Policy Coherence and Incoherence in the European Commission

by Matthew Edwards

10 March 2020

For any government or administration, coherence in policy is essential. It does not matter whether one is looking at the parish or district level, a city, borough, or an entire country: having a group of policies that form a coherent body and do not work at cross-purposes is critical if the governing administration is to achieve its aims and implement its programme in office. The higher up one goes, the more complex things can become, the more interests there are to consider, the more stakeholders (to use the jargon) have to be taken into account (though this doesn’t automatically make any disagreements over policies more intense at higher levels, as anyone who has ever seen or been involved in student, academic or parish-level politics can attest. As Kissinger famously put it, “The reason that university politics is so vicious is because the stakes are so small”.)

Having a coherent policy programme is the reason that governments or administrations take time in putting together their programmes for office. Normally drawing on pre-existing ideological, social, political, and economic biases, views and understanding of the environment in which they will be operating, they spend time working out which parts of the programme have priority, which will be resourced at the expense of others, which fall by the wayside, and – hopefully – at the end of the day, produce a plan that is (at least vaguely) coherent, without any elements that openly contradict each other.

After this, there is then the little matter of implementing all the policies in an effective manner, and in making sure that when there are changes in situations these are taken into account.

This brings us to Harold Macmillan’s reputed answer to a journalist when he was asked what he most feared in government: “Events, dear boy, events”. Keeping government plans and policies coherent can be testing at the best of times. For those institutions and organisations that have the reactive speed of a sloth on beta-blockers, it’s much more challenging.

Three examples of problems within EU decision making, policy planning and implementation have come out recently that show this.

The Iran Nuclear Issue

It’s not exactly come out of the blue that the 2015 Joint Comprehensive Plan of Action (JCPOA) between Iran and the P5+1 (the five Permanent UN Security Council members – China, France, Russia, the UK and the USA – plus Germany, also referred to as the E3/EU3+3) has been running into trouble and is pretty much dead in the water. In May 2018, the US withdrew from the JCPOA and put sanctions back in place. Throughout 2019, the International Atomic Energy Agency (IAEA) reported that Iran was breaking key provisions under the agreement, and in March 2020 stated that Iran was failing to grant U.N. inspectors access to one or more sites of interest. Early in January 2020, Iran announced it would ignore the limit on the number of uranium enrichment centrifuges agreed under the deal, thus withdrawing from the last operational restriction imposed by the 2015 agreement and, following this, on 14 January the foreign ministers of France, Germany and UK triggered the official dispute mechanism.[1]

One day later, on 15 January 2020, the Official Journal of the European Union announced that the “European Union, represented by the European Commission on behalf of and for the account of the partner country, Tehran, Iran” had awarded a Czech firm a contract, worth EUR 2.2 million, aimed at “Enhancing the Capabilities of the Iranian Nuclear Regulatory Authority (INRA) and Supporting the Implementation of the Stress Tests at the Bushehr Nuclear Power Plant”.  In essence, it’s a project funded by the EU – that is, by European taxpayers – for a European company to provide technical assistance to the Iranians to help them fulfil their part of the JCPOA.

The slight, gaping problem becomes clear, given the collapse of the JCPOA.

It’s well known that ‘speed’ is not a word that is usually applied to contracting with international organisations. The processes for this particular contract, for example, began in October 2016 and had gone through tendering, cancellation and direct negotiation. By the time both contract lots had been awarded, the JCPOA that this was intended to support had collapsed – which says quite a lot about the responsiveness of parts of the EU apparatus. (And this is not an isolated case – European Commission EuropeAid contracts to support Ukraine after the 2014 revolution were notoriously slow to make progress, let alone actually make any progress on the ground). While (hopefully) there will be suitable cancellation provisions in this Iran-related contract to ensure taxpayer money is not wasted, the time lags around this contract award – not to mention the lack of coherence and tone-deaf publication of the award notice one day after the official referral to dispute mechanism – is astounding. 

But, one could say, this is just one example, with one desk officer simply being absent minded. Maybe the ‘send’ button had been pressed a while before. The trouble is there are many examples.

