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European Integration Dynamics from a

Neofunctionalist Perspective

The Case of the 2013 Cohesion Policy Reform

Hanna Marie Kviske

Malmö University, Department of Global Political Studies International Relations, IR 61-90, IR 103L

Bachelor Thesis, 15 ETCs Spring Semester 2019

Date of submission: 19.05.2019 Supervisor: Inge Erikson

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Abstract

The thesis analyses the 2013 Cohesion Policy reform as a case of European integration. By revisiting neofunctionalism and combining it with the Multiple Streams approach, the thesis is able to provide a new angle to the phenomenon of the Cohesion Policy’s integration into the European economic governance framework. The thesis utilises qualitative content analysis to systematically analyse the dynamics that influenced the reform process and eventually lead to the establishment of new integrative linkages. It is revealed how the integration dynamics originated in the economic policy arena and spilled over into the Cohesion Policy reform. Consequently, the thesis concludes that the neofunctionalist concept of functional spillover remains a powerful analytical tool and it is shown in what way neofunctional mechanisms continue to materialise in the European polity.

Wordcount: 13.157

Keywords: European integration; 2013 Cohesion Policy reform; neofunctionalism; Multiple Streams approach

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Table of Content

Abbreviations _________________________________________________________ 1 1 Introduction _________________________________________________________ 2 2 Literature Review ____________________________________________________ 4

2.1 The study of the Cohesion Policy __________________________________________ 4 2.2 The Theoretical Approach _______________________________________________ 6

2.2.1 Defining Integration & The Ontology of Neofunctionalism ___________________________ 8 2.2.2 The Multiple Streams Approach _______________________________________________ 10

2.3 Aim, Premise & Limitations _____________________________________________ 11

3. Methodology _______________________________________________________ 12

3.1 Turning Theory into Analytical Tools _____________________________________ 12 3.2 Method & Data ________________________________________________________ 13

3.2.1 Which material to select? _____________________________________________________ 14 3.2.2 What can be answered by the material? __________________________________________ 14 3.2.3 The processing of the data ____________________________________________________ 15 3.2.3.1 What do the categories stand for? ___________________________________________ 16 3.2.3.2 The matrix behind the approach ____________________________________________ 18

5 Analysis ___________________________________________________________ 19

5.1 Phase I – Reflection and consultation on the Cohesion Policy __________________ 20

5.1.1 The Barca Report ___________________________________________________________ 21 5.1.2 Conclusion of Phase I _______________________________________________________ 22

5.2 Phase II – Preparation for the post-2013 Cohesion Policy _____________________ 23

5.2.1 Section I – The pressures and solutions in the non-Cohesion Policy area ________________ 24 5.2.2 Section II – Did the canon transcend into the Cohesion Policy arena? __________________ 26 5.2.3 Conclusion of Phase II _______________________________________________________ 27

5.3 Phase III – Negotiations of the post-2013 Cohesion Policy ____________________ 29

5.3.1 The first coupling – The Commission as policy entrepreneur _________________________ 29 5.3.2 The second coupling – The Friends of Better Spending _____________________________ 30

5.4 The Findings __________________________________________________________ 32

6 Conclusion _________________________________________________________ 35 Bibliography _________________________________________________________ 37

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Abbreviations

CSR Country Specific Recommendations MFF Multiannual Financial Framework MIP Macroeconomic Imbalance Procedure MS Multiple Streams (approach)

EDP Excessive Deficit Procedure

ESI European Social and Investment Fund EU European Union

FBS Friends of Better Spending FoC Friends of Cohesion SGP Stability and Growth Pact

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1 Introduction

After the 2008-2011 economic and financial crisis, a variety of measures were taken that lead to a further integrated European Union (Ioannou et al. 2015). The 2013 reform of the Cohesion Policy reflects one such remarkable case of new integration. It marks a turning-point in the policy’s history as new mechanisms and instruments were established that formally integrate the Cohesion Policy into European economic governance. European officials now describe the Cohesion Policy as “fully embedded in the coordination of economic policy” (Deffaa 2016: 157). Those mechanisms constitute new integrative linkages between the economic and Cohesion Policy arena and allow for greater control over member states’ economic and structural conditions. Hence a strengthening of supranational authority took place. It is the aim of the thesis to contribute to a better understanding of the processes and dynamics that influenced and shaped this step of European integration.

So, what is the Cohesion Policy and what does its integration into economic governance mean? The Cohesion Policy, also referred to as regional policy, is understood as one of Europe’s most complex and relevant investment policies essentially underpinning the European notion of solidarity (Bachtler, Mendez & Wishlade 2013: 11).

The policy aims to reduce disparities between regions and to create economic, social and territorial cohesion. It provides an umbrella strategy for the European Structure and Investment Funds1 (ESI) that address a variety of issues from unemployment, competitiveness and energy sustainability to education, poverty and exclusion. With a budget of € 351.8 billion invested in the 2014-2020 spending period – nearly a third of the overall European budget – the policy is a central investment framework for the Europe-2020 strategy to reach smart, sustainable and inclusive growth (EU Commission 2019a). The policy reflects a unique governance structure that formally incorporates all actors from the supranational to the local level2.

Although the policy spans across all levels, legislative decisions remain on the supranational level and are reviewed by the Commission, Council and Parliament for

1 The European Structural and Investment Funds are made up by the European Regional Development Fund (ERDF),

the Cohesion Fund (CF), the European Social Fund (ESF), the European Agricultural Fund for Rural Development (EAFRD) and the Maritime and Fisheries Fund (EMFF).

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3 every multiannual planning period. The 2013 Cohesion Policy reform reflects such a review that re-defined the structure, priorities and technicalities for the 2014-2020 spending period.

Scholars acknowledge that the 2013-reform “established a new architecture of the policy, defined new goals and finally changed the task and the raison d’etre of the policy” (Becker 2018:1). However, the changes are not limited to policy-internal modifications. It also further integrated the policy into European economic governance, which evolved the regional development policy into an element of the EU’s economic governance mechanisms. The integrative linkages have two substantial consequences. First, they strengthen the EU’s say in planning and implementing regional development programmes which makes the programmes more aligned to overall European interests thus enabling European institutions to execute more control over member states’ domestic developments. Second, the policy’s integration into economic governance means that ESI funding no longer is solely tied to policy-inherent conditions but may, under certain conditions, be suspended based on macroeconomic conditionalities. The establishment of such macroeconomic conditionalities consequently means that regional and local actors depending on EU funding may be penalised for misbehaviour on a national level (CoR 2012: 24). The act of integration must be understood as a reflection of task-expansion on the supranational level which provides the EU with more leverage to implement its macroeconomic framework.

