Reforming the European Commission (Palgrave Studies in European Union Politics)

Palgrave Studies in European Union Politics Edited by: Michelle Egan, American University, USA, Neill Nugent, Manchester Metropolitan University, UK and William Paterson OBE, University of Aston, UK. Editorial Board: Christopher Hill, Cambridge, UK, Simon Hix, London School of Economics, UK, Mark Pollack, Temple University, USA, Kalypso Nicolaïdis, Oxford, UK, Morten Egeberg, University of Oslo, Norway, Amy Verdun, University of Victoria, Canada, Claudio M. Radaelli, University of Exeter, UK, Frank Schimmelfennig, Swiss Federal Institute of Technology, Switzerland. Following on the sustained success of the acclaimed European Union Series, which essentially publishes research-based textbooks, Palgrave Studies in European Union Politics publishes cutting-edge, research-driven monographs. The remit of the series is broadly defined, both in terms of subject and academic discipline. All topics of significance concerning the nature and operation of the European Union potentially fall within the scope of the series. The series is multidisciplinary to reflect the growing importance of the EU as a political, economic and social phenomenon.

Titles include: Ian Bache and Andrew Jordan (editors) THE EUROPEANIZATION OF BRITISH POLITICS Thierry Balzacq (editor) THE EXTERNAL DIMENSION OF EU JUSTICE AND HOME AFFAIRS Governance, Neighbours, Security Kenneth Dyson and Angelos Sepos (editors) WHICH EUROPE? The Politics of Differentiated Integration Michelle Egan, Neill Nugent, William E. Paterson (editors) RESEARCH AGENDAS IN EU STUDIES Stalking the Elephant Kevin Featherstone and Dimitris Papadimitriou THE LIMITS OF EUROPEANIZATION Reform Capacity and Policy Conflict in Greece Stefan Gänzle and Allen G. Sens (editors) THE CHANGING POLITICS OF EUROPEAN SECURITY Europe Alone? Eva Gross THE EUROPEANIZATION OF NATIONAL FOREIGN POLICY Continuity and Change in European Crisis Management Adrienne Héritier and Martin Rhodes (editors) NEW MODES OF GOVERNANCE IN EUROPE Governing in the Shadow of Hierarchy Wolfram Kaiser, Brigitte Leucht, Michael Gehler TRANSNATIONAL NETWORKS IN REGIONAL INTEGRATION Governing Europe 1945–83 Hussein Kassim and Handley Stevens AIR TRANSPORT AND THE EUROPEAN UNION Europeanization and Its Limits

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Robert Kissack PURSUING EFFECTIVE MULTILATERALISM The European Union, International Organizations and the Politics of Decision Making Katie Verlin Laatikainen and Karen E. Smith (editors) THE EUROPEAN UNION AND THE UNITED NATIONS Intersecting Multilateralisms Esra LaGro and Knud Erik Jørgensen (editors) TURKEY AND THE EUROPEAN UNION Prospects for a Difficult Encounter Ingo Linsenmann, Christoph O. Meyer and Wolfgang T. Wessels (editors) ECONOMIC GOVERNMENT OF THE EU A Balance Sheet of New Modes of Policy Coordination Hartmut Mayer and Henri Vogt (editors) A RESPONSIBLE EUROPE? Ethical Foundations of EU External Affairs Philomena Murray (editor) EUROPE AND ASIA Regions in Flux Daniel Naurin and Helen Wallace (editors) UNVEILING THE COUNCIL OF THE EUROPEAN UNION Games Governments Play in Brussels David Phinnemore and Alex Warleigh-Lack REFLECTIONS ON EUROPEAN INTEGRATION 50 Years of the Treaty of Rome Sebastiaan Princen AGENDA-SETTING IN THE EUROPEAN UNION Emmanuelle Schön-Quinlivan REFORMING THE EUROPEAN COMMISSION Roger Scully and Richard Wyn Jones (editors) EUROPE, REGIONS AND EUROPEAN REGIONALISM Asle Toje AFTER THE POST-COLD WAR The European Union as a Small Power Richard G. Whitman and Stefan Wolff (editors) THE EUROPEAN NEIGHBOURHOOD POLICY IN PERSPECTIVE Context, Implementation and Impact Richard G. Whitman (editor) NORMATIVE POWER EUROPE Empirical and Theoretical Perspectives

Palgrave Studies in European Union Politics Series Standing Order ISBN 978–1–4039–9511–7 (hardback) and ISBN 978–1–4039–9512–4 (paperback) You can receive future titles in this series as they are published by placing a standing order. Please contact your bookseller or, in case of difficulty, write to us at the address below with your name and address, the title of the series and one of the ISBNs quoted above. Customer Services Department, Macmillan Distribution Ltd, Houndmills, Basingstoke, Hampshire RG21 6XS, UK.

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Reforming the European Commission Emmanuelle Schön-Quinlivan College Lecturer, Department of Government, University College Cork, Republic of Ireland

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© Emmanuelle Schön-Quinlivan 2011 Foreword © The Rt. Hon. Neil Kinnock 2011 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6-10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted her right to be identified as the author of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2011 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin’s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave® and Macmillan® are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN: 978–0–230–25257–8 hardback This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Schön-Quinlivan, Emmanuelle. Reforming the European Commission / Emmanuelle Schön-Quinlivan. p. cm. Includes index. ISBN 978–0–230–25257–8 (hardback) 1. European Commission—Reform. I. Title. JN33.5.S36 2011 341.24⬘2—dc22

2011002010

10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 15 14 13 12 11 Printed and bound in Great Britain by CPI Antony Rowe, Chippenham and Eastbourne

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To Aodh, Adam and Lucie with all my love.

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Contents List of Tables

xii

List of Diagrams

xiii

List of Abbreviations

xiv

Acknowledgements

xvi

Foreword by The Rt. Hon. Neil Kinnock Preface 1

2

xvii xix

Introduction: How to Analyse Administrative Reforms in the European Commission Defining the Commission Administration de mission or administration de gestion? Theoretical framework: analysing institutional change through historical institutionalism Historical institutionalism: an overview Continuum and critical junctures: the value of Kingdon’s model Theoretical significance Research design and case studies Conclusion

7 9 10 12

1950–1984: Constructing the Administrative Commission 1950–1964: an ephemeral administration de mission Formal structures and organisation Processes and procedures Norms and culture 1965–1984: the challenge of a ‘representative’ bureaucracy Formal structures and organisation Processes and procedures Norms and culture Conclusion

13 14 15 17 20 23 24 26 30 33

3 1985–1998: The Foundations for the Kinnock Reforms 1985–1994: detrimental political leadership Formal structures and organisation

1 1 3 5 5

35 36 36

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Processes and procedures Norms and culture 1995–1998: limited but significant organisational changes Formal structures and organisation Processes and procedures Norms and culture Conclusion 4 A Novel Strategy for Reform Telling the story of the Commission’s resignation The systemic environment: the Commission’s legitimacy deficit in the institutional triangle The historical resignation: miscalculations and opportunism of actors of change Administrative reform and agenda-setting Problem stream: the emergence of mismanagement as a problem Policy stream Political stream The strategy for reform Leadership: significant symbolic measures of change from the top Accommodating external and internal pressure Learning from past mistakes: more communication, different communication Conclusion 5

Reforming Public Administrations: New Public Management and the White Paper Reform in the Commission: introducing NPM A contested concept Developing NPM dimensions The content of the reform: the details of the White Paper Activity-Based Management Human resources policy Financial management The White Paper and its grounding in NPM The White Paper with regards NPM’s organisational dimension The White Paper with regards NPM’s political dimension

39 42 44 44 48 52 55 56 57 57 59 63 63 68 69 72 72 74 75 77 78 79 79 84 90 91 93 94 95 96 98

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Contents ix

The White Paper with regards NPM’s democratic dimension Conclusion

100 100

6 From Policy to Practice: Operationalising NPM Implementing the White Paper: a macro-level overview A culture based on service Activity-Based Management Human resources Financial management Implementing NPM ideas NPM’s organisational dimension NPM’s political dimension NPM’s democratic dimension Conclusion

102 103 103 104 107 110 112 112 115 118 121

7

123 125

The Secretariat- General: a Case Study in Innovation Organisational structures The automatic creation of a resource directorate and an internal audit capability A deliberate focus on strategic programming and better regulation Processes and procedures Processes: the constraints of leading by example Procedures: attempts to develop the reforms strategically Norms and culture Norms: docile compliance with the new requirements Culture: emergence of a ‘Cabinet Office’ Conclusion

8 DG Regional Policy: a Case Study in Adaptation Organisational structures Financial restructuring: a smooth transition towards enhanced responsibility The auditing structure: improving the Commission’s legitimacy Processes and procedures Processes: further essential pieces of the Commission’s legitimacy puzzle Procedures: bureaucratised legitimacy

125 128 132 132 136 140 141 142 144 146 147 147 150 153 153 157

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Norms and culture Norms: an attempt to carve out a specific DG identity Culture: a noticeable and deep change Conclusion

160 160 162 165

9 DG Transport and Energy: a Case Study in Resistance Organisational structures Managerial restructuring: normalisation of an existing situation Financial restructuring: a significant change in approach Processes and procedures Processes: the under- estimated backbone of the reform Procedures: a missed opportunity for simplification Norms and culture Norms: the first step towards cultural change Culture: the main hurdle to institutional change in the Commission Conclusion 10

167 168 168 171 174 174 179 181 181 184 187

Conclusions: Understanding Heterogeneous Institutional Change in the Commission From path dependency to political opportunity: explaining revolutionary change An evolutionary reform in its content A revolutionary reform in its process The content of the reform: the Commission’s interpretation of NPM ideas More than a neo-Weberian reform, less than a NPM reform NPM: the path to an administration de mission Differentiated institutional change: the challenge of reform in a multi- organisation The limits of historical institutionalism in explaining patterns of change The significance of translation: the role of intervening variables Conclusion

Sources Notes Keys to interviews

189 191 191 193 196 196 200 203 203 205 209 211 211 214

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Contents xi

Bibliography Archives of the ECSC Archives of EEC Commission documents relating to the 1995–1999 reform package Index

215 227 227 228 229

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Tables 1.1

Defining characteristics of administration de mission and administration de gestion 3.1 Enlargements and portfolios – the organisational structure of the Commission 4.1 Key actors in the events which resulted in the Commission’s resignation 7.1 Changes in SG structure from 2003 to 2009

4 37 61 130

xii

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Diagrams 2.1 2.2 4.1 5.1 5.2 7.1 8.1 8.2 9.1

Reports on reform of the Commission in the 1970s Key dates in the Commission’s administrative and leadership history, 1965–1973 Short chronology of events leading to the Commission’s resignation NPM’s defining dimensions Analytical framework of NPM reforms Preparation for the 2008 SPP in the SG Preparation for the 2008 SPP cycle in DG REGIO Evolution of payments over a programming period in DG REGIO Preparation for the 2008 SPP in DG TREN

27 32 60 82 83 134 155 163 176

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Abbreviations AAR ABB ABM AIPN AMP APS BAT CDR CIE COCOBU CWLP DAS DECODE DG EAEC EC ECA ECSC EEC EP EU HI HoU IA IAC IAS IEEA IRMS MAP 2000 PDB PPBS

Annual Activity Report Activity Based Budgeting Activity Based Management Autorité investie du pouvoir de nomination (appointing authority acting in the name of its institution) Annual Management Plan Annual Policy Strategy Bureau d’Assistance Technique (see TAO) Career Development Review Committee of Independent Experts, also known as Wise Men Comité de Contrôle Budgétaire (Budgetary Control Committee) Commission Legislative Work Programme Déclaration d’Assurance Dessiner la Commission de Demain (Design Tomorrow’s Commission) Directorate General European Atomic Energy Community European Community European Court of Auditors European Community of Steel and Coal European Economic Community European Parliament European Union Historical Institutionalism Head of Unit Impact Assessment Internal Audit Capacities Internal Audit Service Intelligent Energy Executive Agency Integrated Reporting Management System Modernisation of Administration and Personnel Policy 2000 Preliminary Draft Budget Planning, Programming Budgeting System xiv

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Abbreviations

SEM 2000 SPP TAO TFAR US WFS

xv

Sound and Efficient Management 2000 Strategic Planning and Programming Technical Assistance Office Task Force for Administrative Reform Union Syndicale Workflow System

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Acknowledgements This book would not have been possible without the constant guidance and advice of Professor Brigid Laffan. I would also like to thank the Commission officials whom I interviewed, who gave their time to answer my questions and always showed immense enthusiasm and friendliness in explaining how their institution worked. Despite being under immense pressure herself, Dr Monica O’Mullane read my draft with critical and friendly attention and gave invaluable feedback. I am also indebted to the fantastic editing team at Palgrave Macmillan and Newgen as well as to the anonymous reviewer for his/ her extremely useful comments. Finally, I would like to thank my parents, who probably cannot believe I have published an academic book in a foreign language. I also have a thought for Mr Patrick Quinlivan who always supported my academic endeavours. His son remains my rock, despite having no interest in the European Union!

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Foreword Dr Emmanuelle Schön-Quinlivan’s book analyses the impact which the administrative reforms that were launched under my leadership in the European Commission in 2000 have had on the institution over the past ten years. It traces the arduous but rapid processes of designing, negotiating and implementing the reforms and it very usefully examines the nature, scope and dynamics of institutional change which resulted in the Commission. For practitioners, academics or those affected by change, a study which goes beyond the analysis of the content of a reform programme and objectively assesses positive and negative results is thought provoking and instructive. This volume is novel and challenging for three reasons. First, it takes a very interesting historical institutionalist approach by chronicling the construction of the Commission as the administrative and executive institution of the EU in the past 60 years, therefore putting the Reforming the Commission White Paper of early 2000 into context. That essential background provides a very important setting for the policy choices made in the White Paper. Second, the book develops a fresh conceptualisation of New Public Management which takes the analysis beyond the technical, organisational side of administrative reform and embraces political and democratic issues such as transparency and openness of bureaucracies. New Public Management has been the basis of all administrative reforms across the Western world in the past 30 years but very little work has been done on its implementation by international organisations. That, as a result, gives Dr Schön-Quinlivan’s work particular significance. Third, this book not only investigates the institutional impact of the reform at Commission-wide level, but it also looks at the reform in action and, through case-studies of Directorates-General, it unveils the formidable – but vital – diversity of the European Commission and the challenges which that inevitably poses to reform. Reforming the European Commission is a valuable contribution not only to the literature on European institutions but also to the development and application of New Public Management. I recommend it for its theoretical and empirical insights in a domain – the reform of international public administrations – which has been under-researched. In

xvii

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addition, I commend Dr Emmanuelle Schön-Quinlivan for the rigour, quality and depth of her research and the very welcome clarity of her thinking and writing ... I can only wish that we had enjoyed the advantage of an examination of administrative reform of this quality when we embarked on the task in the late 1999. Certainly, any future modernisation of the Commission – and such updating is always necessary in a dynamic public service organisation – will be greatly assisted. THE RT. HON. NEIL K INNOCk

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Preface Monday 15 March 1999, 10:00 p.m. As the President of the European Commission, Jacques Santer, scanned the room he saw stress, strain and tiredness etched on the faces of his 14 colleagues. He had called this special night meeting to discuss the hardhitting report of the Committee of Independent Experts (CIE), a group which had been formed under pressure from the European Parliament to investigate allegations of fraud, mismanagement and nepotism in the Commission. The report was damning. Santer took a deep breath and methodically summarised the key findings of the report. He noted that a few individual Commissioners were criticised and that the Commission as a whole was found to have lost political control over the use of Community funds and the appointment of staff. Silence greeted the end of his summation as he concluded that this was a crisis unprecedented in the history of the European Commission. Neil Kinnock, Commissioner for Transport, was the first person to break the awkward silence. He said that the report was devastating and that, in his opinion, ‘the CIE had been a set-up’ (Kinnock, 2006). The only option he could see to express his indignation was to resign. Neil Kinnock was supported by Commissioners Karel Van Miert and Franz Fizchler. All three speakers referred to an unacceptable and scandalous critical sentence regarding work ethics in the Commission which had been added at the last-minute to the report late on Sunday evening. The sentence to which they referred read: ‘It is becoming difficult to find anyone who has even the slightest sense of responsibility’ (CIE, 1999a, p. 9.4.25). The Commissioners were appalled by this sentence and the tone of the report as a whole. At the conclusion of a heated two-hour debate it was agreed that the most appropriate way to express their disagreement was to resign. Thus, at midnight on Monday 15, March 1999, Jacques Santer announced to the assembled press the College’s historical decision to resign en masse. He presented the decision as a noble one, stating that the Commissioners ‘thus assume their responsibility in keeping with their undertaking to take action on the findings of the inquiry’ (House xix

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of Commons, 1999, p. 3). The European Union was now formally without its ‘executive’ at a time when it faced a number of critical issues including the negotiations on enlargement of the Union to Central and Eastern Europe. Even though the CIE, which was appointed by the European Parliament, did not identify any instances of fraud, the incoming College of Commissioners, under President Prodi’s direction, took on the mandate of reforming the European bureaucracy. Neil Kinnock was hand-picked by Romano Prodi to be one of the Commission vicepresidents and to handle the administrative reform portfolio. Within six months Neil Kinnock, together with his cabinet and an ad hoc Task Force on Administrative Reform (TFAR), master-minded a White Paper entitled Reforming the Commission which listed 98 measures and was branded by Le Monde as ‘a root and branch reform of the European Commission’1 (Zecchini, 2000). Ten years later, the time has come to ask what impact the Kinnock administrative reforms have had on the Commission.

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1 Introduction: How to Analyse Administrative Reforms in the European Commission

Defining the Commission The European Commission is a relatively recent creation by international public administration standards. It was officially created on 1 January 1958 when the Treaty of Rome came into force. Legally one single body, the Commission, referred to as ‘the House’ (Cini, 1996, p. 101; Shore, 2000, p.127) by European officials, is in fact intrinsically dual, with two levels of action: the College of Commissioners and the services. This ambiguity is a good illustration of the Commission’s organisational essence. Its supranational character entitles it to initiate, draft and sometimes even implement legislation which then applies in each member state. This makes it radically different from a general secretariat of an international organisation (Kassim, 2004a; Cram, 1999). The Commission cannot be regarded as the mere counterpart at international level of national civil services. However, significant inspiration for its organisational characteristics at the time of its founding can be traced to the French administrative system with some input from the Germanic model (Stevens and Stevens, 2001). Neither an international secretariat nor a government of the EU, the European Commission is often described as a sui generis institution where political–administrative relationships are particularly complex. The scope of its power and influence expands beyond the traditional boundaries of an a national civil service. Its political component, the College of Commissioners, whose members can be seen as ‘political entrepreneurs’ (Joana and Smith, 2002, p. 243), confirms the atypical nature of the Commission. It does not operate in a sovereign nation-state and ‘it has had up to now no power to raise revenue of its own; it is not based on 1

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any electoral or Parliamentary majority; above all – it lacks authority to make decisions on its own’ (Coombes, 1970, p. 101). It has become a cliché to say that the Commission has no match in the world of international or national administrations (Nugent, 2001; Stevens and Stevens, 2001; Cini, 1996; Edwards and Spence, 2006). A quick observation of the European Commission highlights the multi-national, multi- cultural and multi-lingual aspects of the organisation which led Cram (1994, 1997, 1999) to call into doubt the homogeneous nature of the Commission and refer to it as a ‘multi- organisation’ (see also Caremier, 1997, p. 238). Similarly, Christiansen (1997) brought to light the intra-institutional conflicts among Directorates- General (DGs) while Ross (1995) mentioned the in-fighting between DGs and their Commissioner as well as between the Commission President and particular DGs. As a result, the image of the Commission which has recently emerged in the literature is that of a heterogeneous organisation with conflicting interests and cultures. This remains an essential element in understanding the Commission as a whole institution because the diversity of nationalities, languages and cultures magnifies its importance. It is, however, fairly typical of any public administration where officials work in different bureaux and develop different interests (Downs, 1967; Niskanen, 1971; Dunleavy, 1991). The European Commission was put at the heart of the European Community’s institutional structure because of its commitment to ‘creative thinking’. Jean Monnet (1976) considered the European Commission to be the crux of any successful development of an integrated European system. Its functions are multi-faceted and representative of its hybrid organisational nature. The Commission’s formal roles include agenda-setting, legislative and executive functions. It acts not only as an internal driver of European integration but also as an external representative of the EU on the international stage. Formally, the Treaty on the Functioning of the European Union (TFEU) confirms the Commission has an exclusive right of competence in every matter except in three of them which are freedom, security and justice. The Commission is further involved in policy implementation, specifically in the area of competition as defined by the TFEU in articles 107, 108, 109 but also through setting out the detailed rules which are not included in primary legislation and which are required to guarantee consistent implementation. In addition, the Treaty states that the Commission should act as a legal guardian of the European treaties and ensuing legislation. The Commission therefore plays a supervisory role

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with regard to implementation and possible infringements of EU primary and secondary legislation. Finally, and crucially, the Commission also has the exclusive power to draft the budget. Beyond those formal roles allocated by the Treaty, the Commission has developed the scope of its powers through more informal channels such as agenda-setting, brokerage and lobbying. It has maximised its influence by developing think-tanks, which reflect on potential ways for the Commission to pursue new policies. This gives it a more informal, but nevertheless influential, role in innovative agenda-setting. As Pollack (1997, p. 125) argues, the Commission has been enabled to ‘ “set the agenda” by constructing “focal points” for bargaining in the absence of a unique equilibrium or by constructing policy proposals and matching these to pressing policy problems in an environment of uncertainty and imperfect information’. The Commission juggles its role as a policy entrepreneur, which plays a significant part in policy-making towards further European integration, and its role as a policy manager, which has increased with the extension of the EU’s fields of competence and is more technical, bureaucratic and routine.

Administration de mission or administration de gestion? The literature that analyses the duality of the Commission’s functions and identity (Morgan, 1992; Berlin, 1987; Pisani, 1956; Caremier, 1997) traditionally opposes two concepts: the administration de mission, which is entirely dedicated to the achievement of one specific goal, i.e. European integration, and the administration de gestion, which is not teleological and is focused on policy management. This categorisation was coined by Pisani in a 1956 article (pp. 324–325). Academics (see Pisani, 1956; Caremier, 1997) identify five defining characteristics in an administration de mission and in an administration de gestion (see Table 1.1.). Significant departures from this academic definition of an administration de mission can readily be identified in the case of the 1958 European Commission. Even though authors like Berlin (1987) and Caremier (1997) have used the concept to describe the Commission at the time of its inception, it is worth noting that it did not entirely fit the profile. First, it was never given a specific time limit to reach its goal, unlike the High Authority, the ancestor of the Commission as the administration of the European Coal and Steel Community. The Treaty of Rome did not mention disbandment. Second, the European Commission was much more hierarchical than the High Authority even though views are rather

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Table 1.1 Defining characteristics of administration de mission and administration de gestion Administration de mission

Administration de gestion

It is set up to fulfil a specific task It is given a defined time framework It delegates implementation to other structures It is partisan It is non-hierarchical

It is a day-to- day administration It does not have a specified life span It manages policies It is bureaucratic and neutral It is hierarchical

contradictory on the topic. Coombes (1970, p. 311) strongly argues that Hallstein’s Commission did not request ‘mechanical rules and regulations and [that there was] little stress on hierarchical lines of command and on departmental prerogatives’. On the other hand, Noël (1992, p. 150) insists that Hallstein, in making the Commission an efficient organisation, was significantly inspired by the highly hierarchical Auswärtges Amt1 where he had worked. However, a common sense of adventure and mission inhabited the Commission under Hallstein’s strong political leadership until 1963. It can therefore be argued that the Commission was never a pure form of administration de mission. Authors like Berlin (1987) and Caremier (1997) used the terms in reference to the Commission to demonstrate the substitution of the administration de mission with the administration de gestion. The bureaucratisation of the European institution over time would have automatically led to the death of its political capacity. The argument is that the management of policies is incompatible with the pursuit of a ‘mission’ – a political goal – and that there is therefore automatic and total replacement of one type of administration by the other. The case of the Commission turns out to be particularly complex. Berlin (1987, p. 38) had already pointed out that ‘the design administration de mission envisaged for the early Commission did not fit a pure model’. He nonetheless concluded that there had been ‘[a] move from an administration de mission to an administration de gestion’ (1987, p. 306). The common assumption in literature is that the Commission has moved from one type of administration to the other. The growing number of staff and structures of the European institution as well as increased red tape and complexity of hierarchical structure have been criticised over the years. Internal dealings have become much more neutral and impersonal as the

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Commission assumed more and more policy-management functions. Over the years, the Commission has constantly adapted to the environmental changes and new challenges it has had to face. As a result, it has been both types of administration at the same time, either in equilibrium or one type has dominated. The Commission was never solely an administration de mission in its pure theoretical conception: it was not created for a set period of time. Even though it was given a specific task to fulfil, this task has kept changing and this constant fluctuation has been at the centre of the most recent debates on European integration: the internal market has been achieved, a common commercial policy has been set up, the EMU is up and running, so where next? The questions of the end product of European integration have resurfaced, as in Jean Monnet’s time. The recent administrative reforms initiated by Commissioner Neil Kinnock and President Romano Prodi were devised to ‘help the Commission to fulfil its institutional role as a motor of European integration’ (European Commission, 2000a, p. 5). The affirmed purpose of the administrative reforms was to give the Commission the means to perform its managerial tasks more efficiently in order to maintain and strengthen ‘the key role of the Commission as an independent public service acting as the guardian of the Treaties and the motor of the Union’ (European Commission, 2000a, p. 27). Focusing on enhancing the Commission’s legitimacy and regaining the lustre which made it a ‘motor of European integration’, the reform aims to make the administration de gestion more efficient and effective in order to free resources to focus on the administration de mission which will complete the Commission’s political ambition.

Theoretical framework: analysing institutional change through historical institutionalism Study of the Kinnock reforms should not be done in a temporal vacuum. The strength of this book is that it is set in an evolutionary continuum which helps understand the choices made by actors for change in a constraining institutional context. In this respect, historical institutionalism (HI) provides a very relevant framework within which to analyse institutional change and formation over time, as well as their unintended consequences (Pierson, 1998). Historical institutionalism: an overview The theoretical framework of this book is HI, supported by Kingdon’s agenda-setting framework, which together underpin the analysis of

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institutional change and critical junctures in relation to the evolution of the European Commission. The book moves away from a ‘static snapshot’ of institutional analysis at one particular time to develop a dynamic approach to HI. First, this version of HI can be described as dynamic because it puts time at the very heart of the analysis of the Kinnock reforms. Second, it focuses on the characteristic mechanism of institutional change, namely path dependency, which integrates the identification of institutional change with its causes. Third, it is also dynamic because it investigates the interaction of ideas with institutionalism and their transition from the institutional level to the organisational level in order to illuminate heterogeneous patterns of change. A core concept in HI is path dependency. In the HI literature, path dependency refers to ‘self-reinforcing or positive feedback processes’ that occur at critical junctures or ‘formative moments’ which are very difficult to reverse (Pierson and Skocpol, 2002, p. 700). It is admitted that the concept of path dependency is seldom used, with careful elaboration of the causal mechanisms involved (Campbell, 2004; North, 1998). Since path dependency is so significant in the theory of HI, attempts have been made to clarify the mechanisms involved and to justify the use of the concept in the explanation of institutional change and not simply institutional persistence (Pierson, 2000). Going beyond the linear path dependency, which assumes inertia of prior policy patterns, some HI literature has highlighted the dynamic adaptive capacity of institutions. This allows them to respond to dysfunctional initial choices without following a straight path of development. Pierson (1998) has highlighted the capacity that actors have to recombine existing elements in order to forge an innovative institutional solution, what Campbell (2004, p. 69) calls a ‘process of bricolage’. HI provides a framework for the analysis of institutional formation and change over time, as well as their unintended consequences (Pierson, 1998). It relies on the idea that institutions produce independent effects on social life which are not the results of aggregated individual choices (Scott, 2001). Contrary to rational choice theory, which focuses on human intentionality as the main determinant of political outcomes, HI argues that individuals and their interests are significantly constrained by institutional factors. HI is grounded in institutionalism because it insists on a variety of institutional factors which can influence policy choices. It challenges the view that ‘institutions embody the long-term interests of those responsible for original institutional design’ (Pierson, 1998, p. 34). It is historical because it ‘takes seriously long-term processes of institutional and political change and is focused

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not just in the past but on processes over time’ (Pierson and Skocpol, 2002, p. 698). The HI approach is particularly relevant in the case of this study because it insists on path dependency and the stickiness of institutions in the process of change. It brings to light the influence of past policy choices, actions and inaction in the design and outcomes of the Kinnock reforms. But this research does not aim to set the reforms into a historical continuum which emphasises stability over change due to institutional constraints (Peters, 2001). It focuses instead on institutional change which can be revolutionary (Krasner, 1984; Baumgartner and Jones, 1993) or evolutionary (Pierson, 1996). Linking path dependency, political opportunities and the translation of ideas, this research articulates an original analytical framework in order not only to identify institutional change but also to explain its occurrence, thereby setting it as the dependent variable. When tracing institutional change in the Commission in its formal and informal aspects, three institutional dimensions of analysis can be identified on the basis of Bulmer and Burch’s work (1998) and are used in this book. They include formal organisational structures as well as informal institutional aspects: ●

●

●

The structural dimension, which centres on the variation in organisational structures. The regulative dimension, i.e. processes and procedures, which sets rules constraining actors’ behaviour. The cultural dimension, which includes the cognitive domain with the actors’ beliefs and internalised symbolic representation of the world and the institution in which they are involved. Normative elements which would be regarded as more formal aspects of the cultural dimension are also taken into account (March and Olsen, 1989, p. 22).

Continuum and critical junctures: the value of Kingdon’s model Whether seen from a pattern of punctuated evolution or punctuated equilibrium (Hay, 2001; see also Pierson, 1994, 1998), the exploration of institutional change still revolves around the concept of ‘critical junctures’. HI literature usually associates these critical junctures with crises when the institutional core is challenged (March and Olsen, 1989; Bulmer and Burch, 1998; Baumgartner and Jones, 1993; Collier and Collier, 1991). However, little is said about what constitutes a critical juncture and what elements need to be present to constitute sufficient

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pressure for change. In this regard, theoretical help can be sought from the agenda-setting literature (Kingdon, 1984). Kingdon’s categorisation of forces – the problem stream, the policy stream and the politics stream, which explain why an item reaches the agenda – is used in this book to identify critical junctures. This framework is used in detail in Chapter 4 to analyse the 1999 Commission resignation and its role in institutional change in the European administration. This book’s theoretical framework being HI supported by Kingdon’s model, the definition of political opportunity can be further specified by the combination of factors which are necessary to explain effective institutional change. Three factors have to be present for a political opportunity to materialise. First, an issue is identified as a problem which requires attention. Second, policy entrepreneurs must be ready to mobilise opinion and institutions with a set of ideas and solutions to policy problems. Third, political processes influence how problems are defined and solutions evaluated. According to Kingdon (1984, p. 21), ‘windows are opened either by the appearance of compelling problems or by happenings in the political stream’. Policy entrepreneurs must then act quickly in order to advance their policy solutions before the window closes and the political opportunity passes them by. It is the combination of the problem, policy and political streams which explains sudden agenda change and therefore institutional change. It does not explain the nature of change, which depends on the second independent variable: ideas. This book then looks at, how the emergence of new ideas at the forefront of the Commission’s agenda has affected institutional change in the European bureaucracy. Hall (1989) points to the different ideas embedded in political institutions in order to explain policy change. Similarly, Baumgartner and Jones (1993) consider that ideas are the building blocks of agendas. Majone (1989, p. 2) also argues that ‘we miss a great deal if we try to understand policy-making solely in terms of power, influence and bargaining, to the exclusion of debate and argument’. HI literature (see Immergut, 1990, 1992; Hall, 1992, 1993) has definitely set the role of ideas at the heart of the definition of institutions. Similarly, this research focuses on the role of ideas in determining the Kinnock reform programme and therefore its impact on institutional change in the Commission. Depending on whether institutional change happened in all three dimensions or in just one or two, its comprehensiveness varies. But this measurement of the scope of institutional change must be combined with an analysis of the dynamic of change in order to understand its

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reality. Assessing the scope of change involves comparing the measures listed in the White Paper with those which were actually implemented and categorising them according to the three institutional dimensions. Understanding the dynamic of change relies on deconstructing the translation process of ideas into practice (Campbell, 2004; see also Peters, 1999, p. 73). Theoretical significance The studies that have been carried out so far on the Kinnock reforms have focused primarily on critical analysis of the reform package (Kassim, 2004a, 2004b; Nugent 2001; Cram, 2001; Peterson, 2004), a quantitative measurement of implementation success (Levy, 2004), a culturalist assessment (Cini, 2000; 2002; 2004), or more recently on the reform’s impact on the Commission’s policy output (Bauer, 2006). So far studies of the administrative reform process have tried to explain the Kinnock reforms, their origin, content and time-scale (Kassim, 2004a, 2008; Peterson, 2004; Levy, 2003, 2004; Pollitt and Bouckaert, 2004; Cini, 2000, 2001, 2004). These studies, however, ignore three elements which are fundamental in understanding the complexities of the reform process, outputs and outcomes: ●

●

●

First, the studies disregard New Public Management (NPM) as an independent variable which can explain institutional change: they either overlook NPM as the source of inspiration for the reform or they consider that it is a label which is so all- encompassing that it is meaningless. This research uses NPM as a benchmark and a set of ideas in order to assess to what extent the Kinnock reforms can be associated with the paradigm and what it means for the European institution. Second, previous works fail to comprehensively trace over time the institutional history of reflection on how to reform the Commission. They therefore neglect past suggestions and attempts or failures at reforming which have constructed the 2000 Commission and informed the reform package and its implementation. Third, they focus on the organisational aspect of the reform and brush away its political objective: triggering institutional change in order for the Commission to recapture its leading role in European integration.

This book therefore fills the research gap by contributing to the existing literature in two ways. First, it provides a detailed critical account

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of the European bureaucracy’s development and construction, from its very first creation in 1950 as the High Authority of the European Coal and Steel Community (ECSC) through to the 2005–2010 European Commission. Some historical work was undertaken on specific time periods (Conrad, 1989; Poidevin and Spierenburg, 1993; Coombes, 1970; Page, 1997) but no academic work has covered in a systematic way the 60 years of existence of the European administration in its organisational, financial and staffing dimensions. Second, it sheds light on institutional change resulting from NPM ideas in a multi-national and multi- cultural supranational organisation. It also develops a definition of NPM which goes beyond its traditional organisational aspect and includes its political and democratic dimensions.

Research design and case studies One central question shapes this research: What explains institutional change in the European Commission? When taking institutional change as the dependent variable and trying to explain its scope and variance, two independent variables emerge: political opportunity, which was crystallised in the institutional crisis occasioned by the resignation of the Santer Commission, and NPM ideas, which infused the White Paper and the reform agenda. Therefore two distinct sub- questions structure the analysis developed in this book: ●

●

What was the effect of political opportunity on institutional change in the Commission after 2000? What were the effects of NPM ideas on institutional change in the Commission after 2000?

Furthermore this analysis requires the use of intervening variables which explain the translation of NPM ideas from the macro-level – the Commission – to the meso-level – DGs. Campbell (2004, p. 82; see also Campbell and Pederson, 2001) highlights four which ‘explain the degree to which diffusing ideas are translated or not into local practice’. They are: local organisational context, power struggles, leadership support and implementation capacities. This double-level analysis allows us to go beyond telling the story of the implementation of the White Paper and delve into the entrails of the organisation, looking at the operationalisation of NPM in DGs. Instead of focusing solely on the type of reform which was implemented in the Commission, or its proc-

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ess, the current study wishes to test the outcome of the reform and evaluate its institutional resonance. In order to answer the research questions, three hypotheses are made: H1: The Commission’s resignation generated an institutional crisis which was a political opportunity and triggered institutional change in the European administration. H2: NPM ideas are at the heart of the White Paper and contributed to institutional change in the Commission. H3: The translation process from Commission-wide to DG level affected the dynamic of institutional change across the Commission. The case study approach was used, which allows tapping into different layers of information. It combined archival analysis with document study, as well as 71 interviews with Lord Neil Kinnock, members of his cabinet, members of the TFAR, Commission officials, MEPs, trade unionists and members of the European Court of Auditors (ECA). Furthermore, three DGs that reveal the Commission’s organisational complexity were chosen: the Secretariat- General (SG), DG Transport and Energy (TREN) and DG Regional Policy (REGIO). They illustrate the multi- character of the Commission, whose services are either horizontal, like the SG, or vertical and whose vertical DGs can be either programme-managing, like DG REGIO, or policy-making, like DG TREN. The selection of the three case studies was made on two aspects of the theoretical argument: ● ●

the role of NPM ideas on institutional change the effect of the translation process from Commission-wide to DG level.

The SG, being a central actor and a driving force of the implementation of the Kinnock reforms, could be expected to be keen on managerial ideas, despite not handling a significant budget or managing programmes. Similarly, DG REGIO, due to its programme-management functions, could be expected to be receptive to NPM ideas, unlike DG TREN, whose priority would not be managerial matters because of its policy- creation duties.

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Conclusion Chapters 2 and 3 focus on an evolutionary analysis of institutional change in the Commission from 1950 to 1998, which is useful in assessing how path dependent the Kinnock reforms are. Chapter 4 examines the combination of factors necessary for the creation of a political opportunity and what effect it had on triggering institutional change. Chapters 5 and 6 delve into the concept of NPM, which has been at the heart of all administrative reforms in the Western World in the last 25 years, and take an in- depth analysis of the White Paper, its implementation and its links with NPM. It tests the hypothesis that NPM ideas are at the heart of the White Paper and affected the type of institutional change the Commission experienced. Chapters 7, 8 and 9 embark on case studies at a meso-level to study the scope and dynamic of institutional change resulting from the Kinnock NPM reforms, examining whether the translation process led to uneven change in the SG or DG TREN compared with DG REGIO. Finally, Chapter 10 explains the findings and what has been learned with regard to the hypotheses as well as the strengths and weaknesses of a dynamic HI approach in the analysis of the research question.

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2 1950–1984: Constructing the Administrative Commission

The next two chapters highlight the Commission’s conscious and deliberate attempts at reform and the striking continuity in discourse as well as solutions suggested over 45 years, despite a lack of implementation. It therefore nuances two common views on the European administration: that the Commission did not experience any worthwhile reform process before the Santer presidency; and that the Kinnock reform measures represent a significant departure from past solutions. The literature which focuses exclusively on the administrative structures, roles, staff and culture of the Commission, is thin and restricted to certain time periods (Conrad, 1989; Cassese, 1987; Stevens and Stevens, 2001). The purpose of this chapter is to fill this research gap and analyse the Commission’s administrative development from its ancestor, the High Authority, to its modern form. A historical institutionalist (HI) lens allows tracing the degree of transformation of the institution in its specific constituents – institutional structures, processes/procedures and culture – as well as its accretive and path dependent aspect. Setting the construction of the Commission in its historical and institutional dynamic is crucial to the understanding of the idiosyncratic context in which the Kinnock reforms were conceived and implemented. This chapter and Chapter 3 construct the dependent variable – institutional change – within a time frame following our dynamic HI approach. The evolutionary context involves retracing administrative reforms in the Commission from 1950 to 1998 and the ways in which past choices, actions and inaction have influenced explicitly or implicitly the Kinnock programme of reforms. Path dependency is therefore

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assessed over four distinct time periods; the first two are covered in this chapter and the last two in Chapter 3: ●

●

●

●

1950 to 1964 marks the start of the European integration process and the birth of a European supranational bureaucracy, the High Authority.1 This first attempt at creating a European civil service was then used in 1958 to found the European Commission, one of the key institutions of the European Economic Community. 1965 to 1984 saw the merger of executives in 1967, which constituted a landmark in the European Commission’s administrative history. This period also includes the first enlargement of the EEC to new members, the United Kingdom, Ireland and Denmark, as well as ‘a remarkably clear-sighted and perceptive’ (Stevens and Stevens, 2001, p. 184) report on the European Commission’s administrative organisation, the Spierenburg report. 1985 to 1994 witnessed further enlargement to accommodate Spain and Portugal in 1986. During this time, Henning Christophersen became the Danish Commissioner for Personnel and Administration. The appointments of Christophersen and his Director- General, Richard Hay, heralded a renewed interest in administrative reforms and a five-phase modernisation programme was launched. In this period, Jacques Delors is President of the Commission and shows renewed political leadership. Yet from an organisational viewpoint, dubious procedures and a detrimental culture of informality emerge. 1995 to 1998 saw the most intense period in terms of administrative reforms of the Commission and a reassessment of the institution’s ethos, which ended in December 1998 with the first signs of a crisis brewing.

1950–1964: an ephemeral administration de mission We first analyse how the High Authority and then the Commission developed and adjusted their formal organisational structures in order to fulfil their mission. In a second section, we focus on processes and procedures which emphasise the bureaucratic growth of the European administration, in contrast with its original conception as an administration de mission. Finally, we discuss the evolution of the cultural environment in the institution from 1952 to 1964 which reveals most strongly how the administration de mission status became a myth in the early days of the European administration.

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Formal structures and organisation Jean Monnet had a long-term idea for the European Coal and Steel Community (ECSC) as he revealed in his Mémoires (1976, p. 436): In reality, I had made no plans for a long-lasting and large settling, because I was hoping – and still am – to set up soon the European institutions in a district with its own sovereignty. I was determined to make the High Authority an organisation as light as possible. Jean Monnet regarded himself as an institutionalist because he believed that ‘nothing is possible without men, nothing is durable without institutions’ (1976, p. 360). He believed in an institution which would operate with a limited number of staff, mostly on flexible terms of employment with minimum guaranteed stability. So when he and his team started working on structuring the administrative services, they concentrated on organisational mechanisms which would allow a constant flow of fresh ideas within the High Authority. Avoiding reproducing at European level any single model of national bureaucracy, a unique institution composed of mixed national characteristics was shaped which, it was hoped, would remain flexible, non-hierarchical and adaptable to allow future development of the institution. The first High Authority comprised nine members, appointed for a renewable six-year mandate,2 who vowed their independence from their governments. Jean Monnet was the obvious choice for the presidency of the High Authority. The new institution had to deal with urgent administrative issues. In August 1952 a Comité de Démarrage (CEAB 2/701, p. 3; CEAB 2/88 p. 19) was set up in order to work out the organisation of the High Authority’s administrative services (Mazey, 1992, p. 34). In October 1952, 12 divisions and services were established (CEAB 2/713/1). There was no separation of coal and steel markets and formally the organisational chart listed all administrative units on the same level. Set up to fulfil a specific task – i.e. build a common market of coal and steel industries from six European countries, over a set period of 50 years, with the aim of ultimately creating a European political union – the High Authority led a constant reflection on its own organisational efficiency. As early as end of 1953, Jean Monnet had to revise his original idea of a non-hierarchical, small, flexible and supranational institution because it defied organisational logic. As he described in his note to his successor in 1955 (CEAB 2/91, p. 3), ‘during approximately the first

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18 months of its activity, the proposals drafted by services were directly transmitted to the High Authority for its meetings’. This absence of hierarchical links within the administrative services led to overlapping, duplication and confusion (CEAB 12/82/3, p. 271; CEAB 12/82/3, p. 250; CEAB 12/82/1, p. 81). The Commission reached its final decisions in terms of structure and appointments in March and April 1958. The First General Report of Activity (1958, p. 22) detailed the structure of nine DGs, to which were added a Secretariat3 and three Joint Services among the three Communities. It also stated that DGs were divided into Directions. Each DG was referred to by a number rather than a name.4 Unlike Jean Monnet, Walter Hallstein (the first president of the European Commission, from 1958 to 1968) decided to work more from an a priori framework instead of being dictated to by the Commission’s organisational design from practice. Like Monnet, however, Hallstein took a direct interest in appointments. He personally met with every main candidate and his approval was imperative in order to choose any Director- General (Noël, 1992, p. 148). Less than 12 months after the constitution of the European administration, the Commission contracted Bosboom en Hegener, a Dutch consultancy company specialising in organisational design, to review the organisation of the Commission’s administrative services with the idea of rationalising them. In a report transmitted to the Commission on 6 August 1959, Bosboom en Hegener recommended that the Commission adjust its organisational arrangement as it developed, otherwise it would lose control of itself. The consultants insisted on better horizontal coordination between services and more efficient division of work among DGs. Their main proposal was to allocate responsibility for supervising the entire administrative system to a single person instead of dividing it, as it was, between the College, the Secretariat, DG IX and the various DGs. They therefore suggested that a common Direction should be set up for the Secretariat and DG IX and pleaded for ‘a system of centralised responsibility’ (BAC 51/86/854, p. 35). Their report led to very few actions. However, as a follow-up, the Commission decided in 1960 to set up a Comité de rationalisation composed of Bobba, Verloren van Themaat and Ortoli (COM/60/PV 94 final 2ème partie, p. 13). The Comité highlighted some objective reasons for the inefficiency of the Commission: A certain inertia typical of multilingual organisations [ ... ]; the substance of Commission’s powers which are about initiation rather

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than decision and management; the nature of the institution because collegial responsibility into the smallest matters excessively extends the Commission’s direct competence [ ... ]; finally, what one would call the rotation of problems, a fractured mobilisation of the administration from time to time, without any relay from conception or negotiation tasks to managerial ones. Each of these four obstacles has remained at the heart of every administrative and organisational reform programme launched by the Commission. Despite a constant reflection on the Commission’s structure and organisation, very few recommendations were implemented. Processes and procedures Processes The years 1952 to 1957 saw the shift from fluid processes to bureaucratic procedures. Even though it is clear that Jean Monnet had little enthusiasm for managerial matters, he ‘took a keen interest in all administrative appointments’ (Mazey, 1992, p. 38; see also Poidevin and Spierenburg, 1993, p. 98) at the start. In his Mémoires he recalled that he personally met with each candidate and then discussed the applications with the other members of the High Authority (1976, p. 450). In this respect, Jean Monnet agreed with François Vinck (a member of the High Authority from 1952 to 1967) who, in a note addressed to the President on 19 September 1952, expressed the view that ‘recruitment would happen as tasks were arising. The system I recommend allows to fit “the right man in the right place” without too many risks of being stuck, at some stage, with dead weight in the administration’s cogs’ (CEAB, 12/55/2, p. 108). The concern to keep the administrative structure as light and efficient as possible is clearly present in many working documents. The recruitment process was particularly subjective since candidates had to be approved by a member of the High Authority of their own nationality. Conrad (1989, p. 79; see also Poidevin and Spierenburg, 1993, p. 99) describes how, in effect, an unofficial quota per nationality existed in the recruitment of senior high civil servants. As early as 1952 (CEAB 2/713/2, p. 166), it was agreed by the members of the High Authority that ‘with regard to the necessary balance to be maintained when it comes to appointments, certain rules, which will be neither rigid nor put down in writing, will have to be complied with’. Jean Monnet’s obsession with ad hoc rules and verbal agreements is visible in this note.

