTRY] government and which positions did they advocate?

While the interviewee provides an open answer, the interviewer takes notes and indicates the key actors in the Table at GRC.2. The point of the open question is to get the ‘big picture’ of the preference formation process in the given MS. The open part of the question will not be repeated with the 3 remaining issues. Explain:

GRC.2: Please, help me to systematize your answer into the table below, where the position score between 0 and 100 is defined in the policy space above and influence score ranges from 0 (no influence on this issue) to 100 (the decisive influence on this issue).

Try to collect Position and Influence scores for ALL actors. Start with those indicated as most influential in the open answer to GRC.1 and then try to fill the gaps. If the interviewee suggests a position outside of the policy space, note the details in the Comments column. Some interviewees may find the influence of some actors (such as banks or foreign government) inappropriate, in which case you should rephrase the question and ask more about input into the domestic debate rather than direct influence (note this down clearly as some banks might have had an input - e.g. they tried to lobby or participate in the discussion - but they might not have influenced anything).

Spend time on filling in the GRC.2 table completely, because you can use it as a benchmark for the latter 3 issues. This can speed up the interview in the next steps, but only if there are no major gaps. Review the result before moving on to the next question in order to chatch any minor mistakes that could undermine results of GRC and following three issues, such as overlooking an actor by overlooking the line etc..

ESM: The size of the ESM

Introduce the policy issues with the graphical depiction and ask:

ESM.1) Which actors, such as ministries, institutions, parties, or interest groups, had in your view the biggest influence in the formation of the negotiation positions of the [COUNTRY] government and which positions did they advocate?

Perhaps we can look directly on the table of actors and focus on what would be different from the answer to the first question (GRC: Initial willingness to support Greece (First Program)). The position score between 0 and 100 is again defined in the policy space above and influence score ranges from 0 (no influence on this issue) to 100 (the decisive influence on this issue).

Encourage the interviewee to express positions directly in numerical scores or even scribble them onto the printed template. Some like to do so and it can speed up the interview. If you have a complete table for GRC.2, you can ask simply what was different in comparison with GRC. However, do not accept that “it was basically the same” without further probing. You can point out that:

When the size of ESM was discussed:

• it was already clear that Greece and other MS will need lot more money than assumed during the GRC discussion;

• the ESM was to be a permanent feature of the EMU architecture;

• there was more time for the ESM discussion.

Has any of it changed the nature of the discussion compared to GRC?

However, avoid suggesting individual actors (such as public opinion or media outlets) yourself as this could bias answers.

FCO: The legal form of the debt brake

Repeat the procedure used for ESM. To probe the differences from GRC, you can point out that: when the Fiscal Compact was discussed the following was also noted:

• The Debt Brake would impose austerity on domestic economy, not just Greece;

• It was couched in legal terms, but was about the fiscal sovereignty;

• The financial markets were watching closely for Euro Area response.

Has any of it changed the nature of the discussion compared to GRC?

SPA: The blocking of SGP sanctions by reversed qualified majority

Repeat the procedure used for ESM2. To probe the differences from GRC, you can point out that: when the RQMV was discussed during the Six-Pack debate the following was noted:

• RQMV was to increase Commission’s supranational powers;

• It would be more difficult for national governments to prevent sanctions when breaching the criteria;

• It was questioned whether the Commission would use its new powers.

Has any of it changed the nature of the discussion compared to GRC?

Part II. General Questions About Domestic Euro crisis Politics

Explain:

After discussing the positions and influence of domestic and international actors in specific policy domains, we would like to ask more generally about the politics of EMU reforms in [COUNTRY] between 2010 and 2015.

If necessary, you can remind the interviewee that by EMU reforms we mean: the two-pack, six- pack, fiscal compact, EFSF, ESM, the banking union and on the discussions about Eurobonds.