Consequently, it becomes vital to understand under which conditions the process of integration took place. To reach this objective, I argue that a different angle is needed to comprehend the underlying dynamics and processes that lead to this case of integration. The different angle can be generated by re-visiting theories of International Relations (IR). Although IR driven theories may be challenged in current European theorising (Rosamond 2007: 240), I argue that neofunctionalism remains relevant for the study of certain issues due to its competence in understanding and explaining dynamics of European integration. Therefore, approaching the 2013 reform with a neofunctionalist lens allows to better investigate the reform in relation to the Cohesion Policy’s integration. Combining neofunctionalism with the Multiple Streams approach (MS), the thesis sets out to trace the integration dynamics in an effort to contribute to a better understanding of the reform process through systematic qualitative content analysis. The research question thus becomes: In what way does neofunctionalism contribute to the understanding of the Cohesion Policy’s integration into the wider economic governance of the EU?

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4 In order to answer the research question, existing literature will be critically examined, and shortcomings identified. The literature review then sets out to further develop the argument for a neofunctionalist approach in combination with the MS framework. Next, the methodological approach of qualitative content analysis will be introduced in more detail together with a critical discussion of the material. Additionally, the integrative linkages between the Cohesion Policy and economic governance framework will be further introduced. The analysis itself is structured into three sections which are each dedicated to a distinct phase in the 2013 reform process. This enables a systematic presentation to the reader regarding how and where the integration dynamics manifested themselves and how they influenced the 2013 reform process.

2 Literature Review

The following section presents an overview over the current academic debate in regard to the study of the Cohesion Policy and develops the argument for a neofunctionalist approach in order to investigate the 2013 policy reform in relation to the policy’s integration. The literature review is divided into three sections. The first one highlights the shortcomings of the current contributions to the understanding of the policy’s integration. This is followed by a critical discussion of the neofunctionalist model and its combination with the MS approach. The second section further develops the theoretical foundation of the thesis and its most central concepts. At last, the third section further develops the thesis’ premise and aim to contribute to a better understanding of the 2013 Cohesion Policy reform process in regard to the policy’s integration into the economic governance framework.

2.1 The study of the Cohesion Policy

Most of the research on the Cohesion Policy is interested in investigating the policy’s effect on the relations between supranational, national and subnational authority (Adshead 2014, Dąbrowski 2014, Fleurke & Willemse 2007, Hooghe et al. 2010). What becomes apparent, is that the Cohesion Policy is mainly investigated in terms of its influence on other issues, such as regional empowerment (Ansell et al. 1997, Gagliardi & Percoco 2017) and economic growth (Le Gallo et al. 2011). The policy is usually conceptualised as an independent variable. Consequently, changes in the policy are investigated in terms

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5 of their effect on the policies framework and practicability – scrutinising the structural effectiveness of it (Bachtler et al. 2017).

Already this brief overview reveals how the theoretical focus of investigation lies on questions related to European governance and construction and it becomes apparent that most of the research is based on the theoretical foundations of the multi-level governance model (Hooghe 1996). The policy itself has traditionally not been of great interest to IR driven research, which might be explained by two things. First, the policy’s objective is strongly related to developments on a subnational level, which is a unit of analysis that is rarely incorporated in the field of IR. Second, IR driven theories have long been criticised for being unable to incorporate the dynamics and variety of actors that influence this complex policy (Hooghe 1996: 3). Although this criticism should be acknowledged, it must be noted that the 2013 policy reform reflects a case of unique further integration into European economic governance. This dimension of the reform is mainly incorporated in a descriptive manner in the current body of literature (Piattoni & Polverari 2016). It thus becomes relevant to transcend the mere description of the integrative linkages and to systematically analyse the integration dynamics that lead to the policy’s integration.

Berkowitz et al. are the only researchers contributing to a deeper understanding of the macroeconomic integration of the Cohesion Policy. Their systematic investigation of how the economic and financial crisis influenced the Cohesion Policy reform provides a basis for the assumption that the Cohesion Policy reform was influenced by pressures and dynamics from the economic governance arena (2015: 20). The analysis also provides a concise overview over the nature of the integrative linkages which proved to be helpful for the development of clear categories that could be utilised in this thesis’s analysis.

Nevertheless, it must be critically noted that Berkowitz et al.’s research does not utilise any theoretical foundation, which means that the study does not provide any analysis of the dynamics that lead to the integrative links, and neither an analysis of their nature (e.g. are the dynamics of political or functional nature). It is the aim of the thesis to balance this investigative shortcoming by analysing the dynamics through the lens of neofunctionalism; a theory which’s stronghold is the investigation of integrative processes.

Not only is the investigation of the integration dynamics underdeveloped in academia. There is also a limited number of researchers that analysed the characteristics of the reform-process itself. Mendez (2013) approaches the 2013 reform from the angle of discourse theory and examines the role of discourse as means to affect the Cohesion Policy

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6 reform. This contribution is limited to the examination of the discursive actions taken by actors. Becker, on the other hand, argues for the application of the Multiple Streams (MS) approach. The MS framework holds that “the opportunity for change is the result of coupling three relatively independent ‘streams’ of problems, possible solutions and political attention flowing separately through the political system.” (2018: 2). The strength of Becker’s approach is its ability to bring structure to an ambiguous case by providing a clear framework for how to investigate policy-change. Hence the MS approach can be identified as a useful, supplementing lens to guide the thesis in its analysis of how the change of the Cohesion Policy’s relation to the economic governance framework took place.

The literature review so far has not revealed a single comprehensive investigation of the pressures and dynamics that led to the policy’s integration. It identified that there is still room for improvement regarding the analysis of how the reform process took place. Diez & Wiener argue that every theory adds a pixel to the greater picture of the EU as a unique regional organization (2009: 19). It is intriguing to approach the reform from a neofunctionalist approach and to investigate in what way IR driven research can contribute to a better understanding of the cross-policy integration. The following sections provides a critical reflection on the position of neofunctionalism in the context theorising about the EU and further develops the argument for theoretical complementation. Though neofunctionalism has often been criticised as obsolete, Schmitter argues that the theory continues to contribute to the understanding of the European Union and stresses that its “assumptions, concepts, and hypotheses are still worth considering – overtly and not just covertly” (2009: 46). In this light, it is necessary to consider whether and in what way neofunctionalism can contribute to the understanding of the 2013 Cohesion Policy reform.

2.2 The Theoretical Approach

The theoretical focus in the study of the EU has largely turned away from the study of integrational processes towards a focus on governance, but a re-vitalisation of neofunctionalism can be identified after the economic and financial crisis hit the EU. Schimmelfennig argues that major leaps in supranational financial and fiscal integration are visible (2014: 323), which makes it feasible to turn academic attention to a better understanding of integration dynamics.