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The general, flexible ad hoc approach worked for the first 18 months but soon showed its limitations. In particular, as the workload increased and the non-hierarchical structure led to duplication and overlapping of work, coordination within the administrative services became an issue. As a result, by the autumn of 1953, the High Authority decided to set up six permanent working groups which would each be composed of several members of the College as well as senior officials, maintaining therefore the collegiate nature of the decision-making process. Rightly, Mazey (1992, p. 43) concludes that ‘[w]ithin a period of four years the administrative services of the High Authority were thus transformed from an informal grouping of sympathetic individuals into a professional bureaucracy’. The number of staff more than trebled from 165 employees on 1 October 1952 to 513 on 15 March 1954 (CEAB 12/82/3, p. 191). In 1958, the President of the new European Commission, Walter Hallstein, took his inspiration from Jean Monnet but also from his experience of the German administration. When thinking of work processes and recruitment, he proceeded ‘from top to bottom’ (1958, p. 5). It meant that once the Commissioners were appointed by the governments, the President and his team first determined how to divide work within the Commission and then appointed officials to senior positions, the middle ranking civil servants and manual employees being recruited last. Like Jean Monnet, Walter Hallstein personally met with every main candidate and his approval was imperative in order to choose any Director- General (Noël, 1992, p. 148). Walter Hallstein’s aim was to create a truly European public administration which could rival national bureaucracies. He decided that he, together with the two vicePresidents, would be in charge of DG Administration. In fact, Hallstein’s cabinet became extremely influential in shaping administrative practice within DG Administration and Personnel (Coombes, 1970, p. 153). Officially three or four Commissioners were overseeing one area, like in the High Authority. But ‘most work groups quickly became fictitious, whereas they worked effectively in the High Authority until the merger of the executives’ explains Emile Noël (1992, p. 152). Commissioners presented their projects directly before the Commission without debating them in advance of sessions with the other Commissioners in the group. Therefore, it can be said that only the decision-making process remained collegial. The specific allocation of one sector to a Commissioner, a practice rejected by Jean Monnet, quickly became the norm in the European Commission.

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Procedures Because of the novelty of the European adventure, the question of Staff Regulations which would give more stability and security to new recruits was discussed. At the end of October 1952, civil servants were granted a contract in accordance with article 7 of the Convention sur les Dispositions Transitoires which provided for such contractual recruitment until Staff Regulations were formulated by the Commission of the Four Presidents. Jean Monnet was in no hurry to adopt such regulations, which he saw as the start of a bureaucratisation process. Even though salaries were attractive, staff recruitment proved to be more difficult than first envisaged due to the uncertainty about the future of the ECSC. Staff Regulations, which had been under discussion since 1953 and whose adoption Jean Monnet delayed, were finally approved on 28 January 1956, within six months of René Mayer’s arrival at the Presidency of the High Authority: ‘The system envisaged focuses on establishing a framework for statutory civil servants, who could have a career in the Community institutions and to whom job stability is guaranteed.’5 Mayer attempted to create a true European bureaucracy. This meant employing staff on a statutory basis and giving them the prospect of a life-long career within the institution. Conrad (1992, p. 66) summarises the difference in approach between the first two Presidents of the High Authority: ‘Monnet envisaged a statute for the institution, Mayer got a statute for staff adopted’. Little by little a recruitment procedure was set up, with the replacement of the early subjective practice of recruitment by a more objective one involving a concours. For senior positions, the problem of nationality balance kept strengthening with a well established tacit rule of replacing senior civil servants by colleagues of the same nationality (see Poidevin and Spierenburg, 1994, p. 335). The EEC and EAEC Staff Regulations were largely modelled on the ECSC Staff Regulations. They both guaranteed employment stability, non- discriminatory promotion and open competition on the basis of merit. But the EEC and EAEC Statutes of Service of Officials were different on three counts (Cinquième Rapport Général, 1962, p. 307): ●

They provided a different hierarchical structure of grades. Instead of the three categories divided into 13 grades, the new regulation provided four categories grouping a total of 22 grades: A - which designated administrators in charge of the policy-making

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●

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B - which described the more administrative work C - which mainly included clerical and secretarial staff D - which encompassed manual workers like doormen, porters and cleaners. Salaries, which had been heavily criticised at the time the ECSC was founded (see Conrad, 1989; 1992), were reduced for EEC officials. The pension system was also made stricter, allowing staff to retire with 60% of salary after 33 years of service instead of 30 years as previously.

In a second report transmitted to the Commission on 6 August 1959, Bosboom en Hegener examined the organisation’s procedures and work methods. The consultants insisted on better horizontal coordination among services and more efficient division of work among DGs. They first challenged the division of jobs on the basis of nationality at every level. They considered that it was inappropriate and counterproductive at lower levels of implementation. They also stressed the lack of consistency among the various stages of a procedure, calling for a clear statement of internal rules. Interestingly, in a letter to the President of the EEC Council, Hallstein drew the following conclusions from Bosboom en Hegener’s reports (BAC 3/1978/397/2): the evolving nature of the EEC’s scope of competence meant that the Commission’s administrative structure could not be rigid; but the working methods, norms and procedures had to be in order to guarantee efficiency and high performance. Norms and culture From 1952 to 1964, discussions about the High Authority and then the European Commission revolved around issues of supranationality, flexibility and collegiality. The continuity in the normative and cultural development of the High Authority and the Commission is obvious and highlights the similar political and intellectual contexts in which they were founded. The first president of the High Authority, Monnet, and the first Commission president, Hallstein, used the concept of supranationalism, which was mentioned in the ECSC treaty but not in the EEC treaty, as a structuring norm in order to carve the institution’s scope of influence. At a more micro-level Monnet, like Hallstein, applied two main methods of doing business, namely flexibility of organisation and collegiality of decision-making, which created a specific cultural environment for the civil servants.

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In Monnet’s mind, two requirements enshrined in the Treaty of Paris guaranteed the supranational dimension of the High Authority, which was the essence of the ECSC adventure: the independence of the members and their duty to act as a College. Monnet knew what organisational arrangements did not work, like the League of Nations, but he did not have a clear vision from the start what the structure of this supranational power should be in order to be successful (Monnet, 1976, pp. 348–349). He asked Paul Reuter, a law professor, to forge the new structure which would implement the concept of supranational power. Supranational was a word Monnet did not like (1976, p. 352) and certainly did not want to highlight. Calling this new common power structure ‘supranational’ would have scared many within and outside of France. Monnet decided to infuse his project with supranational substance and settled on the name ‘High Authority’. Monnet relied on oral communication6 much more than on written documents throughout his entire career. The early Treaty negotiations, over which he presided, were not scrupulously minuted because he wanted delegations to feel free to amend earlier statements. Flexibility was the cornerstone of the ECSC creation and of its early operation. The quest for flexibility and creativity meant that Monnet avoided any sectoral hierarchies and developed a horizontally organised type of administration where senior officials were able to attend the High Authority’s meetings (Mazey, 1992, p. 38; Conrad, 1989, p. 43; Uri, 1991, p. 100). From the very early times of the ECSC, the distinction between politics and administration was rather blurred in practice. Senior officials and members of the College worked in total interaction and there was no sense of a division between execution and decision-making activities. This integration of politics and administration can be further illustrated by Monnet’s working method. Even though Monnet claimed that he never felt the need for a presidential cabinet and that he entirely relied on the Secretariat of the High Authority (CEAB 2/91, p. 3), again practice sheds a different light on this claim. As reported by Conrad (1989, p. 43; see also Mazey, 1992, p. 38), he surrounded himself with a team of highly qualified and motivated officials. Most of the policymaking work of the High Authority was done in closed meetings by Monnet with his collaborators, and experts who would be asked on an ad hoc basis, as relevant. Monnet’s close-knit team spent days and nights drafting working documents. Monnet’s determination to find another type of administrative structure7 and behaviour was fulfilled during the first year of existence of the High Authority. Flexibility, communication, a sense of mission and

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no hierarchies were the four key principles which Monnet managed to introduce into the new supranational European institution. Monnet aimed to create ‘Europeans’ (Uri, 1991, p. 79) and, as he discussed in his Mémoires, he was happy to see that national civil servants who came to Luxembourg on short-term contracts were going back to their national administrations with the idea that ‘the legend of a new type of men was about to be born in the Luxembourg institutions like in a laboratory’ (1976, p. 441; see Shore, 2000, pp. 138–139). In 1957, ‘[r]eflecting ... a feeling that the name “High Authority” was over-grand, “High Authority” was replaced with “Commission” for both the EEC and Euratom’ (Nugent, 2001, p. 26). The significant change lies in the Commission’s substance and standing which departed from Monnet’s supranational High Authority. Fransen argues (2001, p. 124) that ‘Europe was reborn out of a kind of patricide’. Monnet had given an ultimatum to the six foreign ministers in the build-up to the 1955 Messina conference, making their genuine commitment to pursuing integration and supranationalism a condition for his renewal at the head of the High Authority. The French government refused and Monnet resigned. It was another indication that mindsets had changed since the early 1950s and that the European Commission would certainly not be envisaged as a purely supranational bureaucracy. Following the idea of bringing back some intergovernmentalism into the European venture, the word ‘supranational’ was not used at any point in the 1957 Treaties. The word was even deleted from the ECSC Treaty when it was amended by the 1965 Merger Treaty. The reality was that the Commission which came out of the 1957 Treaty was under much more intense Council scrutiny than the 1951 High Authority had been. Moreover, the Council of Ministers gained very significant decision-making powers, to the detriment of the Commission (see Condorelli-Braun, 1972, pp. 28–29). The significant influence of the Commission from 1958 to 1964 can be attributed to Hallstein’s presidency. The treaties did not mention ‘supranational’ any more; intergovernmentalist mechanisms were strengthened. But in his inaugural speech, Hallstein spoke of ‘our Commission, which is among the EEC’s institutions whose supranational character is most clearly branded’ (Annexe II COM/58/PV 1 final, 16/01/58, p. 2). Like Monnet, Hallstein was known as ‘Monsieur Europe’ because of his activist presidential style. He even claimed that he could be regarded as a European Prime Minister (Urwin, 1995, p. 103), thus seeking to boost the Commission’s political profile. Although his ‘Herr Professor’ attitude was criticised, Hallstein managed to build a close-knit group of

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Commissioners, ‘the nine of Bruxelles’ (Condorelli-Braun, 1972, p. 163), whose friendship was common knowledge. Hallstein shared Monnet’s approach to European integration, stating ‘we are going to set up a major administration’ (quoted in Noël, 1992, p. 152); but he believed a bureaucratic structure could bring the necessary efficiency to the Commission’s work. Emile Noël (1992, p. 150) contends that Walter Hallstein got his inspiration from the Auswärtiges Amt,8 which he set up in Germany: ‘it was a very hierarchical structure, where each level had its responsibility, where matters were going up and down’. He carries on explaining that in this German bureaucratic structure, Hallstein used to make comments on draft documents using a green pen while his secretary used a black pen and each level in the hierarchy used a different colour. He applied the same method within the Commission, as Archives demonstrate. The European institution had to accommodate itself with offices in Val Duchesse where the negotiations for the Treaty of Rome had taken place. Lemaignen (1964, p. 30) describes the room where the Commission’s sessions were held as ‘a small, nearly dark room, which a table just about big enough for the nine Commissioners filled entirely’. This room, however, suited Walter Hallstein’s working method. He was radically against large cabinets, which was the French tendency. He wanted the deliberations of the Commission to take place in this small room which could take the minimum number of collaborators. Collegiality was restricted to decision-making so Hallstein considered that discussions at the Commission’s sessions should happen among the nine Commissioners, the supreme decision-makers, without any interference from staff. According to Lemaignen (1964, p. 31; also see pp. 32–37), even when the Commission moved to rue Belliard in more spacious facilities, the rule of ‘intimate meetings’ was maintained. Senior civil servants were no longer invited to the Commission’s sessions, as during Jean Monnet’s period in office.

1965–1984: the challenge of a ‘representative’ bureaucracy In 1965 the Presidents of the Commission, the High Authority and the European Atomic Energy Community Commission decided to act on the widely acknowledged problem of the existence of three different Communities with similar organs which led to duplication of tasks and a waste of resources. They devised a plan to solve the issue and decided to suggest to the six Member States that the executives and the Councils

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of the Communities should be merged. The Merger Treaty was signed on 8 April 1965. Looking at the structural and organisational overhaul triggered by the Merger Treaty, we first give a picture of the single European Administration which was shaped in the years 1967–1968 and remained largely unchanged until 1985. In a second section, we study the consequences of the organisational restructuring on the Commission’s processes and procedures. After merging the three administrative structures to create a single administration, the Commission introduced several reflective reform processes in order to devise a modern working environment for staff. The processes offer a diagnosis of the institution’s problems and suggest measures which precisely pave the way for the 2000 White Paper. Finally, the merger, as well as the first enlargement of the EEC, significantly affected the cultural matrix of the Commission, which moved away from a ‘partisan’ to a ‘representative’ institution. Formal structures and organisation The Merger Treaty came into force on 1 July 1967. It created a single Commission of 14 members for the first three years, after which it would be reduced to nine. During its session on 20 July 1967, the Commission made official the allocation of the 14 portfolios and decided to create working groups composed of members of the Commission in order to ‘ensure internal coordination and collaboration between Commission members and heads of Directorates General’ (COM (67) PV 3 final, 2ème partie, 20/07/1967). Coordination and cooperation among staff – over 5,000 of them were parachuted into a new structure and a new post – proved to be the biggest challenges of the new Commission. Uncertainty and delay characterised the merger of the three Communities and led to low staff morale. Annex I of the Merger Treaty provided that the single Commission’s responsibilities included taking all the necessary measures to rationalise its services within one year and that it must periodically report progress to the Council. The 1966 General Report demonstrated the Commission’s efforts, since the institution did not ask for any extra staff. In 1967, establishment plans listed 5,149 staff divided among three institutions. In 1968, a single establishment plan showed 4,953 employees distributed over 20 DGs, 14 cabinets and 7 administrative units. According to the Rapport Final sur les Opérations de Rationalisation published in 1969 (BAC 17/1986/266, p. 3) the merger facilitated the reduction of the number of DGs by 20% and of the number of Directorates by 12%. It particularly insisted that ‘it was not a matter of adding up three administrations but

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rather creating a new administration of the single Commission’. New DGs, like the Regional Policy DG or the DG for Generic Research and Technology, were created in order to take into account the changing political and economic situation of Europe since 1952. Between 1970 and 1975, a few significant amendments with regard to financial matters were made, which proved to be important in the life and development of the European bureaucracy. The Treaty of Luxembourg of 22 April 1970 granted the European Parliament (EP) more budgetary powers but limited them to the spending side. The Treaty of Brussels of 22 July 1975 gave the Parliament the right to reject the budget and to grant the Commission a discharge for implementing it. These two treaties put the EP at the centre of the budgetary process and gave it some power to oversee the Commission’s administration of the budget. The same 1975 Treaty of Brussels set up the European Court of Auditors (ECA), a body responsible for scrutinising the Community’s accounts and financial management, which began work on 25 October 1977. This move towards external auditing coupled with the EP’s increased powers over the implementation of the budget put greater pressure on the Commission’s financial management. From its creation the ECA found flaws in the Commission’s financial processes and became increasingly more insistent on necessary reforms. From an organisational viewpoint, the number of DGs did not change between 1967 and 1985 (Berlin, 1987, p. 51). However, they almost all at some point experienced structural modifications, either a merger with another DG or rearrangement of internal divisions. DG Economic and Financial Affairs and DG Personnel and Administration seemed to be the only DGs untouched during that period. Berlin highlights that organisational changes within the Commission are not only based on logic and coherence but also, very often, on external political constraints which defy good administrative management and generate irrational results. On the one hand, Berlin (1987, p. 53) considers that there was a deliberate administrative policy, in the 1970s, on the Commission’s part, to strengthen horizontal administrative units within the Commission, which was an attempt to improve organisational coordination and communication; but he also gives a telling example of how biased administrative reorganisation can be. In 1973 the first enlargement of the EC to include the United Kingdom, Ireland and Denmark took place, as well as the appointment of a new Commission headed by a Frenchman, FrançoisXavier Ortoli. The appointment of the new College of Commissioners led to some reorganisation of administrative services and, more specifically, of DG External Affairs and DG Development and Cooperation.

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DG Development and Cooperation was allocated responsibilities that formerly fell to DG External Affairs. Berlin (1987, pp. 55–56) insists on the political context for such an organisational choice: Thus it can be noticed that the strengthening of DG VIII, to the detriment of DG I, comes at a time when the latter is being headed by a British Commissioner, whereas DG VIII remains under the responsibility of a French Commissioner [ ... ] Moreover, the strengthening of DG VIII was a problem because France, which had the presidency of the Commission, could not, given the balance between portfolios, keep DG II ‘Economic and financial affairs’ as well, which is another great French tradition. As a result France momentarily abandoned DG II for the RFA. This was only acceptable to France because DG VIII was strengthened. It also had the advantage of taking away from British influence, Britain being in charge of DG I, the essential elements of development policy which are very dear to France. The first enlargement of the Communities forced the Commission to reorganise its administrative services and allocate Directors- General posts on the basis of countries’ political, economic and demographic weight. These considerations meant that this reorganisation was not, therefore, as had previously been the case, based on a search for efficiency or rationalisation. Processes and procedures Processes The 1970s were marked by the number of reports (see Diagram 2.1) reflecting on the type of organisation the Commission had become. Between 1970 and 1972, three different groups were appointed to review the organisation: ●

●

●

In April 1970, the Table Ronde des Huit9 handed its report evaluating the way in which the organisation was able to meet functional requirements as well as provide an adequate working environment for a modern staff community (BAC 164/89/309). In June 1970, the Groupe Paritaire des Dix10 handed in their followup report which devised a series of measures to be taken in order to implement the recommendations from the Table Ronde des Huit. In 1972, from the perspective of the enlargement, the Commission mandated external consultants headed by Yves Poullet, a Belgian academic, to assess the consequences of the enlargement on the organisation and the functionality of the European bureaucracy.

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June 1970

1972

Table Ronde des Huit

Groupe Paritaire des Dix

Rapport Poullet

1979

27

1979

Spierenburg Report on Report European Institutions

Diagram 2.1 Reports on reform of the Commission in the 1970s

The report of the Table Ronde des Huit did not aim to propose any reform programme. Divided into two sections, ‘Efficient Organisation’ and ‘Humane Organisation’, the report gave for the first time an insight into the post-merger Commission. The picture was not much different from that painted by Bosboom en Hegener in 1959 or Ortoli in 1961. Three essential points were made: ●

●

●

The horizontal and vertical division of functions did not allow the Commission to use its full potential. The excessive number of administrative units and the rigidity of the organisational model applied to the Commission were particularly criticised. When it came to work practices, the report, like Ortoli’s 1961 report, highlighted the lack of strategic planning within the Commission. Given the ever- expanding scope of competence of the Commission but its limited financial and human resources, its lack of ‘strategic programming’ (p. 11) seemed a real deficiency. The absence of a link between organisational and budgetary functions led to the erratic development of the Commission which was in need of an independent auto-regulatory body steering the organisational expansion of the institution. François-Xavier Ortoli had made the same recommendation nine years earlier.

Since Ortoli’s report, every analysis of the Commission’s administrative services emphasised the lack of coordination processes. The Commission was losing its homogeneity through unplanned and erratic growth; this bore the consequence of an increase in bureaucratisation and rigidity, which were regarded as the tools to keep this ever- expanding organisation in functional order. As a result of this diagnosis, the Groupe Paritaire made specific recommendations about the strengthening of the organisation’s performance and its ability to change through increased flexibility. The 1972 report, Fonctionnement interne de la Commission: rapport Poullet, identified the Commission’s

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strengths and weaknesses, insisting on the ‘the division between rulers and ruled, which translates in the behaviours and strategies of the group’ (Poullet, 1972, p. 30). In January 1977, the appointment of Jenkins at the head of the Commission ‘raised high hopes for a revival in both influence and status of the Commission’ (Nugent, 2001, p. 38). Aware of the Commission’s ‘management task and continuing duty to innovate in the interests of Europe as a whole’ (Jenkins, 1980), he appointed the Spierenburg Committee to review internal workings. The awareness of the difficulties generated by a multi-national organisation whose components kept increasing had become more acute with the enlargement to the United Kingdom, Ireland and Denmark and the forthcoming enlargements to Greece, Spain and Portugal. Beyond these circumstances, the report became a reference in the Commission’s administrative reform history. The Spierenburg report made the same points as previous reports: ● ●

● ● ● ● ●

heterogeneity and high number of portfolios, lack of active coordination within the Commission by its Presidency, lack of responsibility of the Directors- General, excessive number of administrative units, poor allocation of staff, necessity for work-programming and poor recruitment and promotion mechanisms.

However, it stressed more than any prior report the importance of managerial skills and management standards. When presenting the report before the staff, Roy Jenkins explained (1980, p. 5): ‘You are not only the chief policy advisers of the Commission, you are also its principal line-managers. That second function is just as important as the first’. This mirrored the argument made by the report (1979, p. 24) that: [t]he key to the efficient working of a streamlined system of this type is greatly increased emphasis on management qualities. It should not be possible for anyone to be appointed Head of Division (and a fortiori to a higher position) unless he has shown aptitude for management, fostered by the Commission through suitable training programmes (original emphasis).

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Finally, the Spierenburg report recommended that the position of Director- General be reinforced through the strict limitation of cabinets’ role and also through the acknowledgement of his sole responsibility for the conceptual and managerial tasks performed by his DG. When reviewing administrative policy within the Commission, the Spierenburg group advised the Commission to reduce the number of administrative units.11 It further proposed that each DG establish a work programme which would include guidelines, objectives and a schedule of work. This idea was implemented by Neil Kinnock in 2001. As for staff careers, beyond better advertising of concours in Member States as well as greater decentralisation of tests and a more regular promotion policy, the report encouraged staff mobility which ‘must be made a right and a duty’ (1979, p. 31). Once again, the Kinnock reforms made mobility a central aspect of the 2000 administrative reform. Procedures The political focus at the start of the 1970s was strongly on financial matters. The Council decision of 21 April 1970, as well as the treaty signed on 22 April 1970, changed the financial structure of the European Communities and affected considerably the Commission in its budgetary role. Three new procedures were introduced: ●

●

●

A system of own resources was created which replaced Member States’ contributions. New budgetary procedures were adopted and a single budget for the European Communities was put in place. The Council passed a decision requesting that the Commission engaged in multi-annual budgeting.

These changes forced the Commission to modify its internal financial procedures. The motto once again was ‘rationalisation’. As a result the Commission took a decision on 14 October 1970 (COM (70) PV 138 final) in order to gradually introduce the use of Planning, Programming Budgeting System (PBBS) in its budgetary choices. The 1970 General Report of Activity strongly emphasised that the Commission would from then on be ‘subjected to tough choices and it will have to be sure that it can indeed allocate in an optimal way its resources among the various policies, so that there is maximum return on Community expenditure’ (1970, p. 405).

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Apart from financial procedures, the Commission focused on amending Staff Regulations. Amendments happened in four waves: ●

●

●

●

First, in 1972, the Council agreed to amendments of Staff Regulations which led to the introduction of part-time work and new social security and pensions schemes (OJ No. C100, 28/09/1972). Then, in 1973, amendments were made to the Staff Regulations in order to remove some discrimination in salaries between men and women officials. The third wave of amendments took four years to be accepted by the Council. In 1974, the Commission put forward a proposal for change dealing more particularly with organisational aspects such as team work as well as social improvements with regard to working conditions and hours and the right to strike. On 2 May 1978 the Council adopted a watered- down version of the Commission’s proposal. Finally, in 1978, the Commission sent to the Council a proposal for amending Staff Regulations to establish an Administrative Tribunal of the European Communities which would settle disputes arising between the institutions and their staff.

While changing personnel procedures, the Commission also officially admitted to the principle of recognition of Staff Organisations/ Trade Unions (SO/TU) on 24 May 1970 (General Report of Activity, 1970, p. 394). In practice, it led the Commission to agree in September and October 1970 to setting-up a specific dialogue with SO/TU regarding wages. Norms and culture The implementation of the Merger Treaty signalled the start of a new chapter in the Commission’s institutional life. With Walter Hallstein’s departure, the ‘relatively united, committed partisan organisation’ (Coombes, 1970, p. 259; see also p. 255) came under pressure from Member States and the Council. Facing a situation of weak leadership, the Commission developed into a more representative organisation open to outside interests. This engendered a shift towards a clearly bureaucratic culture, which was easier to maintain in the face of staff diversity, rather than promoting a common understanding of a project. European integration had entered a new era in the late 1960s with the resignation of high profile Walter Hallstein as the Merger Treaty

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was coming into force and shortening the mandate of the Commission President. After a decade of both successes, such as the creation of the customs union and the Common Agricultural Policy, and tensions, like the French vetoes of British adhesion and the ‘Empty Chair’ crisis, the European Commission was left in a weak position within the institutional triangle. The EEC was itself facing numerous obstacles at the end of the 1960s. The International Monetary System felt the first disturbances, the financial arrangements for the Common Agricultural Policy had to be finalised and the European Assembly was pushing for more budgetary powers (Franck, 1987, p. 130). The European Commission had no sooner adjusted to the overhaul constituted by the merger of the three Communities that it had to prepare for its first enlargement. As a consequence of the Luxembourg compromise, it was clear that the enlargement would make decision-making even more difficult and therefore curtail the Commission’s proactivity. It had to take into account, more than ever before, national interests. Because of the Luxembourg compromise, Member States which were dissatisfied with a Commission’s proposal could delay a decision indefinitely (Nugent, 2003, p. 171). This forced the European administration into more caution and mediation with different parties and more particularly the COREPER. Representativeness of outside interests became the well- embedded norm in the Commission. After Jean Rey’s rather timid three-year presidency from 1967 to 1970, a new Commission headed by the Italian Franco Maria Malfatti took office in July 1970. The Commission experienced a rather unstable time between 1970 and 1973 due to a lack of leadership. Malfatti was criticised for his ‘ineffectual style’ and his failure ‘to bolster or enhance the capacity of the Commission to enact its various forms of authority’ (Drake, 2000, pp. 67–68). The Commission’s authority within the Community system suffered further when Malfatti left in the middle of the second year of his mandate in order to run in his domestic general elections. Sicco Mansholt was then appointed to finish Franco Maria Malfatti’s term. Even though Mansholt had the charisma and the vision to lead actively the European Commission, he was only an interim choice and stayed for nine months at the head of the institution. The shortening of the Commission President’s mandate to two years, coupled with the rather low-profile characters who were appointed to the post, allowed the Member States to re-invest the European scene. Diagram 2.2 summarises the administrative and leadership history of the Commission in the first years following Walter Hallstein’s resignation.

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Signature of the Merger Treaty 1965 - Empty Chair Crisis - Discussions over Hallstein’s successor

Implementation of the Merger Treaty

- Table ronde des Huit - Groupe Paritaire des Dix

1967

1970

- Resignation of Hallstein - Appointment of Rey

Appointment of Malfatti

Rapport Poullet 1972 - Resignation of Malfatti. - Appointment of Mansholt (interim)

1973 Appointment of Ortoli

Diagram 2.2 Key dates in the Commission’s administrative and leadership history, 1965–1973

Dick Taverne in 1979 (House of Lords, 1980, p. 1) summarised the evolution of the Commission’s influence by outlining: the attitude towards the Commission, a different frame of reference within which the Commission could work, a different attitude within the Member States, a greater feeling of national self-confidence, perhaps, since the original founding of the Community and therefore a stronger influence by the Council which represents the national interests. With Gaston Thorn’s appointment at the head of the Commission in 1981, the administration became even more subservient to the views of Member States, setting its ‘position within the European policy process’ at an ‘all-time low’ (Cini, 1996, p. 66; see Drake, 2000, pp. 70–71; Scotto, 1994b). Coombes (1970, p. 261) makes a direct link between the representativeness of leadership and bureaucratisation, stating that: First as the leadership becomes more representative of outside interests, hierarchy must be stressed more and more [ ... ] In any event, the common culture is constantly being threatened by recruitment of nationalistic and technically-minded officials and as a reaction to this rigidities develop in an attempt to ‘cure’ the organisation of its flexibility and openness. The concept that bureaucracy is on the one hand inevitable in the lifecycle of an organisation and on the other used as a defence mechanism

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by the organisation was visible in the Table Ronde des Huit and the Groupe Paritaire des Dix published in 1970. They linked the structural and functional problems of the organisation with the malaise among staff, specifically stressing the need for flexibility throughout the organisation, in the DGs’ establishment plans and within work relationships. The red thread throughout the two reports, which was also present in Poullet’s report, was the call for increased flexibility. The 1970s reports clearly signalled the wish to bring back the type of organisation that the early Commission and the High Authority had been, where hierarchies were not too strict and rigid formulas and precedents did not rule. The report of the Groupe Paritaire (BAC 164/89/310, p. 23) therefore concluded: the implementation of the proposed reforms, especially in the perspective of a relaxing of the organigramme, an improvement of the material working conditions, a fairer recruitment and career policy, the setting up of positive or negative sanctions of work and merit, a robust and continuous training, the setting up of an action programme and, overall, the elimination of stumbling blocks, will certainly clear up the current malaise. Aware of this malaise, Roy Jenkins was the first Commission President to take stock of the changing nature of the Commission since Walter Hallstein. His agenda was not solely political; he also decided to tackle the Commission’s managerial shortfalls. He understood that the Commission had moved on and had to address its new organisational, financial and human dimensions within a changed political environment for it to regain its leading role. The Spierenburg report was a clear signal sent by the Commission to the other European institutions that it had taken stock of the necessity to reform itself rather than try to go back to its foundations; this led to the acceptance of bureaucracy rather than the ideal of a European adventure as the shared organisational culture.

Conclusion The administration de mission of the ECSC was extremely short-lived and the Commission never fell into this category. This contradicts the traditional analysis made in the literature on the Commission which often calls the institution an administration de mission (Morgan, 1992; Berlin, 1987; Caremier, 1997; Spence, 2006). This conceptual categorisation of the European institution has entertained the myth of an

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atypical non-bureaucratic administration which defies organisational logic. Yet, as the High Authority’s tasks and size increased, the necessity for reliable bureaucratic structures and procedures became urgent. It does not mean that the organisation became rigid. Jean Monnet, as well as Walter Hallstein, used processes to keep the structure and everyday work as flexible as possible. The 20 years that separated Walter Hallstein’s departure from Jacques Delors’s arrival at the head of the Commission witnessed some significant institutional change. The year 1965 was a critical juncture when it came to organisational and structural change, with the obvious challenge of merging three different executives. However, the organisational impact of the merger has to be combined with political circumstances such as the Empty Chair Crisis, as well as weak leadership from 1967, in order to understand the more transformative change that took place regarding processes, norms and culture. The merger triggered a restructuring which lapsed then into the less formal dimensions of the institution. During the 1970s, therefore, review processes were launched; even though they were not significantly implemented, they demonstrate an evolution in the assessment of the Commission’s status as an administration, with the Spierenburg report finally focusing on tackling policy management and accepting that the Commission had evolved into a hierarchical bureaucracy.

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3 1985–1998: The Foundations for the Kinnock Reforms

The year 1985 marked a turning point in European activism and, more specifically, in the Commission’s political life. The decade during which Jacques Delors was President of the Commission witnessed the most fruitful relaunch of European integration and policy conception. The institution’s problems were more associated by officials and politicians with a lack of vision and leadership than with poor organisational structures and management (Hermanin, 2006, p. 14). The focus in 1985, therefore, was on ways to recapture the Commission’s power and influence in the policy process. Until 1992, Jacques Delors managed to reinvigorate European integration thanks to a ‘Big Idea’ (Grant, 1994, p. 66), namely the completion of the Internal Market, as well as a new driving force composed of three partners, France, Germany and the European Commission. However, the Maastricht treaty and its difficult ratification started the cyclical decline of the European institution’s influence and effectiveness. When Jacques Delors left the presidency of the European Commission, Heads of State and Government met in order to unanimously agree on a replacement. Jean-Luc Dehaene appeared as the favourite and was supported by 11 countries. The UK, however, used its veto because of Jean-Luc Dehaene’s outspoken federalist views. Since unanimity was required, a consensus formed over the name of Jacques Santer, the Luxembourg Prime Minister, who was regarded by the UK as ‘the least bad of candidates’ (Scotto, 1994a). When his nomination went before the EP to be approved, Jacques Santer’s position was further weakened. He received 260 votes from the MEPs with 238 votes against and 23 abstentions. Despite the lack of attention paid by the Commission to administrative and organisational issues during Jacques Delors’s presidency, the academic literature – and specifically Les Metcalfe – started pointing 35

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towards the Commission’s managerial deficiencies and discussing the existence of a ‘managerial deficit’ in the 1990s (1992, 2000). This literature grew following the administrative reforms started under Jacques Santer’s presidency. Stevens and Stevens (2001), Cram (1999, 2001), Levy (2002, 2003, 2004, 2006), Edwards and Spence (2006), Peterson (1999), Laffan (1997) all discussed the European bureaucracy’s lack of managerial capacity and skills. This chapter constitutes the final evolutionary panel in the Commission’s administrative history, setting the historical path of analysis for Neil Kinnock’s reform. Its aim is twofold: ●

●

In continuation from Chapter 2, it highlights how Jacques Delors’s strong leadership gave more political influence to the Commission but further stifled the organisation as a whole and enhanced the need for in- depth administrative reforms. Through an analysis of institutional change in the Commission under Jacques Santer’s Presidency, this chapter brings to light the introduction to NPM’s ideas in the reform programmes implemented by Commissioners Erkki Liikanen and Anita Gradin. It therefore insists on the continuation in the ideas for reform between Jacques Santer’s team and Neil Kinnock’s.

1985–1994: detrimental political leadership In the context of ongoing enlargements, the first section will demonstrate the strain that an unplanned organisational development of the Commission’s services, under increased political pressures from Member States and Jacques Delors’s leadership, put on the institution. The second section will highlight how Jacques Delors focused on processes, and specifically working processes, in order to circumvent the ‘lourdeur’ of the organisation. A third section will discuss the cultural and normative consequences of such makeshift organisational development. Formal structures and organisation After the Eurosclerosis of the 1970s, the 1986 Single European Act set everything in place to relaunch a durable European integration. The Commission received new areas of responsibility, which engendered an increased workload and a mismatched allocation of staff. As a result, Jacques Delors’s strong leadership, which led the Commission to regain a prominent position on the European scene, meant deterioration in the coherence of the institution’s organisational structures. The years

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1985 to 1994 saw the organisational Commission being overwhelmed by the political Commission. The number and content of portfolios had evolved inconsistently, depending on personal and political considerations which emerged from national bargaining with regard to the appointment of Commissioners (Berlin, 1987, p. 42). Some portfolios carried more prestige and more weight in the decision-making process than others and were therefore more attractive to larger Member States. The 1979 Spierenburg report had already highlighted this pitfall,1 which had not been tackled by the time Jacques Delors arrived in 1985, as Table 3.1. shows. The situation had grown out of any logical proportion in order to accommodate smaller and larger countries, old and new members. When Jacques Delors arrived at the head of the Commission in 1985, any managerial problem which had been outlined by the Spierenburg report had already worsened (Stevens and Stevens, 2001). Jacques Delors’s style of management was strongly based on cabinets, which became ‘increasingly instrumental in building policy majorities and package deals across Community institutions and with Member States’ (Donnelly and Ritchie, 1994, p. 47). Cabinets under Jacques Delors grew in influence and ‘became a particularly burning [management issue]’ Table 3.1 Enlargements and portfolios – the organisational structure of the Commission President of the Commission Hallstein Hallstein Rey Malfatti Mansholt

Dates of office

Number of Member States

1958–1961 1961–1967 1967–1970 1970–1972 1972–1973

6 6 6 6 6

Number of portfolios 9 9 14 (post-merger) 9 9

1973: enlargement to the United Kingdom, Ireland and Denmark Ortoli Jenkins

1973–1977 1977–1981

9 9

13 13

10 10

14 14

12

17

1981: enlargement to Greece Thorn Delors

1981–1985 1985–1986

1986: enlargement to Spain and Portugal Delors

1986–1990

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(Peterson, 1999, p. 56). Yet there were some disadvantages to the system. The interaction between Jacques Delors’s cabinet and the various DGs was recurrent and often turned into interference on the cabinet’s part into Directors- General’s business. Directors- General were often unaware that officials under their responsibility had been asked to work on a specific project by Jacques Delors or his cabinet. This political intrusion of the cabinet into the DG’s business meant that each Director- General felt less and less responsible for the achievements of their DG. Pascal Lamy admitted that the use of short- cuts to get things done could be counterproductive. In an interview with Grant in 1993 (quoted in Grant, 1994, p. 114), he claimed: Probably we should have changed the structure of the institution but we thought it wasn’t a priority. The problem is that officials spend too much time managing tasks and not enough time on the tasks themselves. The circuits are too complicated, there’s too much paper. The bureaucratic noise of the house is too loud compared with what it produces. Planned structural change did not happen in the Commission under Jacques Delors. Hermanin (2006, p. 19) pointed out that ‘the main innovative initiatives regarding internal organisation during the 1980s were restricted to human resources policy and were translated into minor reforms carried out by Henning Christophersen, then Commissioner for administration and personnel, and by the Director- General of DG Administration and Personnel, Richard Hay (Hay, 1989, pp. 41–45)’. In 1989, the Commission adopted a new strategy towards staffing. Instead of looking for extra staff from the Council, it decided to explore internally how it could redeploy its staff and their posts so that priority areas could receive attention immediately. The European bureaucracy therefore started a wave of reform called the ‘Management, redeployment and information programme’, which stressed the importance of decentralising key powers to operational departments. It organised the decentralisation of career management and gave greater management powers to Directors- General, who became responsible not only for staff mobility up to middle manager level but also for work arrangements among his or her staff, thanks to the devolution of the appointing authority’s powers (23rd General Report of the EC, 1989, p. 44). This programme was also set up to compensate for the lack of staff in comparison with the workload to be handled. It aimed to redeploy staff

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towards priority tasks and achieved the transfer of 7.5% of total staff to priority areas (24th General Report of the EC, 1990, p. 374). Finally, the Commission launched a screening exercise in order to define optimum allocation of human resources and identify problematic areas like mini-budgets, which had been used to hire temporary staff on operational budgets rather than administrative ones. A followup programme adopted in May 1991 ‘envisaged, internally, an improvement in administration, departmental organisation and the use of human resources through redeployment and reorganisation’ (25th General Report of the EC, 1991, p. 375). The Commission also adopted guidelines to streamline personnel and administration policy. They included the reorganisation of DG Personnel and Administration ‘with the aim of redeploying its resources towards programming, coordination, guidance and logistical support for the management of the institution’s human and material resources which will be handled on a more decentralised basis by the other Directorates- General’ (25th General Report of the EC, 1991, p. 376). The Commission’s main concern in 1991 regarding its personnel and administration policy lay in administrative decentralisation and the empowerment of DGs in personnel matters, which has remained one of the deepest trends in reforming the Commission. Processes and procedures Processes Jacques Delors focused on getting the Internal Market completed by 1992. He turned the Commission into a highly pro-active political actor despite its inefficient organisational state. In order to achieve his goal, he put in place staffing processes which helped him select appropriate officials who would form reliable networks. It was also under Jacques Delors that the Commission developed dubious practices such as the Bureaux d’Assistance Technique and the mini-budgets in order to cope with resource shortages. Even though tensions developed as Jacques Delors set up his system of leadership, he was well aware of the exceptional human resources he had at his disposal and put in place a promotion/appointment process which helped him constitute a strong network. Jacques Delors had the charisma to re- energise the European Commission, which had not had a visionary leader in a decade. In practice, he made sure his enthusiasm and ideas would be heard within the Commission by taking a keen interest in recruitment. He and his cabinet therefore monitored staffing and promotion so that people loyal to Jacques Delors’s project would be

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appointed to key positions (Ross, 1995). Hooghe (2001, p. 30) indicates that the officials recruited for these influential posts were sometimes, and not surprisingly, referred to as the ‘Delors mafia’, which reveals the level of control Jacques Delors could exercise and the resentment felt by some officials. Jacques Delors and Pascal Lamy’s keen interest in recruiting for key positions did not extend to other areas of personnel policy and human resources management at large. The Dane Henning Christophersen, former Finance Minister and Deputy Minister in his home country, was appointed to head DG Personnel and Administration, DG Budgets and DG Financial Control. He also held the title of Vice-President of the European Commission. His portfolio was quite heavy but very coherent. Personnel and organisational matters could not be examined in isolation from the financial context. Henning Christophersen put administrative reform on the Commission’s agenda (Metcalfe, 2000; Hermanin, 2006). The fact that Denmark had engaged in incremental public service reforms in 1983 (Knox, 2002), in which Henning Christophersen had been much involved, might explain the Commissioner’s keen interest in an administrative reform programme for the Commission. The Danish reforms had required the modernisation of administrative and budgetary systems, simplification of procedures and decentralisation to local government. The Commission’s programme bore some resemblance to the Danish reforms and focused primarily on developing managerial skills among European officials, simplifying administrative procedures and decentralising some functions towards operational departments. Under Henning Christophersen’s lead, the Commission launched in 1986 its own reform process based on a programme called ‘Modernizing the European civil service’, which reframed the institution’s modernisation policy endorsed in September 1985. The main idea of this new action plan was to ‘set clear objectives for each department within the framework of the annual programme adopted by the Commission ... [and] motivate individual members of staff by providing a clearer definition of their responsibilities and by improving the dissemination of information’ (20th General Report of the European Communities, 1986, p. 44). The programme had two strands: ●

●

First, management seminars were organised for directors-general, directors, heads of divisions, assistants to directors-general and staff representatives. Second, the programme sought to raise awareness of management responsibilities below the rank of Head of Division.

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Change not only affected the head of DG Personnel and Administration, who was replaced three times in five years, but it also impacted on the Director- General of this service. Richard Hay, who had been DirectorGeneral of DG IX from 1986 to 1991, left his job to Franz de Koster. In 1994 Philippe Petit-Laurent’s report entitled ‘Reflections on the efficiency of the institution and its administration’ focused its analysis on ways to improve human resources management in order to make the Commission more efficient. It recommended in particular better assessment, programming and management of personnel needs and making training and recruitment more professional with the creation of an inter-institutional body (European Commission, 1994). Procedures The Commission under Jacques Delors saw a dramatic increase in its areas of competence and its tasks. Yet human and financial resources did not match this increase. In order to carry on performing, the Commission adopted two main procedures which circumvented the obstacle of resources: ● ●

a system of mini-budgets the Bureaux d’Assistance Techniques (TAOs) or Technical Assistance Offices (TAOs).

The mini-budgets allowed the Commission to use the operational part of the budget (part B) to recruit staff for tasks which should be carried out by the Commission’s fonctionnaires under the administrative part of the budget (part A). Since the Council repeatedly refused to grant the Commission’s staffing requests, the administration hired a significant number of experts on a contractual basis to manage expenditure programmes and perform public service duties. Not only were these staff in a vulnerable position due to the contractual nature of their employment but they were not covered by the Staff Regulations since they were not fonctionnaires. In 1990 the Court of Auditors condemned this circumventing of formal recruitment policies, which had become quite common. Stevens and Stevens (2001, p. 22) refer to a 1992 report by MEP James Elles2 that ‘in some DGs, the number of outside staff was greater than the number of statutory staff’. The abuse of formal procedures was even more patent with the Technical Assistance Offices (TAOs). The Commission decided to contract out to these TAOs technical and limited tasks which were not cost- effective for it to do. However, the institution lost control

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of this procedure to which it resorted in public service activities such as assessing tenders, contract management. Spence (2006) even comments that TAOs led to the emergence of quasi-private personnel administrations. The TAOs were at heart of the accusations of fraud and mismanagement made against the Commission in 1999, particularly regarding the management of structural funds. In 1996, just as Jacques Delors had left the Commission, the InspectorateGeneral of the Services identified 51 TAOs which employed 600 people across 14 DGs (Nugent, 2001). Reflecting on the procedures used by the Delors services, Stevens and Stevens (2001, p. 470) point out that: If the mini-budgets did much to undermine the integrity of the Commission’s formal recruitment policies, the TAOs must bear a similar responsibility for undermining the integrity of the Commission’s financial management. It does not come as a surprise, therefore, that the Delors years did not witness the introduction of significant new formal administrative procedures except for a few amendments to Staff Regulations.3 Amendments to Staff Regulations were still constantly on the Commission’s agenda (see Rapports d’activité de la Communauté européenne, 1985–1995) but they represented very technical and piecemeal changes when the Commission would have preferred a staff policy overhaul. Norms and culture Between 1985 and 1994 a culture of ‘adhocness’ developed in the Commission, particularly under Jacques Delors’s influence who chose not to reform the organisation and preferred to set up informal shortcuts in policy conception and decision making in order to achieve his goals. This culture proved to be damaging for two reasons. First, it demoralised the top officials who did not belong to Jacques Delors’s ‘réseau’ and who were side-lined despite their competence. Second, it meant that formal procedures were circumvented and that dubious practices arose. After his appointment by the Heads of State and Government in September 1984, Jacques Delors spent time reflecting on ways of breathing new life into the construction of Europe. He realised that over the years the Commission had had many good ideas but had failed in pushing them onto the agenda and seeing them through. He was aware that

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the Commission was no longer a flexible and rather light bureaucratic instrument and that he needed to consider the new bureaucratic configuration if he wanted to achieve his target. It is generally agreed (Stevens and Stevens, 2001; Nugent, 2001; Cram, 1999) that Jacques Delors was the first European Commission President to demonstrate real leadership qualities since Walter Hallstein. He arrived at the head of the European executive with a clear project and the willingness to politicise his function. Drake argues that (2000, p. 51) ‘[t]his acted as a resource and burden for himself, a precedent for his successors and a warning to member governments about the potential of the Commission to disrupt the Community system when led by an individual as determined and dedicated as Jacques Delors’. Faced with the Commission’s rigid and hierarchical structure, a type of structure he was familiar with after spending years in the French politico-administrative system, Delors decided to rely on his cabinet to collect relevant information from DGs, exercise influence and push for action when the European administration proved to be too slow. Delors’s style often led to by-passing traditional mechanisms within the Commission. Well aware of the secrecy and power struggle which goes on within administrations, Jacques Delors focused on mastering every dossier on the Commission’s agenda so that he would always be in control of the administration. His cabinet particularly helped him in this regard. Grant (1994, p. 91), relaying feelings expressed by officials interviewed by McDonald (1997, pp. 67–68), believes that: [h]is methods were often unorthodox, sometimes dubious and occasionally improper. By the end of his reign, Delors’ personal system of command and control had begun to damage the Commission’s internal organisation, sap the enthusiasm of its officials and contribute to the tarnishing of its image. This way of doing things can be compared to Jean Monnet’s in the early years of the High Authority. However, the European executive was not a small structure anymore and the ‘ad hocness’ of working methods based on a ‘réseau de relations’ bred resentment with many senior officials who felt under-valued and even excluded for reasons unrelated to their competence. However, this culture of ‘ad hocness’ did not affect middle management the same way. Mobilisation of the Commission through demands from Jacques Delors, his cabinet and the College for more and better quality outputs could only be sustainable for a limited

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period of time if no rewards were attached to good results. Ross argues (1995, p. 158) that: [w]ithout a mobilised Commission, the ‘product’ would not be good enough to achieve success. But without success there could be no mobilised Commission. This was one reason the first period of the Delors presidency had been very tense ‘in house’. It was not until the passage of the Delors package in 1987–1988 that there was clear internal support for the Delors strategy and method to ensure peak Commission administrative performance. Like Jean Monnet, Jacques Delors demanded a lot of hard work and commitment from his employees in order to meet the deadline of 1992 for the Internal Market. Ross (1995, p. 34) explains that, given Delors’s demands and the resulting pressures for the civil servants, who still had to perform their day-to-day jobs and prepare for the enlargement to Spain and Portugal on 1st January 1986, the demoralised and divided bureaucracy could have broken down. Yet the opposite seemed to have happened. Jacques Delors’s leadership style proved quite authoritative and anti-lines of command, relying constantly on talented, loyal officials and his cabinet headed by the ‘remorseless’ (Nugent, 2001, p. 77) Pascal Lamy. Ross highlights the considerable advantage this Delorist system had in the context of a rigid and bureaucratic institution. He concludes (1995, p. 158) that ‘[b] oth did a good job at the kinds of cross-divisional horizontal communication at which the Commission would otherwise have not been particularly gifted’. Horizontal communication across the institution, whose weakness had been repeatedly highlighted in previous Commission reports, was improved by the constant circulation of information between Jacques Delors’s cabinet and selected officials within DGs. However, it also generated intense ‘inter-Commission rivalries’ (Peterson, 1999, p. 57). Jacques Delors and his cabinet had developed such an alternative system of short cuts, which allowed them to get things done faster, that a lot of officials felt left out. One official bluntly explained that ‘[b]y relying excessively on informal channels, the formal channels have become atrophied and the morale of senior officials has suffered’ (Grant, 1994, p. 112).