GV1: The Change of Position and the change of Government

Ask:

GV1: According to your expertise, was there a major change in the position of [COUNTRY] in the reform negotiations on the two-/six-pack/fiscal compact and EFSF/ESM, or the banking union? If yes, were these position changes linked to the government change from [initial PM] to [later PM(s)] government?

This question has to be customized by the interviewer to the country’s specific history of government changes from 2010 to 2014. Although this is an open question, if possible, the interviewer should standardize the answer into the following table.

[Initial PM’s] [Later PM’s] government government two-/six-pack/fiscal compact

EFSF/ESM

Banking union

GV2: The Impact of the Eurozone non-membership

If the member state is not part of the Eurozone ask (for all Eurozone members this question should have been removed when customizing the MSQ - see A.2 above):

GV2: Like other countries, [COUNTRY] is not a member of the Eurozone. How did this status influence the [COUNTRY] governments’ positioning in the discussions on the different approaches to reforming the Economic and Monetary Union mentioned before? Try to find out whether the non-EA MS really took explicit positions on EMU reforms. It seems that most did not and it would be helpful to find out whether insiders see it that way and what were the reasons for such non-positioning.

After the open formulation, check with the interviewee the following prompts and add, if necessary, further general arguments:

❑ The government pushed for reforms ❑ The government pushed for reforms outside of within the current Treaties. the current Treaties.

❑ The government supported ❑ The government supported mechanisms mechanisms that ensure participation of exclusively designed for member of the Eurozone. Eurozone non-members in the new governance structures.

❑ The government pushed for reforms ❑ The government was not worried about further that will not make it more difficult to integration within the Eurozone, as there is little later adopt the euro. interest in adopting the Euro in the foreseeable future.

❑ Other ❑ Other argument: ______argument: ______

PL1: The role of the National Parliament

Ask:

PRL1: Please let us also discuss the role of the parliament in more detail. Could you tell us whether the national parliament’s role in influencing the national government’s position became stronger, weaker or stayed the same in the reform discussions from 2010 to 2014 mentioned before? Could you explain why?

❑ weaker ❑ The parliament lacked new control instruments.

❑ The parliament lacked information on the policy of the government.

❑ The parliament did not have sufficient time and resources for discussing the policy of the government.

❑ The parliament got fewer media attention.

❑ Other argument/observation:

❑ no ❑ Nothing important in the power relation between the change government and parliament changed. ❑ The parliament got new control instruments for involvement, but did not use them.

❑ Other argument/observation:

❑ stronger ❑ The parliament acquired new control instruments.

❑ The parliament was better and more swiftly informed on the policy of the government than previously.

❑ The parliament had sufficient time and resources for discussing the policy of the government.

❑ The parliament got more media attention.

❑ Other argument/observation:

Pay attention to the “Other argument/observation” that allows the interviewee to provide an open answer to the question. There is likely to be greater diversity of explanations than captured by prompts, hence they need to be recorded in the “Other argument/observation:” row. Note that the influence of the parliament is compared across time for the respective parliament, not relatively to any other institution.

PL2: The role of the governing party [delete if not relevant]

If the distinction between the role of the national parliament (PL1) and the role of the governing party (PL2) is not relevant, then this question should have been removed when customizing the MSQ (see A.2 above). Otherwise ask:

PL2.1: Within the parliament, we are also interested in the governing and opposition party. Could you please tell us whether the role of the MPs of the most important governing party in influencing the national government in EU affairs became stronger, weaker or stayed the same from 2010 and 2014?

❑ weaker Could you explain why?

❑ no change Could you explain why?

❑ stronger Could you explain why?

There are no prompts in this question, because explanations are likely to be specific to circumstances. Again, the influence of the party is compared across time, not relatively to any other institution.

PL3: The role of the opposition party

Ask the question the same way as PL1.

ID2: Dominant Monetary policy goals

Ask the question the same way as ID1 below.