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7 Opposing scholars argue that tendencies of increased politicisation indicate a new era in the EU that can no longer be incorporated in the neofunctionalism. They argue for a new era of post-functionalism (Hooghe & Marks 2008: 1). However, scholars such as Tortola (2015), Greer & Löblová (2017) and Schmitter & Lefkofridi (2016) support Schimmelfennig’s position and stress that neofunctionalist mechanisms are as relevant in explaining EU integration dynamics as they have always been.

Especially the contribution by Niemann & Ioannou is of relevance to the objective of the thesis. Their research provides a comprehensive analysis of the pressures that developed within the economic policy area after the economic and financial crisis. The study reveals that neofunctionalism is still a relevant framework for explaining and understanding how crisis management lead to further integrative measures (2015: 212). However, their analysis is limited to measures taken within economic governance, inter alia deeper integration within the same area. It does not consider the formal integration of the Cohesion Policy into the economic governance framework, which reflects a task expansion into a new policy area. It is relevant to expand the research of Niemann & Ioannou so as to incorporate this development.

The research discussed so far legitimises the assumption that the neofunctionalist lens can produce new knowledge when applied to the 2013 Cohesion Policy reform. In line with Diez & Wiener, I believe that theories should not be treated as competing but complementing frameworks. By applying neofunctionalism to a policy that traditionally is associated with the multi-level governance framework, I aim to bridge hard lines between individual schools. Those dividing lines are a result of disciplinary politics and may lead to false dichotomies between theories that fuel negative tensions and possibly hinder the creation of knowledge (Rosamond 2007: 237). Approaching the reform from a neofunctional perspective will allow to redirect the focus away from the governance-dimension, which was so dominant over the last decades, and to examine it in the light of socio-economic integration processes whilst also providing a thorough analysis of the reform process itself.

Whilst a consensus can be identified postulating a continued relevance of neofunctionalist logics within the EU, the latest contribution to the literature on neofunctionalism suggests that it is not sufficient to merely re-visit the past but instead to adjust the theoretical framework of neofunctionalism to the current conditions. In order to fully grasp integration as part of policy-reform processes, Greer & Löblová argue for a fusion of neofunctionalism with the MS approach (2017: 394). While their focus lies on

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8 the study of integration in European health policy, the research principles can be transferred to this study as they both reflect further integrative actions on the European level. The combination of those theories, they argue, allows for a focus on the processes leading to policy change rather than the characteristics of the policy (2017: 408).

The MS approach is a model for policy change that appoints special significance to context and time (Ackrill et al. 2013: 872). This is especially relevant for the case of the thesis as the context of the economic and financial crisis arguably had a great effect on the 2013-reform of the Cohesion Policy. Before further discussing the benefits of the MS approach, a critical aspect must be reviewed.

In contrast to neofunctionalism, the MS model is not a traditional approach within the field of IR but stems from the political study of the American federal system. However, it must be considered that the EU is a unique case of deep regional integration with highly complex policy-making mechanisms. It can therefore be argued that frameworks from domestic political studies, once adjusted to the European context, may be able to grasp and analyse the formal process of policy change in a better and more adequate way (Zahariadis 2008). The model’s strength is its emphasise on the ambiguity and complexity of a political system and agenda-setting processes therein, which is as relevant for the EU’s political system as for national politics (Zahariadis 2008: 527, Ackrill & Kay 2011). The problem tackled by applying this particular lens to the analysis of the 2013 reform is the one of institutional complexity. The MS approach allows for the categorisation and identification of central developments and actors that had relevant influence on the reform process and thereby complements the neofunctional model that focuses on the identification of integration dynamics.

The following sections will further discuss the foundations of both theories while outlining in what way both models can organically interact.

2.2.1 Defining Integration & The Ontology of Neofunctionalism

In neofunctionalism, integration is understood as the expansion of tasks from the national to a supranational level that traditionally has been mapped in terms of scope and locus (level). This refers back to Lindberg & Scheingold’s understanding of scope as the initial expansion of EU authority to new policy areas and levels as the deeper task expansion within a policy area (1970: 67, 68-71). In order to measure integration as defined by Lindberg & Scheingold, Börzel argues for a measurement in terms of formal decision-rules (2006: 4). In relation it can be constituted that the formal integration of the Cohesion

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9 Policy with European economic governance is a case of integration in terms of scope where authority expended from the economic policy into the regional development arena.

In line with Schmitter, I argue that the neofunctionalist concept of spillover continues to be a powerful tool that helps to understand the dynamics and pressures that led to the integration of earlier rather uncoordinated EU policies. Thus, the neofunctionalist perspective can contribute to a better understanding of the reform in its greater European context. Before the concept of spillover will be discussed, a short introduction of the theoretical basis will be provided.

The ontology of neofunctionalism is one of ‘soft’ rationalism (Schmitter 2009: 57, Rosamond 2006: 25, Ruggie et al. 2005: 292). Unsurprisingly then, actors are conceptualised as rational beings, which due to imperfect knowledge tend to make short-termed decisions. Accordingly, neofunctionalism conceptualises integration as a process that, once initiated, develops its own dynamics. It is therefore relevant to acknowledge that states, though relevant actors, no longer are the only relevant actors but others come to matter as well. Special attention is thus given to the supranational body and the role of interest groups and elites for initiating further integration (Schmitter 2009: 52-56)3.

A conceptual weakness could be identified in the neofunctionalist focus on transition of interaction towards the supranational level as it leaves aside the effect of the supranational on the sub-national level (Hooghe 1996: 92). It is necessary to be aware of this conceptual shortcoming. Nevertheless, as the Cohesion Policy reform takes place on the European level, the theoretical shortcoming does not compromise this analysis. By allowing for the incorporation of sub-national entities as both political actors (i.a. Committee of the Regions) and interest groups (i.a. regional representatives) the neofunctional framework is adequate to ensure that no relevant actor and relation is excluded from the analysis.

As already indicated, the notion of spillover is the most relevant concept to consider for this case. The fundamental principle holds that collective action taken in one issue area might create the need for further collective action in another area (Lindberg 1963: 10). In general, spillover pressures may not only come from other issue areas but even cause further integration from within (Niemann 2006: 30). Although there is a variety of different spillover-types, Niemann & Ioannou argue that functional spillovers are the most relevant for explaining integrative steps taken to secure the economic union (2015: 198).

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10 It can therefore be assumed that functional spillover is also the most relevant type for the case of the Cohesion Policy too.

Functional spillover refers to the pressure that arises when an original integrative objective requires further cooperative action in another area. Those pressures can originate from within as well as spill over into other issue areas due to functional and political interdependencies (Niemann 2006: 30). Already in 1958 Haas identified, what only grew in bearing, that in most sectors, economic issues and politics are so interdependent that it becomes difficult to isolate them from each other, which means that developments in one area likely influence others too (2008: 297). In the event that functional dissonances between issue areas do not result in coordinated action, their tension may grow to the extent that they cause a crisis. In the process of resolving such a crisis, actors may be pressured to take further integrative steps (Niemann & Ioannou 2015: 198). It is relevant to note that functional pressures do not automatically determine actors’ behaviour. Rather, Niemann emphasises, the actors’ perception of the pressure matters in determining their response, which is why the analysis of political discourse is an insightful tool to examine which functional pressures are considered by relevant decision-makers (2006: 4, 31). These points need to be considered for the analysis and the methodological approach alike.