1995–1998: limited but significant organisational changes Formal structures and organisation Jacques Santer arrived in the job with one motto, which revealed not just his intentions but also his room for manoeuvre allocated by the

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Member States: ‘Less action, but better action’ (Santer, 1995). In his speech to the European Parliament, which was part of the newly laid proceedings allowing the MEPs to take a vote of approval of the new College, Jacques Santer strongly insisted on the need to improve the Commission’s budgetary and administrative culture. He clearly stated he was aware of the constant critical reporting of the ECA and the EP on these matters and that improvement could only stem from a constructive relationship with the scrutinising institutions. Jacques Santer’s programme of work explicitly included administrative reform measures. A few reasons explain this focus on administrative issues: ●

●

●

●

●

First, the political opportunity structure, which had been so favourable to Jacques Delors in 1985, had radically changed by 1995. Further European integration was not a priority for Member States any more since it had created such chaos with the 1992 ratification of the Maastricht treaty. Second, the circumstances of Jacques Santer’s nomination and the EP’s tight vote of approval on the matter were not conducive to any outward demonstration of leadership by the new President, who was, however, known for his federalist views just like Jacques Delors. But, unlike Jacques Delors, Jacques Santer was portrayed from the start as a weak and bland President with no political charisma. Peterson (1999, p. 53) summarises it by saying that ‘he was nobody’s first choice’. Third, the EU had changed and enlarged to another three countries, which had brought the number of Commissioners from 17 under Jacques Delors to 20 under Jacques Santer. Santer’s weak authority made it even more difficult to keep the cohesiveness of a larger College. Fourth, countries which were net contributors to the EU budget like France or Germany wanted to reduce their payment and considered that administrative reform of the Commission would be conducive to better management of resources. Finally, Jacques Delors’s terms had led to a significant increase in the Commission’s workload but its operation and working practices had not been adjusted to the new situation. Nugent points out (2001, p. 49) that: DGs had been created (and occasionally disbanded) in a somewhat ad hoc way, whilst staff were caught up in an outmoded and rigid personnel policy framework that was not capable of placing

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people where they were most needed to respond to the Commission’s expanding and changing responsibilities. In this context, administrative reform of the Commission seemed to be a safe option for all parties involved: the Member States would be satisfied because it would involve an investigation of wastage within the Commission and would lead to economy and value for money; and the Commission President would avoid the Member States’ ire by directing his work into a reform that was not overtly political, which could spawn improved effectiveness for the European bureaucracy. These reforms were promoted by Sweden and Finland, two countries that had joined the EU in 1995, both with strong traditions of administrative accountability and transparency. The reform process was divided into three projects: Sound and Efficient Management (SEM 2000), Modernisation of Administration and Personnel Policy (MAP 2000), and Designing the Commission of Tomorrow (DECODE). They aimed at decentralising certain aspects of internal decision-making (Cram, 1999, p. 53), which involved setting-up resource units. This was the most significant structural aspect of SEM 2000 and was based on the same financial principle that Neil Kinnock put at the core of his programme: the separation between policy conception/management on the one hand and financial/resources management on the other (SEC (95) 1785, recommendation n. 8): By setting up a clear separation between the two paths (the conception-policy management path and the budgetary and financial management path) and by creating better balance between the two, the aim is that the requirements of implementing operational actions do not overtake the obligations to respect financial regulation and the principle of sound financial management. The idea was to create a counter-weight in DGs directly accountable to the Director- General, which would not come under pressure on operational grounds. This was implemented on a Commission-wide basis (The Evaluation Partnership, 1999, p. 29). However, the Evaluation Partnership, which was hired by the Commission from January to June 1999 to evaluate and report on the effectiveness of the implementation of SEM 2000, pointed out some difficulties. Even though all financial/ resource units in the administration had complied with their reporting duties, half of the DGs still had no separation between the finance/

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resource function and the operational function. They further comment that: Where DGs have followed the recommendations, there have been some positive effects in improving decision-making, communications and in the status of staff. On the negative side, a communication gap has opened up between operations and resource units, some report an extra layer of bureaucracy and operational staff are not always being drawn into the decision making process. Linked with this reorganising of DGs was the staffing issue. The increased awareness of financial matters, which Erkki Liikanen and Anita Gradin wanted, implied filling vacancies in financial positions as well as training new staff appropriately. Therefore recommendation 10, made for the SEM 2000 programme, included three aspects (SEC (95) 1785): ●

●

●

Protecting exposed officials/rotating. The Inspectorate- General of the Services was asked to give a list of criteria that would define sensitive posts. Improving the prestige of budgetary/financial functions. Making sure that structurally, the opinions given by the budgetary/financial section within a DG have more weight than before in the decisionmaking process. Making officials feel responsible.

The Evaluation Partnership highlighted that the Commission was faced with the challenge of reducing the level of dependence on outside staff. Despite a substantial decrease in non-statutory staff between 1995 and 1997, the trend changed in 1997 and 1998. Moreover, there ‘continues to be a chronic lack of suitably qualified staff in financial management. Transfer attempts have usually failed and a shortage on reserve lists persists’ (The Evaluation Partnership, 1999, p. 35). Financial training remained formal, based on rules and regulations rather than hands- on management skills. Looking at the SEM 2000 measures, many recall the Kinnock financial reform, which led interviewed officials to highlight the continuity between the two reforms. As we will see in future chapters, Neil Kinnock learned the lessons from SEM 2000 and put a strong emphasis on financial training, which has become a reality for all officials in sensitive posts and even beyond.

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Processes and procedures Processes From 1995 to 1998, Commissioners Erkki Liikanen and Anita Gradin started a significant reform process that formed the basis for the Kinnock reforms from 1999. On 25 January 1995, at the Santer Commission’s first session, it was agreed that Erkki Liikanen, the Finnish budget, personnel and administration Commissioner, together with Anita Gradin, the Swedish Commissioner in charge of financial controls and the combating of fraud, would submit ‘a report on the ways to reinforce financial management within services, as well as the potential consequent suggestions’ (PV(95) 1232, 25/01/95). On 21 March 1995, Erkki Liikanen and Anita Gradin sent a note to the relevant Directors- General informing them of their three-phased reform process. This programme of work was adopted by the Commission on 29 March 1995 and was called SEM 2000: 1. The first phase aimed to ‘consolidate the system within the existing framework of business’ (SEC(95)477, p. 1) as well as the introduction of the SINCOM 2 accounting system. This would happen through rationalising internal procedures and modifying internal rules as well as organising information meetings for staff working in financial services. Heavy emphasis was laid on the importance of strict financial control. 2. A second phase would deal with internal organisational issues, a substantial reform of the Commission’s financial management culture as well as the necessary amendments to Staff and Financial Regulations. 3. A third and final phase would emphasise partnership with Member States and their role in the management of major programmes accounting for around 80% of Community expenditure. Reporting on each phase was a built-in requirement of SEM 2000. The first report on phase one was adopted by the Commission on 21 June 1995 (PV 1253, 21/06/95, p. 29).4 It gave a more precise diagnosis of the Commission’s financial management and made proposals within the existing procedural framework. This work came under five headings (SEC (95)1013/5): ● ●

Structure and organisation of budgetary and financial units Training, making staff responsible and modernising management tools

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Rationalising and simplifying procedures Generalisation of the evaluation culture Improving the follow-up of observations and recommendations made by the ECA, the Council and the EP.

Phase two started as soon as phase one was over in July 1995. A detailed document was published by Erkki Liikanen and Anita Gradin in October 1995 following discussions of the 11 proposals made in July (SEC (95) 1301/4), which stated the measures to be taken (SEC (95) 1785). They were adopted by the Commission in November 1995 (SEC (95) 1814/5). They covered a wide range of problematic financial issues for the Commission, like systematic evaluation of community programmes, matching of operational with administrative resources, rationalisation of ex ante controls, deepening and widening of the audit function and separation of conception and resource functions. A twelfth miscellaneous recommendation was also added: DirectorsGeneral should examine internal procedures in order to cut out red tape and clarify personal responsibilities; significant organisational changes are suggested regarding the Commission Consultative des Achats et des Marchés (CCAM). Liikanen announced phase three at the Budget Council in November 1995. A later document detailed the means by which to reinforce the partnership between Member States and the EU when it came to management by the Member States of European monies5 (SEC (96) 388). One of the key measures was the appointment of a Group of Personal Representatives of EU Finance Ministers who would improve cooperation between the Commission and the Member States in management and control of the European Union spending. They ended up including Agenda 2000 issues in the remit of their work, which generated synergies with regard to simplification, rationalisation and modernisation (The Evaluation Partnership, 1999, p. 74). SEM 2000 was not the only reform process launched by Erkki Liikanen. On 30 April 1997, a personnel policy programme called Modernisation of Administration and Personnel (MAP) (SEC (97) 1735), was unveiled. It aimed at devolving power over human resources from DG Personnel and Administration to other DGs, managerial delegation, empowerment and responsibility as well as simplification and rationalisation of administrative procedures. In April 1997, the Commission approved a programme of 25 specific measures designed to simplify inhouse procedures and achieve important delegation of personnel matters to the Directors- General, with regard to resources, staff mobility,

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the recruitment of auxiliary staff, publication of vacant posts and staff training. As a follow- on to SEM 2000, seven measures were included to raise awareness of operating costs like translations and interpretation or telecommunications costs. Given the focus on simplification and the cutback on the red tape, a greater use of information technology, in particular of the Commission’s intranet and internet servers, was also promoted. In September 1997 Erkki Liikanen published a report on the measures to be implemented in phase one (SEC (97)1735). The introduction to this document put a strong emphasis on the fact that consultations with staff representatives had led to the inclusion of the modernisation of social dialogue in the list of measures to be implemented. The concertation6 process eventually broke down. This was indicative of the widening gap and increasing defiance between officials and Commissioners. Georgakakis’s work on Commission trade unions (2000; 2002b) very finely analyses the development of a ‘climat’ in the Commission, which climaxed with the College’s resignation in 1999. Procedures As the reform process had reached its final stage, the Commission decided to have a complete review of the procedures put in place. An evaluation of the implementation and results of the SEM 2000 initiative and its contribution to the overall management reform of the Commission was commissioned to a firm of external consultants at the end of 1998. The striking element about SEM 2000 is certainly the number and wide range of measures that do not seem to be organised into a coherent and interrelated framework. It can also be noted that constant monitoring and reporting took place (see SEC (96)1015; SEC (96)659 final; SEC (97)1062/3; SEC (1998)760/4). Yet there was a clear ‘lack of detailed progress documentation at operational level’ (The Evaluation Partnership, 1999, p. 24). The consultants concluded in a report published in July 1999 that while most of the recommendations of SEM 2000 had been put into effect, some design faults of the administrative reform programme remained. They pointed out a lack of coherence and consistency in the expression of its objectives, a failure to identify problems exhaustively, a focus on inputs rather than outputs, and huge complexity in the presentation of SEM 2000. The consultants (The Evaluation Partnership, 1999, p. 23; see also Levy, 2002, pp. 4–6) highlight that: [w]hen all three stages are added together, there are about 54 individual recommendations, covering many detailed facets of sound and

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efficient management in the Commission. Each one relates to a very specific action or groups of actions and the inter-relationships do not follow any particular overall logic. Reviewing had been either general or extremely specific, as the Commission’s Communication 1996 ‘Concrete steps towards best practice across the Commission’ demonstrated. It focused entirely on evaluation and monitoring from the perspective of securing ‘value for money from [the EU’s taxpayers’] contributions together with developments in Member States and elsewhere towards resultsoriented public sector management’ (SEC (96)659 final). Moreover the evaluation report outlined the flaws in the implementation and follow-up to SEM 2000 due to inconsistency, lack of performance measures, lack of budget for implementation and ‘thin’ response from individual DGs about the progress of the SEM 2000 implementation. The evaluation report also revealed a lack of effectiveness of some measures. The consultants praised the Commission for rationalising some of the internal financial management procedures.7 Evaluation and targeted fraud-proofing measures appeared to be the most effective. The Commission seemed to be more responsive to the ECA’s observations. There was also a very visible improvement through the Group of Personal Representatives of EU Finance Ministers, who made an important contribution to better financial management by preparing the Regulation on minimum standards in the Member States of financial control in the Structural Funds. In this domain, budget forecasting and fraud prevention were improved. However, planning tools like Integrated Resource Management (IRM) were only introduced late and led to some duplication in certain units. Member States/ECA discussions were not improved. But most importantly, financial and resource management and control as well as budget planning and prioritising, two central aspects of SEM 2000, were still in their infancy in 1998. They had not proved their effectiveness. As a result, Levy (2002, p. 5) comments that ‘[a]s SEM 2000 was aimed primarily at improving financial management, it cannot reflect well that it failed to deliver in this area’. Yet it can be contended on the contrary that the Santer Commission succeeded in a crucial area that had been a black spot for the institution for the last 30 years. It established a new financial awareness and value for money ethos through more, if not perfect, effectiveness in financial management (Laffan, 1997; Peterson 1997).

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Norms and culture Jacques Santer’s leadership style was radically different from Jacques Delors’s. His attempt to reform the institution is proof of his formal approach. However, SEM 2000 and, more specifically, MAP 2000 revealed a norm that developed across the Commission between 1995 and 1998: the divide between rank and file civil servants and top officials. It infused the reform process and served as a lesson for the Kinnock reforms and ways of negotiating them. From a personnel standpoint, SEM 2000 reforms did not achieve a level of ownership by staff which would have guaranteed its success. The creation of resource units under SEM 2000 was ‘perceived by some as a second layer of bureaucracy and systems at operational level and the opposite of what [the reform] was aiming for’ (TEP, 1999, p. 3) which demotivated some financial officials. If staff on the whole were not opposed to SEM reforms, their implementation in a top- down fashion did not make the European rank and file civil servants feel included in the reform process, which is crucial for a cultural change to happen. In addition, staff were not convinced by the commitment of the top officials to better resource management and more openness and transparency of decision-making processes (Cram, 1999, p. 55). MAP 2000 suffered from the same flaw as SEM 2000. There was a perception by staff that they were not involved in the reform process through sufficient consultation and saw it as a top- down rather than a bottom-up approach (Cram, 1999). Therefore many DGs opposed the adoption of the first stage measures of MAP 2000. As a compromise, these were made voluntary, as were the second stage measures agreed at the end of 1998. Phase two intended to ensure that increased responsibility for the management of administrative resources was fully transferred to individual DGs. Stevens and Stevens (2001, p. 191) argue that acceptance of Erkki Liikanen’s management reform was growing. By the end of 1998 the number of DGs which had volunteered to adopt stage one measures had gone up from six to 27. A growing number of managers were, therefore, willing to commit themselves to the management reform. Yet there was still a significant number of rank and file officials, and also Directors- General, who did not agree with the way the Commission was developing. Georgakakis identifies three critical cleavages which were active within the Commission and formed the root of the 1999 scandal. The first divide was between the trade unions that represented officials and the College. This was a new situation for the Commission and

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was highlighted by the Union Syndicale, one of the Commission’s trade unions, in a pamphlet. It spoke of ‘a dichotomy “base” vs “boss” which was rather surprising in a structure which is mainly composed of graded agents’ (tract de l’US, 2/04/98). The second divide developed between trade unions that were mildly supportive of Erkki Liikanen’s reform and those who were staunchly against it. The third divide was cultural and anchored in the opposition between North and South. There was a feeling in the Commission that since Jacques Santer had arrived, a new balance towards Scandinavian and managerial solutions had developed. In order to suggest a coordinated consultative effort on the College’s part, five high-level reflection groups8 composed of Directors- General were set up in October 1997; their report on the next steps for MAP 2000 was submitted in March 1998. However, once again, the handling of parallel discussions over personnel matters and the poor level of consultation with and information for staff led to a determined opposition from the unions. The Caston report, which was a confidential document detailing radical reforms in sensitive areas of personnel management, contradicted the stated commitment made by the College to get staff involved and negotiate in the open. It further fuelled suspicions of many civil servants about the real objectives of the second phase of MAP 2000 and threatened to derail the project altogether (Cram, 1999, p. 57). When the College suggested amending Staff Regulations, the atmosphere in the Commission was far from favourable to sensitive discussions between staff and Commissioners. Even if an overhaul of Staff Regulations, which had been devised in the 1960s and reflected a rigid structure, was long overdue, the handling of SEM 2000 and MAP 2000 together with the leaking of the ‘secret’ Caston report had wearied Commission staff. Moreover the ‘Method’, i.e. the ‘ten-yearly discussions with Member States regarding the periodic adjustments of the salaries and employment conditions of all European civil servants’ (Cram, 1999, p. 58), was to be considered in 2000. At the end of March 1998, a group of external consultants advised the Commission to emphasise the coherence of the administrative reform programme and to bring the three strands together under the umbrella of a broad programme called ‘Tomorrow’s Commission’. On 6 April 1998, a project entitled ‘Personnel Policy in the European institutions – towards the future’ was published on the intranet of the Commission. Stevens and Stevens (2001, p. 192) describe the schedule for the document which was meant to be passed to unions on 15 April for consultation then discussed by the College on 20 May and finally

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debated with the unions on 25 June. However, as soon as it was circulated on the intranet, the trade unions expressed their opposition to any discussions among the Commissioners without them being present. This bubbling dissent climaxed into a successful strike on 30 April 1998 followed by 93% of the Commission’s staff 9 (Georgakakis, 2000, p. 62). For the first time in the social history of the European Commission, ‘Directors- General, positions which are renowned for being political and close to the College, demonstrated against it [the Caston report]’ (Georgakakis, 2002b, p. 5). Following this outburst the Williamson group, with equal representation from staff and management, was established. It managed to reopen the dialogue with staff associations and made recommendations on more regular concours, more training and greater mobility both within the Commission and the other EU institutions. But the notion of performance-related pay acting as an incentive for civil servants was firmly rejected (Stevens and Stevens, 2001, p. 193). It felt like too little, too late for Commission staff. The final aspect of the administrative reform package under Santer took the form a Commission-wide screening exercise which was decided upon in October 1997. Known as ‘Dessiner la Commission de Demain’ (DECODE), it was carried out under Carlo Trojan’s supervision, the Secretary- General between November 1997 and May 1999. It aimed to ‘provide an up-to- date analysis of all activities carried out by the Commission, as well as the resources and working methods used’ (SEC(97)1856). It presented an exact picture of the staffing, organisation and the deployment of resources within the Commission. Beyond the mere assessment of the state of the Commission in 1997, DECODE also strove to define activities for the Commission in the future, taking into account its needs and political priorities. It aimed at identifying best practices within the institution but also overlapping and wastage and the tasks which could be eliminated. The recommendations made on the basis of this analysis focused on structures, activities, resources and working methods. They were to be used in future decisions about the reorganisation of Commission. Given the problems created by the two previous programmes, SEM 2000 and MAP 2000, a real effort was made to communicate better, inform, involve and consult the Commission staff. Scepticism among staff was still quite strong and in the light of the event, the resignation of the Santer Commission made it questionable whether the results of the screening exercise would be used by the new Commission.

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DECODE was the final piece of the administrative reform package launched by Liikanen and Gradin. But the puzzle did not appear coherent. Kassim (2004a, p. 36) comments that the reform: lacked an overall strategy and was not based on systematic diagnosis. Initiatives were launched piecemeal, with no clear final ambition, proper coordination or sufficient forethought. The management of the reform was little short of disastrous. There was little attempt to prepare the ground by explaining the purposes of proposed changes to relevant constituencies. A climate of secrecy surrounding the reform enabled the staff unions to exploit anxiety among Commission personnel. The ‘malaise’ was growing in the Commission but nobody anticipated the events that took place in March 1999.

Conclusion Even though Jacques Delors is regarded as the first visionary leader since Jean Monnet and the one who brought the European Union to the level of integration it enjoys at present, his two presidencies were rather detrimental to the Commission as an institution. Nonetheless, under his leadership, the European administration changed on three institutional levels: formal structures and organisation; processes and procedures; culture and norms. On all three levels, the responses to the increase in the Commission’s areas of competence, the mismatch between human resources and tasks as well as an evolutionary change of the institution which never resolved into a paradigmatic shift, became embedded in the Commission’s institutional fabric. The institution that Jacques Santer inherited in 1995 was in need of a coherent reform programme which SEM 2000, MAP 2000 and DECODE did not deliver. Nonetheless they became significant for two reasons: they paved the way for the Kinnock reforms, particularly in the financial domain; and they were the first reforms to be broadly based on the New Public Management (NPM) philosophy. Yet the political systemic environment created conditions favourable to the events which resulted in the Commission’s resignation in March 1999 and the subsequent 2000 reform programme presented by Neil Kinnock.

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4 A Novel Strategy for Reform

This chapter develops the independent variable which is political opportunity and tests the hypothesis that the Commission’s resignation resulted in significant institutional change in the Commission. Using Kingdon’s model, it analyses the ways in which the problem, policy and political streams combined and met at a critical juncture. The year 1999 was marked by a historical political crisis as the College of Commissioners resigned and a wide-ranging administrative reform package reached the top of the Commission’s agenda. Instead of the Committee of Independent Experts’ (CIE) reports being added to the pile of recommendations and suggestions the Commission had collected over the years, they were at the start of a genuine, deep and broad managerial reform programme, which marked a definite break in the evolutionary pattern of the administrative Commission. The change did not lie so much in the content of the reform, which included several measures suggested in previous reports,1 but rather in the fact that poor managerial capacity and awareness in the Commission started to be defined as a problem which had to be resolved. Telling the story of the Commission’s resignation paints the picture of an institution under external pressure for institutional legitimacy. Yet it is only by analysing the ways in which the problem stream, policy stream and political stream combined that a clear ‘window of opportunity’ for policy change (Kingdon, 1984, p. 173) can be identified, explaining why 1999 turned out to be such a critical year in the administrative history of the Commission. As a result, the Commission chose a strategy of reform based on learning from past errors, which accommodated conflicting external and internal pressure for change. 56

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Telling the story of the Commission’s resignation In order to understand how the reform package reached the top of the Commission’s agenda, it is important to have a detailed view of the steps which led to the Commission’s resignation. The 1990s marked the end of the window of opportunity for the Commission to further political integration. This loss of influence was reinforced by a loss in legitimacy of the European Union institutional triangle, which sets the background to the 1999 events. This shift in power within the institutional triangle empowered some individual and institutional agents of change to promote plans for action that were based on miscalculations and opportunism more than on rational choices. The systemic environment: the Commission’s legitimacy deficit in the institutional triangle The lack of efficiency of the Commission which marred the last years of the Delors Commission was addressed by Jacques Santer, as detailed in the previous chapter. Improving management effectiveness, staff policy and work routines fitted perfectly with his motto of doing less but doing it better. Besides, it was a non-political issue which could only please Member States since the aim was to get value for money and stay away from further integration until the House was better organised. After launching a significant phased reform, which ran throughout Santer’s mandate, it might seem ironic that the first College of Commission to tackle issues of mismanagement be forced to resign on specifically these questions. It can, however, be pointed out that SEM 2000, MAP 2000 and DECODE might have increased awareness of managerial and financial issues within the Commission or at least given the green light to individuals to highlight dysfunctions. In practice, as Nugent points out (2001, pp. 50–52), it was difficult for the Commission to reduce its activities because four major deadlines were looming: an Intergovernmental Conference (IGC) which had been called for in article N of the Maastricht Treaty had to be held in 1996; the third and final stage of the Economic and Monetary Union was to start in 1997 and the Euro to be launched in January 1999; the Commission had to process applications from ten Central and Eastern European countries and manage the largest enlargement of the European Union ever; finally, a pluri-annual financial perspective, whose detailed preparation lies with the Commission, had to be negotiated before the end of 1999. From a substance point of view, however, the Commission kept a low profile during the 1996 IGC and did not

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defend pro-integrationist but rather ‘consolidationist’ views (Nugent, 2001, p. 51). The Commission remained focused on managing what was already in place and dealt with internal administrative affairs rather than attempting to extend its powers. Since the mid-1990s, the weight of influence in the inter-institutional decision-making process had shifted from the European Commission to the Council of Ministers, the European Council and the European Parliament. As discussed by Héritier (2001), the 2000 White Paper on European Governance was an ‘attempt on the part of the Commission to assert and reposition itself in the system of inter-institutional decisionmaking and, indeed, to regain lost ground’ (2001, introduction). The hypothesis Héritier put forward was that the Commission’s leverage in the European system of governance thinned out over the years. Examples confirmed this view: first, comitology led to an increasing political control of the Commission by the Member States acting collectively as the Council of Ministers. Second, the new co- decision procedure established by the Amsterdam Treaty favoured bilateral relationships between the European Parliament and the Council of Ministers from the perspective of reaching ‘early agreements’ which excluded the European Commission. Third, the well-known entente between the European Commission and the European Parliament, usually against the Council of Ministers, was not as relevant as before. As reported by Héritier (2001, p. 3) after interviewing officials in the European Commission, ‘the Parliament is going through a kind of phase, in which they are so amazed at the possibility of having direct contact with the Council that they’ve forgotten their own friends in the Commission over this’. More specifically, the internal environment of the Commission had changed with the departure of Delors and the arrival of two Nordic countries, Finland and Sweden, which were extremely keen on administrative reforms, efficiency and rationalisation of the administration. In 1997, Erkki Liikanen, the Finnish budget, personnel and administration Commissioner, together with Anita Gradin, the Swedish Commissioner in charge of financial controls and the combating of fraud, launched a strategy of change of Commission working practices. The ‘Delors management’ was widely criticised by the new team in charge, as were so- called southern practices. An example of such practices mentioned by Georgakakis (2002b, p. 5) was the withdrawal of the officials’ right to tax-free alcohol and tobacco suggested by Anita Gradin.

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The internal tensions which existed between Commission staff on the one hand and Directors- General and Commissioners on the other hand became apparent to outsiders as early as the end of 1998 through leaks to the press (Georgakakis, 2002a, p. 7). The breaking of the internal/external rule by the whistleblower Paul Van Buitenen, who first drew MEP Pauline Green’s attention to issues of irregularities, mismanagement and nepotism in the Commission, might be explained by his loyalty towards the policy of moralisation of the institution and therefore set the scene for an externalisation of organisational tensions. The historical resignation: miscalculations and opportunism of actors of change The events which led to the resignation of the European Commission started with revelations by a Belgian newspaper, La Meuse, which published, in October 1998, excerpts from a May 1998 report by the DG Financial Control. This report severely criticised the absence of supervision regarding humanitarian expenditure towards Bosnia and Africa between 1993 and 1994. It involved the awarding of four entirely fictitious contracts to three related companies which were part of the Perry-Lux group, presumed to have strong political support within the Commission. Simultaneously, Paul Van Buitenen, an accountant in DG Education, Training and Youth, criticised the management of the Leonardo da Vinci programme and requested an audit (see Stevens, 2000). Even though the audit was finally carried out and revealed serious, if not fraudulent, mistakes in the financial management of the educational programme, the information was kept internally. The European Parliament had never heard about it before it decided to take a vote in order to extend the programme. Paul Van Buitenen determined to blow the whistle to the Commission President and the Secretary- General about financial management failures in the Leonardo programme (Diagram 4.1. gives a brief chronology of the key events; Table 4.1. lists the essential actors of change). In his book, Van Buitenen recalled the hypocritical attitude of Carlo Trojan, the Secretary- General, and Jacques Santer, the Commission President, who was assuring the EP that ‘he intended to give article 206 of the TEU “its full effect” in combating fraud’ (2000, p. 96) and yet refused to transfer a copy of the Leonardo I audit report to the COCOBU. No action was taken by the top hierarchy of the Commission about the allegations made by Van Buitenen and the Secretary- General

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9/12/1998 10/12/1998 17/12/1998 12/01/1999 Van Buitenen transmits file to a Green MEP Aelvoet

COCOBU EP adopts refuses Elles’s discharge report in favour of discharge by EP of the 1996 budget

Commission wants EP’s support. MEP Green discusses with Santer tabling a motion of censure

14/01/1999 Rejection of the motion of censure. 293 against 232 in favour 27 abstaining

05/03/1999

15/03/1999

Cresson refuses to resign

CIE publishes its first report. The Commission resigns en masse

Diagram 4.1 Short chronology of events leading to the Commission’s resignation

warned him against the publication of in-house information. Van Buitenen nonetheless transmitted the file he had compiled to Green MEP Magda Aelvoet on 9 December 1998 and to the ECA a few days later (Van Buitenen, 2000). At a meeting on 10 December 1998, one day after the transmission of information by Van Buitenen, the COCOBU, following several extremely close votes, adopted the report by James Elles, recommending to the EP that the Commission be granted the budgetary discharge for 1996. The final vote was 14 in favour and 13 against. The Elles report was very critical of the ‘flaws in management organisation’ which ‘had inevitably led to operational distortions in implementing policies’ (EPPED, 1998). The proposal made by the COCOBU in December 1998 that the discharge be granted was accompanied by a call for a work programme to be established over the next 12 months to ensure significant change with a view to modernising the Commission by 1 January 2000. However, on 17 December 1998, the European Parliament refused to discharge the 1996 budget. James Elles never envisaged that the refusal to discharge the budget might lead to a motion of censure (Interv K4, 2006; see also Malone, 2002, p. 88). The European Court of Auditors had consistently criticised the management of funds by the European Commission over the years. Yet its institutional role as an actor of change was less significant in the crisis than that of the EP and the Commission. Expecting the EP’s refusal to discharge, the Commission decided to force the issue and published a news release the day before the EP voted on the budgetary discharge, requiring the tabling of a motion of censure in case of a negative vote. Since no motion of confidence existed in the European political arrangement, the leader of the PES, MEP Pauline Green, tabled a motion of censure against the Commission in order for it to be massively

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A Novel Strategy for Reform 61 Table 4.1 Key actors in the events which resulted in the Commission’s resignation Individual actors

Institutional actors

James Elles Rapporteur on the 1996 budgetary discharge Edith Cresson Commissioner for DG XXII Education, Training and Youth Jacques Santer President of the Commission Paul Van Buitenen An accountant in DG XXII Pauline Green MEP, PES COCOBU European Parliament College of Commissioners Committee of Independent Experts

defeated and to demonstrate the EP’s support to its supranational colleague. The strategy was well rehearsed since Green and Santer were seen discussing the motion of censure in the Hilton only a few days prior (Intervs K4, K7, 2006). However, on 14 January 1999, the motion of censure was rejected unconvincingly, with 293 against the motion, 232 in favour and 27 abstaining (Scotto, 1999b). At this same session of the EP, as a consequence of the tight vote, the MEPs adopted a resolution which called for the creation of a Committee of Independent Experts (CIE) under the auspices of the EP. Set up on 14 January 1999, the CIE was instructed to ‘examine the way in which the Commission detects and deals with fraud, mismanagement and nepotism, including a fundamental review of Commission practices in the awarding of all financial contracts’ (CIE, 1999a, 1.1.2). It had to report swiftly to the EP, by 15 March 1999. The scope of investigation of the CIE was particularly wide given the vagueness of the concept of mismanagement. The CIE defined it as ‘serious or persistent infringements of the principles of sound administration and, in particular, to acts or omissions allowing or encouraging fraud or irregularities to occur or persist’ (CIE, 1999a, 1.4.3.). Fraud and nepotism could be more easily circumscribed. The CIE found no instances where Commissioners were directly and personally involved in fraudulent activities (CIE, 1999a, 9.2.3; Tomkins, 1999), despite accusations made against ‘southern’ Commissioners like Edith

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Cresson, Manuel Marín and João de Deus Pinheiro. The bulk of the report was based on the assessment of a few specific cases of EU programme management – tourism, MED, ECHO, Leonardo and nuclear safety – as well as allegations of misconduct by the Director of the Security Office who reported directly to the Commission President. The CIE agreed to such a short deadline on the condition that it could write a second report forthe end of the year dealing with ‘a more wide-ranging review of the Commission’s culture, practices and procedures within the context of the issues arising in its first report’ (CIE, 1999a, 1.1.7.). Even though some parliamentarians, like the Frenchman Jean-Louis Bourlanges or the German Undine-Uta von Blottnitz, called for the Parliament to finish with the Commission and use its Treaty power to dismiss it (see Malone, 2002). Malone (2002) and Dinan (2000) clearly state that the resignation of the Commission was not the result intended by the European Parliament. They point towards a series of miscalculations, misjudgements and mistakes by both institutions in order to explain the unexpected announcement in the middle of the night on 15 March 1999 of the mass resignation of the Santer Commission. The meticulous investigation revealed quite a grim picture of the Commission: lack of adequate staffing which led to the use of irregular procedures like the ‘mini-budgets’; lack of responsiveness to audits pointing to financial irregularities; lack of adequate sanction of officials in breach of the Commission’s procedure; lack of control of private contractors in TAOs that managed substantial budgets and implemented European public programmes; the failure of control mechanisms; and favouritism. After a two-hour meeting of the College on 15 March 1999, Santer realised that the only option was resignation and he and his colleagues chose to collegially resign before any decision on an eventual motion of censure was taken (Interv Kinnock, 2006). An EU-wide call for rootand-branch administrative and managerial reforms was made by several Member States’ leaders. A former Italian Prime Minister, Romano Prodi, the Member States’ favourite, was quickly appointed to replace Jacques Santer, who was still asked, alongside the rest of the Commissioners, to finish his term. In appointing Neil Kinnock as Commissioner for Reform and Commission Vice-President, Romano Prodi gave a strong signal that administrative reform would be one of the institution’s priorities. Prodi chose a friend he could trust and a political heavy-weight from the Santer Commission, someone who therefore knew ‘the House’ (informal name given to the Commission by officials) from inside.

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The factual story of the Commission’s resignation, however, needs to be conceptualised in order to understand why and how administrative reform made it to the agenda on this occasion when it had failed to do so since the 1960s. In order to understand agenda-setting and policy formation in the dynamic HI perspective used in this book, Kingdon’s model proves to be useful in identifying the critical juncture and providing tools to analyse its consequences.

Administrative reform and agenda-setting Looking at the Commission’s administrative history from 1950 to 1999, it is clear that many suggested solutions, in the form of various reports, had been floating around the institution for a long time but reform only got on the agenda when it met a problem, i.e. the Commission’s mismanagement. In 1999, three different streams combined to set the agenda process in motion. The problem stream fixed actors’ attention on the transformation of an issue into a problem. The policy stream provided the series of ideas and alternatives to the existing agenda from which one was picked to carry forward. Finally these two streams came together with a political stream, which explains why the reform item achieved such status on the Commission’s agenda. The year 1999 was a critical juncture because of the meeting of these three streams. Problem stream: the emergence of mismanagement as a problem Three elements define the problem stream. First, indicators give the measure of the change in status from issue to problem. The CIE’s first report mapped out the extent of mismanagement in the Commission. Second, events focus actors’ attention on the problem. The College’s resignation made it apparent that the problem could not be ignored. Finally, feedback such as the CIE’s second report gave information on the Commission’s current performance and made recommendations for improvements. Indicators In its first report of March 1999, the CIE found evidence of poor management in four programmes – tourism, MED, ECHO, Leonardo da Vinci – and criticised the award of contracts to Technical Assistance Offices (TAOs). They used their findings as case studies which they generalised to the entire institution. In the case of administration of tourism policies, the CIE criticised how the Commission ignored the

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early warning signals from the ECA and the EP which had pointed towards failure to respect budgetary and accounting rules, among other misconducts. It also highlighted how the shortage of human resources compared with the number of tasks was a cause of management weakness and provided the opportunity for potential fraudulent operations. The second case that the CIE examined looked at the MED programmes of aid and decentralised co- operation with countries outside the EU in the Mediterranean region. The considerable budget allocated to these programmes was managed by a company, ARTM, set up by DG External Relations, outside all the rules of the public procurement Directive, which guarantees competitive tendering. ARTM had delegated technical supervision of the programmes to several TAOs. Two of the four members of ARTM’s management board were also directors of TAOs involved in the managing of MED programmes. The conflict of interest was flagrant and well-known by the Commission, which eventually requested the two officials to resign. Even though the CIE did not consider that Commissioner Manuel Marín could be held responsible for the bad management, they noted that the MED case highlighted both leniency, if not complacency, in the awarding of contracts, and conflicts of interests within the Commission. The third case involved the European Community Humanitarian Office (ECHO) and more specifically, four contracts awarded in 1993 and 1994 for aid operations in Bosnia and the Great Lakes region in Africa. It was established as early as 1997/1998 that these contracts were completely fictitious (CIE, 1999a, 4.1.3.). The CIE pointed to three key aspects of bad management of the ECHO programme. ●

●

●

First, it observed a rather traditional trend within the Commission, i.e. its reliance on outside contractors, mini-budgets and external consultants to carry out ECHO’s tasks (CIE, 1999a, 4.2.4.). Second, the Commission had taken four years to finally become suspicious of some of ECHO’s contracts. This proved again that the necessary control mechanisms were not working adequately or fast enough. Finally, the CIE criticised the fact that the Commission had transmitted information on the ECHO programme to the EP under external pressures coming from the leakage of the Unité de coordination de la lutte anti-fraude (UCLAF) inquiry report of 18 May 1998 and persistent inquiring by the rapporteur for the COCOBU (see CIE, 1999a, 4.2.32.).

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The fourth case to come under the CIE’s scrutiny was the Leonardo da Vinci programme about which the allegations of fraud and mismanagement were the most serious. The CIE’s conclusions on this specific programme (CIE, 1999a, 5.8.1.), which was under the responsibility of the most criticised Commissioner, Edith Cresson, crystallised all the weaknesses of the Commission’s management system. Staff shortages within the Commission led the institution to outsource the implementation of the project to a TAO following a public call for tender. In late 1994, Agenor was awarded a five-year contract despite previous audits revealing unsatisfactory financial management. DG Education, Training and Youth took no action despite the seriousness of the irregularities and their repetition over time. In 1998, DG Financial Control undertook an official audit which confirmed the internal audit’s conclusions and found other occurrences of corruption, missing accounts, fraudulent payments, illegal salary increases, false or double invoicing and nepotism (see CIE, 1999a, 5.4.2.). The Commission did not inform the Parliament of the significant financial and managerial problems which Leonardo encountered, even though the EP was working on Leonardo II. Once again the culture of secrecy prevailed (see Tomkins, 1999). The CIE’s report served as a very clear indicator of the scale of mismanagement and painted a picture of the problem which needed to be addressed. The Commission’s resignation, which resulted from the report, definitely sparked the start of a process which turned an issue – the use of mini-budgets and TAOs – into a problem: mismanagement and irresponsibility. Events For the first time, criticism by MEPs of the Commission’s alleged mismanagement and embezzlement of funds targeted specific Commissioners. Two socialist Commissioners, Edith Cresson, in charge of DG Education, Training and Youth, which was responsible for the management of the Leonardo da Vinci programme, and Manuel Marín, Commissioner for External Relations, were specifically targeted. As Malone demonstrates (2002), the European Parliament, like any political body, divided along partisan lines with the German conservative MEPs leading the accusations against the socialist Commissioners. For a few weeks, the pressure mounted on Edith Cresson and it seemed clear that her resignation would put an end to the malaise. However, Cresson did not want to be the scapegoat and stated clearly that she would not leave the Commission even if the report from the Committee of Independent Experts (CIE) implicated her (Zecchini, 1999). Not only

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did she consider that she had done nothing wrong but Jacques Chirac also made it clear he would not accept that a French Commissioner be blamed and shamed (Intervs K4, K7, 2006). This arrogant attitude from the French camp fuelled the anger of MEPs as well as that of some Heads of State and Government. Santer started by supporting the principle of collegiality which is central to the functioning of the European Commission, and consequently dismissed the possibility of selected Commissioners resigning. However, after the tight vote on the motion of censure and the appointment of the independent experts, he changed his mind and hoped that the implicated Commissioners would act responsibly and draw all the consequences from the experts’ report (Scotto, 1999c). Jacques Santer was hoping that Edith Cresson, in particular, would take the decision to leave the Commission but he did not take any steps towards the enforcement of article 216, nor did the Council. On 15 March 1999, the CIE’s report became public, including the damning comment regarding officials’ sense of responsibility (CIE, 1999a, 9.4.25). According to Neil Kinnock, the Commissioners who saw the report on the Sunday evening confirmed that this sentence was not included but simply added on at a late stage ‘presumably for press appeal’ (Kinnock, 2006). Even though Jacques Santer first adopted a complacent attitude towards the report and its potential consequences, a meeting of the College at 10 p.m. on 15 March soon made it clear that they had no choice other than to resign. Stevens correctly identifies (2000) four factors that led to the unpredictable resignation of the Commission, which many officials also regarded as unnecessary. The Santer Commission could not avoid its demise because various Commissioners had ignored for months criticism of the management of their DG; they had reacted rather arrogantly and sluggishly when administrative failures were pointed out to them; they had often responded with complacency; finally, the communication strategy had failed to stress the strengths and successes of MAP and SEM 2000 as well as DECODE. As a result, this resignation focused in a dramatic way actors’ attention on the problem of management in the Commission. Feedback In its second report of 10 September 1999, the CIE structured its recommendations along three lines: management, finance and staff. It concluded the report with a review of Commission-wide issues, namely integrity, responsibility and accountability. The report touched on every aspect of the Commission’s organisational and management

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practices. The composition of the CIE, which included former members of the ECA, meant that the Commission’s financial dimension attracted the most scrutiny. It is also in these chapters that the CIE is the most specific in its recommendations and the way in which to achieve them. Financial issues, which were at the heart of mismanagement allegations, as well as calls for an overhaul of the Commission’s financial management and control environment, therefore formed the focal point of the experts’ work. The traditional system of ex ante financial control was particularly criticised by the CIE as one of the roots of the various cases of mismanagement that were identified. The experts believed (CIE, 1999b, 12) that: [t]he existence of a procedure whereby all transactions must receive the explicit prior approval of a separate financial control service has been a major factor in relieving Commission managers of a sense of personal responsibility for the operations they authorise while at the same time doing little or nothing to prevent serious irregularities of the sort analysed in the Committee’s First Report. Even though three separate individuals are involved in the authorising of expenditure – the authorising officer, who enters financial commitment, the financial controller, who checks for conformity with the appropriate rules and procedures and the accounting officer, who carries out the operation – irregularities were still numerous because of the lack of responsibility felt by the people concerned. The Committee made it clear that the ex ante control of the regularity of financial operations and the ex post audit of the carrying out of operations should not be performed by the same DG in order to avoid conflicts of interest and wrongdoing. Apart from financial matters, with which the CIE chose to start its report, the experts significantly acknowledge the importance and quality of the European Commission’s human resources. The longest section, about 20% of the report, is entirely dedicated to staff, who are regarded as a key prerequisite for the Commission to ‘operate effectively and retain its traditional role as the driving force behind European integration’ (CIE, 1999b, 6.7.). The problems that the Commission was facing were not any different from those that national civil services had had to address. The Committee emphasised again the detrimental effect that the lack of a sense of responsibility had on the entire organisation. The experts noted that the Commission’s overall structure, organisational criteria and arrangements, practices and procedures, had not been adapted over its 50-year existence.