European Union expansion into the Western Balkans

The glacial pace of expansion – or lack thereof – of the EU into the Western Balkans has drawn many scathing comments, with the process behind it also facing criticism. The EU itself recognised that the accession process was failing to deliver and the European Commission under Jean-Claude Juncker made a grand statement in February 2018 for a ‘credible enlargement’ into the Western Balkans by 2025. That, of course, was before “events” happened, in this case the October 2019 ‘non’ by the French of opening accession negotiations with North Macedonia and Albania. (Even though everyone involved knows that opening negotiations is in reality not even a half-step forward: remember that Turkey officially opened negotiations for membership in 2005 and those have not exactly made much progress.)

Clearly the French ‘non’ has been opposed by other European governments and has certainly drawn criticism. Yet the point was reached where the French government used an effective veto because it seemingly felt that its concerns were not being listened to or meaningful consideration given to them. This lack of effective communication between a national government and the Commission and other member states has happened before – for example, the December 2011 UK veto of an EU-wide treaty. But none of the concerns regarding expansion are new. The French Government has been sceptical on European Union expansion for many years. The points over whether the scepticism is justified can be argued over, as can the negative effects of the accession negotiation veto.

The lack of coherence and responsiveness in the EU position has been widely exposed on this issue – and, again, not for the first time. Juncker’s February 2018 ‘credible enlargement’ statement faced immediate opposition and downplaying from a number of countries – with Emmanuel Macron saying, in May 2018, “I am not in favour of moving toward enlargement before having all the necessary certainty and before having made a real reform to allow a deepening and better functioning of the European Union”. The exact same message was repeated in October 2019.

The responsiveness of the European Commission and European Council to French concerns has been shown to be lacking, with the result that EU policy coherence on enlargement has been shown to be non-existent. This is not to suggest that it is easy to square the enlargement issue. There are multiple problems that need resolving, deep-seated issues within individual Balkan countries that have to be addressed before they will be able to accede to the EU (corruption and rule of law not the least). Member states have multiple (often opposing) views. It isn’t and won’t be easy.

But by trying to force the opening of negotiations through a mixture of tone deafness and unwillingness to listen, the message has been sent that unless a country is willing to dig in its heels, issue a veto and cause (yet another) crisis at a European summit, seemingly little will be done to take its concerns into account.

Protecting democracy, protecting the environment, keeping a majority

One of the large issues that has repeatedly come up in recent years has been the extent to which the rule of law, democratic norms and/or ‘European values’ have been coming under threat from certain quarters within the EU. Headlines such as this in The Guardian have been relatively common. Whether one agrees with this proposition or not – and indeed there is a very strong and heated debate (argument) over what exactly the meaning is of the phrase ‘European values’ – one of the responses from Brussels is to consider whether some EU funds (namely Cohesion Funds) should become conditional and depend on respect for rule of law (referred to in the jargon as “changed conditionality or reinforced conditionality”).  The idea behind “changed conditionality” on EU funds is that those countries who were shown to be backsliding on rule of law issues would have EU funding withdrawn or reduced.

This tool would be used to ‘encourage’ certain countries to respect the rule of law and democratic norms. If a member state is found to exhibit “generalised deficiencies” with respect to the rule of law, the European Commission would be empowered to suspend or terminate the payment of some EU funds to the recipient, as well as prevent their entry into new legal arrangements concerning EU funding programmes.

It is clear that this measure is directed, in particular, at Poland and Hungary – or rather the Law and Justice Party (PiS)-led Government in Poland and Victor Orban’s Fidesz-led Government in Hungary – although there are other countries that might also be affected.

We now reach the point where policy coherence and responsiveness – or, rather, policy incoherence and a lack of responsiveness – comes into play. The idea for conditionality has run into a number of issues: firstly, the reality of what is being proposed, rather than the headlines; secondly, the priority that environmental protection has gained over the past year; and thirdly, European Parliament and European Commission political realities.

The threat of conditionality on Cohesion Funds sounds like a major one: EU funds would be with-held, governments would lose investment and support from Brussels, economic growth would slow, jobs would be lost, the government in question would become unpopular as it gets the blame (in theory anyway) and so on. Well, yes and no. Firstly, it’s important to remember that the money coming from Brussels actually comes from the countries that then get it back, recognising that (for example) Poland and Hungary are net beneficiaries of EU funds (i.e. they get more than they give). While the current negotiations over the Multiannual financial framework (MFF) for 2021-2027, which could be charitably described as argumentative, are ongoing, one thing that is clear is that the overall funds that are available will be less than between 2014-2020, due to the UK leaving the EU and the withdrawal of UK net-contributor financial contributions: there is a EUR 75 billion hole in the budget that needs to be squared through increased contributions from EU member states (i.e. EU taxpayers) or reduced expenditure. The amount available for the Cohesion Funds element of the EU budget will be less, even if the proportions spent on each part of the EU budget remained the same as MFF 2014-2020 (they won’t). Even absent ‘conditionality’, the overall funds going to Hungary and Poland would be less anyway – in the order of around 25% less – due to changes in development levels and the need to fill the hole in the EU budget. So, item 1, even with all other things being equal, Poland and Hungary would have received less money anyway.