2.2.2 The Multiple Streams Approach

Whereas the competence of neofunctionalism lies in the analysis of integration dynamics, MS’s strength is its structured conceptualisation of policy change under conditions of ambiguity. The model introduces five structural elements at the heart of the approach: the three different streams of problems, policies and politics, the window of opportunity and policy entrepreneurs. It is the task of the elements to simplify the specification of complex interaction dynamics.

The streams capture the overall developments of a political context; only when they are coupled can change take place. The problem stream refers to real, as well as constructed, problems that compete for the attention of political actors. Attention will turn to certain problems once the political actors “come to believe that [they] should do something about them” (Kingdon 1995: 109). The relevance of a problem can change once new indicators, dramatic events and external as well as internal crisis alter the actors’ perception (Sarmiento-Mirwaldt 2015: 432). The notion of ‘problem’ is compatible with the concept of functional pressures in that both are only relevant when acknowledged by key actors.

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11 The policy stream then refers to the environment in which different solutions to those problems are developed and debated by experts and brought forward in form of proposals and memos. From this pool of ideas and opinions only a few proposals will eventually gain political attention. Coupling the MS understanding of experts with neofunctionalism allows for the argument that experts can be viewed as part of an epistemic community in which options and ideas are prone to favour European integration (Pollack 2010: 18). The solutions provided by the policy stream are taken up by political actors and transcend into the politics stream (Becker 2018: 3). A window of opportunity must open that eventually allows for the coupling of the three streams and for policy change to take place.

Once a window is open, a policy entrepreneur is needed to bring an issue onto the political agenda. Those entrepreneurs can be perceived as ‘power brokers and manipulators’ who’s task it is to couple the streams (Ackrill et al. 2013: 872). This again marks a point in which the intertheoretical compatibility becomes apparent as the role of policy entrepreneurs is also greatly acknowledged in neofunctionalism (Schmitter 2009: 43).

Overall, the theoretical discussion above clarifies that an organic interaction between neofunctionalism and the MS approach is not only possible but beneficial to this research. Additionally, no ontological or epistemological contradictions could be identified that might pose a threat to theoretical coherence.

2.3 Aim, Premise & Limitations

The literature review and elementary theoretical concepts introduced and discussed above lay the foundation for the formulation of the premise and aim of this thesis. The review of existing research on the Cohesion Policy revealed that the aspect of the policy’s integration into the European economic governance structure has not been thoroughly investigated up to this point. Previous research was not able to exceed a descriptive approach on this account. I argue that it is time to turn away from policy essentialism and the focus on governance-aspects if we want to understand the process of integration. It is my understanding that the combination of central neofunctionalist concepts with the Multiple Streams approach may lead to a more fruitful way to investigate the integration dynamics in a central policy area of the European polity.

The aim is to meet the academic shortcomings, outlined in the Literature Review, by supplementing the existing research on the reform with a systemic analysis of the reform

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12 process in the context of the economic governance area. The assumption motivating this research is that the integration of the Cohesion Policy is a consequence of the management of integrative pressures that developed in the economic policy area and spilled over into the Cohesion Policy reform. The thesis thus investigates the reform as a case of cross-policy integration in the EU that left European institutions with more leverage and control over member states. It must be acknowledged that the reform took place against the background of the economic and financial crisis; the findings should thus not be detached from their context. Consequently, the generalisability of the findings is limited. However, a single case study allows for greater internal validity and depth understanding. An in-depth understanding of this case of integration may contribute to a better understanding of the European polity and the way different policy areas influence each other.

The following chapter further develops the operationalisation of the central theoretical concepts and critically presents the methodological approach to the analysis. Additionally, the processing of the material is discussed in detail, which also incorporates a presentation of the integrative linkages between the Cohesion Policy and economic governance framework. This is necessary to set the stage for the then subsequent analysis of the 2013 Cohesion Policy reform process.

3. Methodology

To analyse the Cohesion Policy reform process, the thesis builds on an interpretivist methodological approach with qualitative content analysis at its centre. This chapter first presents how the concept of functional spillover is operationalised and then sets out to critically introduce the chosen method and material in more detail.

3.1 Turning Theory into Analytical Tools

The theoretical foundation of the thesis builds on a combination of the MS framework and neofunctionalism. The former is utilised as a lens that allows to more systematically approach the reform process based on the structural elements discussed in the Literature Review – the three streams, the policy entrepreneurs and the window of opportunity. Those elements help to manoeuvre the ambiguities of the reform process and to identify and position central developments and actors. Neofunctionalism, on the other hand, is more than just a lens. Its concept of functional spillover is central to the analysis. Hence, the following section discusses the concept’s operationalisation.

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13 Firstly, functional pressures and interdependencies between policy areas can be operationalised by examining the positions and debates of political experts and actors. Secondly, it is the perception of relevant political actors that defines how strong functional pressures are. Thirdly, the degree of functional pressures correlates with the pool of possible solutions to given tensions. The greater the pool is, the weaker is the functional spillover (Niemann & Ioannou 2015: 200). In order to investigate in what way and where pressures arose, and whether they spilled over from one policy arena to another, it is necessary to consider central developments in both the economic and Cohesion Policy arena. The methodological approach and the material must thus be able to serve this requirement.

3.2 Method & Data

Alexander George emphasises that departing from a certain theoretical angle determines the methodological approach of any research (2005: 18). Neither neofunctionalism nor the MS approach promote or disregard certain methodologies as long as the methodological framework is aligned with neofunctionalism’s ontology of ‘soft’ rationalism. In order to analyse the reform process and to identify in what way functional pressures influenced the policy’s integration, the methodological approach is based on the notion of backward-tracing. The underlying logic is that by operationalising the integrative linkages between the Cohesion Policy and economic governance into distinct categories it becomes possible to trace when, where and under which circumstances the integrative linkages occurred. Additionally, the theoretical framework of the thesis holds that the views of political actors and experts have a great effect on how problems and functional pressures are perceived. Consequently, to understand actors’ perceptions is relevant to the thesis as well. Hence, a systematic qualitative content analysis of central pieces of communication was identified as a suitable approach as it allows to get a better understanding for both manifest and latent content (Weber 1990: 74). The approach also allows sensitivity to actors’ discursive actions; a point raised earlier in the literature review. In comparison to quantitative content analysis, qualitative content analysis is not limited to descriptive ‘what’ questions but is able to answer explanatory ‘how’ and ‘why’ questions as well (Pashakhanlou 2017: 450). The approach’s ability to reduce communication to specific themes makes it beneficial for the objective of this research as it focuses on the very specific aspect of the Cohesion Policy’s formal integration into the

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14 economic governance framework. However, Pashakhanlou also emphasises that it is necessary to analyse a research subject within its context in order to avoid wrongful conclusions (2017: 449). The analysis thus utilises secondary literature on the 2013 Cohesion Policy reform and the parallel policy areas to imbed the interpretation and presentation of the material and ensure contextual validity.