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Finally, the CIE finished its assessment of the European institution’s need for reform by commenting on ‘the backdrop of a particular administrative “culture” prevailing in the Commission’ (CIE, 1999b, 7.1.1.). Interestingly, the concept of responsibility which was the main thread of the CIE’s report was given a definition centred on integrity in European public life, accountability and political responsibility. Policy stream The ideas and policy options regarding reforms that were floating around in the ‘primeval soup’ (Kingdon, 1984) dated back to the 1970s with the report by the Table ronde des huit and the 1979 Spierenburg report, which was regarded as the first concise analysis of the Commission’s organisational needs. With the arrival of new Northern Member States such as Sweden and Finland in the EU in 1995 and the appointment of a Finnish Commissioner to the Budget, Personnel and Administration post as well as a Swedish Commissioner to the Financial Control and Fraud Prevention job, new reform ideas entered the Commission. Having implemented substantial decentralisation of powers to local authorities as well as modernisation of their budgeting systems during the 1980s and 1990s, Finland and Sweden had experienced deep reforms which were inspired by the concept of New Public Management. Pollitt and Bouckaert (2004, p. 286) acknowledge that those two countries did not ‘embrace fashionable management ideas as enthusiastically as did [the Anglo- Saxon world]’ but they picked and chose the new management concepts that suited their needs. As a result Liikanen and Gradin imported such NPM ideas to the Commission when reform came onto the agenda. Instead of designing an all- encompassing reform package, Liikanen focused on financial management with SEM 2000 as early as 1995. The emphasis was put on reorganising financial units, separating resource units from operational units, tightening financial control and developing constant evaluation in order to achieve measured results. With MAP 2000, decentralisation of many personnel matters to DG level also became a priority. For the first time, some NPM tools such as decentralisation, evaluation, and value for money were used in changing the way of doing business in the Commission. With the resignation of the College, new ideas were added to the existing governing agenda. During the summer of 1999 Neil Kinnock, who was finishing his term and knew he would be part of the 2000–2005 Prodi Commission, gathered his chef de cabinet and a few colleagues and wrote a paper outlining what the Commission needed to do in order to reform itself successfully. He thought the

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reform required a Vice-President to drive it and who would take ownership of it (Kinnock, 2006). Neil Kinnock therefore came into the job with a set of ideas on how to reform the Commission, focusing himself more specifically on personnel policy. He particularly considered that the career system should be totally linear, allowing a hard-working 21year- old secretary to become a director by the age of 47 for example (Coull and Lewis, 2003, p. 4). His focus was on developing a culture of management. The UK had been one of the front runners in the implementation of NPM ideas (Pollitt and Bouckaert, 2004; Flynn and Strehl, 1996; Hughes, 2003). It can therefore be argued that Neil Kinnock might have been influenced by the British system and the British experience of the 1980s and 1990s in his thinking about the reform. He forcefully asserted that ‘the reform had to be centred on crucial principles of responsibility, accountability and transparency’ (Kinnock, 2006). As the reform process was launched in summer 1999 and the Task Force for Administrative Reform (TFAR) was set up to design the reform programme before 28 February 2000, several other entrepreneurial actors got involved in the drafting of the reform. Hermanin (2006, pp. 52–53) particularly highlights the competition which emerged among Neil Kinnock’s cabinet, DG ADMIN, the Secretariat- General, DG BUDG and the TFAR. It seems that Kinnock, his cabinet and DG ADMIN chose to take charge from the start of the Staff Regulations and personnel policy changes. Meanwhile, DG BUDG defended its vested interests in the financial reform just as the Secretariat- General had in the new strategic programming cycle so that it would not see its workload increased. The pool of ideas and entrepreneurs wishing to impose their policy choices was therefore quite large and diverse, which resulted in several hands being involved in the final White Paper. Political stream Finally, analysing the political stream, which combined with the problem and policy streams to become a critical juncture leading to change, helps in determining why reform reached the top of the agenda. National moods and organised political forces were identified as the two key elements which made it the right time for a policy change and for the reform of the Commission to reach the top of the agenda. National moods The general context in the 1990s was not favourable to the European Commission and its task of furthering European integration. The Delors era was marked by significant integrationist achievements like the SEM

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programme, which then led to the EMU schedule. Yet the window of opportunity which benefited Jacques Delors in the late 1980s and early 1990s had already started closing by the second half of his second mandate, after the Maastricht Treaty. The Franco- German- Commission trio did not seem to work so well as a leading force for European integration any more, particularly after the French ‘little yes’ of 50.3% and the Danish ‘big no’ to the Maastricht Treaty. As a result of the painful ratification of the Maastricht Treaty in 1992, Member States became less open to the broadening of the Commission’s field of competence. They were also more attuned to their public opinions which started awakening to a technocratic elite-driven venture. The Commission was facing a problem of legitimacy which meant that it ‘was now operating in an environment in which legitimacy could note be, as it could with the High Authority in the 1950s, justified as deriving from its status as a competent body of experts authorized by member states to act independently in the interests of Europe’ (Nugent, 2001, p. 46; see also Drake 1996). The President of the European institution, Jacques Santer, had been appointed in 1995 as a compromise candidate. His lack of charisma combined with cautious Member States when dealing with any supranational topics can explain why Santer’s motto for his mandate was ‘less action but better action’. The tone was set for the Commission to be less ambitious, less active and deal with less politically sensitive issues as public opinions, through their leaders, had wanted. As the events of early 1999 unfolded and the Commission resigned following the CIE’s report, calls for a root-and-branch reform of the European administration came from the UK and Germany in particular. Even though public opinions did not express any direct interest in this politico-administrative matter, growing resentment towards an institution considered all-powerful and encroaching on national interests formed a supportive context for the reform. Organised political forces A careful reading of the report showed that ‘the Committee found no proof that a Commissioner had gained financially from any such fraud, irregularity or mismanagement’ (CIE, 1999a, 9.2.3). But the general feeling engendered by the CIE’s work was that of a significant loss of control over the institution by the College. The CIE considered that Commissioners claiming they ‘were not aware of what was happening in their services’ might be sincere but nonetheless revealing of ‘a serious admission of failure [ ... ] concerning problems that were often common knowledge in their services’ (CIE, 1999a, 9.2.2.).

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However, the perception from inside the European administration, coming from the Commissioners as much as the officials, was that the CIE had responded to the EP’s political pressure to produce a damning report. It has to be noted that the Commission was not consulted on the composition of the CIE, which was left in the hands of the EP as Neil Kinnock noted regretfully. After the EP’s refusal to discharge in January 1999, Neil Kinnock suggested that ‘a proper independent Commission of Investigation be set up with the EP and the Commission agreeing on the terms of reference of the investigative body and its chair’ (Kinnock, 2006). The European elections were taking place in June 1999 and it was argued that the EP was trying to gain political visibility for electoral reasons (Intervs H13, H12, 2006). Another aspect which should be taken into account when analysing the EP as an organised political force is the composition of the COCOBU. Despite recommending, after a very tense debate, that the EP discharge the 1996 budget, many Commission officials mentioned the tension between the COCOBU and the European administration, due to some members of the EP’s committee (Interv H5, 2006). A financial official in the Commission insisted on the tension within the COCOBU when the Elles’s report was discussed and pointed out that ‘some reasonable voices like the head of COCOBU were not heard at the time the EP made noises about resigning the Commission’. A new chairman and some new members were appointed in 2004, which signalled the start of less politicised relations between the COCOBU and the Commission. Finally, as early as ten days after the Commission’s resignation, a clear reform mandate was given to Romano Prodi by the European Council at the Berlin European Council summit, on 24 and 25 March 1999 (European Council, 1999). It instructed the following: The European Union needs, as soon as possible, a strong Commission capable of taking action, while respecting the rule of openness and closeness to the citizens. Mr Prodi shall be asked to prepare a programme outlining the way in which the new Commission shall work. [ ... ] The new Commission should speedily put into effect the necessary reforms, in particular for the improvement of its organisation, management and financial control. In order to do this, the next Commission ought to give urgent priority to launching a programme of far reaching modernisation and reform. In particular, all means should be used in order to ensure that whenever Community funds, programmes or projects are managed

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by the Commission, its services are suitably structured to ensure highest standards of management integrity and efficiency. The Commission’s renewal in September 1999 with Romano Prodi as the new President therefore meant that the reform item was at the top of the administration’s agenda. Leadership from the very apex and commitment to this reform process were made clear when Prodi appointed Kinnock Commissioner for the Administrative Reform and gave his post a high profile by making him one of the two Vice-Presidents. The reform was deep and wide-ranging and it was supported by the entire College and not simply the Commissioner for Administrative Reform, Neil Kinnock.

The strategy for reform Pollitt and Bouckaert (2004) insist that ownership of a reform by staff and leadership from the top are two key elements of a reform’s success. Neil Kinnock was facing a significant challenge in designing and promoting the most wide-ranging reform programme the Commission had ever known. Staff were suspicious. The strategy chosen by Romano Prodi and Neil Kinnock to design and drive forward the reform of the European administration relied on three elements: symbolism, accommodating external and internal pressure for change, and learning from one crucial past mistake, a lack of communication. Leadership: significant symbolic measures of change from the top Prodi and Kinnock understood that they were faced with an obligation to achieve results when reforming the European administration. The Commission’s resignation can mostly be imputed to its open conflict with the EP following the CIE’s report. Yet other institutions had a more back-seat role. The ECA had been refusing the positive DAS2 on payments relating to the EU budget, except for administrative expenditure, for years and the Commission was getting frustrated by being blamed for poor financial management which it regarded as largely out of its control, since the Member States were in charge. The Council, through constant restrictions on the human resources available to the Commission, also contributed to a tense situation. Neil Kinnock was aware that tinkering with the existing organisational format would not improve the institution’s efficiency which the EP, the ECA and the Council were calling for, but more importantly it would not help to

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regain the institution’s legitimacy on the European institutional scene. Despite this observation on the Commission’s legitimacy challenge which all officials made in 1999, there was no unanimity in the institution over the reform content, which meant that Kinnock’s success in designing and implementing a reform programme was not guaranteed. He knew he was offered ‘a poisoned chalice that he could not refuse’ (Interv H13, 2006). As soon as Prodi was nominated President, he made a few strongly symbolic announcements which set the tone for the reform package to come: ●

●

●

●

●

He strengthened the two recently approved codes of conduct, one laying down the rules for the conduct of Commissioners and the second regulating relations between Commissioners and Commission departments. He reduced the size of cabinets which had become the crux of many tensions within the Commission He also required that Commissioners have their office in the building of their DGs, which would no longer be referred to by numbers but by the name of their function. The various portfolios were streamlined and made more coherent with a view to making the DGs, which were cut from 42 to 36, appear more like ministries. Finally, Prodi gave the portfolio of Administrative Reform to Kinnock and made reform the Commission’s priority by giving the British Commissioner Vice-Presidential status and assigning February 2000 as the deadline for a final formal reform package.

The work on the reform package started as early as 14 September 1999 with the setting-up of a Task Force on Administrative Reform (TFAR) composed of ten Commission officials from different DGs, of different nationalities and of different levels of seniority. Claude Chêne, a senior French official, was appointed head of the TFAR, whose task was twofold. It had to draft the White Paper for the reform of the Commission and it had to operationalise the various proposals it would make.3 It was attached to DG ADMIN, newly headed by Horst Reichenbach, and was meant to monitor the implementation of the White Paper through close relations with central services regarding coordinated processes. Moreover, Kinnock gave the same assurance to Chêne and Reichenbach – that each would have a free hand in the implementation of the reform – which created immense tension between DG ADMIN

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and the TFAR. Strategic guidelines regarding the content of the White Paper were approved by the College on 8 December 1999 and a draft document was adopted on 19 January 2000. Staff, trade unions, Member States and the European Parliament were consulted on the options chosen and made comments that were largely included in the final version of the White Paper, Reforming the Commission, approved on 1 March 2000. Accommodating external and internal pressure Neil Kinnock and Romano Prodi built the entire reform process and the communication of it on lessons learned from past errors. First they showed the commitment of the entire College of Commissioners, not simply that of one or two Commissioners, as had been the case with Erkki Liikanen and Anita Gradin, by choosing to publish a White Paper, a statement of the institution’s policy. This demonstrated a clear political commitment from the top which was reinforced by the appointment of a Reform Group, chaired by Vice-President Neil Kinnock and composed of seven Commissioners, Vice-President Loyola de Palacio and Commissioners Mario Monti, Franz Fischler, Michaele Schreyer, Pascal Lamy, Poul Nielson and Antonio Vitorino. Second, they strove to accommodate external and internal pressure for change throughout the reform process. From an external viewpoint, they kept the Commission’s promise of implementing the recommendations of the CIE’s second report. The structure of the White Paper even mirrored that of the report. It was an assurance given to the EP that the Commission was not going to be complacent about reform. Since the reform was triggered by external pressure, the reform process always tried to remain open to the outside. Therefore Kinnock went before the EP to present and debate the White Paper on 1 March 2000. He also presented a progress report on the reforms in 2001. Similarly, he had to take into account the Council’s requests for reduced staff input, changed pension rights and salary scales, since their agreement was essential to change Staff Regulations. Compared with SEM 2000 and MAP 2000 launched by Erkki Liikanen and Anita Gradin which were internally driven, the Kinnock reforms were externally initiated, which created a suspicion among staff of ‘a hidden agenda, dictated from above with many motives behind it, like secret confidential arrangements with Member States to cut down on the general well-being of staff in the Commission and their professional identification with the Commission’s mission’ (Interv H1, 2006). From an internal standpoint, DG ADMIN asked to be in charge of reforming personnel policy even though the TFAR had this

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competence. Neil Kinnock and his cabinet agreed and worked with DG ADMIN on amendments to Staff Regulations. Meanwhile, DG BUDG defended its vested interests in financial reform, just as the SecretariatGeneral had in the new strategic programming cycle, so that it would not see its workload increased. Third, the Commission being such an unusual institution, it was decided that it should be able to reform itself. Despite the reform being triggered externally, the content of it was mostly drafted internally. The CIE’s report was only a blueprint which the Commission took into account but to which it added as well. For that purpose, a number of Planning and Coordinating Groups (PCGs), drawn from across the Commission on a voluntary basis, were established to inspect financial circuits but also matters of human resources, externalisation and Activity-Based Management (ABM). According to Neil Kinnock and his cabinet, consultants were not brought in to draft the core and structure of the reform programme. It was understood that the reform would only be successful if the in-house knowledge was used. Yet Hermanin (2006, p. 69) reports that within the PCG on audit, ‘we agreed to cooperate with experts from the World Bank, the European Court of Auditors and New Zealand (which is considered as a leading country regarding NPM)’. Neil Kinnock acknowledges that he and his team had ‘discussions with the World Bank but soon realised that their situation was too different since the World Bank had 10 million dollars to spend on its reform’ (Kinnock, 2006). Kinnock’s past experience with Arthur Andersen and as a politician in the UK, another leading country on NPM reforms, explain better where his influences originated. Learning from past mistakes: more communication, different communication Neil Kinnock knew that even though the Commission did not have a strong tradition of labour disputes, he would face some opposition from trade unions and staff in general. Commission staff had massively gone on strike in 1998 against MAP 2000 after the Caston report was leaked. Therefore communication, transparency, information, and consultation with Commission staff were really at the centre of his strategy. It is rather unusual to see a list of changes following staff consultation included in a reform programme. Annex II of the White Paper highlighted the centrality of staff involvement, which Neil Kinnock believed essential even if many criticised the extent to which staff contributions were genuinely brought in. Kinnock set up a Reform Correspondent

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Network; a reform correspondent was appointed in each DG ‘to liaise with the Reform Task Force, to relay questions and concerns from staff and to help to communicate the detail and reasoning of proposals’ (European Commission, 2001a). Aware of the consequences of the handling of the Caston report, Kinnock and the TFAR also decided to put all the documents related to the reform on the Commission’s intranet, Europaplus, on which staff could make comments. Critics said that there was an overload of information in the name of transparency ‘which was probably the most abused term in the whole process. Many references in the reform have got nothing to do with transparency but transparency sounds so sexy that they believe that acceptance will fly much higher’ (Interv H1, 2006). It remained that Neil Kinnock totally committed himself to presenting, explaining and selling the reform to staff through visiting each DG in turn in 1999 and 2000, addressing people’s questions in mass meetings in the Charlemagne building and having breakfast meetings with officials at all levels. In 18 months, he had 106 meetings with various Commission staff. Staff were also invited to email him personally with their comments. Communication was at the heart of the acceptance of the reform in Neil Kinnock’s mind. He therefore went before the EP in plenary session, together with Romano Prodi, on 1 March 2000 to present the White Paper. He also gave seven press conferences between 1999 and 2004 on the progress and milestones of the reform process. Part of this communication with staff involved taking a different approach from that of Erkki Liikanen and tackling trade unions which had blocked previous reform efforts. Kinnock explained that Liikanen’s task was made more difficult by having to negotiate with 60 to 100 people whereas he obtained agreement from five out the six unions in January 2000 to give a maximum of 21 union officials involved in official bodies dealing with concertation arrangements on the Commission reform (Kinnock, 2006). He also reduced the number of staff allocated to the unions and required a registration of membership as well as the publication of their accounts. The White Paper was drawn up very quickly and tried to take into account staff comments on the initial version circulated in January 2000. As some members of Task Force testified, the final draft of the White Paper reflected DG ADMIN’s views to the detriment of some fundamental elements included by the Task Force on human resources and financial management (Intervs K8, K9, 2006). More specifically, the Task Force wanted to think about larger problems of governance since they believed that most of the Commission’s problems were upstream at

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the planning and programming stages (Interv K8, 2006). However, the Council and the EP were mostly interested in inputs and did not judge the Commission on its outputs.

Conclusion This chapter confirmed the hypothesis that the Commission’s resignation generated an institutional crisis which created a political opportunity for institutional change. It clearly demonstrated that 1999 was a significant, critical year in the history of the construction of the administrative Commission, which explains why and how the reform item climbed to the top of the institution’s agenda. The issue was finally defined as a problem which political actors could not ignore. Numerous solutions regarding every organisational aspect of the Commission as well as entrepreneurial actors for change were available. Finally, these elements met a favourable political environment which made it impossible for the Commission to maintain the status quo. This critical juncture, therefore, opened a ‘window of opportunity’ for policy change. Kingdon (1984, p. 173) argues that ‘the policy window is an opportunity for advocates of proposals to push their pet solutions [ ... ]’. Despite insisting that he did not want the job of reforming the Commission, Neil Kinnock placed himself at the right time in the right place in order to push ‘his pet solution’, a paper laying out the basics for a reform programme which he wrote in the summer of 1999 and submitted to Romano Prodi. It remained to be seen what type of change this critical juncture would generate. In order to assess the nature and scope of institutional change undergone by the Commission as a result of the 1999 political opportunity, this book first focuses on a macro-level of analysis, studying the content of the reform programme and to what extent it was influenced by NPM ideas.

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5 Reforming Public Administrations: New Public Management and the White Paper

The administrative structure of the Commission has remained unchanged to a large extent for the last 20 years. Although all EU member countries shifted towards a managerial approach with more or less enthusiasm, the European Commission only took timid steps with SEM 2000 and MAP 2000. French civil servants admitted that the Commission ‘feels like the French administration of many years ago’ (McDonald, 1998, p. 33). Yet as explained in previous chapters, many reform efforts have been made in the past looking at decentralisation of tasks, emphasis on the necessity of managerial skills, flattening of the institutional structure, focusing on outputs rather than inputs, all of which define the NPM concept. Following the Commission’s resignation and the opening of a political opportunity for significant policy and institutional change for the first time since the Merger in 1965, the Commission organised itself sufficiently to design the White Paper Reforming the Commission, which Neil Kinnock wanted to make public within six months of being appointed. This chapter tests the hypothesis that NPM ideas affected the content of the White Paper and therefore the nature of institutional change in the Commission. Reading the White Paper gave the impression that reformers took a checklist of various NPM reforms and decided to include all aspects of it in the Commission’s reform programme. They particularly insisted on efficiency and effectiveness, being more discreet about economy which could have generated fears among staff of reduced resources. The first section of this chapter looks at the existing literature on NPM and develops an original analytical framework for analysis of managerial reforms. The second section details the content of the White Paper and 78

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its very wide-ranging measures aimed at transforming the culture of the Commission. Finally the third section confronts the first impression of the White Paper with the reality of its 98 measures, evaluating the extent to which these measures were inspired by NPM ideas. It therefore focuses on policy discourse and the NPM rhetoric which is used to legitimise reform. Pollitt (2001; see also Hood and Jackson, 1991) believes that ‘[t]alk has a life of its own ... It is a means of winning legitimacy and support’.

Reform in the Commission: introducing NPM NPM ideas being a key explanatory variable which is under-researched in the context of the Commission, this book develops a broadened conceptual definition which gives added value to the current literature on the issue. The first section gives an overview of the concept. The indicators of NPM which are used to assess the nature of institutional change throughout the White Paper are then determined. A contested concept The first point that can be made is that NPM is a contested concept which is often presented as a convenient all- encompassing label (Greve and Jespersen, 1999; Hood, 1991; Manning, 2000) that is used to designate any type of financial, human or organisational transformations in the work practices of bureaucracies since the end of the 1970s. Regarded by some as an ideology, by others as a value framework, a paradigm or even a theory, authors do not agree about its intrinsic components. NPM may take different forms ‘in terms of more participation, more or less partnership, more or less rationality’ (Leca, 2000, p. 123) but NPM reforms are said to describe a similar phenomenon: the importation of private sector and market-based mechanisms to manage the public sector (Hood, 1991). Given the ‘rise of “new public management” over the past 15 years [which] is one of the most striking international trends in public administration’ (Hood, 1991, p. 1), evaluation of the doctrine and its outputs has also been very abundant. Hughes (2003, p. 65) summarises the contested points: ●

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Economics is a flawed social science which can not be applied to such a distinctive economic system as the public sector. For the reason mentioned above, the import of private management techniques and models into the public sector is criticised.

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NPM is considered neo-Taylorist by some others like Pollitt (1993). NPM involves a detrimental politicization of the public administration. Concern is expressed over conflicts between managerial accountability and political accountability. Difficulties with contracting- out arise due to the inadequacy of market solutions to some public sector needs. NPM generates ethical issues since it removes many safeguards to honesty and neutrality in the public service. Finally, particularly in the UK, NPM reforms have been fast-paced and led to implementation problems with a lack of ownership of the reforms and staff de-motivation.

NPM can be described as an Anglophone doctrine, advanced originally in the United Kingdom (UK), America, Canada, Australia and New Zealand during the 1980s. Many public administration authors therefore regard the UK as a leading country on NPM reforms in terms of breadth and depth of changes (Pollitt and Bouckaert, 2004; Pollitt, 1998; Hood, 1991; Cole and Jones, 2005; OECD, 1995; Minogue, 1998; Polidano, Hulme and Minogue, 1998; Dunleavy, 1994). Its emergence was heralded by international organisations, the OECD and the World Bank, as the necessary remedy for the Traditional Public Administration (TPA) model’s flaws with regard to inefficient, ineffective and unaccountable administration in a fast-moving and highly competitive world. Yet, when looking at the content of NPM reforms across the world (Pollitt and Bouckaert, 2004), it becomes apparent that there is no ‘trend towards structural convergence and isomorphism’ (Clark, 2000, p. 26). Clark outlines another approach called ‘structured pluralism’ focusing on the variation in individual countries according to their histories, traditions and constitutional arrangements. Pollitt and Bouckaert (2004) also argue that the absence of convergence can be explained by the lack of universal vision of what the reforms were meant to achieve. They identify four main strategies which countries have chosen and which can explain the type and content of the reform implemented: ● ●

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Maintain: tighten up traditional controls. Modernise: fundamental changes to the administrative system while retaining the distinctiveness of public provision. Marketise: more competition and market-type mechanisms in the public sector. Minimise: reduce the state’s remit to its minimum.

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These strategies are reviewed in the conclusion with regard to the Commission’s reform programme. NPM is most often understood as an organisational concept (Pollitt, 2003; Homburg, Pollitt and van Thiel, 2007; Hood, 1991; Pollitt and Bouckaert, 2004) and the literature has largely focused on this specific aspect. Based on neo-institutional economics and managerialism, NPM represents a series of tools and techniques taken from the private sector so that government can get its job done better (Hood, 1991; Hughes, 2003; Lane, 2000; Leca, 2000). Yet this research argues that NPM should be conceptualised beyond organisational terms. When studying the development of the concept, two waves can be identified in ‘Real Administrative Reforms’ (Toonen, 2001, p. 184). At first, from the late 1970s to the early 1990s, governments that engaged in administrative reforms focused on reducing and controlling government activity. This involved less but more efficient government, which was understood as making the public sector work like a private enterprise, always striving to ‘do things better’. The second wave, which can be dated from the early 1990s, included a reflection on the changing relationship between the state and its citizens: government- designed programmes aimed at moving closer to citizens and increasing transparency. Since the 1970s, NPM has achieved a certain distinctiveness and stability which can be articulated around two interconnected dimensions: the organisational dimension which constitutes the core of NPM and is still centred on the three Es, efficiency, economy and effectiveness; and a political dimension. It would be erroneous to believe that NPM reforms only deal with technical matters and that the introduction of a few private sector management tools remedies public administration’s rigidity, cost and red tape. If the organisational and political facets of NPM are regarded as two intersecting circles, then it can be argued that the common section to the two circles condenses issues of accountability, openness and transparency which stem from organisational and political changes. This represents NPM’s third dimension: the democratic one (Diagram 5.1). As time went by and the 1957 six-member Community turned into the 1999 15-member Union, the administrative system ‘attracted the comment that it combined the less desirable features of both French and German systems’ (Stevens and Stevens, 2001, p. 31) and that the Commission had not modernised itself. In response to this common view, Kinnock designed a reform which he admits ‘needed to be British, i.e. centred on responsibility, transparency and accountability’ (Kinnock, 2006). These principles were coupled with requirements for efficiency,

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Organisational dimension

Democratic dimension

Political dimension

Diagram 5.1 NPM’s defining dimensions

effectiveness and economy of scarce resources and called for a modernised governance of the Commission (European Commission, 2000a). These key objectives, which were clearly discussed in the introduction to the White Paper and reiterated by the vast majority of Commission officials interviewed, indicate a strong grounding of the reform in the body of literature on New Public Management. Following the discussion on NPM’s dimensions and indicators in the introduction, this section aims to operationalise the concept and develop a hypothesis in order to assess the scope of influence of NPM ideas on the White Paper and the nature of the institutional change it engendered. An in- depth study of the literature on NPM reforms led to a threetiered analysis. At a macro-level, NPM’s political dimension represents the environment in which NPM reforms are designed and implemented. At a meso-level, its organisational dimension is the practical core of reforms which is grounded in public administration and radiates into the political and the democratic dimension. At a micro-level, NPM’s democratic dimension creates the link between actors of the governance model, between politicians, bureaucrats, customers and citizens. NPM has been studied through different theoretical grids such as rational choice (Barzelay, 1992), interpretive theory (Bevir, Rhodes and Weller, 2003), transformative approach (Christensen and Laegreid, 2001) and Historical Institutionalism. The latter led to comparative NPM studies which focused on assessing the leading and lagging countries in the implementation of NPM reforms (Hood, 1995; Flynn and Strehl, 1996; Christensen and Laegreid, 2001; Aucoin, 1990; Pollitt and Bouckaert, 2000; Kickert, 1997; Olsen and Peters, 1996). However, no study has attempted to analyse NPM-inspired reforms in the institutional context

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Disaggregation

Blurring of frontiers

Organisational dimension

Diagram 5.2 Analytical framework of NPM reforms

INDICATORS

DIMENSIONS

CONCEPT

Change of role of state

Depoliticisation of governance

Political dimension

NPM REFORMS

Accountability/ responsibility

Transparency/ openness

Democratic dimension

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of the European Commission and understand their impact on institutional change. The dynamic historical institutionalist (HI) approach of this book evaluates the influence of NPM ideas over the content of the White Paper and their effects in terms of the nature and scope of institutional change undergone by the Commission (see Diagram 5.2.). Neil Kinnock, his cabinet and the Task Force for the Administrative Reform (TFAR) avoided expressly referring to NPM, or any other managerial concept, in the reform package. Two reasons can explain this. First, NPM has been most enduring and wide-spread in the UK, which has involved abundant critical assessments on its efficacy to modernise public administration, and Kinnock did not want to create an a priori bias against his reform. Second, given the particular organisational nature of the Commission, it was crucial for the successful acceptance and implementation of the reform package that it be designed by officials rather than specialised external management consultants. They therefore used an approach which presented it as an in-house reform based on core NPM principles such as transparency, accountability, responsibility, efficiency, effectiveness, value for money and decentralisation. Developing NPM dimensions The organisational dimension In light of its birth environment – an unprecedented fiscal crisis facing governments in an increasingly globalised world – it seems obvious that NPM would be a matter of organisational transformation geared towards increased efficiency, effectiveness and economy. NPM’s organisational dimension is thought of in terms of changes to structures and procedures which can be contrasted with Crozier and Friedberg’s (1977) approach based on power, strategic actor and uncertainty. Finger and Ruchat (1997, p. 35) specifically detail the main aspects of organisational restructuring under NPM (see also Giauque, 2003). Two broad organisational changes are involved in NPM reforms: on the one hand, disaggregation which includes decentralisation and the deinstitutionalisation of personnel and financial systems (Peters and Pierre, 2001, p. 6), and on the other, the constant blurring of the frontier between private and public sector through a stress on competition and private sector styles of management practices. Disaggregation has had two effects: ●

First, according to Peters (1993), decentralisation has led to the institutional layering of the state. It has materialised through the

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mushrooming of executive agencies or at-arms-length public bodies which aim at externalisation of executive tasks. These new organisational forms were designed to free-up ministries for core tasks like policy advising (Jobert, 2002). The emergence of those diverse structures has nonetheless engendered horizontal organisational fragmentation, each agency focusing on one task outside any coordination with agencies or departments other than its own tutelary department. They have also contributed to vertical political fragmentation (James, 2001; Mayntz, 1997) with the re- creation of the policy/implementation dichotomy. NPM was born from the feeling that public servants superseded politicians thanks to their specialised knowledge of public affairs and files (Dreyfus, 2000; Peters, 2001). NPM has tried to re- empower politicians and restrict the role of public servants in terms of their managerial tasks. However, as claimed by Peters (2001, p. 32) ‘[w]hat the ideological shift to managerialism has done ... is to reiterate the familiar politics-administration dichotomy’. Second, NPM reforms have led to the deinstitutionalisation of personnel and financial management. Olsen and Brunsson (1993, p. 4) consider that organisations can be said to be institutionalised ‘insofar as their behaviour is determined by culturally bounded rules which manifest themselves in certain routines for action and which give meaning to those actions’. In both cases, human resources and financial management, there has been a shift of value reference. These culturally bounded rules built on hierarchy, permanency and continuity which used to give meaning to public administration’s actions have been challenged by other cultural references from the private sector like performance and quality of outputs. Financial management likewise underwent significant changes. Financial reforms have ranged from better budgeting and improved accrual accounting systems to total rethinking of the costs of public service provision. The last step in the control of the best use of public resources was taken with the explosion of auditing. Peters (2001, p. 41) considers that ‘[a] uditors have now been transformed from their green- eyeshade image to being integral parts of the reform and accountability process in many contemporary governments’.

The second aspect of NPM’s organisational dimension incorporates an incremental blurring of lines between public and private sectors. This has happened noticeably through the development of contracting out public service delivery, which has even been referred to as the ‘marketizing of government’ (Peters, 2001, p. 41). It is based on the

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introduction of maximum competition into public administration and the belief that all public service functions are marketable. As a result, competitive tendering should be used in every area of government. When discussing NPM reforms, Dunleavy and Hood (1994) mention traditional characteristics – deconcentration of administrative units through ‘agentification’ and the creation of at-arms-length public bodies, opening up of the civil service and more flexible personnel policies, empowerment of the lower- echelon bureaucrats and improvement of performance and of the quality of outputs. But they insist on a further crucial element in their eyes which relates to institutional configuration: the viewing of organisations as a chain of low-trust principal/ agent relationships with a network of contracts linking incentives to performance. Douglas (1982) categorised this phenomenon as moving the public sector organisation ‘down-grid’ and ‘down-group’. Dunleavy and Hood (1994, p. 9) explain: Going down-group means making the public sector less distinctive as a unit from the private sector (in personnel, reward structure, methods of doing business). Going down-grid means reducing the extent to which discretionary power (particularly over staff, contracts and money) is limited by uniform and general rules of procedure. The obvious criticism that is made to this approach is that market solutions do not automatically work well under all circumstances (Donahue, 1989, p. 223). Supporting the opposite fundamentally denies the distinctiveness of the public sector. The political dimension As is apparent throughout the examination of its organisational dimension, NPM is a highly political concept. It is particularly restrictive to envisage it as the sum of private sector techniques. Its political dimension can be regarded at present as the hot issue, central to the development of states in Western countries. NPM’s political dimension can be divided into two composing features: • The changing role of the State. Peters (1993, p. 46) claims that changes stemming from NPM doctrine ‘really extend much more deeply into the process of governing and the manner in which the State relates to society’. He sets his analysis at three different levels of power and State influence: the macro-level where a loss of legitimacy of state action is witnessed; the meso-level which testifies to the further hollowing

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out of the State with decentralisation of programme delivery; and the micro-level which sees civil servants’ role challenged. Without theorising, NPM has induced a strong practical change in the conception of the State. It is no longer regarded as the only – or even the main – provider of public services. This has led many commentators to refer to governance rather than government. In its broader acceptance, governance ‘covers the whole range of institutions and relationships involved in the process of governing’ (Rhodes, 2000, p. 1). It is a new way of conceptualising state capacities and the relationship between the state and civil society under severe internal and external pressures. Rhodes (1997) outlines the similarity between NPM and governance which equally aim to be more responsive and problem solving. It can be argued along with Leca (2000) that the shift from government to governance consequentially induces a real risk of confusion between government and NPM. • The depoliticisation of governance. Jobert (2002) talks about the shift of power towards nonmajoritarian institutions, such as consultancy offices, international institutions or agencies, which have developed an anti-political mode of governance in order to counter the overpowering Weberian State. He believes that the governance model is inevitably antipolitical because it strives to marginalise politicians and throw away bureaucrats seen as outdated (Merrien, 1999). Governance and NPM are part and parcel of the same reform process (Rhodes, 2000). Even if NPM offers a conception of the relationship between politics and administration, some authors (Peters and Pierre, 2001; Toonen, 2001; Jobert, 2002; Finger, 1995) have questioned the effective move towards reappropriation of policy-making by politicians. They have actually hypothesised that NPM-based changes have created at most a shift of power towards non-political officials and at least increased conflicts between politicians and bureaucrats. As very well explained by Aucoin (1990), managerialism and public choice theory, the two component streams of the NPM model, have a very different approach to the continuum of policy and administration. The former considers that managers must have the freedom to manage and therefore autonomises administration from politics (Finger, 1995). The latter, on the contrary, ‘emphasises the role to be played by elected representatives in governance. It does not admit to a policy/administration dichotomy that would carve out spheres of responsibility for politicians on the one hand and bureaucrats on the other’ (Aucoin, 1990, pp. 126–127). NPM, therefore, surfs on this

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contradiction. There is a dual movement which depoliticises governance while at the same time politicising public administration. The democratic dimension NPM’s third dimension centres on one of the key aspects of democracy and it is no surprise that it cuts across the organisational and political dimensions: transparency and accountability. NPM seeks to put the citizen at the centre of its business. Therefore, after a concern about the taxpayer’s money, NPM reforms included attempts at making public administrations more open to the citizen and more transparent through legislation giving access to official documents. Following transparency and openness and thus some interactivity between the politicoadministrative world and the citizens comes the issue of accountability of bureaucrats. Indeed, there are fears that ‘[b]ehind the hollow state metaphor is another metaphor ... that of leakage in the channels of authority’ (Bardach and Lesser, 1996, p. 198). Accountability in the TPA model was perceived as a significant problem which contributed considerably to the public sector’s bad image. Accountability in a hierarchical system tends to be negative and error-based. It does not encourage officials to be innovative and risk-taking in their work practices since there is no incentive for doing the job better but only sanction if the job is badly performed. Accountability has always been a very intricate area at the interface of public administration and politics, central for democracy (Moe and Gilmour, 1995). There are two dominant grids of analysis for accountability: internal/external and managerial/political. The distinction between internal and external accountability is certainly the most crucial in order to understand NPM’s scope. Internal accountability, also called responsibility, refers to a subjective sense of obligation and a concern for the consequences of one’s actions. External accountability, geared towards political direction, involves scrutiny, control and imposing sanctions. With the development of NPM, ‘[a]n ‘audit society’ has effectively been installed, and its regulatory and numerical values are fast outstripping the values of law and parliamentary democracy in providing standards of accountability’ (Harlow, 2002, p. 20). This shift to ‘the regulatory state’ has produced new complex models of accountability (Day and Klein, 1987). In particular, NPM has tried to develop a culture of accountability which led to the distinction between managerial and political responsibility. Managerial accountability and political accountability are not easily interchangeable because, unlike the private sector, the raison d’être of the public

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sector is to promote and pursue collective interests. Indeed, political accountability is based on representation, whereas managerial accountability relies on output, transparency and contractual relations. Accountability of the managerial kind is delegated to managers who have to give an account of their performance not only to the politicians but also to the customers, i.e. the public. Managerial accountability is key to the operationalisation of NPM’s political dimension because it is the chain that links together citizens, bureaucrats and the political leadership in a transformed state system which includes such diverse stakeholders. Nonetheless, it is still unclear whether NPM reforms have led to a ‘leakage of accountability’ (Milward, 1996, p. 87). Making bureaucrats more accountable might mean taking away responsibility from politicians and therefore undermining political accountability. Christensen and Laegreid (2001) rightly predict the danger of the managerial model of accountability. They agree with Minogue (1998) that modern public administration is not all about efficiency and is certainly ‘no guarantor of good political and social judgement, which is essential in securing genuine political responsibility and legitimacy. The pursuit of accountability can exact a price in the decline of a sense of responsibility’ (Christensen and Laegreid, 2001, p. 111). NPM reforms and the accountability changes which they have engendered have created the problem of ‘many hands’ where fragmentation of accountability actually dilutes accountability. The traditional ministerial responsibility is therefore challenged by contractual accountability, which is crucial in the context of decentralisation. But although politicians are happy to see their own responsibility for the actions of bureaucracy reduced, the overall reflection should centre on the problems this can cause. NPM has not strengthened accountability mechanisms within public administration but it has made them more complex and diverse. The Commission’s reforms were not only a matter of outputs and modernisation. Kinnock had a clear outcome stated on the first page of the White Paper’s introduction: ‘Administrative Reform will help the Commission to fulfil its institutional role as the motor of European integration’ (European Commission, 2000a, p. 5). The reforms were therefore used as a means to an end in the wider context of institutional struggle by the Commission for influence on the European Union scene. The White Paper was not only about increasing the Commission’s efficiency; it was also, and maybe even more, about regaining its institutional legitimacy.

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The content of the reform: the details of the White Paper The wave of administrative reforms started effectively on 1 March 2000 with the adoption by the College of the White Paper Reforming the Commission. A timetable for implementation was decided, fixing the second half of 2002 as the final deadline. In an address to the European Parliament on 1 March 2000, Neil Kinnock pointed out that the systems and structures of the Commission had not changed for the last 40 years even though it had been allocated new tasks in an enlarged European Union. In the perspective of the enlargements to come, he called for new methods of work and insisted on effectiveness, responsibility and accountability as the core principles of the future Commission, which ‘is not, and will not be, a secretariat’(Interv. H13, 2006). It is interesting to note that the financial measures contained in the White Paper were considered as a continuation and strengthening of SEM 2000. The White Paper, which was divided into a first part on strategic guidelines and a second part on operational measures, focused on three main areas of change plus a common one. The first section of the strategic guidelines called the reform programme ‘a political project of central importance for the European Union’ (European Commission, 2000a, p. 5) which was based on ‘the tenets of good governance’ encompassing five principles. These principles were meant to underlie the cultural change that Kinnock wanted to bring to the European administration: ● ●

● ●

●

Independence of the Commission. Political and managerial responsibility from Commissioners, Directors- General and each official. External and internal accountability of the Commission. Efficiency in the achievement of results, which is strongly linked to simplification of procedures. External and internal transparency and openness which would encourage better communication.

Once again the Commission insisted on the significant political dimension of this reform and its role in giving back to the institution its policy conception and political initiative functions, which were essential in keeping a ‘strong, independent and effective Commission’ (European Commission, 2000a, p. 5). The Commission set independence at the top of the list of defining characteristics of good governance in order to remind all that this externally-triggered reform of its working practices did not mean it intended to become anyone’s agent.

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In order to give back to the European Commission its policy conception capacity, which was its core task according to the White Paper, the institution had to become more effective at programme management. The general framework of the reforms was grounded in ethics. Therefore Kinnock and Prodi put a specific emphasis on high standards of public behaviour after the way the Santer Commission resigned. Ironically, it was the Santer Commission that devised the Code of Conduct for Commissioners and the Code of Conduct governing relations between Commissioners and Departments. But they were adopted under the Prodi Commission as one of their very first decisions. Beyond the ethical dimension which Kinnock and Prodi wished to give to the reform, the White Paper was organised around three pillars: the way political priorities are set and resources allocated, changes made to human resources policy and the overhaul of financial management with an effective internal control system. Activity-Based Management Beside the common issue of culture and ethics, the first of the pillars on which the reform was built centred on balancing tasks with resources in order to obtain results on its policy priorities. This strategy was threefold: ● ●

●

Activity-Based Management (ABM). Externalisation of non- core tasks. The better use of resources also drove the Commission to envisage an externalisation of management activities which included a structured replacement of the much criticised Technical Assistance Offices. In order to counter-balance scarce resources, the Commission had the choice of devolving its non- core activities to Community public bodies, like agencies, decentralising them to national public bodies or contracting out part of them to private sector bodies (European Commission 2000a, p. 11). More efficient, performance- oriented working methods involving the decentralisation of decision-making, the simplification of administrative procedures and leaner administrative structures, as well as more team work.

Taking stock of the Williamson report and more particularly of the DECODE screening exercise, a system of Activity-Based Management (ABM) was introduced in order to ‘promote efficiency because decisions on priorities, policy objectives and activities will be matched with decisions allocating human, administrative, IT and financial resources’

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(European Commission, 2000a, p. 9). The Commission’s decisionmaking processes were therefore integrated into a consistent system, moving away from simply following the rules towards a more pro-active approach, i.e. delivering outputs and results. Most importantly, ABM was flagged as the main answer to the waste of scarce resources by the Commission. Its key feature lay in the planning of the Commission’s activities. It was with respect to these activities that priorities were to be set, objectives defined, resources allocated and managed and performance monitored and reported on. As a result, the use of the Commission’s resources would be much more policy- driven thanks to the setting-up of the Strategic Planning and Programming (SPP) function, located within the Secretariat- General under the authority of the Commission President. Since the new system was intended to be more policy-focused, the SPP function issued a set of clear policy orientations under the authority of the President, after a debate in the College in December of year n-2. Then, around February of year n-1, DGs had an opportunity to comment on and propose policy priorities. These proposals were sent back to the SPP which prepared a draft Annual Policy Strategy (APS) in cooperation with DGs. The College reviewed it and established an ‘annual policy strategy which outlines policy objectives, proposed policies and the matching human and financial resources by policy area for the whole Commission’ (European Commission 2000a, p. 9). This strategy was then discussed with the Council and the EP and constituted the main reference in the establishment of the Preliminary Draft Budget by the Commission. On the basis of this APS, each DG determined clear and measurable objectives in Annual Management Plans (AMP) between February and May of year n-1. DGs should use an Integrated Reporting Management System (IRMS), an information technology management tool which provides data on human and financial resources and helps with planning, monitoring and reporting activities.1 Levels of achievement of the objectives stated in the AMP were reported in the Annual Activity Reports (AAR) submitted by each DG by 1 May n+1. Directors- General evaluated the activity of their DG and gave a written Declaration of Assurance, which could be qualified with comments of reservation and concern, that the resources at their disposal were used economically, efficiently and adequately. A synthesis of the reports submitted by each DG was presented to the EP, the ECA and the Council. The aggregation of the AMPs formed the annual Commission work programme in January of year n. The Commission’s annual work programme translated the APS into policy objectives and an operational

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programme of decisions to be adopted by the Commission. It set out major political priorities and identified legislative initiatives that the Commission intended to adopt for the realisation of these priorities. The President presented the Commission work programme to the EP and the Council. Human resources policy The second pillar of the Commission’s reform dealt with the achievement of better management of human resources: ‘[t]he modernisation of human resources policy from recruitment to retirement is required for the benefit of staff of all grades’ (European Commission, 2000a, p. 12). A commitment was taken to enhance gender equality and ensure effective equality of opportunities. In an attempt to reconcile professional and private lives, parental leave, family leave, flexibility in working conditions, maternity and paternity leave were all considered for improvement. Other measures to modernise and improve working conditions included greatly expanded training, strengthened management, fair and firm procedures for dealing with professional under-performance, which would be assessed according to specific criteria and agreed job objectives. Mobility was also a key element of the modernised staff policy. Together with extra training where required, improved procedures for advertising vacant posts and for the handover of responsibilities facilitated mobility to and from the other European institutions, Member States and private organisations. Emphasising the high quality of Commission staff, the White Paper nonetheless remarked that management of human resources had not evolved over the last 15 years. In practice, it had led to the constant exodus of top-level Commission officials to the private sector in recent years because of a lack of opportunity to fulfil their potential. Management, career development, discipline, pay and pension as well as whistleblowing formed the core of the human resources development chapter. Significantly, stress was put on managers and management skills which did not form part of a Commission official’s training and were regarded as crucial for senior positions. Therefore ‘[s]pecific action [was] also needed to raise the level of management skills and create a common management culture across the Commission’ (European Commission, 2000a, p. 12). The White Paper mapped out a new linear career system without categories. Promotion from grade to grade was to be based on merit but seniority allowed progress within a grade. After insisting on the centrality of management skills, the reform programme also attempted to

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make provision for career development for people who did not want to, or could not, become managers. The new career system following the spirit of the reform mainly rewarded good managers, since the shift from administration to management was the cultural change that Kinnock was looking for. A new annual staff appraisal system which would be ‘rigorous, objective and fair’ (European Commission, 2000a, p. 29) was required. It forced Heads of Units (HoUs) to enter into dialogue with their staff and use a ‘two-way feed back’ method with a marking system that would form the basis for promotion of staff. This new human resources policy involved substantial changes to Staff Regulations. The main bones of contention were pay and pensions. In 1991 the Member States tried to challenge the Method,2 a complex mechanism for annual adjustment of pay of Commission staff compared with wages paid to officials in national administrations and spending power in Brussels. After an unusually significant number of officials went on strike,3 a compromise was found which was due to expire on 1 July 2001. Therefore, the White Paper explained that two separate negotiations were pursued with the Council: one on the Method from June 2000 and the second on amendments to Staff Regulations from December 2001. The task on the Commission’s hands was quite vast since the Council, which had to agree to changes made to Staff Regulations, would push for lower pay and pensions to reduce administrative costs whereas the trade unions would try to preserve existing arrangements. Financial management The third and final pillar of the administrative reform sought to improve financial management, efficiency and accountability. ‘One central aim of the reform is to create an administrative culture that encourages officials to take responsibility for activities over which they are responsible’ (European Commission, 2000a, p. 19). A clear link was established between EU funds and taxpayers’ money, which should increase the onus on European civil servants to restore public confidence in the management of the EU’s budget and the control of expenditure. Rules for authorising expenditure were made easier and decentralised. Controls currently under the responsibility of the Financial Controller were transferred to DGs which meant the end of a centralised ex ante visa and an increase of individual responsibility for middle and senior managers. This gave more responsibility to Directors- General in terms of management of financial interventions. In return for more responsibility, Directors- General were directly answerable for the operation of their departments.

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The White Paper wished to bring more flexibility to the new system but obligatory minimum standards relating to financial management and control were also to be met by each department. To guarantee that standards were met, a Central Financial Service was created in May 2000 to define financial rules and procedures, set common minimum standards for internal controls in DGs and provide advice on their application. This sound financial management reform was to be complemented with an independent Internal Audit Service (IAS), under the responsibility of Vice-President Kinnock. It appraised the quality of performance of Commission services in carrying out policies, programmes and actions. As part of this modernised system a third structure, the Audit Progress Committee, was established to monitor, through internal and external audits, the operation of the control processes in the Commission. The key idea behind the IAS was to separate internal audit from financial control, which had created conflicts of interest in the previous system and led to many cases of financial mismanagement and irresponsibility. Not only were there Commission-wide obligatory common minimum standards defined by the new Central Financial Service, but the new system put in place included decentralising responsibility for financial management and control systems and built-in checks and controls. As a result, each Directorate- General had a specialised audit capability, reporting directly to the Director- General, to carry out reviews of the internal control system of the DG. However, a common understanding of the concepts and new vocabulary of the new audit, financial and control system across the Commission was required from staff and compulsory training on the Commission’s budgeting and financial systems was introduced. This dimension of the financial reform linked with the second pillar, which aimed at modernising personnel policy and making Commission staff aware of new ways of carrying out their tasks in a flexible and decentralised environment. The idea was to create a culture of learning whereby staff could improve continuously. In this vein, the possibility of the creation of a European Civil Service training centre for middle and senior managers was suggested for discussion with the other Institutions.