The next issue is how important are those Cohesion Funds? The European Commission states that the Cohesion Fund is “aimed at Member States whose Gross National Income (GNI) per inhabitant is less than 90% of the EU average. It aims to reduce economic and social disparities and to promote sustainable development”. The funds can be used for projects relating to transport, environment, and energy infrastructure, all of which can aid economic growth and development. In terms of impact though, a European Commission study from 2015 found that Cohesion Funds seemed to have a beneficial but ultimately small impact on economic growth.

Cohesion Funds are only one of the types of funding that comes back from Brussels to member states: there’s also the European Regional Development Fund, the European Social Fund, the EU Solidarity Fund and so on. For Hungary, in MFF 2014-2020, Cohesion Funds were under 24% of the total funds that came from Brussels; for Poland, 26% of the total. So, given that conditionality would only be applicable for Cohesion Funds, roughly three-quarters of EU funds wouldn’t be touched at all by the measures designed to protect the rule of law and European norms.

Further, it is not clear whether the conditionality mechanism in reality would be a ‘one strike, all funds cut’ or smaller progressive reductions (e.g. 10%, then 20% etc). If the latter, taking a 10% reduction as an example, cutting Cohesion Funds would thus be a 10% reduction of around 25% of the overall funds – so 2.5%. In Hungary, during MFF 2014-2020, EU funds contributed about 3% of GDP – so the reduction would be 0.075% of GDP (which given the increasingly unreliable manner in which GDP is calculated is basically a rounding error). Even if all Cohesion funding were cut overnight in MFF 2021-2027, it would amount to just 0.75% of GDP (or rather, 0.06% and 0.6% of GDP, given that Cohesion Funds are likely to be 25% lower in MFF 2021-2027 anyway). With the prevailing low interest rates and the willingness of institutional and private investors to chase returns, there is little doubt that Hungary (or any other EU government) would face few difficulties in raising this amount on the international markets if it so wished.

The second part of the protection of rule of law/European norms/’Cohesion conditionality’ issue is the increasing focus on environmental protections, where the problem of overall policy coherence raises its head. The new Von der Leyen Commission has been vocal in saying that it has an “increase in ambition” to strengthen climate action, launching a highly publicised ‘Green Deal’, with Von der Leyen saying, “This is Europe’s ‘man on the moon’ moment”. Ignoring for the moment that these ambitions actually only include EUR 7.5 billion of ‘fresh money’ over the 2021-2027 period that hadn’t previously been allocated and that the highly publicised aim of mobilising EUR 1 trillion of investment uses a similar methodology to that of the Juncker Plan (whose questionable effectiveness was criticised by the European Court of Auditors), many of the measures that will be undertaken have to be directed at those areas of the EU needing the most investment to reduce carbon emissions – whether in electricity generation through decarbonisation (notably phasing out coal plants), improving ‘cleaner, cheaper and healthier’ forms of transport, or renovating buildings to cut energy consumption. The areas that need most investments are in eastern Europe. Poland, for instance, is the second largest consumer of coal in the EU; the Czech Republic, Romania, and Bulgaria still rely heavily on lignite. In short, much of the environment funding will need to be directed to many of the same countries where ‘conditionality’ may reduce Cohesion funding – and may well just end up directly replacing it, given the Cohesion funding focus on, for example, environmental protection and resource efficiency, the low-carbon economy, and network infrastructures in energy and transport, and the fact that a large amount of the environmental-focused funding will not be distributed through Cohesion Funds but rather through the ‘Just Transition Mechanism’.