Three aspects were considered during the research process in order to ensure a coherent employment of the method: careful material selection, a reflection on what the data can answer, and how to process it.

3.2.1 Which material to select?

In order to ensure a thorough analysis, three aspects are needed to be considered for the selection of material. First, that the material is meaningful to the Cohesion Policy as well as the economic policy arena in order to identify possible functional spillovers from one into the other. Second, as the reform process was lengthy and complex, it was critical that the material reflects the timely dimension from 2008 – 2013. Third, the material must reflect the variety of actors that were relevant in shaping the reform; those are the European Commission, Council, Committee of the Region, Friends of Better Spending, the Friends of Cohesion as well as experts such as Fabrizio Barca (Piattoni & Polverari 2016). The material selected can be categorised into four different types – reports, reflection / position papers, research documents, and proposals / regulations.

3.2.2 What can be answered by the material?

The analysis of the official documents allows for identification of the different positions concerning the actors involved in the reform process as well as detection and interpretation of their individual interests and priorities. Furthermore, it is possible to recognise interconnections and consents between documents in relation to the Cohesion Policy’s integration both within and across the economic and Cohesion Policy arena. The interpretation of those findings through the lenses of neofunctionalism and MS then allows a better understanding of the integration dynamics and their influence over the outcome of the policy reform.

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15 3.2.3 The processing of the data

The material was examined for its position on the establishment of formal linkages between the Cohesion Policy and the economic governance framework and for how those positions were communicated. For the analysis, three categories were pre-defined based on the notion of backward-tracing. The categories derived from a thorough reading of the study ‘European Economic Governance and Cohesion Policy’ produced for the EU Parliaments Directorate General for Internal Policies (DG Internal Policies 2014) and supported by Berkowitz et al.’s research (2015) and reflect the final linkages between the Cohesion Policy and economic governance framework. The reasoning behind this approach is that the formal linkages reflect the solutions found and adopted by the EU to meet functional shortcomings in the economic governance system. It is not the aim of the thesis to establish how the Cohesion Policy is integrated, as this would be a rather shallow investigation, but to investigate how the pressures and dynamics worked that eventually resulted in further integration across policy areas. The three categories help to identify when, where and how the eventually adopted solutions first appeared and trace their development over time and across policy areas.

Each category reflects a central economic policy objective that is integrated into the Cohesion Policy reform through different measures. Hence, the identification of those measures in the material allows to draw logical conclusions on the policy objective and the actors’ position on those, as policy objectives and actions are logically connected. Table 1 provides a visual overview of the three different categories and how they are integrated into the Cohesion Policy.4 Thereby their order does not reflect any form of prioritisation. A more detailed discussion of the categories’ implications for the linkages between the Cohesion Policy and the economic governance framework will follow below.

4 All tables presented in the thesis were constructed by the author and are presented in picture-form due to editing

reasons. The originals can be accessed via:

https://drive.google.com/open?id=1K_e3dGhlk2mvYOruVAo8yENvVdbf--7h

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16 Table 1

3.2.3.1 What do the categories stand for?

With the premise to provide the reader with a better understanding for what the categories mean in the context of economic governance, the following sections discuss them in more detail.

Type A – The category reflects the economic policy objective to contain national imbalances and to prevent negative fiscal, monetary and macroeconomic developments that could spillover from one member state to another or even pose a threat to the community as a whole.

The objective is integrated into the Cohesion Policy through linkages to the Excessive Deficit Procedure (EDP) and Macroeconomic Imbalance Procedure (MIP). The subpoints of the category refer to these procedures. The procedures were introduced after the economic and financial crisis in order to strengthen economic governance. The linkages mean that ESI funding can be suspended based on macroeconomic conditionalities. In more detail, in the event of a member state exceeding its budget deficit, which is sealed

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17 by the Stability and Growth Pact (SGP), the Commission is obliged to propose a partial suspension of ESI funds under the EDP5. Similarly, under the MIP, the Commission may recommend the Council to take actions against member states in the event that excessive national imbalances are identified. The corrective and preventive arm of the MIP also allows the Commission to request member states to re-programme regional development projects if they do not reflect Country-Specific Recommendations (CSR) given by the Commission (DG Internal Policies 2014: 42-43).

Overall, the actions falling under Type A are of corrective rather than preventive nature and strongly related to sanctioning and the suspension of funds. Before the 2013 Cohesion Policy reform, the Cohesion Fund was the only one coupled to such macroeconomic conditionalities6. The expansion of this linkage to all ESI funds allows European

institutions to apply the corrective measures to all member states receiving EFI funding. Type B – The category refers to the policy objective to support structural and administrative reforms in certain member states and is linked to the CSRs that are given by the Commission to every member state.

As part of the European Semester, the Commission annually reviews member states’ economic situation and assesses whether imbalances or excessive imbalances exist that could pose a risk to the state of the community. As part of the assessment, reform agendas are reviewed as well. On the basis of the annual analysis, the Commission then give CSRs that contain policy guidance for the future development of each member state. The CSRs are a central tool to synchronise national with supranational developments. Recommendations related to issues governed by the Cohesion Policy must be addressed in the Partnership Agreements and operational programmes formulated between the Commission and each member state (Regulation No. 1303/2013: 340). The Commission may request a member state to redefine a programme according to those recommendations. Additionally, new ex ante conditionalities for regulatory, strategic and administrative capacities were introduced. Those conditionalities shall ensure that all conditions for successful programme implementation are provided. The policy reform has contributed to a stronger pressure on national governments to implement structural

5 The Excessive Deficit Procedure (EDP) is a procedure of several steps potentially culminating in sanctions to ensure

that member states maintain control over their budgetary deficit so as to enable a better functioning of the Economic and Monetary Union (EMU). (Eurostat 2019)

6 The Cohesion Fund is one part of the ESI funds. It is not directed to regions but aimed at member states with less

than 90% of the general EU Gross National Income. The other ESI funds on the other hand are more or less accessible to all regions.

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18 reforms in order to receive ESI funding through the introduction of ex-ante conditionalities.