ID1: Dominant Macroeconomic and fiscal policy principles (Ranking Questions)

Ask:

ID1: Now, we would like to ask you more broadly about the dominant economic ideas in [COUNTRY]. Views among experts and policy makers differ in the question of how states should regulate and intervene in the economy. Of course, specific fiscal and macroeconomic policy actions depend on the given circumstances, but there are also clear differences between countries in what is considered to be the best macroeconomic and fiscal policy.

We would like to explicitly ask you how you see your country in that respect compared to other EU member states. Thus, could you please rank the following three macroeconomic and fiscal policy principles from most important (1), to in-between (2), and least important (3) for [COUNTRY].

Macroeconomic and fiscal policy principles prioritized by [COUNTRY] Rank #

– The state should provide significant economic governance with state-led ____ industrial policies and the like.

– Balanced budgets and stable debts are the macroeconomic and fiscal priorities. ____

– The state should focus on public investments and counter-cyclical policies ____ demand management.

Optional: In case the interviewee comes up with a macroeconomic and fiscal policy option that better describes the dominant guiding principle in macroeconomic and fiscal policy making, list it here:

______

Interviewees may complain that opinions in the given member states are too diverse to provide neat ranking generalized for the whole country. However, it usually helps to stress that it asks for comparison with other EU states as interviewees are able/willing to locate their MS on the more or less interventionist end. The first prompt can be easily qualified by reference to the French-style gouvernement économique.

ID4: Next Integration Steps

Ask:

ID4.1: We would also like to ask you a question about the future. Going forward, what is according to your expertise the preferred way of the [COUNTRY] for reforming the EU? Multiple options are possible.

❑ Relaunch of Treaty change / Constitutional debate

❑ Work within current Treaty provisions

❑ Creation of new institutions for multi-speed Europe

❑ Other (please describe): ______

ID4.2: Can you give further details on this process (e.g., how the Treaty should be changed, which Treaty provisions should be activated or what organs should be created or abolished)?

This is primarily an open question. The prompts are there to help to structure the conversation. The ‘muddling through’ strategy amounts to ‘Work within the current Treaty provisions’ in this context.

ID5: The vision of the European Union

Ask:

ID5.1: The positions of member states’ governments in the EMU reform negotiations are also shaped by the government’s general vision of what the EU should be. How would you describe the [… List governments since 2010 by PM’s surname…] government's’ vision of the EU? Did it support a development of the EU in the direction of [indicate which of the following comes closest]:

❑ Federal Union

❑ Intergovernmental Institution

❑ Multi-speed Europe with a core and more flexible integration around it

❑ No change (status quo)

❑ No preference

❑ Other (please describe): ______

ID5.2: Did this vision influence the government's stance on the reform discussions mentioned above? If yes, can you give examples from the different reform packages? If not, why?

This is primarily an open question. The prompts are there to help to structure the conversation. If the interviewee gives another option, ask, which of the predefined boxes comes closest.

ST1: Negotiation Strategy during the Euro crisis

Ask:

ST1: Finally, we are interested in the negotiation strategies that a national delegation chooses to achieve the goals determined by their governments. Negotiation experts have observed the following three strategies in various international bargaining situations.

Can you give us an estimate of how often the [COUNTRY] delegation uses a strategy that:

❑ Very often

tries to extract concessions from the other side by ❑ Often delaying or blocking negotiations? ❑ Rarely

❑ Very rarely

❑ Never

❑ Don’t know

❑ Very often

uses threats of opt-outs or long transitional provisions ❑ Often to influence other parties’ positions? ❑ Rarely

❑ Very rarely

❑ Never

❑ Don’t know

❑ Very often

is prepared to make concessions to opposing states or ❑ Often when they propose an exchange of concessions for mutual ❑ Rarely benefit, or express understanding for another country’s position. ❑ Very rarely

❑ Never

❑ Don’t know

ST2: Has the negotiation strategy of the [COUNTRY] delegation changed during the Euro crisis negotiations? If yes, please explain how and why?