The White Paper and its grounding in NPM NPM reforms have been classified in ideal types just like the administrative types were by Weber. Based on the literature (Ferlie et al., 1996; Flynn and Strehl, 1996; Giauque, 2003), three main NPM reform

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models can be identified: the market model which focuses essentially on the 3 Es (economy, efficiency, effectiveness); the downsizing model based on decentralisation and flexibility; and finally the excellence model which seeks to change the organisational culture in order to generate a learning organisation. The Kinnock reforms are a cocktail of the three. Due to the mixed nature of NPM, some reform measures can be discussed from an organisational as well as a political angle. The reform package as a whole most certainly includes several elements regarding NPM’s organisational dimension, political dimension and democratic dimension. The White Paper tried to concentrate on refocusing the Commission on its core tasks and making it more efficient at the same time as trying to re-legitimate the institution in the eyes of European citizens through more openness, transparency and accountability (counter-view expressed by Levy, 2002, p. 15). The White Paper with regards NPM’s organisational dimension Two organisational changes can be revealing of an NPM-type reform: decentralisation and the constant blurring of the frontier between private and public sectors through a stress on competition which includes contracting and private sector-style management practices, such as strategic planning. With regard to the Commission’s reform programme, decentralisation is mentioned in two circumstances: the decentralisation of audit, ex post control activities and financial responsibilities and the decentralisation defined as ‘the delegation of responsibilities to national public service bodies acting as intermediaries for the implementation of certain Community policies’. In both cases decentralisation involves the spreading of formal authority and the consequential responsibility from a smaller to a larger number of actors (Pollitt et al.,1998). Financial decentralisation more particularly is presented as a tool to give heads of unit and Directors- General more autonomy and flexibility in their work but also more responsibility. It is deemed to ‘increase efficiency and, linked to a clear allocation of responsibility, will empower officials to exercise their own initiative’ (European Commission, 2000a, p. 8). Decentralisation is used to reorganise management throughout the organisation. Decentralisation in NPM reforms can have two effects. First it leads to the hollowing out of the state and the multiplication of executive agencies which carry out executive tasks. The White Paper offered a comprehensive externalisation policy which involved not just a definition by the Commission of its core and non-core activities but also negative priorities. It provided that ‘[n]on-core activities can be externalised if this is more effective and efficient, without a loss of accountability’ (European

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Commission, 2000b, p. 18). Even though European executive agencies were still linked to the European Commission and were headed by a Commission official, they had a separate legal personality and received an annual grant from the Commission for its administrative expenditure. They therefore generated questions regarding accountability and responsibility of civil servants working in these separate public bodies. They also posed the question of professionalism and reliability since the majority of staff were recruited locally and independently of the Commission. The second effect that decentralisation in the context of NPM reforms can have is a certain deinstitutionalisation of personnel and financial management. Kinnock clearly explained that he wanted to see a cultural shift happen within the Commission where routines are changed from input focused to output focused. The emphasis in the White Paper was on performance and quality of outputs which were the new values that infused the working practices of the Commission. The new process of legitimation of the organisation’s work was therefore based on efficiency, evaluation and effectiveness rather than inputs and continuity of action. Using NPM rhetoric, the White Paper set a framework of ‘more efficient, performance- oriented working methods’ which allowed ‘Heads of Unit [ ... ] to define working arrangements and responsibilities flexibly’ (European Commission, 2000a, pp. 21–22). When looking at reform of human resources management, merit was put at the heart of the system. It was used for the appointment of Directors- General and Directors as well as for promotion of staff. This policy put an end to the traditional automatic progression based on seniority alone. With regard to deinstitutionalisation of financial management, the change in approach was striking. Three elements were particularly important. First, the system moved from a centralised financial control to decentralisation to DG level, which was linked to enhanced responsibility for HoUs. Second, specific training on ‘value for money’ was included, thus highlighting the significance of outputs for the Commission. Finally, an independent Internal Audit Service was to be set up which would carry out financial, compliance and performance audits. The segregation between control and audit demonstrated a remarkable shift in values for the Commission, away from the French tradition of comptroller which existed in the European administration before the White Paper. The second aspect of NPM’s organisational dimension refers to the blurring of lines between public and private sectors through contracting

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out but also through a stress on competition and private sector styles of management. The White Paper called for outsourcing and delegation of activities to private sector entities on a contractual basis ‘if it is a more efficient and effective means of delivering the service or goods concerned’ (European Commission, 2000a, p. 19). Competition was therefore introduced into the Commission. Contracting was first mentioned within the context of non-core activities such as security guards but the door was open to a more substantial dose of competition with contracting being extended to ‘possibly, specific tasks related to core activities’ (European Commission, 2000a, p. 19). Yet the Kinnock reforms cannot be said to move the European public administration ‘down-grid’ and ‘down-group’ following Dunleavy and Hood’s categorisation (1994) since general rules of procedure were still largely governing the institution’s work. But it definitely dented the Commission’s distinctiveness as a public service in so far as it introduced private sector management practices and tools like performance indicators, the setting of objectives for staff, the linking of promotion to merit, merit-based appointments of DirectorsGeneral and Directors and the setting of policy objectives which was packaged as Activity-Based Management (ABM). The key aspect of this feature of the reform lay in the planning of the Commission’s activities. It was with respect to these activities that priorities were to be set, objectives defined, resources allocated and managed and performance monitored and reported on. As a result, the use of the Commission’s resources was much more policy-driven thanks to the setting-up of the Strategic Planning and Programming (SPP) function, located within the Secretariat- General under the authority of the Commission President. The White Paper with regards NPM’s political dimension Beyond its technical dimension, NPM also possesses political characteristics which can be summarised as an attempt to change the role for the State and a wish to depoliticise governance. The Commission cannot be compared to a sovereign state and represents an unusual case. Yet it is an executive body which has to design and carry out policies and programmes. When studying a change in the role of the Commission which the White Paper conceived, it emphasised that the entire reform programme of the Commission was designed to give the institution back some of its lustre as the driver of European integration. The Commission was looking for ways to reinstate its legitimacy in the political institutional triangle which it formed with the Council and the EP and it considered that the Kinnock reforms would be part of the fight back.

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Yet following Peters’s (1993) claims, NPM reforms engender changes at three different levels of State influence: the macro-level where a loss of legitimacy of state action is witnessed, the meso-level which testifies to the further hollowing out of the State with decentralisation of programme delivery, and the micro-level which sees civil servants’ role challenged. Whether the reforms introduced by Kinnock led to further loss of legitimacy of Commission action, which was expressed by public opinion and also Member States, could not be gauged by analysing the White Paper. But looking at the meso-level, the White Paper did challenge the role of the Commission through its policy of outsourcing, which it also decided to ‘possibly’ extend to non- core activities. This was a way for the Commission to reduce its involvement in programme delivery through the use of private or quasi-private means. The other aspect of the externalisation policy actually allowed the Commission to keep programme delivery in-house since the executive agencies were public bodies accountable to the parent DG. They were part of a trend of separating policy-making from policy-managing tasks but did not involve any type of privatisation. At a micro-level, officials’ roles were changed because of pressures for service coming from below. The decentralisation of responsibility on financial matters, together with an emphasis on a service-based culture which the White Paper fostered, put pressure on the officials to consider the ‘customers’ of their policies – civil society or public authorities in Member States – and be responsive to their needs. The White Paper rhetoric on responsiveness and the reference to service as the tenet of officials’ actions could definitely be sourced in NPM. The reference to NPM appeared even more intentional since it did not fit well with the Commission’s type of work which was quite removed from direct contact with the public as customers. Clearly, the drafters of the White Paper intended to modify the principles underlying the role of Commission officials. On the depoliticisation of governance as a consequence of NPM, it has to be acknowledged that the Commission lives in a particular politico-administrative arrangement where the political sphere, the College of Commissioners, is not elected. The delimitation between the political and administrative sphere is therefore variable. Many commentators have pointed out how politicised the European administration is (Stevens and Stevens, 2001, chapter 10; Page, 1997, p. 132; Coombes, 1970; Drake, 2000, pp. 232–234). It was argued that far from re- empowering politicians, NPM reforms led to ‘increasing the powers of non-political officials’ (Peters and Pierre, 2001, p. 9; Peters, 1993).

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In this regard, the delegation of financial responsibility, which made Director- General the ordonnateur délégué, a responsibility previously held by Commissioners before the White Paper, could generate further politicisation of the European bureaucracy. NPM offered a conception of the relation between politics and administration whereby the empowerment of civil servants through NPM reforms created a shift of power towards non-political officials. Toonen (2001) therefore asks the question whether ‘democratic bureau politics’ or ‘bureau political democracy’ prevails. This dilemma has been at the crux of the Commission’s development over the years. The White Paper with regards NPM’s democratic dimension Finally, the Kinnock reforms scored high with regard to NPM’s democratic dimension. The White Paper was laden with references to transparency, openness and ‘improving the dialogue with civil society’ (European Commission, 2000a, p. 6). It formed the main part of its second chapter on a culture based on service. Measures to improve public access to EU documents and a strategy to create a genuine e- Commission were designed to improve the connection between the Commission and European citizens. Beyond openness and transparency, the White Paper strongly focused on accountability, which was mentioned as a key tenet of good governance. Mechanisms to enhance internal managerial accountability, also referred to as managerial responsibility, were laid down, particularly in financial matters. These came as an answer to the CIE’s report, which investigated the allegations of fraud, nepotism and mismanagement and concluded that ‘[i]t is becoming difficult to find anyone with the slightest sense of responsibility’ (CIE, 1999a, 9.4.25). The White Paper also arranged a new mechanism to ensure external accountability through the creation of an independent Internal Audit Service which had the autonomy to carry out internal audits and scrutinise the DGs’ activities. The White Paper wanted to remedy the situation where only the College was accountable and where managers had no personal responsibility. The dual mechanism of internal and external accountability was an essential element of Kinnock’s reforms and was intertwined with the fostering of a service-based culture.

Conclusion An analysis of the key White Paper measures indicates that the Kinnock reforms were clearly rooted in NPM. Many reform efforts had been made in the past looking at decentralisation of tasks, emphasis on the

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necessity of managerial skills, flattening of the institutional structure, focus on outputs rather than inputs, all of which belong to the NPM. It was no secret that Kinnock had done work for Arthur Andersen which led his critics to accuse him of bringing in outdated American models (Interv. H13, 2006). However, no one reform gathered in the one text so many measures directly taken from NPM and no implementation timetable was ever attached to it. This reform programme promised to be rather different from others in its scope but also in the reality of its implementation which was planned over two and a half years. It is therefore essential to analyse whether the reality of implementation of the White Paper at macro-level, across the Commission, matched the clearly NPM-grounded intentions couched in the reform programme.

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Policy design does not tell the whole story of the reform programme. Its implementation and how it may differ from the original set of measures have to be integrated into the picture. As can be expected from the implementation of such a broad and ambitious administrative reform programme, outcomes from the White Paper did not always match expectations and led to some unanticipated consequences which illustrate the difficulty of operationalising NPM. In this chapter, the focus is on implementation in order to go beyond the rhetoric and evaluate how many of the NPM ideas were actually used in practice at a macro-level. Before getting into the core of this chapter, one point must be mentioned about the qualitative approach taken. In a communication on 7 February 2003, the Commission released its assessment of the level of implementation of the White Paper actions and claimed that 87 of the total 98 measures had been approved and implemented (European Commission, 2003a). In a study of the implementation of the White Paper actions, Levy (2004, p. 8) claims that only 53% of ‘final actions’, ‘those involving the actual creation or destruction of systems and institutions, and the implementation of proposals that have already been adopted’, have been delivered. Taking stock of Levy’s quantitative study, the following assessment of implementation of the White Paper takes a more qualitative approach. All measures do not carry the same symbolic or even practical weight. For example, the setting-up of a contract database cannot be compared to the establishment of a new strategic planning and programming cycle. The former might be a useful tool to achieve sound project management in the case of outsourcing; the latter, however, not only represents the overall structure of the way the Commission should carry out its business but it also embodies the heart and spirit of the NPM-based reform. 102

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As in Chapter 5, this chapter first gives a macro-level account of the implementation of the White Paper within the Commission. It then analyses the real organisational, political and democratic impact of NPM in the Commission’s daily work and assesses whether change was experienced along one particular dimension or all three.

Implementing the White Paper: a macro-level overview A culture based on service When it came to organisational culture change, the heterogeneous list of measures gathered under chapter II of the White Paper was implemented rather swiftly. As stated in the White Paper, two out of the three Codes of Conduct which strongly underpinned this cultural change were adopted in the second half of 1999.The first one was a Code of Conduct for Commissioners and the second one ruled the relationships between Commissioners and their Directorates- General. On 1 November 2000, a Code of Conduct on Good Administrative Behaviour was adopted in order to govern the interaction between the public and staff. It gave the public ‘a legal right to expect courtesy, prompt replies to correspondence, impartiality and objectivity in all dealings with the Commission and advising on means of submitting complaints if necessary’ (European Commission, 2001b). Chapter II of the White Paper included further new actions in the areas of public access to documents of Community institutions, an enhanced dialogue with civil society, a new framework agreement with the EP, a genuine strategy towards the e- Commission as well as the speeding up of payments. On 30 May 2001, Regulation 1049/2001 was adopted by the Council, with effect from 3 December 2001, which gave a right of access to European Parliament, Council and Commission documents to European Union citizens and residents. This step towards more openness with the public on the part of the European institutions proved to be successful since over 80% of public mail was responded to within the standard deadline of 15 days in 2003, up from 70% in 2002 (European Commission, 2004a). Following this idea of a more open Commission, the White Paper detailed measures designed to set up the e- Commission, which was part of the Commission’s initiative ‘e-Europe – An information society for all’ (COM (1999) 687, 8/12/1999). The Europa website, the official website of the European Union, was significantly upgraded in 2003/2004, becoming more user-friendly and providing more detailed information about DGs (European Commission,

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2004b). Electronic signatures for administrative acts were adopted within the Commission and a new electronic system for administering and archiving documents was introduced in January 2002. Increased openness and transparency towards European citizens was not the only course of action the European Commission took to mend its institutional legitimacy. It agreed on 5 July 2000 to a new framework agreement with the EP in order to ‘to strengthen the responsibility and legitimacy of the Commission, to extend constructive dialogue and political cooperation, to improve the flow of information and to consult and inform the European Parliament on Commission administrative reforms’ (OJEC, C, 121, 24/04/2001, p. 122). The European Commission was, however, left free to establish the information mechanisms it deemed appropriate. Finally, the last measure in this heterogeneous list designed to foster a culture of service was the speeding up of payments by the Commission. The average delay in payment to contractors was reduced from over 54 days in 1999 to under 43 days in 2003 (European Commission, 2004a). The Commission achieved its initial target of executing 95% of payments within 60 days by 2002. Out of the 11 actions stated in the first section of the White Paper’s Action Plan, only the one setting-up an independent Advisory Group on Standards in Public Life through an inter-Institutional Agreement among the Commission, the EP, the Council, the Court of Justice, the Court of Auditors, the Economic and Social Committee and the Committee of the Regions was rejected by the EP and the Council. Activity-Based Management Following on from DECODE, on 24 May 2000 the Commission adopted (SEC (2000) 852–852/15) guidelines for the description of work and the allocation of tasks. A peer group was also set up comprising Commissioners and chaired by the Commission President. Their task was to review the Commission’s activities and the adequacy of personnel deployment. Their in- depth examination led to the identification of a deficit of 1254 posts. In a two-year strategy adopted on 26 July 2000, the Commission decided ‘to meet around two thirds of these requirements itself, [through] redeployment (222 posts), productivity gains (315 posts) and the exchange of posts resulting from the termination of service scheme (342 posts for 600 departures). The remaining third or so, namely 375 posts, [were] requested from the budgetary authority [ ... ]’ (Bull. 7/8-2000, point 1.10.7). This analysis of the gap between activities and resources was at the heart of the new style of management that Kinnock wanted to see

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implemented. Peterson (2004, p. 26) confirms the significant disruption in the services ‘as nearly 10% of all Commission staff were redeployed from over-resourced to under-resourced DGs’. Activity-Based Management (ABM) was ‘the covering notion for the new programming, budgeting, management and reporting methods’ (European Commission, 2000b, p. 13) to be applied in every area of management of the Commission. In order to coordinate reform-related policies, an ABM steering group, chaired by the Secretary- General and including the Director- General of DG Budget, the Director- General of DG ADMIN and the Heads of cabinet of the President, of the Vice-President responsible for Administrative Reform and of the Commissioner for Budget, was first set up. Three other coordinating structures followed: the Directors- General group, the Resource Directors group and the Interservice Coordination group (European Commission, 2002a). Within the Strategic Planning and Programming (SPP) cycle, the first Annual Policy Strategy (APS) was adopted in 2001. That same year, on 25 July, a detailed step-by-step programme of introduction to ABM in all its activities was approved by the Commission (European Commission, 2001c). The 2002 work programme of the Commission was the first to be agreed under the new system. The creation of the SPP function in the Secretariat- General and the submission of the first Annual Activity Reports (AAR), which gave DGs an opportunity to report on their contribution to the Commission’s objectives and offered an insight into their working environment, both took place in 2002. The Commission then produced a synthesis which gave an account of the 135 comments of reservation and concern expressed by 31 services (European Commission, 2002b). As stated by Kinnock, this exercise of AAR showed that the Commission was willing to ‘diagnose with honesty and apply remedies systematically. It gives tangible evidence of the active commitment of the Commission and its staff to genuine accountability and constant improvement’ (Kinnock, 2002). The synthesis report insisted that key elements of the reform had already been adopted but that ‘the crucial implementation steps would be taken in 2003’ when the Career Development Review (CDR) and the new Financial Regulation (European Commission, 2003b, p. 11) would come into force. The DGs’ reports were forwarded to the relevant parliamentary committees in September 2002. This first set of AARs revealed many of the Commission’s shortcomings and difficulties in adjusting to the Kinnock reforms. It was only in 2003, when the amended Financial Regulation enabled the priority-setting system to be synchronised with the budgetary

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process and introduced Activity-Based Budgeting (ABB), that the ABM system became fully operational. In its paragraph 14, the new Financial Regulation, which came into force on 1 January 2003 (OJ L248/1, 16/09/2002), stated that the: Commission section of the budget should present appropriations and resources by purpose, i.e. activity-based budgeting, with a view to enhancing transparency in the management of the budget with reference to the objectives of sound financial management and in particular efficiency and effectiveness. The 2004 budget saw expenditures, which used to be organised depending on their operational or administrative nature, being categorised on the basis of policies. ABB gave more transparency to the budget. The second significant aspect of chapter III – Priority setting, allocation and efficient use of resources is the development of an externalisation policy. Measures relating to externalisation were put in place quite smoothly, although over a long period of time. From 2000, the private sector TAOs were phased out. A Planning and Coordination Group for Externalisation was set up in January 2000 and presented a report on externalisation of the management of Community programmes on 13 December 2000 (European Commission, 2000c), which set the ground for the creation of a new type of administrative structure: executive agencies. As part of the movement towards a refocus of the Commission’s resources on core tasks and functions, executive agencies were designed to take on non- core activities like programme management. The Council regulation laying down the statute for executive agencies to be entrusted with certain tasks in the management of Community programmes was adopted in 2002 (OJEC, L, 11, 16/01/2003, p. 1). It stipulated that the Commission had the sole right to create executive agencies, which were separate legal public entities, accountable to their parent DG and established for a set time corresponding to the life span of the programme they run. The first executive agency, Intelligent Energy Executive Agency (IEEA), accountable to DG Transport and Energy (DG TREN), was created by a Commission decision in December 2003 (OJCE, 2004). Another category of externalised structures was the establishment of three new administrative offices in January 2003, in order to rationalise the day-to- day management of administrative and support services. The Office for the administration and settlement of individual entitlements

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(Paymaster’s Office) was responsible for determining, calculating and settling individual financial entitlements like pay, mission expenses, and pensions. Two ‘Infrastructure and Logistics’ Offices, one in Brussels and the other one in Luxembourg, were also created to look after all activities associated with the implementation of buildings policy, the management of office space, the housing of departments, maintenance and technical works, security services, purchases, supplies and inventories together with internal logistics and services. Finally, chapter III of the White Paper included three actions on the improvement of working methods and one in particular on simplification of administrative procedures. A major overhaul of the Commission’s Manual of Operating Procedures was completed in 2003. A strong emphasis was put in 2001 with the action plan ‘e- Commission’ which led to the launch of e-DOMEC (Electronic Archiving and Document Management in the European Commission), a new way of managing documents and archives. Human resources Kinnock considered human resources to be a key aspect of his reform, particularly as it involved the main shaper of a new organisational culture. In January 2000, he kick-started the human resources reform with an agreement with five of the six trade unions on a new framework for social dialogue which included ‘a new forum, better delineated levels of concertation and clearer procedures’ (Kassim, 2004a, p. 51). The less controversial measures, for example those on working conditions such as flexi-time, tele-working and the e- Commission, and the introduction of a new disciplinary system, were discussed and proposals were made in October and November 2000. As discontent was mounting in the Commission over the personnel reforms, Kinnock decided to avoid adding any problems to forthcoming negotiations on the career structure and set out instead to secure agreement from the Council to extend the Method, which was due to expire on 30 June 2001. Extension until June 2003 was approved, so the negotiations on the career structure were not polluted. On 28 February 2001, Kinnock unveiled his new staff policy. Kinnock and Prodi met with all the staff on that same day to explain this ‘controversial shake-up of staff pay and pensions’ (Taylor, 2001) which implied changes to Staff Regulations. The set of proposals aimed at removing artificial career barriers. Therefore decisions on individual promotions and rewards were to be made on the basis of a new balance between performance and seniority.

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Training requirements and opportunities were increased, and the role of managers in assessing and guiding their staff and in dealing with underperformance were reinforced. A new training and mobility policy was put in place to assist all staff in managing their careers across a much greater span of jobs. Finally, the Commission proposals protected existing pension rights and guaranteed the long-term security of its pensions system. Kinnock and Prodi were, however, booed out of the room when they presented this ‘new staff policy from recruitment to retirement’ (European Commission, 2001d). In order to avoid a strike action planned for 19 March 2001, Kinnock agreed with the trade unions on 13 March a protocol which defined ‘a mechanism for the negotiation of all Commission proposals on staff policy’ (European Commission, 2001e, p. 3). This resulted in a High Level Negotiation Body chaired by Mr Ersboell, the former SecretaryGeneral of the Council. Comprising representatives from Staff Unions and Administration, the Body was formed in March 2001 and met 18 times between March and June 2001 to discuss the most controversial issues of the consultation papers agreed by the Commission: recruitment, appraisal and promotion, middle management, professional incompetence, discipline, externalisation and non-permanent staff, remuneration, pensions and careers. The Ersboell group submitted its report to the Commission on 28 June 2001 (European Commission, 2001g). Common ground was established on recruitment, selection, life-long training and disciplinary procedures. US, which was the largest trade union, decided to side with the administration and negotiated the reform. The four trade unions of l’Alliance always refused to debate but nonetheless signed the final version of the personnel policy reform package, ‘convinced that it was the only way to avoid the unravelling of the Staff Regulations’ (Interv K3, 2006). However, there was no agreement over the career structure and the pensions until late summer 2001. Finally the Commission adopted its revised orientations on a new personnel policy on 30 October 2001 (European Commission, 2001f) which were worked into proposals to amend the Staff Regulations. From 30 October 2001, the implementation process was split since some reform measures required changes to Staff Regulations and others could simply be introduced by implementing rules. The following amendments and new provisions entered into force between 2002 and 2004: ●

Decision to establish an inter-institutional recruitment office. The European Personnel Office Selection (EPSO) became operational in January 2003.

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●

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Guidelines for job descriptions designed to provide an adequate job profile, job environment and job requirements. Job descriptions for EU officials have been drawn up since 2002. Guidelines for the selection, appointment and appraisal of senior staff which included: taking into account the nationality of the outgoing official, standardised and professionalised application and selection procedures, appointments based on merit and experience and mobility every five years, seven in certain circumstances. A more comprehensive social infrastructure which included maternity leave increased from 16 to 20 weeks on full salary, paternity leave increased to 10 days, 6 months’ parental leave and compassionate leave as well as a series of measures to reconcile career and family. Rules applicable to national experts on detachment to the Commission were changed to increase the maximum period of detachment from three to four years. Measures were also taken to multiply the job swaps between national and Commission officials. Guidelines on mobility, which was only binding for ‘sensitive posts’ such as those dealing with the award of contracts or subsidies. A decision on staff training was adopted by the Commission on 7 May 2002. It set a target of 9½ days of training per official per year by 2005. The training budget also increased from €5.5 million in 2000 to €14.5 million in 2004. A new appraisal system, Career Development Reviews (CDRs), was introduced at the start of 2003. A new category of staff, contract agents, was created.

The proposal to amend Staff Regulations was adopted on 20 December 2001. The Council, however, took until 19 May 2003 to finally reach an agreement. The main points of contention were the pay scale, particularly from the perspective of the enlargement and the pension system. On 1 May 2004 the new Staff Regulations, which maintained the acquis for current staff but significantly reduced pay and privileges for newcomers, came into force. For the first time, the Method was included in the Regulations – article 65 (1) – and applied from 1 January 2004 until 2012 with a review half-way. The new Staff Regulations also endorsed the move to a new semi-linear career path structured around two function groups – Administrators (AD) and Assistants (AST). Promotion from the AST function group to AD was made possible by the introduction of a certification programme. The new system was introduced in a phased transition which

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included a series of new intermediate grades and measures in an infamous Annex 13, which was mentioned by all officials interviewed for its ‘ridiculous complexity’. On 1 May 2006, all staff were transferred to a single salary grid. There was a guarantee given that career profiles would be similar under the new system. Retirement age for newcomers and officials below the age of 50 was raised from 60 to 63 but was maintained for staff over 50 at the time of the reform. The new system also introduced a certification programme which made it easier to move from AST to AD. Financial management Financial issues, which were at the heart of mismanagement allegations, as well as calls for an overhaul of the Commission’s financial management and control environment, formed the focal point of the CIE’s work. Their report had particularly severely condemned the Commission’s financial system, which aggregated financial control with auditing. As an official from the Internal Audit Service (Interv H6, 2006) pointed out, You can’t hide behind the Financial Controller now. In the past 93% of transactions were visaed without checking. Only 7% checked. Among those 7%, there was a monetary unit sample. Up to a certain threshold, no checks were run, then a sampling was done and for the big amounts, there was systematic checking. The problem was that the amount of money checked was big but the percentage of transactions checked was low. From April 2000, three structures were set up in order to separate those two functions: an Audit Progress Committee, a Central Financial Service and an independent Internal Audit Service. The Central Financial Service was created in May 2000 within DG Budget in order to write the proposal for an overhaul of the Financial Regulation, which was adopted by the Commission on 26 July 2000. It was also established to provide coherence across the Commission in the definition and application of rules, procedures and standards of internal control, as well as advice on their application. It therefore put together a series of 24 internal control standards which were adopted by the Commission in December 2000 and have been reviewed every year since. These internal control standards were described by many officials as ‘common sense’ and were usually viewed as ‘useful’ (Intervs H6, H5, H2, L1, L16, 2006). The implementation happened gradually

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and over a long period of time, until January 2004 for some internal control standards. Finally the Internal Audit Service was created by a Commission decision of 11 April 2000.1 The Internal Audit Service was not yet organisationally independent but it started recruiting, adopted a charter on its operations in October 2000 and started assessing the internal audit capacity of the services. The operation and organisation of the ex ante aspects of financial control were laid down by Commission decision of 12 July 2000. On 9 April 2001 the Council adopted Regulation No. 762/2001 (OJEC, L, 111, 20/04/2001, p. 1), amending the Financial Regulation in respect of separating the internal audit function from the ex ante financial control function. This marked the decentralisation of the ex ante control of transactions to the authorising DGs and the end of DG Financial Control. Rules for authorising expenditure were made easier and decentralised. Controls under the responsibility of the Financial Controller were transferred to DGs, which gave the final responsibility to Directors- General in terms of management of financial interventions. In return for more responsibility, Directors- General were directly answerable for the operation of their departments. As a result, each Directorate- General included a specialised audit capability, reporting directly to them. The key element of reform in chapter V – Audit, Financial Management and Control was the reforming process of the Financial Regulation which started with a proposal adopted by the Commission in July 2000. The Council agreed to the Commission’s proposal for a new Financial Regulation in June 2002 and it came into force on 1 January 2003 (OJEC, L, 248, 16/09/2002, p. 1). The main idea was that there should be a separation between the person initiating the transaction and the person verifying it. The financial process starts with the operational officer who initiates the spending, estimates the costs, gets the project evaluated, selected and approved. He/she then passes on the file to the financial officer who prepares the legal and budgetary implications of the spending operation. Finally the authorising officer checks that all the correct procedures have been followed before giving his approval for the operation. As early as December 2000, the Commission designed a Charter of tasks and responsibilities of authorising officers by delegation. The ex ante visa was decentralised into each DG which had the choice among four models to organise their internal financial circuit (see European Commission, 2000b).

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In order to strengthen the means of fraud prevention, the Commission established the European Anti-Fraud Office (OLAF) which started its work on 1 June 1999. The Office was given responsibility for conducting administrative anti-fraud investigations by having conferred on it a special independent status. It specifically worked on an anti-fraud strategy, which led to a Green Paper in December 2001 establishing a European public prosecutor and the criminal-law protection of the Community’s financial interests (European Commission, 2001d). Finally, the Commission also had to comply with article 134 of the new Financial Regulation and put accrual accounting in place, which it did on 1 January 2005. Despite the strong focus on the implementation of a radically reconfigured financial management system, the reform process was threatened in 2002 by allegations of ‘serious and glaring shortcomings’ in the Commission’s accounting practices made by Marta Andreasen, the Commission’s chief accountant (King, 2002). It was compounded by the 2003 Eurostat scandal (King, 2003; Ricard and Rivais, 2003). These two events tarred the Commission’s reform process and efforts to ‘clear the stables’ and make the institution fraudless.

Implementing NPM ideas Analysis of the implementation of the White Paper demonstrates that the implementation of NPM ideas did take place, although unevenly. If NPM’s organisational aspect of the reform became effective after a few years, many elements of its political dimension did not turn into reality. Surprisingly, it is the democratic dimension of NPM which was the most straightforwardly put into practice. The other side- effect of the implementation of the reform was the development of unintended consequences which contradicted the trend set by the Kinnock NPMbased reform. NPM’s organisational dimension Disaggregation Disaggregation happened in a structural but also a normative respect. First, structural disaggregation led to some significant decentralisation of authority and responsibility within the institution (Flynn and Strehl, 1996). The reform was indeed strongly centred around the concept of decentralising financial decision-making, and the responsibility which went with it, from a central DG, i.e. DG Financial Control, to individual DGs. Due to the critical assessment of the Commission’s

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financial management made by the CIE, the reform was made a priority in order to increase each DG’s managerial autonomy when it came to its financial affairs. The measures envisaged in the White Paper were implemented and led to each DG choosing a financial circuit that best matched its type of financial management – direct or indirect – as well as its budget size. This decentralisation process also meant that most DGs had to set up a financial resource unit as well as an internal audit capacity. Some DGs, like DG TREN, therefore, criticised the re- creation of financial centralisation at DG level with the financial unit having the last word on payments (Levy, 2004). Another unanticipated consequence of financial decentralisation was the further fragmentation of the organisation since not all DGs run on the same financial circuit. A HoU noted (Interv P12, 2007): The other problem of reform is that we cannot work together anymore. DGs do not have the same financial circuits or the same control mechanisms. Therefore, when we decide to do something together, we split the tasks and we do things according to our own methods. Decentralisation was also seen in the setting-up of executive agencies which were part of the Commission’s programme of externalisation of executive tasks. These public bodies were designed to take charge of a programme and look after its delivery. They were separate legal entities which were accountable to the parent DG but still operated at arm’s length. Another very noticeable effect of disaggregation was in its normative feature with the deinstitutionalisation of personnel and financial management. The new norms ruling financial and human resources management were efficiency and effectiveness (Interv H12, 2006). As a consequence, officials were requested to identify output and impact indicators and use them in measuring and evaluating their work as planned in the AMP and reported in the AAR. This culture of measuring and controlling, which developed in the Commission, was criticised by some HoUs who considered that it difficult to determine pertinent indicators. NPM reforms also generated an explosion in auditing which was visible in the Commission with the creation of Internal Audit Capacities as well as the Internal Audit Service. Deinstitutionalisation in personnel policy did not, however, happen in the same depth. The new norm, merit, which was meant to challenge the old one, seniority, did not impose itself visibly. Through the CDRs in particular, promotions were meant to be merit-based. Yet nearly all

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officials interviewed considered that the new system which was implemented did not reward the highly performing civil servants but the average. This was due to a development of the reform measure which the Commission bureaucratised in order to make it as fair as possible. The bureaucracy of the procedure, but more importantly the averaging of points at 14.5, totally undermined the procedure. The process of CDR originally involved the allocation of a maximum of 20 merit points and 10 priority points. On average, officials got 14.5 merit points and 2.5 priority points which made a total of 17 per year. This system induced a fight among DGs in order to maximise the number of promotions (Interv H12, 2006). CDRs were more objective than any evaluation in the previous system but they did not create a new merit-based dynamism in the Commission. It was actually quite the opposite since in the old system, an official could be promoted after two years whereas in the new system he/she could only be promoted after three or four years because it takes that much time to accumulate the points (Intervs H14, H8, H9, H12, 2006). Although the CDRs were envisaged as the crux of the new system, if a large spread of points was used in order to identify the top performing and the least performing, they were implemented in a bureaucratic way which defeated the end purpose. Blurring frontiers The other key indicator of NPM’s organisational dimension was the blurring of frontiers between public and private sector which was referred to as a marketising government. In the case of the Commission, part of the externalisation policy relying on contracting out was seen as an attempt to introduce some competition into the administration. However, these contracts were limited to non- core tasks such as security which did not in practice affect the distinctiveness of the European administration as a public sector body. The reality of the implementation of the White Paper did not, therefore, move the organisation down-grid. However, the Commission clearly borrowed from the private sector some managerial tools and techniques. The most important one was the strategic planning and programming which matched resources and activities. Even though the implementation of the Kinnock reforms did not mean identifying negative priorities, ABM, with its Strategic Planning and Programming cycle, Annual Policy Strategy, Annual Management Plan and Annual Activity Report, became a feature of officials’ everyday life. In practice, Commission staff learned to plan ahead, use indicators, monitor and report on their activities. But many officials still tended to think in terms of procedures to follow and did

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not integrate this thinking in a coherent strategic process. They still relied on following procedures with no ‘question of process management. There is no culture to identify and think in terms of rules, how to implement them, what tools to use, how much staff is needed, what key performance indicators should be achieved and what to benchmark against’ (Interv K9, 2006). Officials filled in the appropriate forms and followed all the new procedures but ‘more was required to further embed SPP in the administrative culture’ (European Commission, 2004a, p. 6). An official explained this by saying that ‘the White Paper built the bones and muscles of the reform but not the nervous system which is still missing’ (Interv K8, 2006). Staff were far too focused on managing inputs properly to think about outputs, in the short- or long-term (Interv H3, 2006). Peterson (2004, p. 26) also got this feedback from officials who complained ‘they were justifying their existence rather than actually doing the job they were paid to do’. There was a strong feeling in the Commission that ABM could be useful but consumed ‘a lot of valuable policy-making time’ (Interv K10, 2006). In his analysis of implementation of ABM by the Commission, which he correctly identified as the cornerstone of the reform strategy, Levy (2004, p. 10) considered that ‘the Commission’s conception of ABM bears only scant resemblance to the systems practised in private sector organisations [ ... ] The focus is on the definition of objectives, not costing the activities’. It would be wrong to strictly compare ABM as applied in the private sector with its implementation in a supranational public service. There should be an understanding of the fact that the reform was a process which started with significance attached to the definition of policy objectives and priorities and then moved on to a more purely cost- centric focus. NPM’s political dimension Change of role of the Commission The Kinnock reforms did not mean a loss of legitimacy of the Commission’s action or its hollowing out. The reforms were launched to reinforce the European administration’s legitimacy on the European Union’s institutional scene and demonstrate that it could be an efficient and effective policy-maker and therefore driver of European integration. Be it at macro-level – the European institutional triangle – or meso-level – the Commission’s services – the implementation of the White Paper and the amended human resource policies and procedures demonstrated the capacity of the institution to reform itself. The setting-up of executive agencies meant removing certain tasks from

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DGs and therefore reducing the involvement of the Commission in direct programme delivery. Trade unions from l’Alliance, which was composed of FFPE, Renouveau et Démocratie, SFIE and TAO-AFI opposed to the Kinnock reforms, branded these new public bodies ‘a selling out of the Commission’ (Interv K3, 2006). Yet it cannot be said that they contributed to the privatisation of the Commission, despite what trade unionists said. Many officials considered that, rather than a symptom of externalisation of programme delivery, they represented a policy of internalisation since these bodies were public and accountable to the Commission, unlike the infamous Technical Assistance Offices (TAOs). At micro-level, a new category of staff was created, the contractual agents. They were designed to help the Commission focus on its core tasks and therefore were recruited to work in agencies and offices carrying out non- core tasks, at a lower salary than Commission fonctionnaires. They enjoyed the same rights as the Commission staff and were therefore included in the category of public servants. In comparison, the auxiliary staff who used to work in the TAOs had private sector contracts which created more problems and division between public and private sector than the status of the new contract agents. The noteworthy element is that executive agencies had no problem recruiting extremely qualified staff, despite a lower salary than Commission officials. Jobs were publicly advertised. There was a screening of CVs, a pre-selection through interview and then a final selection panel. The real challenge to the civil servants’ role was the increased pressure for service. Despite not being a traditional public administration serving citizen- customers, the Commission makes policies and delivers programmes which affect citizens directly. Value-added and value for money were therefore mentioned many times in the White Paper and repeated as a guideline of action for the officials interviewed when they were involved in programme- designing and policy-making. This also meant growing demands for accountability of civil servants, which marked a considerable change in expectations from the European fonctionnaires. Even if the service-based culture did not pervade the institution, an increased awareness of value and impact arose with the implementation of the NPM-based White Paper. Depoliticisation of governance A crucial element of NPM was the depoliticisation of governance which consisted of a dual contradictory movement, empowering

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‘at-arm’s-length bodies’ while politicising public administration. The Kinnock reforms reinvigorated the politics/administration dichotomy with the creation of executive agencies. In 2007, two agencies – the Intelligent Energy Executive Agency and the Education, Audiovisual and Culture Executive Agency – were set up. A third on Public Health was in preparation and two others dedicated to transeuropean transport networks and the implementation of the seventh research framework were in the pipeline (European Commission, 2005). They were dedicated to managing and delivering the DG’s programmes, which were regarded as non- core tasks. As a result the parent DGs regained time to spend on core tasks, mainly policy-making. The dichotomy between politics (via policy-making) and administration, with policymanaging, was clear (Aucoin, 1990; Simon, 1957). Another feature of this depoliticisation of governance appeared in the concern expressed by an executive agency official who pointed out the autonomy that executive agencies had and the possible conflicts it engendered with the parent DG. Legally, executive agencies were conceived as separate bodies from the DGs. For example, they had to produce a full set of accounts which were discharged separately from the parent DG’s accounts by the EP. This guaranteed the agency’s independence. In the same vein the agency, which operated on its own budget, had to have an accounting function and an accounting officer who made the payments. This autonomy could also generate ‘a danger of overkill’ (Interv K11, 2006). Agents and officials from executive agencies were the people who were directly in touch with the DG’s stakeholders and dealt with their issues related to programme management. As a result, it would get to know better than the DG about the stakeholders’ needs and what should be proposed in a regulation or a legislative proposal (Interv H13, 2006). Even though the legal architecture which surrounded the development of executive agencies put in place strict accountability mechanisms, the feedback between the policy-makers in the DG and the executants in the agency was left to the executive agency’s director’s discretion. Finally, NPM reform also meant a politicisation of the bureaucracy. Since the Commission is not comparable to a national government, its politicisation was not translated into political allegiance. But in the Commission’s case, literature has already pointed out how politicised the top hierarchy is, in particular in appointing DirectorsGeneral (Stevens and Stevens, 2001; Peterson and Sharp, 1998). Aside from the Kinnock reforms, the political pressure on civil servants from Commissioners increased as a result of Prodi’s measures against cabinets

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which he introduced as a preamble to further reform. As a HoU in DG TREN (Interv L14, 2006) explained, The role of the cabinets and of the Commissioners has decreased since Prodi reduced the size of the cabinets. As they are small now, the Commissioners are very nervous about the way their officials’ work. Barrot is a typical example; he blocks every legislative initiative so there is a lot of de-motivation of civil servants because the political control is strong. More directly linked to the Kinnock reforms, political pressure also mounted on Directors- General with the delegation of financial responsibility. A HoU considered that ‘the College offloaded its responsibility to the services because they organised financial delegation to the Directors- General’ (Interv L2, 2006). This delegation was meant to be a sharing of responsibility: the Commissioner remained politically responsible while the Director- General assumed the managerial responsibility of his/her DG’s finances; but once again this politics/administration dichotomy did not prove to be watertight (Behn, 2001). NPM’s democratic dimension Accountability and responsibility Accountability was always a very intricate area at the interface of public administration and politics, central for democracy (Moe and Gilmour, 1995). Before the emergence of managerial concerns in public administration, responsibility was more commonly used when discussing the relationship between bureaucrats and the public. Mulgan (2000, p. 558) explained the difference between accountability and responsibility: ‘Accountability’ can then denote one set of responsibility/accountability issues, those concerned with the ‘external’ functions of scrutiny, such as calling to account, requiring justifications and imposing sanctions ... while ‘responsibility’ is left to cover the ‘internal’ functions of personal culpability, morality and professional ethics. The Kinnock reforms had the objective of developing a culture based on service. This organisational change encompassed new reflexes with regard to managerial responsibility as well as managerial accountability. The financial reform very noticeably enhanced officials’ awareness of sound financial management as well as a deeply embedded sense of managerial responsibility. The CIE’s damning sentence regarding

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officials’ sense of responsibility (CIE, 1999a: 9.4.25) was perceived by all officials as an injustice. As Karel Van Miert said in the aftermath of the publication of the CIE’s first report, ‘Officials have too much of a sense of responsibility’ (Interv H13, 2006). Similarly an official believed that the CIE’s report was very worthy but that: one killer sentence was an irresponsible thing to say. They behaved in a political fashion which was not their mandate [ ... ] What they meant was, it’s difficult to find anyone in the Commission managerial classes who has a direct sense of financial responsibility. I’m translating for them but that’s what they meant. (Interv H13, 2006) This feeling was shared by most interviewed officials, who believed that the system was taking responsibility away from officials. It was largely acknowledged that the overhaul of the Financial Regulations which, in particular, decentralised financial responsibility to the DirectorsGeneral and middle managers, changed officials’ attitudes when committing European monies. In this matter of financial responsibility, the pendulum even swung too far with the European Parliament criticising the Commission for not spending the money it was allocated (Intervs H1, H13, 2006) which was explained with the fear the new responsibility instilled in many middle managers (Interv P12, 2007). It was argued that financial procedures were too heavy and lengthy to allow for flexible spending of the money and that a balance needed to be struck. The implementation of the Kinnock reforms showed that HoUs became much more aware of the monies committed as well as the outputs they had to produce and how they had to be accountable for them. Reporting became a regular activity of middle managers who in particular contributed to the mid-term assessment of the AMP and the AAR. The most obvious change when studying managerial accountability was the obligation for Directors- General to vouch for the validity of their accounts in the AAR, committing, therefore, their own personal monies in case of irregularities that they did not mention. However, the new system was highly criticised. There was a general feeling coming from DGs that DG Budget was shying away from its responsibility and refusing to play its horizontal role overseeing the Commission’s financial system. DG Budget clearly stated that ‘it is responsible for the pipes but not for the water’(Interv K9, 2006) so it only played a consolidation role. In this regard, Jules Muis, who was appointed as first director of the new Internal Audit Service created in July 2001, opposed the Director- General of DG Budget, Jean-Paul Mingasson, quite starkly.

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Muis believed that financial control should be abolished only over individual transactions but not overall. Therefore DG Budget signed off the accounts on the basis of the information provided by the DGs without controlling the validity of figures it received from individual DGs. There are two ideological camps in the Commission on that topic of financial control but it has to be said that the path chosen in the White Paper is coherent with total financial decentralisation and NPM’s aim to loosen central control. Transparency and openness The more recent waves of NPM reforms have insisted on the importance of transparency and openness in changing government. Blomgren (2007) points to the quest for transparency as a tool to improve efficiency of measures or to deal with distrust within or outside the organisation. In the Commission’s case, it was above all seen as a way to improve the legitimacy of the institution’s actions externally and the legitimacy of the reform package internally. Inside the institution, the implementation of the White Paper brought about many practical changes in terms of transparency in personnel management. As stated in the reform programme, all information on recruitment procedures and the organisation of competitions was accessible on the internet. Job descriptions became a requirement and were even expected. But transparency as a way of improving the efficiency of the Commission’s administrative measures and dealing with distrust could also be fostered by the multiplication of audits, be they performance or financial audits. Yet HoUs commented that they did not always get the result of their IAC’s audit. This lack of follow-up tended to negate the positive impact that performance audits could have on the unit’s efficiency. Furthermore the constant scrutiny and evaluation of officials’ work generated more distrust and demotivation than genuine transparency. In order to fight mismanagement and potential fraud, the reform put in place tighter control mechanisms and procedures which many officials associated with a ‘culture of mistrust’ in the Commission, where it was automatically assumed that people broke rules unless control happened systematically. A former British civil servant made an interesting comparison with the UK civil service ‘where the assumption is much more that people can normally be trusted on the day to day things’ (Intervs H14, H9, 2006). Transparency for efficiency was further hindered with the lack of simplification of procedures criticized by an overwhelming majority of officials. Whether they considered the reform as an improvement or not, interviewed HoUs were snowed under by cumbersome new

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procedures which took up a lot of their time. The reform in that particular sense hit middle management most forcefully as 12 middle managers reported on the negative impact of the procedures on their work (Interv H3, 2006). The Commission heralded transparency and openness as two of the key tenets of good governance. In practice, openness was implemented with the Commission responding well to the significant demand of access to official documents. This step towards more openness with civil society proved to be successful since over 80% of public mail was answered within the standard deadline of 15 days in 2003, up from 70% in 2002 (European Commission, 2004a).

Conclusion At the start of 2006, the Secretary- General distributed a survey to collect the views of Directors- General and Heads of Service on ‘priorities for de-bureaucratising’. Of the 40 contacted, 28 completed the survey. They identified concerns in all of the areas which the Kinnock reforms had tackled. The message was loud and clear: the reform had over-hit the mark and significantly increased the level of red tape in the institution. From the analysis of the substance of the White Paper and of its implementation, three conclusions can be drawn. First, Kinnock, his cabinet and the Task Force clearly found their inspiration in NPM ideas when designing the reform of the Commission, which revolves around four key concepts: decentralisation of responsibility, strategic management, reward of merit and transparency. Second, looking at implementation levels can be deceiving as to the degree of achievement of the reform. Beyond unintended consequences which did not match results expected from an NPM reform, there was a lack of ownership of some reform measures by officials who went through the motions without buying into the normative importance of the process, the SPP cycle being a good example. Third, the promise given by the White Paper that the reform would make the Commission more efficient and effective by ‘[focusing] on core functions such as policy conception, political initiative and enforcing Community law’ (European Commission, 2000a, p. 5) was not kept. The time spent on following new procedures and controlling compliance slowed the Commission down and further demotivated middle management. A Director remarked that ‘if Moses needed only two tablets of law, surely the Commission can do with less than 24 Internal Control Standards’ (Interv H3, 2006).