Type C – The last category summarises the policy objective to encourage targeted investment and to strengthen sustainable fiscal consolidation in the member states. In other words, this refers to the Cohesion Policy’s greater alignment with the Europe-2020 strategy. This aspect is incorporated into the post-2013 Cohesion Policy in terms of greater thematic concentration on core priorities established by the Europe-2020 strategy and the Commission’s ability to request programme-modification in order to ensure more efficiency of the ESI funds. In addition, links to the National Reform Programmes were established as well (Berkowitz 2015: 7).

3.2.3.2 The matrix behind the approach

Analysing the data in terms of these categories allows for a more structured approach that helps to identify when and where arguments spilled over from the economic to the regional policy area. It also simplifies the recreation of the research and contributes to its reliability. Considering the dimension of time, it needs to be acknowledged that the reform process took place over more than four years. Given this, the application of clear pre-defined categories thus permits a more systematic analysis resilient to timely obscuration. In addition, the categories were formulated in a way that allows for their application both in Cohesion Policy documents as well as in documents from the economic and financial policy area, which ensures greater methodological consistency and coherence.

After a first scanning of the material and secondary literature, it was visible that the reform process was characterised by three different phases. Phase I from 2008-2009 was characterised by reflection and consultation and Phase II by the preparations for the post-2013 Cohesion Policy that took place from 2010-2011. The actual reform negotiations took place from 2011-2013 and constitute Phase III. For the processing of the material this allowed to develop a two-dimensional matrix with time defining the horizontal axis and the categories defining the vertical. Analysing the material against this matrix enabled not only identification of possible spillovers of arguments and positions from one policy area to another but also a better understanding of in which phase certain positions and propositions started developing. Table 2 provides a visualisation of the matrix that will be used as a tool in the conclusive phase of the analysis.

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19 Table 2

5 Analysis

I argue that the neofunctionalist perspective’s strength to conceptualise integration dynamics contributes to the understanding of the Cohesion Policy’s integration into the new economic governance and to a better understanding of the development and spillover of functional pressures. In order to fully capture the dynamics and their development, the full reform process, which stretched from 2008 to 2013, was considered. It became apparent that the process was characterised by three different phases, which form the individual sections of the analysis. Phase I is characterised by reflection and consultation on the Cohesion Policy were relatively limited attention was payed to the Cohesion Policy’s role in economic governance. In Phase II, the post-2013 Cohesion Policy was prepared and the context of the freshly agreed upon new economic framework showed to have a major influence on preparation process. Phase III then, is characterised by the negotiations on both the multiannual financial framework (MFF) and the post-2013 Cohesion Policy. The analysis section ends with a conclusive segment summarising the findings of the individual phases.

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20

5.1 Phase I – Reflection and consultation on the Cohesion Policy

The early stages of the pre-reform process took place in the context of the emerging economic and financial crisis. The sudden decrease in public and private investments and the resulting rise in unemployment shook the European Union to its core. The programmes financed by ESI funds, with their “on-the-ground” nature at regional and local levels, were strongly affected by the new economic context. The Cohesion Policy is designed as a long-term structural policy for the regional development of the European Union, but the situation required the EU to take short-termed actions on all levels possible. Therefore, the Cohesion Policy became part of the European Economic Recovery Plan and measures were taken to allow for a continuous and more flexible provision of funds (Berkowitz et al. 2015: 8). Even though the crisis had a direct effect on the utilisation and implementation of the Cohesion Policy from 2009 onwards, it did not influence the early reflections on the future of the policy in an immediate manner. Instead, the early debates reflected upon the objectives and paradigm of the policy which only to a limited extent included positions on a possible coordination and integration of the policy with the wider European framework. Nonetheless, it remains relevant to incorporate this phase in the analysis as it provides an insight into the more concrete struggles and challenges related to the Cohesion Policy.

Given its thematic as well as legislative complexity, Cohesion Policy reforms are traditionally characterised by a lengthy preparation process. The Commission launched the process of policy reflection and consultation early in the programming period by initiating a first public consultation round that included a variety of stakeholders. The received input was then incorporated in the ‘Fifth progress report on economic and social cohesion’ published in 2008. It revealed that most stakeholders perceived the Cohesion Policy as an important corner-stone in the overall construction of the EU and thus rejected any attempt to re-nationalise development policy. The consultation also brought forth the consensus that “[c]ompetitiveness is at the heart of cohesion policy. The requirement of “earmarking” a significant share of the financial resources for the key investments linked to the renewed Agenda for growth and jobs is clearly supported” (EU Commission 2008: 6). The report signifies a first endorsement for thematic and financial concentration on key issues linked to the EU agenda.

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21 In order to support the early reflections on the future of the Cohesion Policy, the Commission actively engaged with experts from the academic field and considered the recommendations of international organisations such as the OECD. After receiving harsh criticism for intransparency of earlier reform processes, the Commissioner for regional policy, Danuta Hübner, adopted a more open and inclusive approach to the post-2013 reform than ever before (Mendez 2013: 640). Hübner acknowledged the debates about the necessity for refocusing the paradigm and objectives of the Cohesion Policy which dominated the problem stream at this time. By ordering Fabrizio Barca7 to formulate an extensive report and to provide an agenda for the upcoming policy reform, Hübner showed that she took the debate and considerations dominating the problem stream seriously.

Considering Niemann & Ioannou’s argument that political experts, such as Barca, can occasionally highlight functional pressures (2015: 199), an analysis of the Barca report becomes relevant.

5.1.1 The Barca Report

The Barca report builds on a multitude of independent research-perspectives with ten working papers that are prepared specially for the report and provide a more detailed insight into core issues of the policy. The academic contributions were complemented by workshops with representatives of 27 member states (Barca 2009: III, IV). The report supported what the OECD had argued earlier; the problem of inefficiency in regional performance can be related to an inability by regions to utilise their individual assets (OECD 2009: 19, Barca 2009: 9). Two of the weaknesses are of interest to the thematic focus of the thesis, which is the extent to which linkages between the Cohesion Policy and the greater economic policy are advocated. Those weaknesses are i) the Cohesion Policy’s “lack of focus on priorities” and ii) “A failure of the contractual arrangements to focus on results and to provide enough leverage for the Commission and Member States to design and promote institutional changes tailored to the features and needs of places” (2009: XVI). Consequently, the report recommends that the post-2013 Cohesion Policy should meet those shortcomings and adopt an overall place-based approach. Furthermore, the report recommends providing the Commission with more leverage to ensure the quality of public spending (2009: XXIV).