Concluding section

Thank the interviewee for completing the interview and providing tremendously helpful information for our project.

As needed you can also ask whether there are persons that the interviewee would recommend for further interview.

Thank the interviewee once again for his/her time.

Check the part B.5 for further tips on the conduct and troubleshooting during the interview. If you experience any unexpected or difficult situations during the interview, share the experience on the intranet at Basecamp.com so we can find a viable solution and help to prepare other interviewers.

B. Tasks to be completed on location for the interview

4. Get ready for the interview (the day before)

Make sure that you know the precise location/meeting point with the interviewee and you can get there on time. Allow sufficient time for registering at the entrance and passing the security procedure (if any). Have the contact information to interviewees ready in case of any problems. You can also consider leaving your mobile phone number with the interviewee when you agree to meet him so he or she has the chance to inform you about delays etc.

Have all things prepared and packed with you. Namely:

• personal ID to enter institutions and business card to present yourself

• complete printed package of interview materials (plus extra copy of the package)

• recording device (fully charged and with backup batteries)

• multiple pens/pencils to scribble on working & info sheets

5. Conduct the interview

Follow the procedure practiced in Part A.3 and the MSQ template.

A couple of recommendations for interviewing elites:

General conduct

• Choose appropriate dress code

• Too much note-taking might disturb the interview although some notes are okay

• Know the background of your interview partner even if s/he gives this information again to you in the interview

• Know the questions well to have a smooth interview process (practice part A.3 sufficiently)

• End the interview positively with Thanking (you received the most valuable resource of an interviewee: time!) and praising („Your expertise is crucial for our research!“)

About the role of the interviewer:

• Make the impression of being informed, but not too informed (why would you need to do the interview if you knew everything?)

• Prove your confidentiality by confidentiality: “Please understand that I cannot tell you whom else I interviewed since I guaranteed confidentiality.“

• Especially after open question: bear the silence and wait for an answer.

• Explain if needed that you do not judge the answers

• Point out that you are dependent on the expertise of your interviewee.

Challenges in interview situations: When questions are criticized - possible strategies:

• say that similar questions have been asked before in other studies, you repeat these questions in order to compare the answers

• Point out that you are dependent on the expertise of the interviewee

• Point out that the MSQ is designed to cover data needs of different partners of the consortium so it is an amalgam of questions, not a research tool with single focus

When interview partner is short of time and wants to end the interview:

• Use some of the time saving tricks practiced for in part A.3 to speed it up

• Skip the fourth issue in Part I and get to the general questions in Part II directly; leave out optional question even if you kept them in during MSQ customization

• Try to make him or her agree to another appointment or at least a follow-up phone call

When you are asked about your underlying hypotheses:

• Interviewee: „What do you expect to find? What are your hypotheses?“ Tell them that elaborating the hypotheses and assumptions might distort the interview results

• But: tell them that they may have a copy of your study after having concluded it

Criticism at your person: Example: „you have to be German to ask such a question“

• Don‘t start discussion, try to keep the person talking, often the criticism is also informative

Note that some interviewees may want to write on the worksheet themselves. Try to get seated in a way that allows them to do so.

C. Tasks to be completed after the interview

6. Complete your notes immediately after the interview

Complete and clean up your notes on info and working sheets immediately after the interview, before you forget any important and/or interesting information. Save the audio file safely and back it up on some other device or storage (if you use a cloud storage for the audio file, make sure that is remains private and is NOT shared to maintain confidentiality of the recording).

Note that if the collected information is not complete or satisfactory in some important way, it is necessary to conduct another replacement interview. Therefore, try to complete it as much as possible before you forget any useful information noted in the interview. If you are not sure about the quality of the interview outcomes, consult your team and/or Salzburg team, which has the overview about the interview experience across the consortium. Each consortium partner needs to get at least 4 complete interviews per member state. This is likely to require more than just 4 interviews as some interviewees simply fail for various reasons. In order to achieve the four complete sets of answers, it is also possible to combine some interviews. For example, if you cannot cover all 4 issues in Part I, you can add the missing issue(s) from another interview or conduct narrowly focused interview asking only for the missing data.