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This chapter, together with Chapter 5, validates the second hypothesis made in this book about the centrality of NPM ideas in the White Paper, despite Kinnock’s denial. Even though change happened, its dynamic might have been more heterogeneous than a macro-level analysis would show. Having assessed the nature of institutional change and the implementation of the reform measures at Commission level, it is time to test the final hypothesis and move to the meso-level in order to analyse how DGs received and translated the Kinnock reforms and what institutional change the reforms generated.

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7 The Secretariat-General: a Case Study in Innovation

Despite its pivotal role within the European public administration as well as between the European Commission and other institutions (Stevens and Stevens, 2001; Kassim, 2004a; Nugent, 2001; Christiansen, 2001), the Secretariat- General (SG) is still a very under-researched service compared with other Directorates- General. Originally created in 1958 and named Executive Secretariat, this horizontal service was designed to provide administrative support to the College of Commissioners as well as guarantee good coordination among services as well as with other institutional actors. Since the Kinnock reforms, in which the SG was heavily involved, the service considers that its role is ‘to define and design the Commission’s strategic objectives and priorities [ ... ]; to coordinate, facilitate, advise and arbitrate; to facilitate the smooth running of the Commission through planning, programming and operation of a modern registry; to act as the Commission’s interface with the other European institutions, national parliaments and non governmental organisations’ (European Commission, 2010). From the perspective of a study on administrative reforms within the Commission, it is interesting to briefly note the development of the Executive Secretariat, renamed Secretariat- General following the 1965 Merger, within a European public administration, originally set up as a non-hierarchical structure but which developed a need for a horizontal coordinating service. In August 1952 a Comité de Démarrage (CEAB 2/701, p. 3; CEAB 2/88 p. 19) was set up in order to work out the organisation of the High Authority’s administrative services (Mazey, 1992, p. 34). Jean Monnet wanted to keep a non-hierarchical, small, flexible structure (CEAB 12/55/2, p. 153). It was decided that the President of the European Commission would not be in charge of a specific portfolio like the other 123

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Commissioners; he would have an overseeing function, while being responsible for the administrative Commission. In this framework, the Executive Secretariat was placed under his authority. As Kassim highlights (2004a, p. 75), ‘the SG played a crucial role in the institutionalisation of the Commission, the formation of its institutional identity and the regularisation of its operation’. In over 50 years, from 1958 to 2010, the SG was only headed by five different Secretaries but one of them put his mark onto the organisation for 30 years: Emile Noël. His focus was European integration and he moulded the SG to play a leadership role among the various services. The position of the SG as the leading service placed directly under the authority of the Commission President gave it a privileged position of influence. Noël himself did not always go through the hierarchy to get things done. Yet when Delors took over as President of the European Commission in 1985 and developed a similar system of personal networks centred on his own cabinet, Noël did not consider it appropriate. Kassim (2004a, p. 79) explains that: there were constant clashes between the Commission President’s cabinet, which sought to establish itself as the nerve centre of the Commission, and the Secretary General (Endo, 1999: 43), who was unhappy with Delors’ apparent disdain for collegiality. Noël retired in 1987 from the Commission and from then on, the SG grew into ‘a service to the service of other services’, which became its motto and how it is referred to within the Commission. Yet the Secretary- General appointed in 2005, Catherine Day, together with Manuel Barroso, tried to change this image and make the SG into a Cabinet Office (Kassim, 2010). In analysing the impact of the Kinnock reforms on the SG, it is interesting to remember that the SG itself was involved from the beginning in the administrative reform process, contributing to the White Paper, implementing decisions from the White Paper and taking on a coordinating role from the end of 2002. This chapter contends that the implementation of the Kinnock ‘one size fits all’ reforms, which were obviously more appropriate for and targeted to vertical DGs, posed great difficulties in a service whose nature it is to coordinate, communicate and support other services rather than to manage a programme or even make policy. Yet, the SG needed to lead by example. Therefore it automatically adjusted its organisational structures to match what was asked of all DGs across the Commission.

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When it came to processes and procedures, the SG had more of a vested interest in implementing the Kinnock reforms and even developing them. Beyond organisational structures, processes and procedures, the change within the SG was largely cultural, with the appointment of a new Secretary- General in 2005, Catherine Day.

Organisational structures In 2008, the SG was structured into eight horizontal directorates. Directorate R is in charge of resources, strategic programming, information management and IT. Four of the other Directorates dealt directly with different aspects of the ‘Better Regulation’ strategy which was, therefore, placed at the heart of the SG’s work. From this organisational chart, it was clear that the SG was involved in a very limited number of operational tasks and it was therefore no surprise that it handled a very small budget of just over €10 million. As it mentioned in its 2008 AAR report, ‘in financial management, the SG has a low risk profile’ (AAR, 2008, p. 37). As for all DGs in the Commission, the Kinnock reforms automatically resulted in some changes in the financial structure of the SG with the creation of a Directorate dedicated to resources as well as an Internal Audit Capability. Yet the SG also made some deliberate choices regarding its restructuring which reflected deeper ownership of the ongoing administrative reform as well as the integration of objectives set out by the European Council. The automatic creation of a resource directorate and an internal audit capability With the dismantling of DG Financial Control, which was responsible for overseeing all financial transactions within the Commission, financial responsibility was decentralised to each and every DG. The White Paper Reforming the European Commission set out four different options for DGs regarding the organisation of their internal financial circuits. The choice of one model of financial circuit over another was largely made depending on the size of the DG’s budget as well as the ‘sensitivity’ of transactions the DG had to handle. The SG chose Model 4 to administer all administrative expenditure, which included administrative appropriations but also expenditure related to publications, online dissemination of institutional information, management of the Community’s historical archives located in the European University Institute in Florence, and financial management of the Bureau of European Political Advisors (BEPA). Indeed, since 2006, the SG had

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become financially responsible for the BEPA, for which it provided auditing and HR services for reasons of economies of scale. This centralised financial structure meant re- creating the system of DG Financial Control within the SG, whereby the desk officer passed on his budgetary file to the line manager who sent it to the Financial Unit where the authorising officer took the final decision without going back to the line manager. The initialisation and financial verification – ex ante controls – were therefore centralised in the financial unit. For all other spending regarding IT and document management, Model 2 which was partially decentralised was chosen. This financial circuit involved the desk officer sending his financial file to the financial officer in the Financial Unit, who then sent it back to the desk officer’s line manager who was the authorising officer. In Model 2, the financial responsibility was partially decentralised to the HoU rather than being centralised within the Financial Unit. In the SG, the financial unit R-1 called ‘Programming and Resources’ was situated in Directorate R ‘Resources and General Matters’. This Directorate1 was created in 2005 after the Barroso Commission was appointed and reflected a relatively late organisational adjustment to the administrative reform requirements. It can, however, be argued that the SG’s budget being so small compared with a strategic planning and programming budget that a resource directorate was not a priority. As a result, the creation of Directorate E, which was then renamed R, could be perceived as a de facto consequence of the Kinnock reforms since the SG had to be exemplary. The financial unit handled some decentralised aspects of human resources for the SG, budgetary matters as well as internal training. About 20 officials worked within the unit: a HoU, a secretary, six on HR issues, six on financial matters, five on training, one on a programme of greenhouse keeping internal to the Commission which was piloted in five DGs. The financial unit worked in contact with another unit which was created as a consequence of the Kinnock reforms, the Internal Audit Capability (IAC). Given the small budget which the SG handled, the IAC carried out mainly operational as opposed to financial audits. When performing audits, the IAC focused on five specific Internal Control Standards (ICS) out of the 162 which applied across the Commission: ● ● ●

compliance with policy rules reliability of information integrity of information

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safeguard of assets effectiveness and efficiency of standards.

Since the SG’s IAC remained a very small structure, it performed only two audits every year but did about four follow-ups on audits carried out in previous years in order to check that audit recommendations were implemented. In 2008, the IAC performed an audit of the SG’s human resources, which involved assessing in each unit whether human resources were used efficiently and in adequacy with the unit’s workload. It was argued that this audit on HR management within the SG was launched because ‘the SG wants a shift from administrative to strategic HR management which involves a greater focus on training and recruitment’ (Interv D2, 2008). Overall the IAC’s audits involved a review based on risk analysis which was then summarised in an audit opinion. But beyond formal audits, the IAC also played a consulting or advisory role by carrying out organisational studies on activities which were less formal. This involved making recommendations on how to modernise the SG or enhance cooperation for the AMP and the AAR. The SG functioned in a system of single audit in cooperation with the IAS, the other IACs and the ECA ‘in order to try and avoid overlap or underlap’ (Interv D2, 2008). To facilitate the achievement of the single audit system, the Audinet was created which was a network of all IACs and the Director- General of the IAS. In 2007, the IACs and the IAS agreed a common methodology on risk assessment which considerably reduced the tensions which previously existed between the IAS and the IACs. However, due to the SG’s position in the Commission’s organisational structure, one ICS generated a specific strain in the relations between the IAC and the IAS. ICS 16 stated that ‘The DG has an Internal Audit Capability (IAC), which provides independent, objective assurance and consulting services designed to add value and improve the operations of the DG’.3 This required that each DG’s IAC formally defined its role and responsibilities in an audit charter. But, as the IAS observed, there were too many discrepancies between the audit charters of the various DGs and they were not in line with the Institute of Internal Auditors’ Standards. It triggered many political discussions between the IAS and the DGs which resulted in a template for an audit charter based on the ‘complied or justified’ principle. It stated that DGs either had to comply with the set standards or justify why they did not. Furthermore, the template audit charter stated that if there was a disagreement between the head of the IAC and the Director- General on the level of

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risk accepted by the Director- General, the head of the IAC could report directly to the Secretary- General. This was known as the ‘escalation clause’. However, a special adjustment was made for the head of the SG’s IAC since his Director- General was the Secretary- General. As a result, he could inform the head of the Audit Progress Committee directly. As part of the Kinnock reforms, an Audit Progress Committee4 was set up in October 2000 to ensure that the recommendations of the IAS and the ECA’s audits were implemented and to assess internal audit quality. It was originally composed of four commissioners and ‘one external member with relevant experience and knowledge of internal audit’.5 It was then expanded to include seven members: the Vice-President of the European Commission for administration, audit and anti-fraud, the Vice-President for inter-institutional relations and communication strategy, the commissioner responsible for financial programming and budget, the commissioner responsible for agriculture, the commissioner responsible for external relations and two external members.6 Yet at an organisational level, it was only in 2005 that the SG created a unit dedicated to be the secretariat of the APC within Directorate C ‘Programming and Administrative Coordination’. From a financial organisational viewpoint, the implementation of the Kinnock reforms by the SG automatically generated new structures which did not revolutionise the service. When looking at the impact of the reforms on the SG’s structure, the setting-up of an IAC performing operational audits as well as providing a consultative service proved to trigger some cultural change focused on audit and control. Nonetheless, the SG was much more deliberate in its organisational change when it came to putting in place structures that developed the strategic programming and better regulation agendas. A deliberate focus on strategic programming and better regulation From an organisational point of view, the SG was undergoing constant change since 2000. Two changes were directly linked to the Kinnock reforms: ●

●

The restructuring of the SG to suit its new functions emerging from the priorities set by the Kinnock reforms regarding strategic planning and programming. The creation of a separate body, the Impact Assessment Board (IAB), which examined and issued opinions on all the Commission’s impact assessments. As discussed later, the Kinnock reforms changed

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the SG from ‘a machine for procedural advice into a policy-making expert’ (Interv D1, 2008). In this respect, the SG needed tools for better policy-making, which meant a new structure to provide advice on the quality of impact assessments carried out by the IAB. Kassim (2004a) traces the organisational change which took place in the SG between 2000 and 2005, which clearly highlights the priority given by the service to strategic programming. It was always stated as part of the SG’s mandate to coordinate planning and programming of the Commission’s work but it was only in 2003 that a specific unit entitled ‘Strategic Planning and Programming (SPP) and Coordination’ was created which specifically reflected the annual processual task assigned to the Commission since the implementation of the Kinnock reforms. In 2005, the strategic planning and programming were even separated from the coordination activities and a distinct SPP unit was created. As SPP became ingrained in the culture of the Commission, the SG’s internal structure was further changed to reflect the new priority and emphasis on better regulation, which was at the heart of the SG’s work as policymaker. Therefore, between 2006 and 2007, the SG was substantially restructured creating four Directorates whose title all included ‘Better Regulation’. Table 7.1. summarises the changes in Directorates in the SG from 2003 to 2009. Yet ABM and programming remained significant within the objective of better regulation with unit B1 as the flagship. Following on from this focus on better regulation and the development of impact assessments, the other significant organisational change was the creation of the Impact Assessment Board (IAB), which several officials deemed to be an indirect consequence of the Kinnock reforms. One HoU argued that ‘the IAB was created under the European Parliament’s pressure, which wanted some neutrality in proposal assessment. It should be done by third party but the compromise found was that an independent body ensures quality check’ (Intervs D1, D2, 2008). The IAB was not mentioned as one of the 98 measures included in the White Paper but it was definitely part of a dynamic started with the reforms which focused on quality control. Systematic Impact Assessments (IA) started being carried out in 2003 as a result of the administrative reforms and their emphasis on quality control as well as better regulation. The motivation behind introducing a system of IA was clearly to bring coherence to an instrument which was already in use in certain sectors but not others. A HoU explained that ‘Manuel Barroso decided without any consultation to create the Impact Assessment Board in 2006. This was a real innovative institutional creation’ (Interv. D6, 2010). Chaired by the Deputy

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Table 7.1 Changes in SG structure from 2003 to 2009 2003

2005

No Directorate R

No Directorate R

2009 Directorate R Resources & general matters - Programming and resources - Mail & document management - Information technology - Information & databases

Directorate A

Directorate A

Directorate A

Registry Registry Registry and - Meetings of the College - Oral procedures & Commission decisionand follow-up circulation of making procedures - Written procedures documents - Advice, developments - Electronic transmission - Written procedure, and logistics of documents habilitation & - Oral procedures delegations - Written, empowerment - Electronic transmission and delegation of documents procedures Directorate B

Directorate B

Directorate B

Relations with Civil Society - Relations with agencies - Application of Community law - Openness & professional ethics - Archiving systems & the historical archives

Relations with Civil Society - Application of Community law - Transparency & relations with civil society - Archiving systems & the historical archives - [deontology]

Better regulation & administrative policies - ABM, financial and administrative programming - APC Audit - Crisis Management - Public Service Ethics - Document Management Policy

Directorate C

Directorate C

Directorate C

Programming & Commission policy coordination - SPP & coordination - Policy coordination - Publications - IRMS

Programming & administrative coordination - SPP - Coordination of administrative and budgetary policies - Annual report & publications - Secretariat Audit Committee

Better regulation, evaluation and Impact Assessment - Evaluation - Better regulation and IA

Continued

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Table 7.1 Continued 2003

2005

2009

Directorate D

Directorate D

Directorate D

Relations with Council - Relations with Council I - Relations with Council II - Coordination of codecision

Policy coordination - Lisbon strategy task force - Policy coordination I - Policy coordination II

Better regulation and coordination - Strategic objective prosperity - Strategic objective solidarity - Strategic objective security and external responsibility

Directorate E

Directorate E

Directorate E

Relations with the EP, European Ombudsman, Economic and Social Committee, Committee of the Regions

Resources and general matters - Programming and resources - Mail & documents - IT - Information & databases

Better regulation and institutional issues - Institutional issues - Application of Community law - Transparency, relations with stakeholders and external organisations

Directorate F

Directorate F

Directorate F

No Directorate F

Relations with the Council - COREPER I - COREPER II, G7/G8 - Codecision

Relations with the Council - COREPER I - COREPER II - Codecision

Directorate G

Directorate G

Directorate G

Resources & general matters - Programming and resources - Mail, documents & internal information - IT & databases

Relations with the EP, European Ombudsman, Economic and Social Committee, Committee of the Regions & national parliaments

Relations with the EP, European Ombudsman, Economic and Social Committee, Committee of the Regions & national parliaments

No Directorate H

Directorate H

No Directorate H

Institutional affairs - European constitution - Institutional affairs & better regulation - Governance Source: Kassim (2004a), updated by author.

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Secretary- General responsible for Better Regulation, it was composed of one Director from each of the Commission’s DGs that had ‘the most direct economic, social and environment expertise in integrated impact assessment’:7 DG Environment, DG Economic and Financial Affairs, DG Employment and DG Enterprise. The IAB operated under the direct authority of the Commission President. Officials in the SG deemed its work efficient yet one rightly pointed out that ‘in recent years, DG TREN on the energy side and DG Justice and Home Affairs have also produced masses of legislation’ (Interv D5, 2008). Organisational changes due to the Kinnock reforms seemed to have been well accepted by the SG officials, mainly because they did not significantly alter the functioning of the DG. In the case of the creation of the IAB and the four Directorates dedicated to ‘Better Regulation’, these changes even reflected the Commission’s and the SG’s new priorities.

Processes and procedures Like all DGs across the Commission, regardless of their function and their aim, the SG had to implement all the processes and procedures laid out in the White Paper. It was almost more significant for the SG to do so and lead by example since it was one of the actors master-minding the White Paper and its implementation. Yet, the limits of the Kinnock reforms appeared quite clearly with its ‘one size fits all’ approach which suited vertical DGs better than horizontal ones. The SG therefore stuck to the letter of the reforms by implementing the SPP cycle but it was also innovative in developing new processes in the spirit of the reforms. Building on the priorities identified by the Commission, the SG keenly developed the Impact Assessment procedure which was an indirect consequence of the Kinnock reforms. With less enthusiasm, the SG also implemented the Career Development Review system, and quickly realised its shortcomings. Processes: the constraints of leading by example The Kinnock reforms aimed to change the Commission’s focus from inputs to outputs. It therefore laid out new processes which helped the Commission with its strategic planning and put the emphasis on a necessary link between resources and results. The overarching new process took an entire chapter of the White Paper and is referred to as ActivityBased Management (ABM). In the context of an increase in the number of programmes, because of the enlargement to ten new Member States in 2004, the Commission could not carry on taking on new tasks without

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considering its finite resources. The ABM process was designed to give the Commission visibility in terms of activities and available financial and human resources as well as to set out the objectives to be achieved. Prioritising was at the heart of the process. The SG was at the centre of the ABM cycle. The ABM steering group, which was composed of the Directors- General from the SG, DG ADMIN, DG BUDG, DG DIGIT, members of the cabinets as well as the Head of the IAS on invitation, drove the entire programming cycle and embodied the political legitimacy of the process. The HoU of SG-B1 ‘ABM, financial and administrative programming’ acted as the secretary for the ABM steering group, whose role was to prepare the Annual Policy Strategy, allocate HR and determine budgetary targets. The ABM in general was considered to be a positive addition to the Commission’s processes. It focused attention on the priorities set by the President of the Commission rather than on each official’s agenda. Officials also considered that it clarified relationships with colleagues as well as helping to manage expectations. A HoU argued that ‘It gives deadlines and, let’s be honest, it also allows you to steer your collaborators’ work more firmly. ABM is a management not a control tool’ (Interv D3, 2008). This last point was variously disputed by officials depending on their experience and whether they considered that the EP used the process to systematically point to the Commission’s shortcomings. As a result, several officials pointed out that the ABM was a good idea when taken at face value. There was a lack of understanding as to how to use the documents resulting from the process. A HoU openly pointed to the pressure exerted by the EP through the COCOBU which meant that ‘there is a tendency to squeeze on the level of administrative support. The COCOBU exercises healthy pressure but it is politically driven’ (Intervs D10, D11, 2008). As part of the ABM, the SG had to put together an AMP for the year to come. The AMP had both internal and external dimensions. In its internal dimension, the SG listed what its objectives were and how it was going to achieve them. In its external dimension, the SG used the AMP to sell itself and its activities to the outside. As a HoU explained however, ‘The SG performs such diverse activities that it is difficult to put the AMP together’ (Interv D12, 2008). The SG was involved in the APS at two different levels. It had to prepare its own AMP followed by an AAR, like every DG in the Commission. But it was also involved in examining DGs’ AMPs which set the framework of discussion on achievement of priorities and related objectives as well as on adequate resources. The President’s cabinet and the SG controlled whether DGs’ AMPs were

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opportune and fitted in with the principle of subsidiarity. It was mainly SG- C1 which assembled the contributions from the various DGs for the Commission’s Legislative Work Programme and ‘added political flavour to them’ (Interv D1, 2008). Several units in the SG considered themselves at the margin of the ABM process because they did not have operational tasks. Yet they could be consulted on contributions from other DGs. For example, unit ‘Better regulation, evaluation and impact assessment’ was regularly asked about DG REGIO’s contribution. The SG drafted an AMP stating the main priorities for the year to come, the general objectives, its human and financial resources as well as its Activity-Based Budgeting Activities. Each of these activities was divided into sub-activities for which specific objectives, result indicators and main policy outputs were identified. Diagram 7.1. summarises the timeline of the SPP cycle. The AMP within the SG was generally considered as an artificial exercise, whose external dimension was to prove to other institutions and Member States that the Commission had mended its ways of doing business, which seemed more significant than its internal dimension. Moreover, according to an adviser to the Secretary- General, Directorates in the SG did not tend to carry out annual reviews or mid-year reviews of its AMP as the other DGs (Interv D8, 2008). Yet this was contradicted by a couple of HoUs who indicated that two to three times a year, Catherine Day, the Directors and three HoUs met to assess the implementation of the AMP (interv D3, D7, 2008). Ultimately it was Day who confirmed or amended the orientation taken in the AMP. Even if objectives were eventually identified in the AMP, it seemed very difficult to find appropriate result indicators which made sense and were not simply mechanical (Intervs D7, D10, D11, 2008), given the

November 2006

February 2007

December 2006 Start of the SPP cycle. Road map from Directorates

July 2007

March 2007

Preparation of APS and PDB

Secretariat-General sends a directive of preparation for the CLWP

September/ October 2007

January 2008

September 2007 December 2007 CLWP finalised by Secretariat-General after discussion with Cabinets and DGs

Preparation 2006 AAR

Adoption of CLWP by College

Preparation 2008 AMP

Diagram 7.1 Preparation for the 2008 SPP in the SG

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type of policy-making rather than policy-managing activity that the SG performs. This was noted in the 2006 AAR (p. 19) which stated that: Most of the issues for which the SG has a leading role have a high political profile and are heavily dependent on the actions of other institutions and Member States. Such is the situation concerning objectives for the Lisbon Strategy and Better Regulation. Therefore, in managerial terms, quantitative indicators are difficult to define. An official, whose function used to be to explain to DGs how to define objectives and indicators, argued that he changed his mind on their usefulness when he was transferred to a unit within the SG where he had to identify objectives. He claimed that ‘it is a burdensome, useless and time- consuming process. Nobody wants to define objectives. Every year you have to write them down. The way it happens is that you find a victim in the unit who’ll spend a lot of time identifying objectives’ (Interv D1, 2008). The other process which was put in place as a direct consequence of the Kinnock reforms was the internal control framework which aimed to strengthen control effectiveness. As stated in one of the SG’s documents,8 ‘like any modern administration, the Commission needs to show that its internal control systems provide sufficient assurance on the execution of its activities’. There were originally 24 ICS developed for the Commission environment and based on the internationally recognised COSO framework of best practice. In 2007, the SG, ‘within the spirit of the ongoing debureaucratisation and simplification initiatives’, adopted a more flexible approach because ‘all ICS [Internal Control Standards] may not be equally important to all DGs – or Directorates and Units – at all times’.9 As a result, their number was brought down to 16. ICS were perceived as a requirement only for financial people. Their name was changed to ICS for effective management to raise officials’ awareness that everyone in the Commission must be concerned by compliance with them (Interv D10, 2008). Over time, the level of control of compliance also alleviated. Until 2006, DG BUDG asked for an overview from each DG, SG included, for each ICS so that DGs could point out the weaknesses and DG BUDG could anticipate financial problems. The SG had to do two reports, one on compliance and one on effectiveness in the context of the AAR. However, DG BUDG realised that there was compliance with more than 90% of the ICS. Since the 2008 AAR, reporting on effectiveness and compliance has been done by exception (Interv D4, 2008). The SG was

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in charge of a small group of HoUs who met and were asked for their input for new ICS and what they felt was most relevant. The SG definitely put in a genuine effort to streamline the bureaucratisation of ICS and make them as effective as possible through feedback from various DGs (Interv D10, 2008). Overall, the SG led by example, even if the implementation of the Kinnock reforms did not fit its horizontal activity very well, as in the case of the AMP. HoUs pointed out that the ‘one size fits all’ approach in the new processes proved to be rather constraining. Yet the SG was happy to be proselyte and spread the good word through operational DGs because it considered AMPs and AARs more relevant to them. Trying to move beyond the constraining aspect of the reforms, the SG adequately focused on amending ICS so that they were as effective as possible. When interviewed, HoUs in the SG automatically focused on the results of the Kinnock reforms within other DGs rather than within the SG. Because of the SG role from the inception of the reforms, HoUs tended to think of the wider institutional picture. They acknowledged the ABM’s usefulness in some respects but they also highlighted its inadequacy with regard to the SG’s type of work. Procedures: attempts to develop the reforms strategically As one of the actors of change, the SG had to lead by example. Yet, it also strived to constantly develop the Kinnock reforms to coincide with the Commission’s strategic objectives for effective European governance. In the 2001 White Paper on European Governance, a few months after the publication of its White Paper Reforming the Commission, the Commission stated that ‘proposals must be prepared on the basis of an effective analysis of whether it is appropriate to intervene at EU level and whether regulatory intervention is needed. If so, the analysis must also assess the potential economic, social and environmental impact’ (European Commission, 2001, p. 428). The integrated approach of Impact Assessment (IA) set out by the Commission in the 2002 Communication on Impact Assessment was largely ingrained in ‘the culture of the Commission of better regulation’ (Interv D1, 2008). The SG was in charge of regularly updating the guidelines on IAs, in consultation with other services. It strongly believed that IAs were not a bureaucratic exercise anymore but proved that they added value. Yet several HoUs in the SG, whose structure highlighted the focus on better regulation, also acknowledged the time it took to carry out an IA. In IAs, defining the problem to address came first and could be quite difficult. There was also the issue of subsidiarity which was a hurdle for DGs with

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less exclusive and clear- cut competence to justify them addressing the problem, as in the case of a proposal regarding public health (Interv D6, 2008). According to a HoU (Interv D6, 2008): the Kinnock reforms have created a process of decentralisation as well as new responsibilities and rules which are applied very rigidly, the IACs, the IAS, the CDRs. There is so much more control. The new procedures reduce the room for manoeuvre of DGs. But the SG unit provides support rather than exercise control. There is a continued effort for DGs to use IAs. It gives political visibility. DGs accept that IAs are unavoidable and sometimes DGs insist on doing the IA even though the unit does not require it. There were three key procedural phases. The first phase consisted of planning the IA integration into the SPP cycle. Since 2005, all elements in the Commission Legislative and Work Programme (CLWP) have been subject to an IA. The roadmap for each proposal included in the CLWP had to be drafted to give an estimate of the expected timetable for the proposal as well as more detailed information about how the IA could be taken forward. An Inter-Service Group was also set up, which included SG- C1 ‘Evaluation’. Interested parties were consulted and the expertise was gathered. Finally the first phase was completed with the carrying out of the IA. In a second phase, findings were presented in an IA report. The IA and the proposal were forwarded to the Inter-Service Group and then to the College of Commissioners. The third phase was started by transmitting the IA report and the proposal to other institutions. The central aspects of this procedure were that stakeholders be consulted and that the IA report be written in a non-technical language accessible to everyone, not only people from the House. The phase was completed when the SG published the final report on the Europa website to guarantee full transparency. However, even officials in the SG recognised that some proposals did not warrant an IA, like the IA report done on ten years of existence of the EMU or those done on Green Papers which were consultative documents. As was very often the case in the Commission, implementation of a new procedure went beyond what was reasonable. In 2007, 102 IAs were carried out. More than 200 had been done by March 2008. Beyond the proposals included in the CLWP, two other criteria were used to determine whether an IA was necessary: the newness of the proposal, which went further than recasting an old policy, and the extent of the impact anticipated. The obvious criticism that was made

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about the criteria used to determine the relevance of an IA was that they seemed all- encompassing, which probably explained the explosion in the number of IAs carried out in 2008. This sharp increase also strained the SG’s resources. SG C2 ‘Better regulation and Impact Assessment’ was composed of 18 staff, only nine of whom worked on IAs. An informatics system was used for IAs whereby a web-based tool allowed different pieces of information to be uploaded to the website which was accessible to relevant people. This IT tool also had an alert system about deadlines that people had to meet and it was a useful record of what was done. The second procedure which stemmed directly from the Kinnock reforms concerns personnel management and the implementation of the Career Development Reviews (CDRs). The CDRs are a Commission-wide procedure which the SG had to implement as instructed. They were at the centre of a reformed HR system which aimed to motivate and reward the best performing officials by linking promotion with merit, therefore complementing the existing system of promotion based on seniority. CDRs involved a yearly discussion between each HoU and his or her staff, administrators and assistants. The HoU launched the CDR procedure via computer. The civil servant had ten days to evaluate him/herself. Then the superior discussed the self- evaluation with the employee and gave a mark out of 20 based on three criteria: efficiency, ability and aspects of conduct. This mark went to the Director for validation. The mark given by the HoU was translated into merit points. The DirectorGeneral then had a certain number of priority points to allocate to the staff he/she considered the best performing, a maximum of ten per official. The official retained these points in a ‘knapsack’ which followed him/her even if he/she moved DG. This system was put in place not only to reward the most hardworking staff but also to make the promotion system more objective. But most SG HoUs agreed that the CDRs were still extremely subjective. One commented (Interv D1, 2008) that: HR management has demotivated staff, diminished the prestige of the institution and exposed the Commission to competition from the outside. It has lowered the ability of the institution to attract young talents [ ... ] But the Commission is losing its best people and has less ability to attract and recruit people at senior level, in their 40s because there is no career path for them and the salary remains average at grade A5.

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This was a relatively pessimistic view regarding the ability of the Commission to attract young people, which was shared by other HoUs (Intervs D7, D8, 2008). This loss in attractiveness of a Commission job varied as well from country to country. In 2007, the SG was only able to recruit one Dutch official due to lack of interest from the Dutch. Posts in the Commission still remained attractive to people from the new Central and Eastern European Member States but already some Slovenians were finding better jobs in multi-nationals. The CDRs, as well as the semi-linear career system which was part of the Kinnock reforms, were the main reason why Commission officials felt demotivated. The semi-linear career structure meant ‘breaking the glass ceiling’ to the extent that there would no longer be four categories of staff but just two: administrators and assistants. Officials felt that this new structure had been negotiated for financial reasons with the Council of Ministers: to have more people starting at a lower level and therefore paying more towards the pension system. In parallel, the CDRs were implemented with the system of merit and priority points. However, the CDRs were perverted in two ways: ●

●

The averaging of merit points. In order to equalise marks given by generous or tough markers in different units throughout the Commission, DG ADMIN informs the administrative services of each DG that the total of marks given should reach a certain average, 14.65 out of 20 for 2007. Since the quality of officials is very high, HoU find it difficult to give a mark below 11, which means that in order to comply with the average mark they cannot give high marks either. A SG HoU argues that ‘the system has been destroyed by the annual average set by DG ADMIN’ (Intervs D10, D11, 2008). It is also an inflationary system which is not sustainable in the long run. The discretionary allocation of priority points. The system was intended to be more objective than the previous one. However, there is no transparency on how the Director- General distributes the priority points. The Human Resources Unit suggests that officials on the brink of promotion should be given the priority points. This means that the allocation of priority points does not always reflect a specifically good performance by the official during the year but rather a necessity for human resources to get people promoted.

One of the most criticised unintended consequences was that CDRs slowed the pace of careers and promotions. Combined with the embargo

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on recruitment which the Commission faces until 2013, it can explain the de-motivation of staff. A new CDR system was introduced in January 2009 to reply to criticism of the previous system and try to have ‘a larger spread of marks between an acceptable performance and an outstanding one’ (Interv T7, 2010). As a result, the scale of points went from 0 to 12, with a mark of four or five rewarding an acceptable performance and a mark of 10 to 12 rewarding an exceptional performance. Every year, officials met their reporting officer who indicated to them to which category of performance out of four, IA, IB, II, III, he/she would be allocated. The number of promotion points which was then given to each official depended on the category of performance he/she was in and was decided after consultation of the Joint Evaluation and Promotion Committee in each DG. Promotion points were not given during the evaluation in order to avoid pollution of the dialogue. DGs were told that no more than 30% of their officials could be in category I, with 8% in IA and 22% in IB. Moreover, each category was weighed by DG ADMIN which set an average mark, e.g. 10.5 points for category IA. The new system was heavily criticised for two reasons: ●

●

Officials were very disgruntled to be given a mark of four or five when their performance was deemed acceptable since the mark was below average, the maximum being 12. The double weighing was perceived as ‘double penalisation and led 4,000 officials to appeal against their CDRs in 2009’ (Interv T4, 2010).

CDRs remained the most controversial aspect of the human resources reform when so much was done regarding ‘training with an offer hugely improved and second to none’ (Interv T4, 2010). SYSLOG was introduced to record all training undertaken by officials in their training passport. Every year the CDR dialogue also includes an agreement on a training map for the year to come.

Norms and culture The White Paper Reforming the Commission stated the intent to develop a culture of service within the institution (European Commission, 2000a, p. 7). The SG being one of the actors in the reform, it had to lead by example and show the way. It therefore implemented all of the new normative features included in the reform programme, sometimes

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to extreme. Being the central horizontal service of the Commission, it has also used the opportunity provided by the reform and its unfolding to redefine its position in the institution and to recast its role (Kassim, 2010). Norms: docile compliance with the new requirements Mobility of staff was a significant normative change in the Commission and the SG. The Kinnock reforms required that every official in a sensitive post must change jobs after a maximum of five years. For certain senior posts, an exception could be made to extend the period to seven years. A strong culture of mobility developed within the Commission in general and the SG in particular. There was an issue about the definition of ‘sensitive post’, which was very broad and meant, for example, that half of Directorate B in the SG was categorised as such. Even though most SG HoUs consider mobility healthy, particularly since it was very rare before the reforms, they also tended to discuss the ‘problem of continuity of institutional memory’ (Intervs D3, D10, 2008; Intervs T3, T7, 2010) that it engendered. As a result of officials across the Commission complaining about the loss of expertise, the list of sensitive posts was reviewed in 2009 and reduced (Interv T4, 2010). The SG seemed to be a service which lacked – until the Kinnock reforms – proper filing procedures so that anyone could be replaced. Two HoUs in different Directorates mentioned examples of one official who knew everything about his job and its history but nothing was documented so that nobody could have stepped in had something happened to this official (Intervs D3, D10, D11, 2008). Mobility became so much part of the normative environment that even officials who did not have to move did so to secure better prospects of promotion (Interv D1, 2008). The second significant change to the normative environment was the development of the training programme from which all HoUs interviewed benefited. Interestingly, several HoUs who did not deal with financial matters still followed a financial training course. One HoU explained that he had to write opinions on DG REGIO’s document regarding the annual decision on programme funding, for example, and he needed to be versed in the new financial regulations in order to complete the task (Interv D1, 2008). This showed how significant the financial dimension of the Kinnock reforms was. It was pointed out, however, that 9 ½ days of training per year per person was a very ambitious target: ‘When you exclude language classes, after a few years, you don’t know what course to attend. There are only so many times you

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can attend courses on CDRs, speech writing, financial regulation and IAs!’ (Interv D1, 2008). Officials also tended to point out that the most useful and relevant training was usually delivered by in-house civil servants who knew how the Commission worked. Examples of training courses that SG HoUs followed included a course on ICS delivered by DG BUDG or the Management Training Programme provided by external consultants over two days focusing on how to do evaluation and handle conflict. The scope of training was therefore very wide, going from language classes to financial regulations or more general managerial skills. Finally, most SG HoUs commented on the Commission-wide change of culture towards ‘cumbersome control and compliance for the sake of compliance’ (Interv D2, 2008). Some felt that the Kinnock reforms removed any flexibility within the system. One lamented over ‘the disappearing of any humanity. It’s become a machine. Now, everything is computerised, organised in boxes. Those who used to give some of their time don’t do it any more’ (Interv D8, 2008). The example of organising missions and business trips was often given. These were now entered in an IT tool. However, if the secretary made a mistake in entering the details of the trip, he/she could not amend them because there was an obsession with fraud which meant that anything which was validated was set in stone. One SG official had to handle this case and commented: ‘it took a month to fix the mistake. IT is used in an inquisitorial way. There’s an obsession for a certain form of efficiency which leads to another form of inefficiency’ (Interv D8, 2008). Interestingly, some HoUs pointed towards DG BUDG and DG ADMIN which they considered had not integrated the culture of service towards other DGs yet and did not help officials when it came to answering their queries on funds left for business trips, for example (Intervs D10, D11, 2008). Most officials in the SG considered that tightening and improving financial mechanisms within the Commission was important internally as much as externally to prove to other institutions and the Member States that the House was efficient and ethical. Despite a certain level of ‘over-reform’, the majority of SG officials acknowledged positively the normative change in the Commission. Culture: emergence of a ‘Cabinet Office’ The Kinnock reforms triggered genuine cultural change within the Commission as the financial awareness pointed out in previous sections shows. As one of the leading and proselyte services on the

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implementation of the reforms within the Commission, the SG was keen to demonstrate by its own actions the usefulness of the reforms and how they could be extended and developed. It was very clear that ‘the SG really tries to do what it preaches and this is a very big concern for Catherine Day’ (Interv D2, 2008). Under Commissioner Siim Kallas, nothing of the Kinnock reforms was amended, except for the CDRs. He focused his energy on developing the transparency and openness aspects of the Kinnock reforms. More Commission documents therefore became accessible. He also fought to have the list of beneficiaries of Community funds published. Even though Member States were the ones spending 80% of the budget, there was no transparency on beneficiaries and amounts received. Kallas, with the SG, drafted the European Transparency Initiative, which can be accessed from the SG’s welcome website page. It was widely acknowledged by the SG HoUs that there was a new culture of work coordination and collegiality, which entailed more openness and consultation. The development of the IAs played a significant part in this. It was impossible to have surprises at College level and for a proposal to reach the discussion table that nobody had heard of. Information was also regularly exchanged among Directorates in the SG and genuine efforts were made to develop networks. The SG became a solution provider with an enhanced role in networking among services. A HoU commenting on this cultural change was pleased to see that ‘there is an automatism to get information circulating even though culturally, information remains power’ (Interv D7, 2008). Information was the crucial primary material with which the SG worked and carved out its influence. It was therefore interesting to see the deep change in culture within the SG which happened under the influence of Catherine Day since 2005. Her predecessor, David O’Sullivan, kept a rather technical vision of the SG’s role as ‘un service au service des services’. He did not want to make the SG a service at the service of the President of the Commission and he ‘sat on the fence’ (Interv D5, 2008). However, Catherine Day made the clear decision to move the SG closer to a ‘Cabinet Office’ and advance its political analysis capacity (Intervs D7, D8, 2008). Since she wanted the SG to deliver policy advice and ensure policy coordination in other DGs, she insisted on people within the SG networking because there was a perception that there was no informal coordination. As a HoU recalled, ‘at a meeting organised by Day, one HoU asked about organising informal breakfast meetings. Day simply replied that they didn’t need her for that’ (Interv D6, 2008). This shift in focus regarding

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the SG’s role explained why information circulation became so crucial. The SG could not afford to wait for it but it had to ‘go and get information, circulate it and process it. It’s a cultural change and this is why a diplomat was appointed to the post of principal adviser, to give it political colour’ (Interv D8, 2008). A couple of officials pointed out the potential problems of Day’s strategy for the SG. They claimed that the SG was going to lose its ability to influence the DGs and act as ‘a political arm to put forward the political vision of DGs’ (Interv D12, 2008). This used to be the SG’s essential role as summarised by former Secretary- General Noël. Yet the SG acting as a ‘Cabinet Office’ to the President could be perceived by the DGs as being too far removed and on the side of the President’s cabinet, which remained very powerful. There seemed to be some uncertainty as to the relationship between the President’s cabinet and the SG in its new role. In any case, the risk for DGs to feel betrayed by the SG was present.

Conclusion The Kinnock reforms put the SG in a schizophrenic position. Since it was involved in the implementation of the White Paper, the SG felt it had to lead by example and it implemented several measures without developing any feeling of ownership, either because it did not deem the reform measure relevant to its horizontal coordination work, as in the case of defining result indicators for the AMP, or because it disapproved of the reform, for example the CDRs. As a HoU pointed out, ownership of the reform was not helped either by the fact that ‘Kinnock’s team’s starting point for the reform was that anything done before was rubbish’(Interv D7, 2008). Even within the SG, this argument did not go down well. However, beyond this feeling of duty to show the way, the SG’s implementation of the Kinnock reforms was also a case study in innovation regarding carving out a new role for itself as a consequence of the organisational and managerial restructuring brought on by the Kinnock reforms. This came over time and took two forms: a practical and structural one; and a political one. From a practical and structural viewpoint, the SG structured its work around the Better Regulation agenda and incorporated every aspect of the Kinnock reforms into it. From a political standpoint the SG, under the directorship of a new Secretary- General, developed the new political culture of policy adviser to the President of the European Commission. It tried to move from a reactive service to a

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pro-active one, on the back of administrative reforms which raised managerial awareness and skills among staff. The risk of this innovative move by the SG from ‘a service to the DGs’ service’ to ‘a service to the President’s service’ was that it might cut itself off from the DGs and lose their trust while being superseded by the President’s cabinet, which remained politically powerful.

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8 DG Regional Policy: a Case Study in Adaptation

The Treaty of Rome was silent on the setting-up of a Community regional policy. Significant change came with the Single European Act in 1985, whose title V was dedicated to ‘Economic and Social Cohesion’. The Delors Package I was adopted in February 1988 which doubled the money allocated to structural funds, reaching 63 billion ECU in 1993. However, new member state Spain requested a more noticeable increase of financial assistance towards poorer regions of the Community. Soon Ireland, Greece and Portugal joined the lobbying and it led to the creation of the Cohesion Fund by the Maastricht Treaty. The Delors Package II, agreed in December 1992, allocated 15.5 billion ECU to the Cohesion Fund and 141 billion to the structural funds for the 1994–1999 period. Since the Maastricht Treaty, the European Union has further developed its regional policy,1 particularly with the 2004 and 2007 enlargements to 12 central and eastern European countries whose standard of living is significantly below the EU’s. As a result, in the period 2007–2013, cohesion policy benefitted from 35.7% of the total EU budget, or €347 billion. The development of DG Regional Policy (REGIO) since 1985 is emblematic of that of the Commission. A rapid increase in its workload and financial allocation over a short period of time generated concerns of mismanagement and misappropriation of funds, which the Kinnock financial reform attempted to answer. DG REGIO’s Director- General was replaced in January 2007. German official Dirk Ahner took the post and restructured the DG’s units. Three intrinsic features made DG REGIO an interesting case study from a comparative perspective with DG TREN. First, it focuses mainly on policy management and has little role in policy conception. Second, it is responsible for a sizeable part of the EU budget but its management is shared with the Member States.2 This makes the issue of responsibility 146

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for fraud or mismanagement quite problematic, which explains why it has been at the centre of the CIE’s report and is still at the core of the discussions between the ECA and the Commission. Finally, due to this shared financial management and the significant delegation to Member States, it is a smaller DG than DG TREN, with staff numbers reaching 722 in 2007 including contractual agents (Interv P11, 2007). Looking at the institutional impact of the Kinnock reforms on DG REGIO, this chapter contends that, given the nature of the DirectorateGeneral’s tasks, the reform, specifically in its financial aspect, significantly changed the way of doing business as well as the image of the DG. Organisational structures were modified to comply with the reform requirements and enhance the DG’s sanctity in terms of financial management. However, practical implementation of processes and procedures which were a direct or indirect result of the reform turned out to be more noticeable and homogeneous thanks to the IT methods chosen to implement them. This had a consequence on the cultural environment of officials who insisted on the emergence of a dual culture of responsibility and control.

Organisational structures In 2007, DG REGIO was structured into three coordination directorates, five operational ones and one external auditor directorate. The four coordination directorates included Directorate A which was in charge of financial and human resources and information technology as well as all activities pertinent to the ABM exercise; it was directly accountable to the DirectorGeneral. The financial side of the Kinnock reforms resulted in an overhaul of the DG’s organisational structure. Following the CIE’s report (1999b, 3.24.1.), strengthening of financial control and audit was enshrined at the heart of Kinnock’s reform. Decentralisation of control was therefore implemented and demonstrated its pertinence by instilling all officials with a deep sense of financial responsibility. Two separate auditing structures were created in parallel, the Internal Audit Capacity (IAC), which came as a direct result of the White Paper and the imperative of segregation between control and audit, and Directorate I on external auditing, which emerged indirectly from the implementation of the reform. Financial restructuring: a smooth transition towards enhanced responsibility As mentioned in previous chapters, the CIE criticised the ex ante financial visa which made DG Financial Control responsible for financial

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transactions and divested officials of any financial responsibility. The White Paper therefore set up financial decentralisation and each DG was asked to choose from four types of financial circuit the one that was best adapted to the nature of their financial transactions. DG REGIO chose Model 3 which was a fully decentralised financial system with counter-weight. As a result, DG REGIO was restructured and Directorate A set up. Unit A3, which counted 43 officials including 12 contractual agents, was in charge of budgetary and financial management. REGIO A3 was ordered around a HoU and a Deputy HoU. The financial structure was also strengthened by a special adviser to the Resource Director who followed the implementation of the internal control standards and coordinated risk analysis across the DG. This organisational arrangement highlighted the specificity of DG REGIO’s tasks and the importance which was given to the control standards in the daily work of the DG. Together with the Director, the Head of the Financial Unit as well as ad hoc specified officials, the adviser was also a designated authorising officer which allowed him to sign off financial payments. The adviser was responsible for the follow-up to reports and recommendations made by the IAS or the IAC. Finally, he also presided over the ad hoc group which dealt with financial correction in case the verification in the Member State revealed irregularities. Model 3, which DG REGIO chose, was nicknamed the ‘Four Eyes’ because it involved four people controlling the transaction: ●

●

●

●

The desk officer in the operational unit (‘initiating officer’) checked the coherence between the payment claim, the progress report and the provisions of the decision with the help of a checklist. The head of the operational unit (‘verifying officer’) had a second look at the financial soundness of the project. He/she endorsed the desk officer’s recommendation through a checklist. The financial desk officer in the financial unit (A3) (‘financial initiating officer’) checked the financial accuracy of the transaction with the help of a checklist and initiated the financial transaction (in ABAC/Sincom). The verifying officer in the financial unit (A3) (‘financial verifying officer’) had a second look to the file and validated the financial transaction (in ABAC/Sincom). Finally, the authorising officer, i.e. the Director, as ‘subdelegate authorising officer’ made a final check with the help of a checklist and authorised the payment (in ABAC/Sincom). He was seconded by a financial assistant who made an ex ante verification.