7 Fabrizio Barca at that time was the Italian Director-General at the Ministry of Finance

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22 Point i) can be understood as a demand for thematic concentration which also refers to a stronger alignment of policy priorities with EU priorities. From a neofunctionalist perspective, Barca’s argument for greater coordination with EU objectives highlights functional pressures arising from within the policy area. Those functional pressures arise from inefficiencies related to the exceeding number of priorities, which hamper the policy from reaching its full potential. The argument for thematic concentration and coordination is a soft reflection of the Type C category and so is the argument for increasing the Commissions’ capacity to ensure the quality of public spending. Even though the report supports some measures related to this category, it does not actively promote the integration of the Cohesion Policy within the wider European economic policy framework. This becomes most apparent when examining point ii) in more detail. While the Barca report argues for the establishment of ex ante conditionalities, in relation to institutional design, the conditionalities are related to a member states’ / regions’ ability to implement and measure programmes. In other words, ex ante conditionalities and institutional conditions are not linked to the more general context of structural frameworks for the sake of enabling a stronger and structurally more sound European Union. It can thus be concluded that the Barca report provided a reflection of the Cohesion Policy in relation to the policy’s paradigm and its ability to achieve its goals. Pressures related to an integration of the policy into the greater economic policy are only visible to a limited extent.

5.1.2 Conclusion of Phase I

The agenda developed by the Barca report was to a great extent embraced in the Commissioners’ reflection paper on the future Cohesion Policy (Hübner 2009). The succeeding Commissioner for regional policy, Pawel Samecki, continued the course of his predecessor. His orientation paper included the points of thematic concentration “on a limited number of priorities in line with the future EU 2020 strategy” and “increased coherence and coordination with sectoral policies at national and EU levels to achieve greater synergies” (2009: 6). Overall, it can be concluded that the first phase of the Cohesion Policy reform process only to a limited extent reflected any of the categories that were linked to the integration of the Cohesion Policy into the European economic governance framework. It established that only Type C is partly represented. This connects with the finding that pressures identified as a challenge for the Cohesion Policy result from the policy’s inefficiency to fulfil its full potential. The solutions posted to face

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23 these challenges, however, do not encourage further integration of the policy but are related to the internal aspects and the overall paradigm of the policy. Hence, it must be concluded that the first phase did not seem to reflect any neofunctional mechanisms in terms of functional pressures or even spillovers. The fact that a formal linking of the policy to the economic governance framework was not considered may be related to the fact that the overall processing of the crisis was not initiated and could thus not affect the framing of problems and solutions in the Cohesion Policy area.

What is notable, on the other hand, is the Commissions’ active role in shaping the identification and formulation of shortcomings in the Cohesion Policy, relating to the problem stream, and their active participation in the debate about identifying policy solutions in the policy stream. These actions were performed in an effort to ensure that policy solutions and the debate in general are aligned with the interests of the Commission, which could be interpreted as steps taken to increase the legitimacy of the supranational institution in the reform process. The early public consultation that rejected any re-nationalisation of development policy and the Barca report’s argument for strengthening the Commissions strategic role are good indications of those steps. Phase I revealed that introducing integrative linkages between the Cohesion Policy and economic governance was not a priority in the reflection and consultation process. Since the proposition for such an integrative step did not occur within the policy review process, it poses the question: where and when did they arise?

5.2 Phase II – Preparation for the post-2013 Cohesion Policy

By the time the preparations for the post-2013 Cohesion Policy began, the European context had fundamentally changed. In June 2010, the EU formally adopted the Europe-2020 strategy that set out the long-term strategic framework for the next decade. The debate about greater economic policy coordination through the introduction of a European Semester was one dominating aspect of the second phase. The contextual change in the economic policy arena subsequently had a strong effect on the preparations for the Cohesion Policy reform. A paradigm shift in the economic arena can be detected that increasingly called for more European policy coordination across different policy areas and for economic surveillance as a prerequisite for a sound European Union.

The following part investigates to what extent the policy solutions, formulated in the economic governance arena, spilled over and influenced the formulation of post-2013

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24 Cohesion Policy proposals in the policy stream of the Cohesion Policy reform. Through a systematic analysis of material from both policy areas, it is possible to show in what way proposed solutions to functional tensions transferred from the economic governance to the regional development area.

5.2.1 Section I – The pressures and solutions in the non-Cohesion Policy area

In order to identify the central pressures in the economic governance area and to gain a better understanding of whether a canon is visible, the first section discusses three different documents in total. Two documents are from the Commission: The Communication on Reinforcing Economic Policy Coordination and the Budget Review. The third document is the mid-term report from CRIS, the special committee on the Economic, Financial and Social Crisis established by the European Parliament. The documents were chosen based on their central role in the processing of the economic and financial crisis. Additionally, it was necessary not to limit the analysis to the work and position of the Commission but to incorporate the Parliament’s perspective into the analysis so that possible disagreements could be detected.

The documents support each other in identifying macroeconomic imbalances, poor implementation of the SGP and structural flaws of member states as central weaknesses of the European economic governance system. Especially the poor implementation of the SGP was identified as a central problem (EU Commission 2010a: 4, CRIS 2010: 48). The SGP originally was introduced as a mechanism to contain the functional dissonances between the supranational economic policy and national budgetary, fiscal and structural policies. However, due to its poor implementation, the dissonances prevailed and had fundamental consequences. Niemann & Ioannou argue that if existing functional dissonances are not resolved, they may be amplified in times of crisis and possibly integrative measures will be triggered (2015: 202). The proposals put forward in all three documents reflect such a neofunctionalist logic.

The CRIS mid-term report agrees with the points made by the Commission in terms of strengthening fiscal consolidation, promoting structural reforms and strengthening the managing position of the Commission, but there are two fundamental difference between the position of the CRIS and the proposals of the Commission. First, though the CRIS acknowledged the necessity of better policy-coordination on the supranational level in order to insure better functioning of the economic system, it’s overall focus continued to lie on corrective measures instead of preventive ones. This becomes mostly apparent in

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25 that it urges “the Commission to put in place an enforced European sanctioning mechanism […] in order to force Member States to respect the rules of the Stability and Growth Pact” (2010: 64). This position is raised multiple times throughout the report (2010: 48, 59). Second, the report considers the Cohesion Policy merely as a tool for assistance and does neither consider it as a mechanism to initiate / incentivise structural reforms nor as a mechanism through which SGP compliance can be achieved.

The position reflected by the Commission in both documents, on the other hand, holds that “[p]revention is more effective than correction” (2010a: 8). With this position in mind, the documents go much further into detail investigating concrete measures for a possible introduction of conditionalities so as to improve the quality of public spending and motivate structural reforms. In order to strengthen the preventive efforts, the establishment of a Common Strategic Framework (CSF) is encouraged as a tool for the Commission to define investment priorities and generate better policy coordination. To achieve greater coherence, the establishment of links between the National Reform Programmes and Cohesion Policy programmes are suggested (2010b: 12, 13). This aspect is a clear reflection of the Type C category. Policy coordination and the concentration of resources on supranational agreed upon priorities are presented as a requirement to maximise the impact and efficiency of future European investment and Cohesion spending in more detail. While the CRIS only had perceived the Cohesion Policy as a tool for assistance, the Commission early on viewed the EU budget, and subsequently ESI funds, as a vehicle to establish better preventive measures. This refers to, amongst other things, the introduction of ex-ante conditionalities to redirect and improve funding in an effort to increase the quality of public spending (2010a: 5) and the contribution of EU funds to structural and administrative capacity building (2010b: 14). The Commission argued for a greater incorporation and utilisation of EU funds to implement preventive measures and to make the economic system more resilient. The documents reflect the themes of all three category types and indicate the first formal linkages between conditionalities of ESI funds. The possibility of retaining funds in the event of member states disregarding SGP obligations is also emphasised. Once more the Commission and Parliament hold similar positions. However, the withholding of funds remained limited to the Cohesion Fund, which means that the expansion of this macroeconomic linkage to all ESI funds was not yet considered.