7. Enter all data to MSQoutput template and archive template and audio file

We have to archive all information from interviews while preserving the confidentiality of our interviewees. For each MS interview, the interviewer has to deliver separately the scanned template, enter data to MSQoutput form and transfer the audio recording to the Salzburg team that maintains the consortium archive and database. This is to be done in the following steps:

1. Scan the first 3 pages of the MSQ template that contain personal information, the declaration of consent and the code assigned to the interview. Send it to Thomas in Salzburg ([email protected]) in a separate email. This information will be kept confidential in a separate archive as required by our Data Management Plan and Ethics clearance for member state interviews.

2. Scan all remaining papers used for the interview into a single PDF, use the identifying code to name the PDF file and email it to Thomas in Salzburg ([email protected]) for archiving.

3. Prepare all information for entering to the MSQoutput form. This online form is based on the Surveygizmo.com, which allows you to pause the data entry but not to close and restart it. Therefore, it is better to prepare everything for a quick entry. You can see the structure of the template in a PDF here. If you need to merge information from several interviews, prepare it for entry. Four complete sets of answers have to be entered for each country, but it is very useful to enter data from any additional or even partially complete interviews. The MSQoutput form contains a Rating column, which works the same way as the credibility ratings during the document analysis: 1 = information explicitly stated by the interviewee; 2 = information based on general rule suggested by the interviewee (such as “the influence and position score were the same as on G1(Greek) question” etc.); 3 = information based on the interviewer’s interpretation of interviewee’s open answers.

4. Enter all prepared information into the MSQoutput form at once. The form is available at http://goo.gl/V33V3H. (GIZMO ACCOUNT NO LONGER VALID) If you encounter any problems with the form or need help with data-entry process, contact Thomas ([email protected]).

5. Since the audio recordings of interviews are likely to be large data files, it may be best to put them all on one flash-drive and hand it over to Thomas during the Executive Committee meeting in Vienna on November 14, 2016. This is also the best way to protect their confidentiality. However, if this is not practicable (or not for all files), contact Thomas ([email protected]) to arrange a secure transfer of the audio recordings over the internet.

Since we have introduced a detailed MSQoutput form, there is no need for word-by-word transcription of the interview. All information relevant for the EMU_SCEUS_FORM dataset (i.e. data on the formation of member state preferences) should be entered in the MSQoutput form either as numerical scores or as text. Therefore, consortium partners are not expected to transcribe interviews (unless they wish so) and are expected to use the dedicated resources to prepare at least the four complete sets of answers.

END

1 Appendices

Appendix A: Communication (components for the email to potential interviewees)

Make sure that the email is always personalised.

Project introduction:

Our research project aims to understand the preferences of EU member states and EU institutions relating to the reforms of the fiscal and economic governance during the last 5 years. We try to map cleavages and common ground on the EU level and within each member state. To this end we will conduct 180 elite interviews across the EU and the data will help us to assess the political feasibility of various EMU reform proposals. The project is funded by the EU’s Horizon 2020 program and executed by a consortium of 8 universities.

Project website: www.EMUchoices.eu

After the interviewee agrees to meet, you should inform her/him about the topics to be covered by the interview by formulating a short vignette based on the contested issues you hope to cover:

During the 60-minute interview, I would like to discuss the process of formation member state’s negotiating position on contested EMU reform proposals. A short outline of questions is available at www.EMUchoices.eu/outline

On confidentiality:

The participation in the research project is voluntary and confidential. The consent with the use of data collected through interview for the purpose of this research project can be withdrawn at any point before, during or after the interview. See the declaration of consents at www.EMUchoices.eu/consent