Finally, the political reality question hits any measures related to the protection of the rule of law and European norms. Even getting the conditionality mechanism approved and accepted has and is proving divisive. The Von der Leyen Commission has a tiny majority in the European Parliament – and is actually dependent upon support from some of the political parties whose behaviour the additional rule of law/conditionality measures are intended to address. It has already shown that it is going to adopt a pragmatic approach and will be focused on forging consensus. But this clearly diminishes the chances of any substantive action being taken. As one study – submitted to the European Commission – regarding this issue pointed out, “the prevention of (in some cases, further) rule of law backsliding also requires unambiguous political leadership which recognises the nature and the gravity of the current threat”. Aside from press statements, speeches and perhaps the use of measures that are more of an irritant than actually cause pain, this does not seem likely.

Again, the question of timeliness comes up with this issue. These measures have yet to be approved, let alone used, despite the worries over rule of law having been around for quite a few years.

The reality of policy and raising of expectations

These three examples are ones that demonstrate some of the policy incoherence at the EU level. To be fair to the EU, there are examples from many governments where policy lines become crossed and contradictory. The European Commission does not have an easy job. It has to juggle between the European Parliament, the governments of member states, massive vested interests, and political realities. Getting agreement on policy changes takes time. Some of it cannot be done swiftly under the current system for a whole range of reasons, from capacity within Brussels through to a lack of political agreement and the need for treaty changes, which would need referendums to which many European governments have a post-Brexit allergy. (Though it could equally be said to be a 1992 post-Denmark Maastricht referendum allergy, a post-2001 Ireland Treaty of Nice referendum, a post-2005 France or Netherlands European Constitution referendum allergy, amongst others). 

But, frankly, that’s the nature of government and public administration. It comes with the turf.

The policy coherence and responsiveness issues further raise the question of expectations. The EU wants to make sure that the ‘good’ it is doing is known about and the Commission obviously and understandably wants to make sure it gets positive headlines. This is not to suggest that headlines such as mobilising EUR 1 trillion in the European Green Deal are conjured up like a budget exercise from an episode of the Australian political satire ‘The Hollowmen’. But while Commissioners and high ranking EC officials have so far avoided Kevin Rudd’s ‘great moral challenge of our time’ moment and the rather awkward subsequent backtrack on Australian climate change policy, they have raised substantial expectations through their public statements and declarations – Von der Leyen’s “Europe’s man-on-the-moon moment”, for example.

The same has been true through statements made about the rule of law issue. And the public pronouncements regarding specific foreign policy actions, such as the expansion into the Balkans. The disconnect between what is being spoken about and announced and then the reality on the ground and measures actually taken and implemented is all too evident in many places. While generating good headlines for the EU may be the desire, when this is not followed up swiftly and effectively by actual measures that can be demonstrably shown and evidenced, cynicism is all too easy to set in. And this is before incoherence and “events, dear boy, events” happens.

New and old competencies

No doubt the argument could be made that some of the above incoherence and problems in responsiveness are isolated examples. However, at the European Commission level, policy coherence should be a prescribed absolute. The policy areas in which the Commission has competence are ones that it has been given through successive treaties and agreements by the European member states. If it is unable to discharge these coherently, then the policies should not be implemented at the EC level but rather remain with the individual member states with the responsibility for them and the decisions made placed with national governments who can make decisions and compromises best suited to their individual countries and citizens. A thorough, independent and balanced examination and audit of some policy areas and the effectiveness of the Commission and EU funding instruments in delivering against their goals would be fascinating – no doubt difficult to undertake but it would show those areas where questions can be focused and discussions over specific competencies had. (The reality of political agreement on the conclusions and resultant actions to take would, of course, be a totally different question).

Of course, such a move, or even such a proposition, would be opposed by many to whom the solution to every European problem is ‘more Europe’ – which in reality means ‘more European Union’ or rather ‘more Brussels’, a very different thing. But with the current capacity and capabilities in Brussels to deliver policy swiftly and coherently, it does not make sense to expand further into new areas of policy until such time as the European Commission and its various apparatus has proven that it can react in a much more nimble and effective manner.

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[1] Once the dispute mechanism is triggered, the procedure envisages a step by step escalation of negotiations ending with the United Nations Security Council (who had endorsed the JCPOA in resolution 2233 (2015). If the negotiations at the Security Council are not successful in resolving the issue, the so called “snap back” provision can be triggered, meaning that all sanctions suspended as part of the JCPOA are reinstated. In order to give the negotiations more time, the three European signatures of the JCPOA decided to extend the 15-day timeline for referral to the Security Council in February 2020. See articles here and here.