Overall, it could be shown that the three policy themes were already reflected in the three documents, although type B and C were most prominent. In the documents, first

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26 explicit proposals were made to meet the functional dissonances of the economic structure. The proposals also encouraged the active coordination of funds with EU-priorities and the possible redirection of funds to increase the policy of public spending. The EU budget was identified as a vehicle for better implementing economic governance. However, the utilising of ESI funds as part of corrective measures (as held in Type A category) was not extensively further developed.

5.2.2 Section II – Did the canon transcend into the Cohesion Policy arena?

This section analyses in what way the canon that dominated the non-Cohesion Policy area of European economic governance influenced the future vision for the Cohesion Policy. The Commission’s fifth report on economic, social and territorial cohesion thereby was a central document that summarised the position of the Commission on the future of the Cohesion Policy. It must be noted, however, that the report is a product of intense cooperation with the Committee of the Region and various representatives from national and regional authorities (Tömmel 2016: 116) so it can be understood as a relative reflection on the dominating canon in the Cohesion Policy’s policy stream.

The Fifth Report on Economic, Social and Territorial Cohesion clearly reflects the positions identified as canon in Section I which entail that close coordination between the Europe-2020 strategy and Cohesion Policy must be ensured and thematic concentration on key priorities is central. Especially under the paragraphs of “Reinforcing strategic programming” and “Strengthening performance through conditionality and incentives” (EU Commission 2010c: 18-20), clear and detailed proposals were formulated that establish links between the programme-planning under Cohesion Policy and the economic surveillance of the EU (e.g. coordination between operational programmes and National Reform Programmes, the CSF as a tool to translate Europe-2020 targets to the context of the Cohesion Policy). Whereas the outlook for the post-2013 Cohesion Policy in Phase I hardly incorporated the dimension of policy coordination between the Cohesion Policy and economic governance beyond the point of thematic concentration, the report dedicates considerable space to the presentation of concrete points of linkage. Already this rather shallow comparison reflects the extent to which the tensions and challenges of the economic governance area spilled over and were established as central aspects for the Cohesion Policy’s reform.

The Budget Review and Communication discussed in Section I communicated a change in paradigm away from pure corrective towards preventive economic governance

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27 that subsequently required better supranational economic management, coordination and surveillance. TheFifth Report on Economic, Social and Territorial Cohesion reinforces this position by establishing that the Cohesion Policy’s effectiveness is dependent on the functioning of the economic environment (2010c: 19). The text communicates that in order for the Cohesion Policy to function, economic governance must be strengthened and to strengthen economic governance, support of the Cohesion Policy is required. This communicative act can be interpreted as legitimising the establishment of formal linkages between earlier relatively unrelated areas, whereby the Cohesion Policy becomes a vehicle to safeguard the achievement of sound economic governance.

It must be noted, however, that the report does not only take up the earlier points for better policy coordination and implementation of structural reforms, but further develops the aspect of macroeconomic conditionality. It is proposed that sanctioning mechanisms should not be limited to the Cohesion Fund but should be expended to all funds governed by the Cohesion Policy. Here, the aspect of utilising EU’s budget to leverage the respect for macroeconomic conditions developed in the economic governance area transitioned into the regional development area and was clearly further developed.

While the Commission showed a favourable position on integrating macroeconomic and fiscal conditionalities into the 2014-2020 programming period, the public consultation revealed that most stakeholders were rather sceptic. Though some of the net-contributing member states supported the initiative, especially regional and local authorities and stakeholders viewed such conditionalities as “potentially counter-productive” (EU Commission 2011a: 8) to the objective of the Cohesion Policy. Here a tension is expressed between the objectives and functioning of the Cohesion Policy on the one hand and the objectives of the Commission to create a sustainable economic governance framework on the other.

5.2.3 Conclusion of Phase II

The neofunctionalist lens made it possible to identify tensions in the economic structure which resulted from poor implementation of the SGP, structural weaknesses in certain member states and inefficiencies in public spending. It can thus be condensed that the core of the functional tensions is its dissonances between supranational economic governance and the behaviour and implementation on the national level. The solution formulated by the European institutions propose further supranational surveillance mechanisms and leverage to ensure national compliance to supranational decisions.

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28 The analysis revealed the extent to which the solutions formulated in the politics stream of economic governance transcended into the policy stream and influenced the preparation of the post-2013 Cohesion Policy. It can be derived that the neofunctional mechanisms operating in the economic policy area subsequently biased the policy stream in the Cohesion Policy reform process towards favouring more integrative steps. Although the Parliament did not fully investigate the possibility of using the EU budget to help implement the new economic governance framework, the Commission did identify EU funds as possible vehicles.

All policy objectives summarised in the three categories were visible, to varying extents, both in Section I and II. It was visible that especially the notion of sanctioning mechanisms was not only adopted, but also expanded, in the Commission’s fifth report. While all categories were reflected, they were not fully developed yet. However, from very early on in the preparation process, the solutions formulated to meet the tensions in the economic policy area are relatively similar to the final integrative measures taken that now define the formal linkages between the Cohesion Policy and economic governance framework. This in turn entails that the pool of possible solutions for the functional dissonances was limited from the beginning. The neofunctionalist assumption is, that the smaller the pool of possible solutions, the stronger the functional spillover (Niemann & Ioannou, 2015: 200). The postulation deems to be accurate in this case.

The analysis further revealed how the Commission shifted the paradigm in the economic area from corrective to preventive measures. The paradigm shift legitimises the establishing of formal, integrative linkages with the Cohesion Policy identifying the policy as a vehicle to ensure a sustainable and strong economic union. This string of communication was also embraced and complemented in the Cohesion Policy report were a clear interrelation between the two policy areas was established.

Overall, the Commission’s dominance in shaping and directing the preparation process, that was already visible in Phase I, is visible again. The transparent communication about the future vision, in combination with active public consultation, allowed for the Commission to pre-structure and guide the difficult debate on the Cohesion Policy reform and thereby strengthened the position of the Commission as both an agenda-setter and policy entrepreneur.

References

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