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Each actor in the payment procedure validated his step by an electronic paraph in the workflow system (WFS). For more efficiency, DG REGIO added one more step: before the payment procedure was launched by the desk officer, a technical verification was made by the financial unit (A3). All officials interviewed, whether working in a horizontal or a geographic unit, commented on the advantages brought by the new financial structure, among which was included the way it made officials much more responsible (Intervs P1, P2, P4, P16, P8, 2007). This was summarised by a former key actor in DG REGIO’s human resources (Interv P8, 2007): The biggest change coming from the reform is the significant increase of awareness in officials about their responsibility. You now have to say why you are not in agreement instead of hiding behind the financial controller. Procedures are rigorous and have counterweights. Each person has a section to check. I am responsible on my own monies when I sign off. All interviewees mentioned this heightened sense of responsibility at all levels within DG REGIO. DG REGIO officials clearly considered that the financial structure puts the final responsibility with operational people (Interv P9, 2007). They did think though that the Commissioners had abdicated their responsibility by delegating it to the Director- General who, in turn, made Directors the ordonnateur subdélégué (Interv P12, 2007). But there was clearly no discontent with the undertaking of responsibility at all levels in the DG. Even though most of DG REGIO interviewees considered that the CIE’s remark on the total lack of a sense of responsibility within the Commission was highly political and unfounded (Intervs P16, P10, 2007), they still agreed that the financial reform made the system ‘very solid’ (Interv P6, 2007): ‘Everybody involved in the decision-making process is made aware of the strict deadlines. The DG publishes every month the commitments and payments that are late, per unit’ (Interv P15, 2007). This financial reorganisation did not generate any bottleneck in the functioning of the DG. As a desk officer commented, ‘you can always go there [to the financial unit] and ask for your dossier to be scrutinised quickly because it’s urgent’ (Interv P16, 2007). The structure put in place seemed to suit all parties and good communication on financial files and financial requirements was the rule within DG REGIO; operational

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units could seek explanation from the financial unit if their project was rejected (Interv P16, 2007). This was confirmed by a survey carried out by the financial unit among geographic directorates which revealed that they had a good opinion of it (Interv P1, 2007). This organisational financial structure was reinforced in 2005 with an efficient IT tool, the Work Flow System (WFS), which computerised internal procedures and payments following a checklist. Although DG REGIO middle managers considered the decentralised financial system as an improvement on the old system, one interesting point was made in order to highlight what the reform meant in terms of resource mobilisation at a Commission level (Interv P2, 2007): The former financial control service had a maximum of 300 people. Nowadays, DG BUDG has about 1,600 people which do ex ante controls. There are about 150 in the IAS, about 5 people multiplied by 30 services who work in the IAC and another 3 by 30 who work on coordinating the internal control. It makes up for over 2,000 people who work on financial control. More than a criticism of Model 3, this remark stigmatised the upsurge of auditing and financial control within the Commission, which came as a direct consequence of the circumstances in which the Commission had to resign. The accusations of fraud and mismanagement which were partially confirmed by the Committee of Independent Experts forced the Commission, and specifically DG REGIO due to the size of the budget it had to manage, to go beyond what was necessary to prove its financial management sanctity. The auditing structure: improving the Commission’s legitimacy The other aspect of the financial reform, parallel to financial decentralisation, was the segregation of the control and audit functions. Therefore Internal Audit Capacities directly accountable to the DirectorGeneral were set up to carry out internal audits for the DG and assist the Director- General with the declaration of assurance he/she has to sign in the AAR. As the 2006 AAR (p. 15) pointed out: [t]he risks in financial management and control arise in two broad ways [for DG REGIO]: risks present in the implementation of European Regional Policy by the Member States and beneficiary countries and the risks in the Directorate General itself.

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In 2010, DG REGIO had an internal audit structure which was called the Internal Audit and Advice Unit (IAA) which performed around 20 audits per year. At the start of the year, the IAA performed a risk analysis of DG REGIO’s activities and defined a work programme accordingly. This work programme was then discussed with the Director- General in the context of the AAR. The audits were diverse. As a Director explained, ‘the ICA’s audits can be ‘audits of compliance, on the internal control standards for example, or risk assessments, like on human resources. But it also has an advice function which is more positive and constructive’ (Interv T7, 2010). The IAA’s work was well perceived by officials, even if they deplored the lack of follow-up on the results which risk assessment exercises produced. Beyond the input the IAA had in advising units on their human or financial management, its crucial function remained that of consolidating the AAR’s process in order for the Director- General to sign the declaration of assurance with the reasonable guarantee of the legality and regularity of transactions. In order to reach this level of assurance, the IAA requested detailed fiches on each programme; operational Directors also did fiches on each country; around 40 meetings were organised in which the fiches were discussed and the reservations concluded. It took the IAA from November to the end of March to complete this work. The IAA was also involved in the AMP process. For example, in 2006 it took a bottom-up approach to carrying out a DG-wide risk assessment which required each HoU to provide a risk assessment at his/her level. The IAA analysed the answers and reported on the main risks which needed to be addressed in the 2007 AMP. The main risks identified related to the implementation of the new IT system SFC 2007, which computerised all formal relationships with the Member States, and the development of appropriate indicators for the evaluation strategy of the future Cohesion Policy Review. The two risks having been identified, DG REGIO’s AAR 2006 stated that ‘[a]ppropriate actions were defined in the AMP 2007 in order to manage these risks at an acceptable level’ (p. 21). This acceptable level of risk was fixed at 2% which was considered by officials (Intervs P6, P7, P1, P2, 2007) too low given the multiplicity of organisations and systems involved in delivering hundreds of thousands of diverse operations (AAR, 2006). This continuous endeavour to reduce the level of risk in financial management also pushed the DG to strengthen its external control mechanisms. In 2004, DG REGIO acknowledged the increased number of staff working on audits and decided to split the Directorate into

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two: a Resources Directorate and a stand-alone Audit Directorate with 80 auditors dedicated to auditing projects and management systems put in place by Member States as well as financial ex post project evaluations. The new environment generated by the Kinnock reforms was centred on performance, value for money and effectiveness. As a result, ‘auditors are very powerful. They are the new stars of regional policy’ (Interv P8, 2007). This recent organisational emphasis on external auditing can be explained by two factors. First and foremost, article 274 of the Treaty states that ‘the Commission shall implement the budget ... on its own responsibility ... having regard to the principles of sound financial management’. Even though project management is shared with Member States who therefore manage 99% of the DG’s budget, the EP reaffirmed the Treaty’s words when it decided to postpone the 1997 budgetary discharge, which started the series of events ending with the Commission’s resignation (PE 230650, p. 7, point 0). After years of ECA reports highlighting the Commission’s lack of rigorous approach to checking the legality and regularity of expenditure, DG REGIO knew that it needed a drastic change and commitment to more and better control of project management systems in the Member States. Regulations 4253/88, 2064/97 and 1260/99 all put the Member States in the front line when combating fraud, requesting that ‘they ensure that management and control systems are in place, vouch for the expenditure declarations presented to the Commission (this time prepared by someone independent of project management) and recover sums lost through irregularity’ (CIE, 1999b, 3.17.2.). The CIE considered that Regulation 1260/99 clarified responsibilities but it insisted that it would depend on its implementation whether it led to better control or not (1999b, 3.17.3). DG REGIO therefore decided to make this Regulation’s implementation different through reorganising itself and allocating adequate resources to maintain the best possible control. Making DG REGIO irreproachable was also crucial if the Commission was to recover some authority on the EU institutional scene. Even though many successive ECA reports well before 2000 criticised DG REGIO’s management control and therefore refused to deliver a positive DAS, it was the resignation of the College of Commissioners and the attached allegations of fraud and mismanagement which durably and deeply tarnished the institution’s legitimacy. The second element which explains the emergence of a separate Audit Directorate is the new process set up by the White Paper, namely the Annual Activity Report (AAR). Since the Director- General had to sign a declaration of assurance which made him/her personally financially

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responsible in case of irregularities which could ‘harm the interests of the institution’ (European Commission, 2006, p. 47), the creation of a separate, properly staffed, Directorate which was dedicated to the audit of the management and control system in the Member States was essential. The IAA ultimately gave its own assurance to the Director- General based on the audit reports it received from the Audit Directorate. This was the result of the ‘single audit’ approach taken by DG REGIO which involved integration of the control activities of the Commission and the Member States. Thanks to an audit tracking tool, SYSAUDIT, adopted in 2005, DG REGIO followed up on the implementation by Member States of recommendations to correct systems weaknesses which it made in its audit reports (AAR, 2006). DG REGIO’s financial organisational structure was overhauled. Due to the nature of the DG’s tasks and the reasons which brought the Commission down, the DG went beyond the letter of the reform and strengthened its financial structure with an Audit Directorate. Overall, the change in formal structures made the DG more coherent towards its own officials and more legitimate externally. DG REGIO’s officials, however, insisted that the processes and procedures were very cumbersome.

Processes and procedures DG REGIO officials did not complain about the rigidity of the processes and looked at both sides of the coin. They commented on the increasing bureaucratisation of their every- day work, yet they also acknowledged that DG REGIO and the Commission in general needed to have irreproachable processes and procedures in order to regain their legitimacy. The financial and ABM processes were therefore well considered, given the DG’s work which placed it at the heart of the financial disrepute exposed by the CIE. In parallel, procedures like the Work Flow System and indicators came to strengthen the credibility and legitimacy built by the processes. Yet some processes like the CDRs and mobility created a lot of tension and difficulties in a DG whose staff requirements were specific due to linguistic constraints on geographical desks. Processes: further essential pieces of the Commission’s legitimacy puzzle The main process which the White Paper introduced was the ABM and SPP cycle. It focused the DGs on strategic planning and programming

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of their work and resources. As detailed in previous chapters, the ABM process included many different steps which extended over two years. DG REGIO’s unit A1 dealt with strategic planning which included the CLWP, the AMP and the AAR. It worked on interpreting the rules and regulations which were sent by the Commission’s horizontal services such as the Secretariat- General or DG BUDG. It compiled them and gathered them into clusters which it then explained to the DG’s directorates. Unit A1 entertained good relations with operational directorates over the AAR and the AMP which was another facet of the APS. In December 2006, DG REGIO received an SPP circular requesting it to submit, by February 2007, a document stating its policy priorities and strategic activities as well as the matching human and financial resources for each policy area. Since implementation of the reform started, rules changed and were adjusted so often that significant explanatory work was required by the unit to keep all directorates up-to- date. The unit sieved through the numerous rules that emanated from the SecretariatGeneral SPP and ‘digest those rules in order to emphasise what is important for DG REGIO’ (Interv P13, 2007). From February to September 2007, the Directorates worked on their operational programming which formed the 2008 CLWP. It also fed the DG’s 2008 AMP which was completed in December 2007. In parallel, unit A1 started the AAR process in December 2006 when it sent out the instructions to the Directorates and ended it with the finalised AAR report published on 30 March 2007. In this document, the DG assessed its achievements in terms of policy results; it reflected on the strengths and weaknesses of the management and internal control systems in place; and finally it made a number of reservations before the Director- General and the Resource Director signed the declaration of assurance. In order to put together this document, one representative per directorate was allocated to deal with the SPP cycle and the indicators who needed to be kept informed and who was Unit A1’s contact. Unit A1 compiled numerous documents for the 2006 AAR. It looked at the 2006 policy achievements, the management tool used in monitoring the actions, the report done by the ordonnateurs sub- délégués, the countries’ audit fiches, ad hoc contributions from the human resources or the finance units and the reports from other DGs to which some of the work was sub- delegated, like DG ENTR, DG RELEX or DG EUROSTAT. As diagram 8.1. indicates, the units and directorates had to deal with several inter- connected but still separate cycles with the AAR, the AMP and the CLWP, which generated a significant processual burden.

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February 2007

December 2006

Start of the SPP cycle. Roadmap from Directorates

July 2007 March 2007

Preparation of APS and PDB Preparation of the 2006 AAR

Secretariat-General sends a directive of preparation for the CLWP

September/ October 2007 September 2007

January 2008 December 2007

CLWP finalised by Secretariat-General after discussion with Cabinets and DGs

Adoption of CLWP by College

Preparation of the 2008 AMP

Diagram 8.1 Preparation for the 2008 SPP cycle in DG REGIO

Neither the former English Director- General of DG REGIO nor the German one in place in 2010 opposed the strategy- oriented development instigated by the reform and reaction from the officials was quite positive. DG REGIO even carried out a mid-term assessment of the AMP and of the AAR. Officials working on operational desks considered that the reporting process was very heavy and not necessarily accurate because there was a lack of information on the impact and output of the policy coming back from the Member States, despite the creation of monitoring committees for each operational programme. 3 Yet, people from horizontal units regarded the mid-term assessments as ‘a useful tool for us and a communication tool with the outside. It allows us to see on which items we’re late’ (Intervs P13, P10, 2007). There was also an intense effort in the DG to coordinate the implementation of the objectives stated in the AMP. Directors met every week to keep abreast of the implementation process and took the necessary decisions. Moreover, the Commissioner met with the Director- General on a weekly basis. Finally, the Director- General was kept informed by bimonthly financial reports, bimonthly activity reports, discussions with the Audit Directorate, weekly meetings with the IAA and with the Resource Director on human resources issues (AMP, 2007). Thus many considered the AAR and the AMP as helpful exercises, ‘which contributed greatly to the internal and external transparency of DG REGIO’s activities’ (Interv T7, 2010). Commenting on the overall process, an official sincerely remarked (Interv P9, 2007): The ABM exercise is done at institution level which goes towards structured planning and programming. The definition of priorities and the programming with regard political objectives are done by

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the whole institution; so it should bring a lot more coherence to the Commission’s action with regard the objectives it has. If you go beyond the severe and delicate aspect of the AAR, it makes you think about the weaknesses of the management and control systems. Overall, we nuance our judgement more and more when it comes to management by member states whereas before we were more lenient. It is the basis for analysis. But the exercise is done in a cosmetic way. Two main elements reduced the programming potential of the SPP cycle. First, it was considered as a formal exercise rather than a programmatic and strategic tool. This lack of commitment to the exercise is revealing, according to one official, of the way the reform was conceived: in a hurry without any consideration for what the DGs had to say. The second criticism was specific to DG REGIO’s tasks and functions. The ABM/SPP cycle included drafting the Preliminary Draft Budget (PDB) of the Commission. This was intended to strengthen the links between policy priorities and the allocation of resources. However, DG REGIO’s tasks were planned over a seven-year cycle. This multiannual cycle of activity did not fit well with an annual programming. In the AAR, the DG accounted for the way it had spent its financial resources in the past year. In fact, payments were integrated in a pluriannual cycle of audits which generated financial corrections over the entire period when audits revealed misappropriation of European funds (Interv P8, 2007). The AAR’s yearly basis made it an artificial exercise for DG REGIO (Interv P10, 2007): There is a problem with the annual structure of the budget and programming. In the end, budgetary discussions within DG REGIO are restricted to discussions on personnel matters because everything has already been decided for 7 years. The pluri-annual programming which rules DG REGIO’s work made the annual cycles of strategic planning and programming introduced by the reform look like an odd fit. The exercise seemed to remain rather formal. The main difference lay in officials’ insistence on how the AMP and AAR deeply raised everybody’s awareness of responsibility and accountability in the DG. Even if the ABM cycle was criticised, its merit was always acknowledged in terms of enhancement of the DG’s, and therefore the Commission’s, legitimacy towards other institutions (Intervs T5, T6, T7, 2010). A similar picture emerged from the interviews

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over the procedures put in place to complement processes, even though their cumbersomeness remained the main feature. Procedures: bureaucratised legitimacy The White Paper developed procedures which were intended to strengthen the credibility of processes. The implementation of the Kinnock reforms by DG REGIO led to procedures intended to ensure objectivity and accurate measurement of performance, be it in the human resources domain with the CDRs or the policy management area with indicators and electronic checklists which harmonised decision-making at DG level. Since the 2000 White Paper, as an indirect consequence of its emphasis on getting value for money from within the Commission, the evaluation procedure of programmes whose management is shared with Member States was toughened up. The 2007– 2013 financial period in particular gave responsibility to each Member State for carrying out evaluations if anything went wrong during the programme. Before the projects started, DG REGIO required that the Member State produced their manual of financial control systems. As part of the ex ante evaluation, the Member State had to do an independent audit of its management system. There was then a mid-term review half-way through the programme. Finally, at the end of the programme, the Commission carried out an ex post evaluation.4 The Kinnock reforms not only insisted on evaluation but also on monitoring. The implementation of the key actions and the progress achieved towards the relevant targets, together with indicators appropriate to each action were monitored through the mid-term assessment of the AMP. This focus on measuring impacts and outcomes of policies and monitoring their implementation was particularly important to DG REGIO’s officials because it was the best argument for the added-value of regional policy in discussions with the EP, the Council and the ECA. As a HoU put it, ‘insisting on indicators and targets is a consequence of the reform. Regional policy was not sold before’ (Interv P13, 2007). Since the reform, the AMP was structured in terms of impact, output and result indicators. Interestingly, an official also pointed out that the HERMIN macrosectoral modelling framework which was used at national and macroregional level did not comprehend all the complexity of specific circumstances. This created a dichotomy between the results and the reality of the situation (Interv P8, 2007). The best example was the regional policy carried out in Italy. It did achieve its objective, which was to build new roads in southern Italy; all the indicators were met.

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However, these roads were used to travel North instead of developing activity and wealth in the South. ‘It can be very difficult to isolate the direct effects of a policy because of exogenous factors. As a result, there are some real problems of quantification when it comes to indicators’ argued a Director (Interv T7, 2010). In order not only to help with the monitoring but also to harmonise policy management throughout the DG, an electronic tool of checklists was introduced. The programme remained active as long as the elements in the checklist were ticked and the enhanced sense of responsibility generated by the reform made the ticking an important operation for the desk officers and the HoUs. Operational staff strongly resisted its introduction because they complained that the checklists were too rigid and did not necessarily fit the situation of their specific project (Intervs P7, P9, 2007). A Director (Interv P8, 2007) joked that: Before it was done in writing and when the checklist arrived and I was still not quite happy with the question on the checklist, I would modify it before answering it. Everybody was doing the same but I have to admit it was not very thorough. Payments could be rejected via the WFS and it automatically generated a letter to the Member States informing them of the situation and the course to take. Even though some officials criticised the WFS for its mechanical aspect and the lack of qualitative appreciation of the situation (Interv P9, 2007), the majority accepted it and even acknowledged that it was beneficial because it brought coherence to the process. The DG also monitored the effective functioning of systems in each Member State through an electronic tool, the SFC 2007, which was shared with the Member States and helped with ‘payment process and negotiation’ (Interv P3, 2007). The other significant procedures which DG REGIO had to implement dealt with human resources management. The most controversial was the CDR and many HoUs in DG REGIO were very critical of it. They acknowledged that the CDR had a couple of positive aspects in that it required that an official met his or her HoU at least once a year. The self-assessment and discussion which ensued were also lauded. However, DG REGIO HoUs had all a similar analysis of the drift in implementation of the CDR. The mechanism was the same as described in the case study of the SG, since it was a Commission-wide procedure with the allocation of merit points and priority points and

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a link between evaluation and promotion. Exactly as in the SG, DG REGIO officials criticised how time- consuming and complex the CDR was. They also considered that the new evaluation and promotion system had five consequences: ●

●

●

●

●

A small spread of points which penalised best performing and rewards the average. Slower promotions for high performing officials. There was an internal rule to DG REGIO which prevented anyone from getting a mark above 14 the year after his/her promotion, no matter what his/her performance was (Interv P8, 2007). There was a Commission-wide competition among DGs over which made the most promotions. Therefore, regardless of their performance, officials who were on the brink of being promoted got the necessary points so that the DG could show the highest rate of promotions possible. A biased human resources management system. This was explained by the intrinsic contradiction of the CDR system which tried to reconcile a necessary points allocation procedure at Commission level with an individual procedure for evaluating an employee. A HoU therefore concluded (Interv P5, 2007): The number of points is determined by the number of promotions and by the Council’s budgetary perspective. But the issue is that the procedure is an individual process. The interview with the official is very good but in a system where the allocation of marks is decided collectively, at a central level, the interview turns into a formality. The CDR procedure in its current version engenders distortions between on the one hand, the official’s personal expectations and on the other hand, the necessary refereeing at a collective level on the allocation of points for promotions in a coherent and equitable way for all services and DGs. The allocation of marks, which did not exist in the old system, generated real frictions within units and made officials more individualistic and competitive. An increasing de-motivation of staff which, in a few cases, contributed to their resignation from the Commission for careers with better promotion prospects.

The CDR procedure was very cumbersome and the IT tool which underpinned it was not user-friendly. As a result, ‘the CDR has turned into mass, but as is the case for some good catholic people, you sometimes forget why you’re going’ (Interv P11, 2007). Its reform, as highlighted in

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chapter 7, did not improve the situation, according to several officials (Intervs T5, T6, T7, 2010). There was a gap between formal and practical implementation of the Kinnock processes and procedures in DG REGIO, seen in a clear lack of ownership of the reform measures by some officials who did not use the ABM process or the CDR procedure as internal management tools. They also complained that they were buried under heavy and lengthy procedures. Yet there was an understanding that the ABM processes and procedures put in place by the reform were crucial, as external management evidence, to the DG’s legitimacy in the context of increased scrutiny by the EP, the ECA and the Member States (Interv T7, 2010). This construction of an internal/external dichotomy was also visible in the norms and culture developed in the DG following the Kinnock reforms.

Norms and culture On a normative level, DG REGIO tried to carve out its own identity through a specific training programme and an ad hoc implementation of mobility. These efforts did not help to bridge the cultural divide which existed prior to the reform between geographic and horizontal units and which was exacerbated to some extent by the mobility programme. The reform, however, developed throughout the DG a dual culture of responsibility and control linked to the officials’ perceived participation in the Commission being granted a positive DAS. Norms: an attempt to carve out a specific DG identity The Kinnock reforms led to the emergence of new norms in the DG. In order to enhance their chances of promotion, and more specifically promotion into managerial positions, officials were encouraged to change jobs every five years. This was obligatory for sensitive posts, which represented about a third of the DG, and voluntary in other cases. There was a lot of resistance from Directors when mobility was promoted. When restructuring the DG, 30 people were constrained. Director- General Ahner did not push mobility when he was appointed since 2007 was a pivotal year when seven-year national programmes were negotiated and adopted. HoUs were reluctant to see their desk officers leave. Given the official’s lengthened career as a result of the reform, unit A2 was trying to promote mobility as a way of enriching one’s CV. However, many officials opposed this normative system for several reasons. First, even though the fonctionnaire on the move carried his/her points in his

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knapsack, he/she was penalised in the CDR because he/she had to work harder to learn the new job. Since the mark in the CDR was the basis for merit points and priority points which finally led to promotion, mobility was frowned upon. There was also tension between operational and horizontal services because ‘half of DG REGIO is categorised as operational which means sensitive posts and automatic mobility, whereas that is not the case for horizontal posts’ (Interv T7, 2010). Second, a few officials (Intervs P9, P11, P12, 2007) considered that mobility was counter-productive because there was a lack of forward planning to preserve institutional knowledge and competence through training of new staff by the leavers. One point has to be made, though, on the topic of mobility. There was a strong divide on the issue between HoUs involved in horizontal work, who were overwhelmingly in favour of the process, and those heading a geographic unit, who were more reticent. Since just under half the posts of DG REGIO are classified as sensitive, it implied a high turnover every five years for units whose work was planned over a seven-year period and involved specific language skills. As a result, ‘the officials in charge of a country want to stay in the job. The heads of unit want to hang on to their top-performing officials who are their apples of their eyes. It is true that it is difficult to let somebody go when you are in middle of programme negotiating’ (Interv P8, 2007). Therefore several exceptions to the principle of mobility were granted in DG REGIO, which caused some HoUs in horizontal Directorates to criticise the lack of normative consistency. The normative system created as part of the reforms included a tailormade training programme. In order to make the transition to the new ways of working easier, DG REGIO put in place training courses which were complimented by every interviewee. The Kinnock reforms insisted that the development of the human resources management include 9½ days of training per person per year. DG REGIO’s human resources unit A2 included five people dedicated to assembling relevant training packages for DG REGIO’s officials. There was a training programme which DG ADMIN offered to all the DGs and then DG REGIO provided seminars which were tailor-made for its own officials, as one explained: ‘Management training is done within the Commission. There is a system of coaching and tutoring. The coaching can be internal or external. It is really well done’ (Interv P3, 2007). A HoU even admitted that she considered it an unnecessary luxury when it was introduced and that she had changed her mind after herself following managerial and linguistic training (Interv P5, 2007). Thanks to the work of the human resources unit on the quality and the relevance of training programmes

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made available to DG officials, DG REGIO’s HoUs felt well- equipped to do their work in a changing environment. The work of unit A2 in this regard also carved out a specific identity for DG REGIO, bringing some cohesion to the DG and support to officials. DG REGIO made special efforts, particularly in the area of human resources, to create a distinctive normative environment within the constraints of the rules set by the reform. Training was one example. Another which was mentioned by quite a few HoUs in DG REGIO was the flexi-time system which was set up. From 1 April 2007, flexi-time became available to anyone in DG REGIO who filled in a time-sheet, which the HoU’s secretary then encoded in TIM (the IT tool used to manage flexi-time). Even though the official working week in the Commission is 37 hours, many work closer to 60 or even 70 hours. Flexi-time allowed officials to declare their real working hours and recover a maximum of 2 days during the following month. These employee-friendly practices within the DG gave the impression of a cohesive working environment to outsiders. Key elements of the official’s life such as training and flexi-time were internalised and accepted. This formal aspect of the cultural dimension was corroborated by the change which happened at a more informal level with the noticeable formation of common beliefs underpinning the achievement of the desired objective: the positive DAS. Culture: a noticeable and deep change When asked about the reform, all DG REGIO officials interviewed insisted on the significance of the financial measures. Due to the circumstances in which the Commission had to resign and the political scrutiny exercised by the EP and the Member States, Kinnock focused his attention on putting in place the appropriate structures, processes and procedures which would guarantee that the Commission’s handling of European monies was irreproachable, even though the Commission only manages 10% of the European budget itself. The message sent by Kinnock was heard loud and clear by DG REGIO officials who did not hesitate to talk about a change in culture with ‘a real awareness of one’s responsibility when it comes to financial matters’ (Interv P15, 2007). Concepts of financial responsibility and value for money became embedded in their every- day work and defined their reference frameworks. As an indirect consequence of the reform, new financial management principles were included in the Council Regulation No. 1260/1999 laying down general provisions on the Structural Funds such as the N+2 rule. It was designed ‘to prevent an excessive build up of unused commitments

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for an operational programme, which can complicate closure and interfere with successor programmes, by providing an incentive to “spend the money” in line with targets’ (OJEU, C 124/4, 5/6/2007). A HoU observed, ‘for years, we never closed the programmes from the 1990s. Commitments were made but not payments’ (Interv P15, 2007). This difference between commitment and payment appropriations is called the RAL, the French acronym for Reste À Liquider. It is used to assess the level of progress in programme implementation in Member States. The RAL keeps on increasing as long as expenses increase which reveal that the authority in charge of the programme is carrying it through. As Diagram 8.2. shows, expenditure in a programme starts slowly and climaxes mid-way or even closer to the end of a programme. Although a programme period runs over seven years, from 2007 to 2013 for example, the real life of projects is longer because of the ex post evaluations which are carried out after the end of the programming period and the N+2 rule which allows Member States to claim for payments two years after a commitment by the Commission.5 This N+2 rule therefore shortened the RAL’s life cycle which demonstrated better programme and financial management by DG REGIO. This culture of financial responsibility which infused all units in DG REGIO was also noticed in the constant discussions over the positive DAS.6 The ECA’s DAS looks at the legality and regularity of the underlying transactions and at the reliability of the Community accounts. It is one of the items examined by the Parliament and Council in drawing up the discharge decision. In 2005, for the twelfth successive financial year, the ECA issued a DAS which was qualified for payments relating to all parts of the general budget of the European Union except administrative expenditure. The qualified DAS reflected the complexity faced by the Commission in implementing the EU budget, and the challenge it

Mid-term Payment

Mid-term

2000

2007 2000–2006 programming period

2010

2007–2013 programming period

Diagram 8.2 Evolution of payments over a programming period in DG REGIO

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faced in providing satisfactory audit evidence to the Court, particularly regarding Member States’ management of European monies. Member States deal with over 80% of the European budget. Yet the Treaty of the European Union states that the Commission is ultimately financially responsible for the Member States’ actions. As a result, the ECA refused to issue a positive DAS, highlighting year after year ‘the continuing weaknesses in Member States’ management and control systems and the Commission’s supervisory role’ (European Commission, 2007, p. 27). Following the ECA opinion No. 2/2004 on an effective and efficient integrated internal control framework (OJEU, C 107/1, 30/4/2004), the Commission adopted a ‘Roadmap to an Integrated Internal Control Framework’ in June 2005. This new framework sought to establish responsibility for budget supervision and internal audit at Member State level. The aim was to encourage the institutions and Member States to work more closely together to achieve an internal control framework from beginning to end so as to provide the ECA with sufficient and reasonable assurance for it to be able to grant a positive DAS on the regularity and reliability of the underlying transactions, principally of payments. HoUs in DG REGIO were all very sensitive to the Commission’s goal of a positive DAS, in which the DG had a significant role to play. Yet there was a belief shared by most HoUs that the positive DAS was not attainable because the ECA is a political institution which maintained its influence through the DAS. An official therefore commented: It has been 15 years that the DAS has been the objective and we are still getting the same comments back from the ECA. It is not a methodology issue but the fact that the Court does not clarify what it wants in order to grant a positive DAS. The Court does not dare criticise the member states. At the moment, the risk of making a mistake [regarding the operations of the sole Commission] is very small. As a consequence, the Commission and the ECA were at loggerheads over the positive DAS. In its 2006 AAR, DG REGIO clearly stated its fundamental disagreement with the Court over the effectiveness of the supervisory controls carried out by the Commission (European Commission, 2007, p. 27): It considers that the Court fails to give sufficient weight to the multiannual aspect of the control arrangements for the Structural Funds that enables them to correct or compensate the material deficiencies over the entire programming period, and that its conclusions are too

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generalised given the small size of the sample and the lack of homogeneity between Funds, Member States and systems. The flip side of this financial responsibility was a feeling which all HoUs seemed to share that there was a pervasive culture of control developing as a result of the multiple processes and procedures generated by the reform. Many complained of the imbalance between the length of time taken to comply with the new processes and procedures and the added-value they actually contributed. The constant internal auditing, auditing by the IAS and the control exercised by the ECA, mainly for the achievement of a positive DAS, created a pressurised environment which officials regretted. A HoU explained that the ECA had expanded its assessment remit by looking at the impact of DG’s policies: ‘evaluation is down to political actors such as the EP, the Council and the Commission. It has nothing to do with the ECA’s work in delivering a positive or negative DAS’ (Interv T5, 2010). However, one HoU pointed out that taking risks would require the political body, i.e. the College, taking some responsibility as well. Yet, bizarrely, the reform has allowed them to be less responsible: ‘The College passed responsibility onto the services even further because they organised financial delegation to the Directors- General’ (Interv P12, 2007). This dual movement of further responsibility of fonctionnaires as well as increased control of their actions created a novel cultural environment which was criticised, yet accepted, by DG REGIO officials because of the external legitimacy it brought to their work.

Conclusion DG REGIO’s implementation and acceptance of the reform was very contrasted. Structural change happened with new financial structures being put in place at DG level to replace the Commission-wide horizontal service of Financial Control. Similarly operational and cultural change was witnessed due to a certain level of integration of the reform measures by staff. Despite being critical of the ‘cumbersomeness’ of the new procedures and processes and the culture of control which they generated, officials generally accepted that these downsides were a necessary trade- off in order to regain their credibility as a DG and showed the outside world that they were legitimate in efficient programme managing. The power struggle in which the DG was engaged with the ECA over the positive DAS shaped the staff’s acceptance of the reform

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and, therefore, their practical implementation of the measures which they believed could bring them the institutional legitimacy they need to face the EP and the ECA. The second aspect which really structured the positive environment in which the reform was received is the DG’s leadership. Since the reform was launched, two Directors- General have been in charge and both have been ideologically sympathetic to the reform measures, which has considerably facilitated their effective implementation.

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9 DG Transport and Energy: a Case Study in Resistance

DG Transport and Energy (TREN) was a new and unusual DG, created in 2000. In 2010, a new Commission was appointed and DG TREN was dissolved into two separate DGs: DG Mobility and Transport (MOVE) and DG Energy (ENER). These two DGs still share administrative support services. DG TREN combined two portfolios: Transport and Energy. As a result, it was managed by a single Director- General but was accountable to two separate Commissioners. French Commissioner Barrot was in charge of transport policy while Latvian Commissioner Piebalgs dealt with energy policy. DG TREN was also located in Brussels and Luxembourg, where the coordination of nuclear policy, nuclear safeguards and radiation protection inspections take place. It had four further characteristics which made it relevant as a case study of the impact of the Kinnock reforms on the European Commission. First, its tasks involved a significant share of policy work. Second, it was the first DG that implemented the policy of externalisation with the creation of an executive agency, the Intelligent Energy Executive Agency (IEEA). Third, staff numbers approached 1,100, including the new category of contractual agents. Finally, it had a relatively small budget compared with other DGs in the Commission – close to €1.5 billion – and operated entirely on the basis of direct financial management. The responsibility for managing European monies was therefore not shared with Member States. This chapter contends that a certain lack of ownership of the reform by staff affected the type of change witnessed, making it more formal than practical. We first observed a significant change in organisational structures, which demonstrated the high level of formal implementation of the reform. However, an analysis of reformed processes and procedures revealed a lack of internalisation of the reform by officials. This 167

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was confirmed by the study of cultural change, which highlighted staff disorientation concerning the Commission’s mission.

Organisational structures In April 2006 DG TREN was structured into nine vertical directorates and two horizontal ones: Directorate R, Resources; and Directorate A, General Affairs. German Director- General Matthias Ruete, appointed in January 2006, was assisted by three Deputy Directors- General. The implementation of the White Paper led to two changes in DG TREN’s formal structures. First the externalisation policy meant that programme management was delegated to executive agencies, public bodies accountable to their parent DG which replaced the much criticised TAOs. Second, the abolition of DG Financial Control meant that financial responsibility was decentralised to DG level and that new structures were put in place at this level. Managerial restructuring: normalisation of an existing situation One of the main reasons for allegations of mismanagement made against the Commission was the existence of TAOs. The Commission used to sub- contract to these private bodies the implementation and supervision of EU programmes; they should have dealt solely with technical matters. However, due to the Commission’s increasing workload in programme management, they sometimes undertook tasks such as public tendering or contract management which the Commission itself should have done. A parallel administration of semi-private personnel therefore developed, which generated increased distrust within the Commission (Spence, 2006). Clearing out the irregularities engendered by the TAOs while maintaining the Commission’s capacity to manage its programmes was at the heart of Kinnock’s reforms. Measures relating to externalisation were put in place quite smoothly, if over a long period of time. From 2000, actions were adopted to phase out the TAOs and create public legal entities specialised in programme management in their stead. As part of the movement towards a refocus of the Commission’s resources on core tasks and functions, executive agencies were designed to take on non- core activities such as programme management. The executive agency had two immediate advantages: ‘It has a single mission – running Community programmes – and is not distracted by legislation, regulation or policy work. It also employs contractual agents who cost less than fonctionnaires. This means that more human resources are dedicated to the running of the programme’

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(Interv K6, 2006). The Council regulation laying down the statute for executive agencies was adopted in 2002 (Council Regulation No. 58/2003/EC of 19 December 2002). It stipulated that the Commission had the sole right to create executive agencies, which were separate legal entities, accountable to their parent DG and established for a set time corresponding to the life span of the programme they ran. They had to produce a full set of accounts which were discharged by the EP separately from the accounts of the parent DG. This guaranteed the agency’s independence and autonomy. In the same vein, the agency had to have an accounting function and an accounting officer who made the payments. Executive agencies operated on two different budgets: an administrative one which came in the form of an annual subsidy, and an operational one which was taken from the budget line allocated to the programme by the budgetary authority. The IEEA, which was accountable to DG TREN, was the first to be created by a Commission decision in December 2003 (OJEC, L, 5, 09/01/2004, pp. 85–86). The IEEA became autonomous on 1 January 2006 and was meant to operate until the end of 2008 when the programme it was set-up to manage expired. Yet, due to energy matters reaching the top of the political agenda, the Commission decided, in 2007, to transform the IEEA into the Executive Agency for Competitiveness and Innovation (EACI) with a lifetime until 2015 (Interv T1, 2010). The agency counted 46 staff, 16 temporary agents and 30 contractual agents. Five out of the 16 temporary agents were seconded officials with positions of responsibility, which was the case for the IEEA Director. The Director was the Autorité Investie du Pouvoir de Nomination (AIPN), which put him directly in charge of setting-up recruitment procedures, hiring staff and signing employment contracts. With the transformation of the IEEA into the EACI, the number of parent DGs has increased from one to four and the number of staff to over 150 (Interv T1, 2010). Issues of accountability were raised by critics. Yet the 2002 Council regulation on the statute for executive agencies stated that executive agencies were managed by a Steering Committee and a Director appointed by the Commission. Two of the five members of the Steering Committee, who were all appointed by the Commission, were from the parent DG. The Steering Committee was required to meet four times a year (article 8, Council Regulation No. 58/2003), meetings at which the executive agency’s draft budget, annual work programme and AAR were approved. The AAR was then attached to the parent

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DG’s AAR. Accountability of the executive agency was also reinforced with a monthly report by the agency’s director to the parent DG and the steering committee, as well as many informal contacts with the parent DG. The director of the IEEA, who used to work in DG TREN and therefore had a very good knowledge of TREN matters and the Commission structure, took part in the weekly management meetings of the DG. This arrangement was, however, not included in any regulation and it came down to the personality of each director to maintain this constant two-way link with the parent DG. Finally, from a financial stand, the IEEA presented a full set of accounts which had to be discharged separately from DG TREN’s by the EP. It guaranteed the executive agency’s autonomy and independence but it also enhanced its responsibility. More than accountability, the problem lay in duplication. Executive agencies were heavy administrative structures whose set-up had to follow a lengthy process. Each of them had to set up an accounting function for example. Yet, with the size of the executive agency growing, ‘economies of scale could be achieved’ (Interv T1, 2010). The noteworthy element is that executive agencies have had no problem recruiting extremely qualified staff, despite a lower salary than Commission officials. Jobs were publicly advertised. CVs were screened, pre-selection done through interviews and finally a selection panel made the definitive choice. In the case of the IEEA, 3000 applied, 300 were interviewed and 40 were employed. As explained by an agency official, ‘it was a very positive experience because we had no idea whether there was a market of people who wanted to work in agencies. We got the quantity but also the quality’ (Interv K6, 2006). Agents were recruited for their expertise but they also received training in financial matters and Commission procedures. Yet, four years on, an EACI official argued that ‘the possibilities of promotion with an EA are limited. This results in a certain level of turnover with EAs. Agencies have to live with this fact’ (Interv T1, 2010). Executive agencies have not saved the Commission any money but they have guaranteed a better use of resources, as pointed out by the European Court of Auditors. They have also given a better visibility to programmes. ‘We have two communication officers who work on presenting the programme to its best. The IEEA’s website is much better now that it is separate from the DG’ (Interv K6, 2006) argued an official from the executive agency. The goal of relieving the Commission of programme management so that it could focus on its mission was achieved. The change in formal organisational structures was visible

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in the organisational chart with the disappearance of certain units whose work was taken over by the executive agency. It represented a clarification and legalisation of an existing situation with the TAOs, which had led to much abuse. The IEEA and its successor, the EACI, were well accepted by DG TREN officials, because they were perceived as a procedure of internalisation rather than externalisation (Interv K5, 2006). The reinvention of existing structures in a tighter and more transparent legal framework modified the organisational chart but the financial restructuring represented a significant departure from previous organisational patterns. Financial restructuring: a significant change in approach The CIE stigmatised the ex ante financial system of control which the Commission was using. It meant that proposals for expenditure sent by DGs to DG Financial Control were checked for conformity and were given the visa if they complied with the appropriate rules and procedures. This visa, which was compulsory before the operation was carried out, did not make staff responsible. They hid behind the Financial Controller if any questions were asked. With the steady increase in transactions over the 1980s and 1990s, 93% of transactions were awarded a visa without checking. In response to this situation, which largely fuelled the CIE’s conclusions that numerous examples of mismanagement existed in the Commission, the White Paper decided to separate the functions of audit and control. It abolished DG Financial Control and decentralised responsibility for financial control at DG level. One single unit with 125 staff dealt with financial and human resources matters until it was split in two in 2002. Once the reform was implemented, Unit R1, in charge of financial resources, evaluation and coordination of agencies, was created as well as financial cells in each Directorate, bringing the total of financial experts to 80 compared with 35 prior to 2002. The 53 officials working in R1 were divided into five teams: ● ●

●

● ●

One team on legal matters, such as contract matters and procedures. One team on financial matters, like commitments according to financial rules. One team on budgetary matters and the different committees on energy and transport in the EP. One team on research activities related to energy and transport. One team on how programmes were managed and funds recovered if they were not used properly.

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From a completely centralised financial management prior to the Kinnock reforms, DG TREN shifted to a system which was fully decentralised with counter-weight, called Model 3 in the White Paper (European Commission, 2000b: 63). This model of financial circuit meant the creation of financial cells in each directorate which worked on the financial aspects of projects while the desk officer handle the operational side. The file was then transferred to the financial unit for final approval. It ultimately came back to the line manager, the Director, who was the authorising officer. In this new structure, everything was done at micro-level and horizontal DGs no longer played any controlling role over financial transactions. DG BUDG through its Central Financial Service, created by the reform, helped unit R1 with financial questions. It organised regular meetings of the Réseau d’Unités Financières (RUF) where there was an exchange of information on changes made to Financial Regulations. In the structure of shared resources between DG MOVE and DG ENER in place since 2010, the financial mechanism has remained the same (Interv T2, 2010). Many DG TREN officials criticised the unanticipated effects of the financial reform. They argued that the new financial circuit, Model 3, recreated centralisation at lower level. There were two problems with the practical implementation of the new organisational structure: ●

●

First, it went against the grain of the reform programme because it did not make operational directors aware of their responsibility. They were indeed responsible for commitments but were dependent on the decision of the central financial unit R1 when it came to payment (Interv L11, 2006). This created a real bottleneck in DG TREN and it was felt that ‘the change the reform has brought on is management by accountants rather than management by objectives’ (Interv L6, 2006). The central financial unit was criticised for rejecting projects without any explanation which further isolated financial cells. Second, DG TREN chose to apply the same financial circuit model to all its Directorates. Some officials argued that Model 1, ‘fully decentralised without “counter-weight” ’ should be used by Directorates with small budgets. One official even considered it should be the case throughout, asking: ‘Is it adequate to have a technical responsibility separated from the financial responsibility for every activity in DG TREN? This is not like real life. The mother of a family is in charge of organising family life and the finances as well; they are not separated’ (Interv L7, 2006). Financial decentralisation put the weight of responsibility on the shoulders of

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Directors- General who were not always prepared to take the risk of going to prison for financial errors. Officials in DG TREN widely denounced this ‘game’ whereby the Director- General decentralised financial responsibility further to Directors, making them subdelegated authorising officers but not giving them adequate human resources. Financial cells which were designed to help Directors were usually staffed with former C-grades who were isolated, each dealing with specific projects. According to a HoU, ‘each Directorate should have a financial unit rather than a financial cell. It would have more visibility and would carry more power’ (Interv L6, 2006). As part of the reform, Kinnock required that Directors- General as well as Directors for Resources each sign a declaration of assurance stating that to the best of their knowledge the use of resources was accurate. This requirement from Directors for Resources was not stated in the White Paper but was added as the reform developed. Kinnock recalled that this new measure created discontent with Directors- General. When he met them, he explained to them how satisfied he was to see that the reform was working. Before shocked Directors- General, he said that ‘two years ago when I made it compulsory for Directors- General to sign the declaration of assurance, you were all against it. Now that I want you to share the responsibility with Directors for Resources, all of you protest that I’m taking power away from you’ (Kinnock, 2006). The Kinnock reforms decentralised all aspects of financial responsibility to DG level. The control function was given to financial units while Internal Audit Capacities (IAC) were created in each DG to carry out part of the audit function that was previously concentrated in the hands of DG Financial Control. In return for more responsibility, Directors- General were directly answerable for the operation of their departments. As a result, each Directorate- General had a specialised IAC, reporting directly and solely to the Director- General, which carried out reviews of the internal control system of the DG. DG TREN’s IAC was a small unit with seven officials. It performed risk analyses of DG TREN’s activities, relying on the objectives for these activities and the procedures used. The IAC selected the most risky activities and drafted a work programme of audit of those activities. A final document summarising the IAC’s audits was attached to DG TREN’s AAR. Finally, the IAC monitored the reserves made in the previous year’s AAR and advised the Director- General on the reserves to include in the next AAR. DG TREN’s IAC performed seven or eight audits per year, mostly operational and financial audits which checked DG TREN’s compliance

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with rules and procedures but also recommended best practice in the field. In 2010, the IAC of DG MOVE/ENER carried out audits on accounting procedures, payments related to research, payment deadlines, ethics and financial circuits. The financial unit was ‘directly or indirectly audited four times’ (Interv T2, 2010). This new system of auditing did not stop at DG level since the IAC was supervised by the IAS and DG TREN’s programmes were audited between 30 and 40 times a year by the ECA (Interv L16, 2006), in particular trans-European networks (Interv L6, 2006). Once the IAC had drafted its work programme for the year, it sent it to the IAS. The IAC passed on its audit reports to the IAS and once a year the audit network met to discuss auditing methods and techniques for example. Yet relationships with the IAS tended to be more tense because ‘it is difficult for them to understand the specificities of each domain’ (Interv T2, 2010). DG TREN’s financial organisational structure was significantly changed with the creation of one dedicated financial unit, a series of financial cells and an IAC. This change in formal structures also indicated a different organisational approach to financial management which matched completely the reform detailed in the White Paper and moved away from the French traditional model of financial comptroller. The main criticism made of the financial reform by operational as well as financial officials was that procedures became more and more layered and control was far too heavy (Intervs L1, L16, L11, L14, 2006).

Processes and procedures Kinnock’s aim was to change mind-sets and make the Commission ‘a world- class administration’. The White Paper therefore set out new processes which involve staff in new ways of doing business. This aspect of the reform necessarily affected the everyday life of staff and generated tensions which are visible in an implementation gap whereby processes formally exist but are under-used in practice. Similarly, procedures were implemented to flesh out and complement processes. However, procedures got absorbed by the Commission and made more complex than intended. The discrepancy between formal and practical implementation of procedures led to the conclusion of a missed opportunity to streamline the system. Processes: the under- estimated backbone of the reform The Kinnock reforms aimed to change the Commission’s focus from inputs to outputs. It therefore laid out new processes which helped

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the Commission with its strategic planning and put the emphasis on a necessary link between resources and results. The overarching new process took an entire chapter of the White Paper and is referred to as Activity- Based Management (ABM), which ‘is the covering notion for the new programming, budgeting, management and reporting methods adopted by the Commission. It encompasses prioritisation and resource allocation at the level of the College and general principles for management at the level of departments’ (European Commission, 2000b, p. 13). In a context of increase in the number of programmes, because of the enlargement to ten new Member States in 2004, the Commission could not continue to take on new tasks without thinking about its non- expandable resources. The ABM process was designed to give the Commission visibility in terms of activities and available financial and human resources as well as the objectives which were to be achieved. Prioritising was at the heart of the process. DG TREN had one unit A1 dedicated to the horizontal function of planning and programming, which was recreated in DG ENER and DG MOVE. The significance given to this exercise, which was compulsory for all DGs, depended on the Director- General’s interest. When Mr Lamoureux was head of DG TREN, the ABM cycle was not considered to be a priority because of a lack of interest in management matters (Interv L4, 2006) and a general distrust in a reform he regarded as too Anglo- Saxon (Interv L8, 2006). However, the personality of the new Director- General, Mr Ruete, who was recruited earlier in his career by Mr Kinnock, was a positive asset in putting the ABM cycle at the heart of the DG’s work. Typically, DG TREN started in November 2006 preparing for the 2008 Annual Policy Strategy (APS) cycle. Unit A1 asked all Directorates for their contributions which included the roadmap, i.e. their initiatives for 2008. Staff in unit A1 selected the most mature initiatives which were included in the final document. Unit A1 therefore engaged in a ‘reconciliation procedure’ of all the units’ submissions under the chairmanship of the DirectorGeneral. In February 2007, the Strategic Planning and Programming (SPP) function in the Secretariat- General prepared the draft APS with DG BUDG and other DGs. This was the foundation stone of the Commission’s Legislative Work Programme (CLWP), for which DG TREN’s Directorates prepared between February and September 2007. The CLWP was a rather succinct document which included around 100 actions for the whole of the Commission. Directorates- General then elaborated a detailed work programme for themselves. During

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this time, the Directorates discussed their objectives, activities and resource requirements. In July 2007, the Secretariat- General officially sent a directive of preparation for the CLWP. The deadline for contributions by DG TREN’s Directorates was set for the start of September 2007. The contributions were then discussed with the Energy and Transport cabinets, the Secretariat- General and the Directorates. The final contributions were sent to the Secretariat- General at the end of September 2007. The CLWP was finalised and then adopted in early January 2008 by the College, which committed DG TREN to achieving the objectives stated in the document (Diagram 9.1). This process has not changed and remains identical in the 2010 Commission. In parallel, unit A1 also had to support Directorates in preparing for the Annual Management Plan (AMP). In September 2006, the Directorates were contacted and asked to send in their contributions and list of priorities for the 2007 AMP. Since the AMP was part of the APS process, the Directorates’ contributions followed from the CLWP but were more detailed. The Director- General, through Unit A1, sent instructions regarding the content of the AMP. The framework and structure of the document was already decided before the Directorates were asked for their input (Interv L9, 2006). Unit A1, whose mission was described in an internal document in 2004 as ‘preparing the DG for the new budgetary method within the framework of the ABM/SPP cycle’ (Interv L11, 2006), suggested that Directorate meetings be held to discuss objectives and indicators at unit level. Most DG TREN Directorates followed the suggestion but without inviting any representatives from Unit A1 which made horizontal visibility more difficult for the staff in charge of the ABM cycle. Unit A1 selected the most mature priorities and appropriate indicators from the contributions it received around the end of October 2006. The Director- General was then informed. The November 2006

February 2007

December 2006 Start of the SPP cycle. Roadmap from Directorates

July 2007 March 2007

Preparation of APS and PDB

Secretariat-General sends a directive of preparation for the CLWP

September/ October 2007

January 2008

September 2007

December 2007

CLWP finalised by Secretariat-General after discussion with Cabinets and DGs

Preparation 2006 AAR

Adoption of CLWP by College

Preparation 2008 AMP

Diagram 9.1 Preparation for the 2008 SPP in DG TREN

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EP and the Council of Ministers received a monthly communication on the indicative programme since there were additions or amendments throughout the year. Similarly, the CLWP was revised mid-term. In 2006, for example, the Spring European Council made specific requests regarding energy which were adopted in August. DG TREN’s AMP was divided into five sections: ● ● ● ● ●

Mission statement General objectives DG’s resources (financial and human) Evaluation plan Activity-Based Budgeting (ABB) Activities.

The AMP started by stating its mission, which was short and straightforward. In a second section, DG TREN’s general objectives were listed. They were taken from the 2001 White Paper on a European Policy for Transport and the 2000 Green Paper on the Safety of Energy Supply. They were also framed by the Commission’s five-year strategic objectives which focus on the EU’s economic growth and prosperity. The clear mention of reference documents in the AMP guaranteed the coherence of the various processes which came under the ABM. The third section detailed DG TREN’s financial and human resources needs, disclosing the allocation of personnel per ABB activity. In a fourth section DG TREN mentioned its plan for strategic evaluations of some of its activities. In the final section, the core element of the AMP was detailed, namely the ABB activities. In the 2006 AMP, eight ABB activities were mentioned. Each was then divided into four to six objectives. Each objective was explained and output indicators as well as impact indicators were attached in order to help ex ante, mid-term and ex post evaluations of projects. The units which were responsible for the objectives’ outputs and impacts were mentioned next to them. Each unit in DG TREN also added an A4 page of specific priorities and resource allocations which were attached to the AMP (Interv L9, 2006). In 2010, the approach has remained broadly identical. In the 2010 AMP, DG ENER also organised its work on the basis of ABB activities. However, the AMP did not include a specific section on human and financial resources. Together with the result indicators and targets, the DG outlined ‘expenditure-related outputs’ (DG ENER AMP, 2010, p. 10). The 2008 ABM cycle was closed with the Directors- General’s AAR which the Secretariat- General aggregated with other DGs’ AARs. In

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the AAR, the Director- General gave a political and budgetary assessment of the past year. He evaluated DG TREN’s activity and gave a written Declaration of Assurance, which was qualified with comments of reservation and concern that the resources at his disposal were used economically, efficiently and adequately. Beyond the financial aspect, the reservations in the AAR also developed into political concerns. In the 2005 AAR, a political reservation was made regarding nuclear policy which was not accepted by the SecretaryGeneral and therefore not mentioned in the Synthesis Report (Interv L4, 2006). Processes are more difficult to change in practice because they require staff’s commitment and vision. ABM represented a significant shift in the way the Commission planned and monitored its work, with a focus on outputs rather than inputs. However, staff went through the motion of the ABM cycle because they had to, but with no faith in its benefits. Indicators posed a problem about their usage. Because of a poor use of resources highlighted by output indicators, the Council decided to cut off funds for a TREN project (Interv L4, 2006). In 2010, a HoU commented that indicators were useful in financial monitoring but in other areas, ‘identification of indicators proved more difficult, particularly regarding impact indicators’ (Interv T2, 2010). In a very Francophone DG, headed by a French Director- General until January 2006, and staffed largely by Southern Europeans, indicators were seen as an Anglo- Saxon tool and strongly distrusted. One official also regretted that no real discussion took place during the drafting of the AMP, which was part of a process of strategic planning but was regarded as a burden by many officials: ‘It is seen as a management tool rather than a reference document with added value’ (Interv L4, 2006). This criticism remained accurate in 2010 with a key DG ENER HoU (Interv T2, 2010) stating: I believe that the AMP is not a very useful tool because it has become an obligation imposed on services without them perceiving the added-value. The same goes for the AAR which has become too much of a burdensome exercise, forcing services to compile information that has no practical relevance. Most officials considered that the AMP was a formal exercise with no financial or human resources impact, even when it clearly demonstrated gaps or deficiencies. Despite some effort made by unit A1 to engage in consensus-building, the quality of deliberations over

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priorities in each unit seemed to be poor. There was a lack of deep consensus over the APS and ABM processes which led to a lack of ownership by staff. There was general agreement in DG TREN to say that the ABM cycle forced the Commission into regular and coherent planning which had existed previously in some parts of the institution but on a more ad hoc basis. Yet the process of decision on priorities was ultimately a top- down one which meant that the entire cycle’s potential was under- developed. The planning, monitoring and evaluation processes, which defined the ABM cycle, lacked integration and remained very formal. The main criticism made of the process was the multiplicity of contributions required from the Directorates. Commissioner Kallas, who was in charge of administrative matters between 2005 and 2010, launched a process of simplification which officials did not see as successful (Intervs T2 and T3, 2010). Procedures: a missed opportunity for simplification The White Paper led to the implementation of a series of new procedures complementing every aspect of the structural and processual reform. They were designed to improve the quality of outputs and the overall philosophy of monitoring and evaluation of the policy process. DG TREN had to adjust to new procedures regarding ABM, personnel and financial management. One of the key procedures implemented as a result of the reform was the Impact Assessment (IA) which, from 2002, had to be performed before every policy proposal was made. It involved researching the impact that the new proposal would have on the economic and social environment. DG TREN was given guidelines on how to perform IAs, whose results were attached in the annexes of every Commission proposal. Until 2007, the IA could be carried out at the same time as the policy proposal was drafted. However, from 2007, the IA had to be done a year prior to the policy being proposed which some DG TREN officials considered unrealistic in a fast-moving economic and political environment (Interv L2, 2006). IAs were also criticised. It was argued that they made the policy process heavier and that policy proposals were already informed by very good knowledge of what was happening on the ground. Moreover, Commissioners who wanted a specific policy proposal to be put forward influenced the IA’s result so that it reflected their opinion (Interv L9, 2006). The ABM process also induced heavy monitoring procedures which added to the workload of the HoUs. During the year of implementation

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of the AMP, the HoUs in DG TREN who had a budget to spend had to perform two types of monitoring: ●

●

Spending of the budget. Every month, the HoU had to ensure that the budget allocated to the unit’s projects was being spent adequately and on time. Compliance with deadlines. Every time a request was made to the unit, which could be a question from the EP or the Member States, it was entered in the computer database ADONIS. Every week, the HoU checked before the meeting of the unit that requests had been answered before the deadline.

Some HoUs decided to perform all the administrative work, which occupied 60% of their time since the reform. They therefore decentralised the conceptual work and gave a lot of autonomy to their staff. Other HoUs in DG TREN preferred to distribute all types of tasks and played a coaching role. No matter how they organised the work inside the unit, all HoUs complained about the significant increase in their workload, mostly in terms of monitoring and reporting. In terms of personnel management, the central procedure introduced by the Kinnock reforms was the CDR, which is probably the most criticised element of the Kinnock reforms. Most officials admitted that the principle of the CDR was good. It was, however, a typical example of a procedure which the Commission made more bureaucratic and burdensome than was intended. As a consequence, the CDR, which was at the heart of the new merit-based promotion system, penalised the best performing staff. A DG TREN civil servant expressly pointed out that ‘Human resources in DG TREN depend on DG ADMIN which depends on DG BUDG which depends on Member States. It means that DG ADMIN sets maximum average points per grade. Then they fix a limit you cannot exceed’ (Interv L5, 2006). DG TREN HoUs made exactly the same analysis of the flaws and perversion of the CDR system as their colleagues in the SG and DG REGIO. They also mentioned that the small spread of points used by HoU ‘favours the average and the weak’ (Interv L12, 2006) and penalised the best performing. They deplored the reduction in promotions (Intervs H4, H9, H12, 2006) and linked it with de-motivation among existing staff and real difficulties in attracting new staff, who prefer working in other European institutions or in the private sector. Finally, the Kinnock reforms also generated new procedures in the financial domain, with a specific focus on monitoring. In order to

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strengthen financial monitoring, the Commission adopted 24 internal control standards which were reduced to 16 in 2007. DG TREN signed a contract in 2006 with Price Waterhouse Coopers to facilitate training seminars on the internal control standards. All officials, including assistants, had to follow this seminar between 2006 and 2011 (Interv L16, 2006). The internal control standards were rather commonsense and did not provoke any negative reaction from operational staff. ‘The game rules have been formalised’ (Interv H14, 2006) commented one HoU who expressed doubt over the quality of monitoring the internal control standards ensured. The implementation gap which affected the reality of change in DG TREN was not only a result of the way new processes and procedures were used; it also came from an unusual cultural environment, which was constantly influenced by recruits from new Member States but was also inherited from a specific historical construction.

Norms and culture The Kinnock reforms wanted to change the culture in the Commission. It therefore reshaped the institution’s formal culture, i.e. norms, hoping that the informal culture, beliefs and values would follow. DG TREN officials adopted the new normative features with some significant criticism. However, the cognitive- cultural framework in DG TREN was in transition. Since internal interpretative processes were influenced by external cultural environments, the Director- General’s personality and working methods were crucial to understanding officials’ beliefs and values. Norms: the first step towards cultural change Five norms were at the centre of the Kinnock reforms. Heralded in the White Paper as ‘the tenets of good governance’, independence, responsibility, accountability, efficiency and transparency were meant to be the guiding behavioural principles for each fonctionnaire. Interviews with DG TREN officials revealed that only two out of the five norms changed their daily way of doing business. Independence of the Commission and its officials was a treaty requirement which was at the heart of the Commission’s identity and role in the institutional framework. The White Paper reaffirmed it as a normative feature of officials’ way of doing business in order to emphasise that they should not be influenced by national interests. All DG TREN officials denied that they might react to pressures exercised by national administrations. In the

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wider context of consolidating the Commission’s role in the institutional triangle, it seemed appropriate to reaffirm officials’ independence but it was a norm that existed and had been followed since 1958. It was true that the higher hierarchical levels of the Commission were very politicised at times of appointments but there was no evidence that, once in post, any Director- General took instructions from his/her member state. DG TREN officials integrated this norm of independence long before the Kinnock reforms. The second norm of responsibility was often mentioned by officials. DG TREN fonctionnaires considered that the view expressed by the Wise Men on a lack of ‘the slightest sense of responsibility’ among civil servants was offensive and totally exaggerated. Nonetheless, Kinnock strongly reinforced the importance of individual responsibility and accountability in the White Paper so that these norms be applied Commissionwide. The result was that DG TREN officials were acutely aware of their responsibility be it in financial or human resources matters. In the new structure of financial decentralisation, the DirectorGeneral was the delegated authorising officer and the Director was the sub- delegated authorising officer. They were the only persons in the DG who were entitled to sign contracts and therefore make commitments. Payments, however, were made by the HoU. The reform expressly intended to create a culture of responsibility, making people who sign for commitments or payments the ones responsible in case of problem. Another example of the strong emphasis put on individual responsibility was the case of the AAR. It was signed by DG TREN’s DirectorGeneral as well as the Director for Resources. As a result, the European Parliament criticised DG TREN, together with other DGs, for not spending resources. DG TREN financial officials admitted that people were too prudent and scared (Interv T3, 2010). HoUs in particular were given this extra responsibility without any increase in salary and yet their responsibility can be committed if there is proof of an intentional or considerable mistake (Interv L1, 2006). In HR management, HoUs bore most of the responsibility since they set objectives for their staff, administrators and assistants, but they also assessed them through the CDRs. The consequences in case of mistake were not as drastic as in financial matters. However, most of DG TREN’s HoUs argued that they had a responsibility to hold onto their staff, in particular the exceptional ones, who were more and more tempted to leave the Commission and go into the private sector. They therefore considered that the new human resources management procedure made them responsible for their staff without giving them any

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motivational tools, and the points system only generated tension in their units. The third normative feature of the reform was accountability which went hand in hand with responsibility. It was interesting to note that DG TREN HoUs were not much preoccupied by their reporting duties. A HoU commented (Interv L11, 2006) that it was because there are no systematic reporting duties. For the programme I’m running, for example, I consider there is not enough reporting. I didn’t manage to set up a database of projects. This area of monitoring is neglected. We can’t provide reports to the inside or to the outside on what is being done. This is a general tendency in the Commission. There are no funds dedicated to database or reporting. And the ECA report has confirmed that. The Declaration of Assurance included in the AAR, which was signed by the Director- General and counter-signed by the Director for Resources, was the main example of formal accountability. The notion of accountability was, however, not ingrained in the officials’ attitude. It did not mean they refused to be accountable but they shared a general belief that the reform increased the level of control in an institution where there was already a culture of blame. The result was that rather than being accountable, which involved bottom-up participation, officials felt they were checked through a top- down mechanism of control. The fourth norm which the White Paper set was a requirement of efficiency from the European public administration. The White Paper primarily linked efficiency with simplification of procedures, therefore considering that the existing ‘way of doing things’ was fundamentally efficient, served by very talented people, but burdened by overbureaucratic procedures (Interv T3, 2010). Without any exception, all DG TREN officials interviewed emphasised ‘how cumbersome procedures are’, which was even increased with the reform. In this sense the reform failed to simplify the decision-making process. It explained why Kinnock’s successor set it as his priority. Most importantly, a significant number of officials disputed the search for efficiency which led to setting what they consider as narrow and partial performance indicators. To illustrate this opinion, a HoU described how a Director in the Secretariat- General, together with a working group, decided that the number of internal processes that were launched during the year was a good indicator of a DG’s needs in human resources. They considered that

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the over-rationalisation of their work processes was counter-productive and that the lack of efficiency in the Commission was due to complex and lengthy procedures, external political pressures and lack of human resources. One final aspect of the normative shift wanted by the reform was an emphasis on transparency. DG TREN officials complied with the new rule of transparent access by external people to all internal documents which were not confidential. There was a deadline of 15 days for DG TREN to answer questions and requests from European institutions, citizens and stakeholders. However, many officials had a guarded attitude towards transparency which meant that ‘the legal framework has changed but there is no cultural change’ (Interv L7, 2006). Officials formally complied with the norms but they did not internalise these norms and integrate them with their beliefs and culture. Independence, responsibility, accountability, efficiency and transparency were the first steps towards a new institutional culture for the Commission which depended on officials’ beliefs, values and symbols. Culture: the main hurdle to institutional change in the Commission Until January 2006, Lamoureux was the French Director- General of DG TREN. A look at the DG’s organigramme led to the conclusion that there was an over-representation of officials from Southern European Member States. This situation persisted in the administrative services of DG MOVE/ENER where two-thirds are Belgian, French, Italian or Spanish (Interv T3, 2010), even if the arrival of Mathias Ruete in DG MOVE and Philip Lowe in DG ENERG in 2010 made English the working language. DG TREN was a very francophone administrative service since Lamoureux insisted on using French as the working language. At the end of Lamoureux’s term there was not a single British, Irish or Swedish HoU (Interv L5, 2006). Kinnock himself acknowledged that there was some friction with Lamoureux, who was the first to organise resistance to some reform measures, like the obligation for Directors of Resources to counter-sign the AAR. A German civil servant who did not agree with Lamoureux’s methods gave a very vivid description of the atmosphere in the DG (Interv L5, 2006): Mr Lamoureux was like Louis XIV. He knew it all. He was dictatorial, had his own réseau. This obviously comes from the French culture

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which puts the emphasis on hierarchy and power [ ... ] Lamoureux did extreme micro-management, circumventing people to get to the person he wanted. He preferred to deal directly with a B grade colleague of the same nationality rather than approach his/her hierarchy if it was not French. He worked on the basis of terror. He kept people on Friday evenings at the DG after 19h just for useless things. He screamed through the corridors ‘Je ne suis entouré que de cons’, while he did not observe the Commission-wide interdiction to not smoke in his office. This extreme view was shared by the majority of people who worked with Lamoureux, including French nationals. This working method based on a network of selected people was reminiscent of the Delors years during which rules were circumvented in order to reach the set objectives. As a result, the people who belonged to Lamoureux’s network regretted the new management style imposed by the German Director- General Ruete, which gave them little freedom (Interv L2, 2006): Lamoureux relied on brains. The DG structure was cosmetic for him. It was good for people he liked. He was interested in people and not at all in functions. The new Director- General has total confidence in the intelligence of the structure. He came into the job with his army, his network. He’s appointed three people since he arrived, three people from his network [ ... ] The Director General meets with the Directors once a week. The Directors say their piece but there is no debate. The rule is that each has his/her own competence: ‘Don’t get involved in my files’. Lamoureux had a precise idea, dictated the text of it which was fine tuned by the heads of unit. Now the head of unit has a mission statement written by the Directorate, which sets its activity remit. The accusation of having a network was therefore made just as much against Lamoureux as it was against Ruete. Even though there was still an over-representation of officials from Latin countries, it was clear that the cut- off line was not between Northern and Southern European civil servants but more on the question of management style between those who belonged to Lamoureux’s réseau and those who did not. This cultural environment of DG TREN was important to understand because it framed the nature of social reality for officials as well as their belief and value structure.

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Even though the Commission is a multi- cultural and multi-linguistic institution, where officials from different Member States approach problems in different ways depending on their national culture, this cultural diversity should not be over- emphasised. Officials themselves were the first to deny the importance of the colleagues’ countries of origin as an explanatory factor of disagreement on how to do the work. They focused more on a gap in generation or on how recently the official’s home country joined the EU in order to explain tension. With regard to aspects of the reform more specifically, the Commission put in place a training programme which requires that every official commits 9½ days per year to diverse types of training. This means of involving staff in the financial processes and procedures was compulsory and was aimed at getting everyone to internalise the same financial norms no matter their nationality. The Kinnock reforms were intended to give more flexibility to the managers and improve overall efficiency in the Commission. Yet the increased number of procedures and the lack of integrated processes, combined with a changed systemic environment where the EP and the Council spent more time scrutinizing the Commission’s work, generated an intense culture of control. All officials in DG TREN who were interviewed insisted on this new aspect of the Commission’s working environment. For example, accountability mechanisms in financial matters were still very formal and induce fear (Interv L14, 2006). Officials argued that even though control mechanisms were in place before the Kinnock reforms, they were strengthened and multiplied to the point that the notion of control and the feeling of being constantly controlled have become part of the officials’ common understanding of how their institution works (Interv T2, 2010). It was noted that the feeling of being controlled did not only come from outside the Commission but also from Commissioners. One DG TREN official pointed out (Interv L14, 2006): Prodi has reduced the size of the cabinets. Since they’re small now, Commissioners are very nervous about the way their officials work. Barrot is a typical example; he opposes any legislative initiative so civil servants are demotivated because there is a strong political control. It can be argued that nothing much was done on transport and energy matters when Romano Prodi became President of the Commission, which explained the intense legislative activity with a Green Paper,

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a White Paper and the start of various international negotiations on these issues. This level of activity was not going to be sustained over years but other officials highlighted the unusual level of political control coming from Commissioners. Control in the Commission took different forms. It was political, applied by Commissioners; it was financial, implemented by the Financial Unit; it was administrative, exercised by the Planning and Coordination Unit in the context of ABM. Control seeped into the officials’ cultural- cognitive conception of the Commission.

Conclusion DG TREN implemented all aspects of the Kinnock reforms and in this respect, institutional change in its structural, operational or cultural dimensions cannot be denied. Yet empirical observation clearly emphasised the lack of ownership of several aspects of the reforms. Officials went through the motions when it came to drafting the AMP or the AAR without envisaging them as useful tools in their daily work. The same approach applied to the CDRs or financial training. This can be explained by two main factors: the DG’s policy-making tasks and leadership. First, officials considered that their main function was policymaking and not policy-managing. Even though it became more and more accepted that management should go hand in hand with policy conception, the former was still regarded as a much less noble task compared with the latter. As a result, some DG TREN officials were resistant to the new practice of setting objectives, monitoring and evaluating. They also considered that it did not add any value to their work. Beyond the nature of DG TREN’s tasks, this attitude might even be better explained by leadership and human agency. When the reforms came into force, a French Director- General who was openly against a series of significant measures of the White Paper was in charge of DG TREN. Lamoureux organised some resistance within the DG and went head to head with Kinnock in a meeting the Commissioner had with DirectorsGeneral. Even though, officially, Lamoureux softened towards the reform, it seemed that resistance towards the ABM process in particular ran deep. As a result, DG TREN underwent some significant structural changes, particularly in the financial domain. But it can be argued that it did not have a choice in the context of Commission-wide reforms enforced from the top. However, in every operational and cultural aspect which required some adhesion and ownership from staff, change was

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more formal than practical, affecting its depth. Despite Anglo-Saxon Directors- General being appointed to DG ENER and DG MOVE, the human fabric of the units and Directorates remained overwhelmingly from France, Italy, Belgium and Spain which confirmed reticence towards reform processes and procedures.

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10 Conclusions: Understanding Heterogeneous Institutional Change in the Commission

Institutional change has been at the heart of the Commission’s reform process since 2000. Rather than analyse whether the Kinnock reforms generated institutional change or not, this research built on the works of Kassim (2004a, 2004b, 2008), Levy (2002, 2003, 2004), Peterson (2004) and Cini (2004), which specifically discuss the Kinnock reforms and unanimously demonstrate the occurrence of change. Even though these authors might not agree on the depth of change or its ‘success’ and how to define it, they all concur that the Kinnock reforms achieved what no other reform programme of the Commission ever did: change and impact. This study therefore sought to re-situate the debate in a historical and evolutionary administrative perspective, which no other researcher had done until now, and to go beyond the observation and measurement of change in order to understand its nature, scope and dynamic as well as the consequences for the Commission as a political institution. It gives an in- depth multi- dimensional answer to the central question: what explains institutional change in the Commission since 2000? In answering this question, this study adds three significant perspectives to the existing literature. First, it sets the administrative reform in an evolutionary perspective which gives a better and more rounded understanding of opportunities and constraints for the Kinnock reforms. It identifies political opportunities in the administrative construction of the Commission from its creation to 1999 and highlights how path dependent the Kinnock reforms really are. It specifically de-constructs the Commission’s resignation as a political opportunity and traces its effects on institutional change. Second, it analyses the macro-level 189

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impact of NPM ideas on the reform content, which has been largely disregarded by the current literature in analysing the type of reform the Commission went through and its wider implications regarding the institution’s political status and legitimacy. Finally, it reaches conclusions on the effects of the translation process on the dynamic of institutional change which the Commission went through, comparing the case study results from the meso-level in order to delve into the depths of the organisation and assess the reform in action. Looking at attempts to reform the Commission over 50 years as well as its institutional construction highlights how many of the ideas which are at the heart of the Kinnock reforms had already been examined and detailed in reports since the 1950s. However, these ideas were never implemented. The macro-analysis of institutional change between 1950 and 1999 and the failure of reform efforts underlines the crucial significance of the Commission’s resignation as a political opportunity which combined the necessary problem, policy and political factors to trigger change and departure from path dependent reform strategies. Therefore the first section of these Conclusions will highlight the path dependency of ideas which informed the reform content but it will also demonstrate the significance of political opportunity in triggering revolutionary change when it came to the reform process. The second section will assess what type of NPM reforms the Commission eventually implemented. Finally, the third section will draw conclusions on the nature and dynamic of institutional change at DG level through a comparative analysis of the translation process of the Kinnock reforms the DGs went through. Building on the dynamic administrative reflection which had taken place in previous years, the Commission took the opportunity offered by the College resignation to design and implement a reform solidly based on NPM ideas, which went beyond traditional organisational aspects and reached into the political and democratic dimensions of the Commission in order to re- establish its institutional legitimacy. These conclusions from the macro-level analysis were further enriched and deepened when combined with changes observed in the DGs in order to assess the full scope of institutional change. The change process in the Commission left a mark but the translation at DG level reveals important variation. If local organisational contexts, implementation capacities and power struggles play a role in the dynamic of institutional change in the SG, DG TREN and DG REGIO, ultimately it is leadership and human agency in those DGs which condition the internalisation and therefore ownership of the reform by staff.

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From path dependency to political opportunity: explaining revolutionary change Historical Institutionalism (HI) acknowledges the importance of path dependency in policy-making and institutional change and puts it at the centre of its analytical framework. Looking at the Kinnock reforms, it is clear that the White Paper was influenced by many previous reports and recommendations which vindicate the path dependency of the Kinnock reforms with regard to its content. Yet the departure from previous patterns comes in the actual reform process, which represents a revolutionary change in approach to administrative reform triggered by political opportunity and carried forward by strong leadership. An evolutionary reform in its content The study of the Kinnock reforms highlights the extent to which their content was path dependent and based on recycled ideas which had been included in the many reports on administrative restructuring and reorganisation produced since the Commission’s creation. A HI approach to the reforms helps qualify the traditional view that the Commission is an administration with a mission which has never considered managerial matters as relevant or significant for its future. A historical perspective emphasises how, within the first 12 months of its existence, the European administration had already commissioned a consultancy firm specialised in organisational design to review the organisation of the Commission’s administrative services with the idea of rationalising them (BAC/51/86/496) Subsequent to this first step towards administrative rationalisation, many more reports followed examining and recommending options to improve the internal functioning of the Commission. Five key elements can be outlined which Kinnock put at the heart of his reforms: strategic planning and programming, mobility, linear career, decentralisation, ethics. First, the report of the Table Ronde des Huit in 1970, like Ortoli’s report in 1961, pointed out that, when it came to work practices, there was a significant lack of strategic planning within the Commission. Given the ever- expanding scope of competence of the Commission but its limited financial and human resources, its lack of ‘programmes d’activités’ (BAC 164/89/309, p. 11) appeared to be a real deficiency. The programming system would have allowed the Commission to provide some genuine political drive, which was expected from the Commission. In 1979, the Spierenburg report re-affirmed the necessity for work-programming

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and stressed the importance of ‘management qualities’. The review group insisted that each DG should draft a work programme to which staff could relate more easily than with the Commission’s annual legislative work programme. Following the signing of the treaty on the financial structure of the European Communities in 1970, in a spirit of better programming the Commission introduced the use of Planning, Programming Budgeting System (PPBS) in its budgetary choices. The White Paper’s second chapter recycled these ideas on programming and set up the ABM cycle and the ABB mechanism which are at the heart of the new Annual Policy Strategy (APS) cycle and aim to improve the Commission’s strategic programming and budgeting through objectives, indicators, monitoring, reporting and evaluation. Second, on the issue of staff management, the Spierenburg report encouraged staff mobility, which it considered as ‘a right and a duty’ (1979, p. 31). It deemed that the number of European fonctionnaires in the Commission was adequate to perform the set tasks but that they were badly distributed. Mobility would help remedy the poor allocation of staff. The Williamson report (European Commission, 1998, p. 55) was less forceful about the necessity for internal mobility but it nonetheless recommended the ‘creation of a favourable environment for mobility’. Kinnock made mobility an obligation for anyone in a sensitive post after a maximum of five years, with some possible derogation until seven years. This measure was key to the reforms and has been implemented across the Commission, despite some serious tensions. Third, in 1982, Morel (1985), the former director of DG IX, which dealt with personnel issues, had already publicly suggested that a linear career structure be introduced. In 1990, an inter-institutional group had further studied in detail the advantages and disadvantages of the linear career (European Commission, 1998, p. 33). Kinnock’s original suggestion was also for a totally linear career structure which would erase the categories and allow anyone to move up from grade to grade. In the end, after negotiations in the Ersboell group, it is a semi-linear career structure which has been implemented with two function groups, assistants and administrators, and a single pay scale with 16 grades. Fourth, and more recently, SEM 2000 decentralised some financial decision-making at DG level. This necessitated the creation of resource units whose Directors became a pivotal element in the financial structure. Santer based SEM 2000 on a key principle: that of the separation of policy conception and financial management in order to create better staff awareness of financial matters and achieve strict financial control. As SEM 2000 was implemented and evaluated, reports advised

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the generalization of the evaluation culture as well as training of staff and making them more responsible. All those ideas have been re-used by Kinnock and further developed, financial decentralisation being strengthened and financial responsibility enhanced. Fifth, it must not be forgotten that it was the Santer Commission which devised the Code of Conduct for Commissioners and the Code of Conduct governing relations between Commissioners and Departments. Ethics had not been very prominent in previous administrative reports but Santer identified it as a crucial issue and put together the two Codes of Conduct which were adopted by the Prodi Commission due to the untimely resignation of the Santer Commission. Once again the continuity of the Kinnock reforms with decisions made previously is striking. The HI approach helps to qualify the usual picture painted of the Commission as a static institution. Many authors have described the inability of the institution to reform itself since 1958 (Stevens and Stevens, 2001; Kassim, 2004a, 2008; Cram, 1999; Nugent, 2001). Even though this assessment is true, ending the analysis with this observation gives a biased representation of administrative reform activity in the Commission as well as an exaggerated impression of the novelty of the Kinnock reforms. Placing the Kinnock reforms in their historical perspective reveals two elements. First, the Commission has always engaged in dynamic reflection over ways of reforming its structures, processes and procedures. Second, the Kinnock reforms are not as novel in their content as they were represented to be. Many measures included in the White Paper had been discussed, suggested and even recommended in previous years. It can be argued that the core administrative reform agenda which Kinnock eventually implemented had been constructed little by little since the 1970s. Yet this accumulation of reports on how to reform the Commission did not translate into change since they were never implemented. Therefore the revolution came from the Commission-wide implementation of the reform package, which broke established institutional patterns. A revolutionary reform in its process Despite a dynamic and constant reflection on how to reform the Commission over the last 50 years, it is the implementation of the Kinnock reforms that has marked a revolutionary change in the institution’s history. One of the key problems that the Commission has encountered in the past about reforming itself was due to the inter- dependent politico-administrative environment in which it lives. In particular, it

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cannot amend its own Staff or Financial Regulations because they apply to all the EU institutions (Stevens and Stevens, 2001). Like all regulations adopted by the Council, amendments to them involve a lengthy process. This dependency of the Commission on external institutions about decision-making on its own workings is not, though, sufficient to explain why previous reform programmes were not implemented, or at best only marginally. SEM 2000 can be cited as an exception in terms of implementation of some financial decentralisation and the creation of resources units but its scope still remained very limited. Overall, it cannot be stressed enough that the implementation of the Kinnock reforms represents a significant departure from the Commission’s administrative past. When it comes to wide-ranging administrative reforms, academic literature is dominated by accounts of failed reforms and unanticipated consequences (Pollitt and Bouckaert, 2004; Christensen and Laegreid, 2001; Bauer and Knill, 2007; Lipsky, 1971; Pressman and Wildavsky, 1973). In contrast, it can be argued that the Kinnock reforms followed a successful process going from the definition of a problem, the setting of an agenda, decision-making and finally implementation. In this regard, success can be seen as the happening of each of these phases, and particularly the near to full implementation of the 98 measures contained in the White Paper. It does not, however, entail that the implementation of the reform has meant the achievement of the White Paper goals. Critics of HI argue that it is not a theory of change but rather a theory of the status quo (Peters, 2001) which insists on the stickiness and inertia of institutions and the way they constrain and refrain changes from happening. Nevertheless HI conceptualises change in the context of stable institutions using the notion of ‘critical junctures’, moments of crisis opening a window of political opportunity for clear departure from established institutional patterns. Pierson insists on the importance of patterns of timing and sequence. He considers (2000, p. 15) that ‘[u] nder conditions conducive to path dependence, the same event (e.g. an exogenous shock such as depression or war) may have a different effect depending on when in a sequence of events it occurs’. In this regard, the use of Kingdon’s streams, which explain agenda-setting, has proved particularly instructive. Kingdon’s model stresses the importance of ideas, individuals and institutions and ‘allows for the influence of both human intentions and impersonal forces’ (Barzelay, 2001, p. 59). This research has therefore developed a more defined concept of political

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opportunity which brings together human agency, institutional context and the ideational realm. As discussed in chapter 4, the Commission’s resignation represented such a political opportunity, which saw the confluence of a problem, policy and political stream that in turn generated the necessary conditions for the reform programme to be put on the agenda. The identification of poor management in the Commission as a problem, which had been done in reports such as the Table ronde des huit, Ortoli’s or Spierenburg’s intersected with organised political forces which had at their disposal decades of reports with proposals as to how to reform the European administration. Unlike 1979, to take only the example of the Spierenburg report, 1999 saw the crucial coming together of political processes and the European institution. This is key to understanding how exogenous pressure for change created institutional dynamism (Thelen and Steinmo, 1992) which led to the Commission taking over the reform process and largely making it an internal experience. Once the reform item made it successfully onto the agenda, the Commission took control of the strategy. This research fully confirms Kassim’s conclusions (2008) on Kinnock’s ‘effective reform leadership’ which included a clear blueprint with tight deadlines, the ownership of the reform by the College, an open and transparent communication strategy with staff and the confronting of staff unions. The use of HI in conjunction with Kingdon’s model as a theoretical framework to analyse administrative reform in the Commission has revealed a pattern of punctuated evolution (Campbell, 2004) which involves long periods of incremental, circumscribed change interrupted by critical moments shaking the institutional status quo (March and Olsen, 1989). The Merger in 1965 was the first critical juncture and the Commission’s resignation in 1999 was the second. Both reforms made it through from agenda-setting to implementation. However, they cannot be compared since the latter was exogenously triggered in a specific political context which played a significant role in the unfolding of the reform process. The Kinnock reforms are a revolution in the Commission’s history as well as in public administration since their implementation was exhaustive and complete. The Kinnock reforms turned out to be evolutionary in content but revolutionary in process. Looking more closely at the content of the reforms, what type of NPM have the Kinnock reforms developed and what does it mean for the future of the European administration?

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The content of the reform: the Commission’s interpretation of NPM ideas Following the indicators outlined in chapter 1, this study has demonstrated that NPM ideas have consistently influenced the design of the Kinnock reforms. It is first essential to draw conclusions on the type of NPM reform that was implemented in the Commission. A second section will analyse whether the main goal set out in the White Paper for the Kinnock NPM reforms, i.e. freeing officials from full-time executive functions in order to focus on core functions such as policy conception, was achieved. This is at the heart of the debate on the Commission as an administration de mission/gestion. More than a neo-Weberian reform, less than a NPM reform As discussed in chapter 5, the Kinnock reforms are decidedly inspired by NPM ideas. But there is a noticeable gap between the rhetoric of the White Paper, which was very NPM- oriented, and its outcome once the reforms were implemented. The main reason for this gap is not, as could be assumed, that the reforms were watered down during negotiations or that the reformers pulled back. It is largely due to the bureaucratisation of the procedures by the organisation during the implementation phase (Pollitt and Bouckaert, 2004). The CDRs illustrate a merit-based, performance- oriented system which was turned into a rigid, narrow procedure which ends up rewarding the average officials because of the instructions given by DG ADMIN and the low spread of points allowed to HoUs. NPM ideas were therefore diluted in the implementation of the White Paper. Yet it should not distract the researcher from the fact that many NPM measures subsisted. The reforms have been particularly strong in the organisational and democratic dimensions of the concept. The political side of NPM, despite being flagged in the White Paper, found next to no materialisation once the reform programme was implemented. The indicators used to evaluate the extent to which the reforms are inspired by NPM ideas show that the Commission disaggregated with the decentralisation of financial decision-making and responsibility as well as the creation of at-arm’slength bodies, namely executive agencies, to which programme management was delegated (Hughes, 2003, p. 62). The reforms therefore arranged the de-bundling of the organisation which effectively happened. Yet it can be argued that the way the reform was implemented bureaucratised the original managerial and flexible intentions laid out in the White Paper. The de-bundling might have happened but the

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meso-level analysis highlighted how, for example in DG TREN, decentralisation of financial control re-created centralisation at DG level, with the financial unit becoming a bottleneck. Yet the same financial decentralised Four Eyes system did not seem to be criticised for its centralisation of powers in DG REGIO, mostly thanks to an interactive relationship between the financial unit and the other units. The Kinnock reforms also led to a deinstitutionalisation of human and financial management which has moved towards new norms such as performance, quality outputs and individual responsibility. Due to intense negotiations in the Ersboell group and the bureaucratised implementation of the personnel policy reform, NPM has been diluted when it comes to human resources. Performance and merit which were meant to be at the heart of the promotion system got severely constrained by the mechanism put in place to implement the CDRs. Still, Pollitt and Bouckaert (2004, p. 236) consider that: [t]he new emphasis on the individual responsibility of directorsgeneral, coupled with new promotion and grading procedures and annual activity plans could begin to shift the management culture, but at the time of writing this is little more than a hope and a prayer. Yet the case studies demonstrate the deep awareness by officials of their responsibility and more specifically their financial responsibility which is not limited to the Directors- General. Even in the SG, where financial management is very limited, officials raised the issue and pointed out the several financial training courses they have chosen to follow. Each HoU has integrated the concepts of value for money, effectiveness and outputs. Annual Management Plans and Annual Activity Reports are indeed constant reminders of what the targets are and whether they are achieved in a timely and legal fashion. It can be argued that the cultural shift towards strategic planning and individual responsibility and accountability has happened even if DG TREN and the SG have had a more formal approach to strategic programming compared with DG REGIO. The blurring of frontiers between public and private sector as a result of the reforms has not quite happened yet even though all the tools for it are included in the White Paper. It spells out an externalisation policy which includes outsourcing of ‘non-core activities as well as, possibly, specific tasks related to core activities’ (European Commission, 2000b, p. 19). The door is therefore loosely left open for contracting out to private

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sector entities which could engage in core tasks. In the implementation of the White Paper so far, contracting out has been very limited, mainly to security functions. In the same way, the ABM cycle which imported strategic planning and programming from the private sector into the Commission (Hughes, 2003) has not been used to its full potential. Its implementation has led to more or less internalisation and therefore effectiveness depending on whether the DG was a policy-making or programme-managing service. The contrast is very visible in DG TREN compared with DG REGIO. The ABM cycle has been more effectively used and accepted by officials in DG REGIO because they consider that their programme-managing function requires them to constantly demonstrate to the outside world that they are effectively and efficiently managing European monies. On the other hand, DG TREN, which deals mainly with policy-making, has not invested in the ABM cycle and tends to go through the motions rather than use it as a management tool. The SG has had a similar approach with drafting its own AMP even though it has appeared proselyte about it towards all other DGs. Beyond the organisational dimension of NPM, its democratic dimension has been the other pillar of the Kinnock reforms. They put a considerable emphasis on accountability and responsibility of officials on the one side and transparency and openness on the other, all in the spirit of ultimately improving the relationship of the bureaucracy with the citizens. Be it at macro- or meso-level, no matter what the function of the DG, all officials interviewed, and not solely the Directors- General who are personally responsible with their own monies when signing off the AAR, mentioned at long length their duty of accountability and responsibility for their actions. It does not mean that there was no sense of responsibility before the reforms were implemented – as the CIE erroneously stated – but the internal culture has clearly integrated it with accountability since 2000. New mechanisms such as the financial procedures and structures have fostered this awareness and contributed to a change in mentalities. Transparency seems to be more problematic in an administration which has a culture of mistrust. The year 2005 still saw the introduction of accrual accounting which brings in more transparency in the use of public funds (Kettl, 2000). Openness which was mainly symbolised by the access to official documents and the obligation to answer those requests within 15 days has been implemented. In this vein of openness, the Commission has developed its website, putting more reports for public access. The heterogeneous character of the institution is, however, reflected in the lack of coherence in documents accessible from DG’s websites. For example, DG TREN’s website

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does not allow access to its AMP and neither does the SG, whereas DG REGIO’s is on the front page. This study therefore validates the Commission’s acceptance of a reform programme that is strongly grounded in NPM and which was moulded to its institutional requirements and implementation constraints. As a result it also shows that some aspects of the NPM package were not implemented. The overwhelming majority of EU Member States had engaged in some sort of managerial reform of their public administration by the time the Commission designed and implemented a similar reform. Many authors (Osborne and Gaebler, 1993; Thompson, 1997; Hughes, 2003; OECD, 1995; Ingraham and Romzek, 1994; Kamarck, 2000) claim that NPM is a worldwide phenomenon, an international administrative trend which countries cannot resist. Kettl (2000, p. 1) more specifically talks about a ‘global public management revolution’ and argues: ‘[t]he movement has been striking because of the number of nations that have taken up the reform agenda in such a short time and because of how similar their basic strategies have been’. In this sense it can be said that the Commission finally gave into a worldwide trend. Pollitt and Bouckaert (2004) discuss how the Kinnock reforms have switched the Commission from the maintenance of the status quo strategy to that of modernisation. They call this reform model the NeoWeberian State (NWS) because it mixes Weberian elements with more managerial ones. In this regard, they join Levy in his conclusion that the Commission retains some very strong bureaucratic characteristics such as distinctiveness of its public status and an emphasis on procedures and centralisation. This has led Levy (2002, p. 7; 2006) to conclude that despite the Kinnock reforms being peppered with many NPM-type measures, ‘it is still the case that traditional legal-bureaucratic remedies outnumber NPM ones by 5 to 1’ (Levy, 2002, p. 7; 2006). Applied to the Commission, it can be argued that three Weberian elements are reaffirmed: ●

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The role of the institution as the main provider of solutions, keeping executive agencies or other externalised options to non- core functions. The role of administrative law with the amendment of Staff and Financial Regulations and the development of numerous new financial, strategic and human resources-related procedures. The distinctiveness of the public service with the absence of quasimarkets, privatisation and internal competition.

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These elements are, however, mixed with: ●

●

●

A shift in the direction of an external orientation towards meeting citizens’ needs. A focus on results rather than procedures in the management of resources, particularly with the Strategic Planning and Programming cycle. The professionalisation of the bureaucrat as a manager, oriented to meeting the needs of his/her citizen/user.

Pollitt and Bouckaert’s model fits the Commission’s case to some extent. Yet this research concludes that the reforms went beyond neo-Weberianism without going as far as full-scale NPM. Pollitt and Bouckaert’s model reflects the fact that the Commission retained the core attributes of a public administration. But it minimises the shift towards NPM through not including: ●

● ● ● ●

●

The de-bundling of the organisation through disaggregation of the financial centralised system. The decentralisation of financial responsibility at DG level. Some private sector techniques such as accrual accounting. The creation of executive agencies in order to manage programmes. The potential for contracting out some specific core tasks to private contractors. The cultural shift towards personal responsibility of the official rather than the sole responsibility of the politician, i.e. the Commissioner.

Full-scale NPM would have required more competition, considerable contracting out, the proper implementation of the merit-based personnel assessment policy and contractual appointments as well as performance-related pay. Yet the organisational and cultural shift which was achieved by the Commission cannot be dismissed as a new form of traditional public administration scattered with a few NPM references (Hood, 1994). This conclusion therefore leads to evaluating whether the NPM reforms achieved what they set out to do: build a world class administration which would reconcile administration de mission with administration de gestion. NPM: the path to an administration de mission It is striking, when reflecting on the Kinnock administrative reforms, to note the conceptual connectivity between NPM and administration

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de mission. An administration de mission is set up to fulfil a specific task in a given time framework. It is partisan, non-hierarchical and delegates implementation rather than manages it itself. In comparison, NPM is non-hierarchical, requesting flat administrative structures. It is nonbureaucratic, fighting against red tape and encouraging risk-taking initiatives. It promotes delegation of implementation in a context of decentralised structures and it is centred on a mission defined by objectives which are regularly redefined. NPM seems therefore the ideal managerial tool to bring the administration de mission back to the fore. As explained in chapter 1, the Commission was never a pure version of an administration de mission, despite Monnet’s dreams. Throughout its history, it has tried to juggle both roles of mission and gestion, one taking precedence over the other depending on the systemic and political environment. When the Prodi Commission was appointed, the political context was not favourable to the creativity and room for manoeuvre that would need to be given to the European bureaucracy if it was to be advanced as an administration de mission. Therefore, the focus was put on effectiveness, efficiency and ‘optimal structures and systems for the deployment of its resources’ (European Commission, 2000b, p. 6) in order to allow the Commission to work on its core functions and ‘fulfil its institutional role as the motor of European integration’ (European Commission, 2000b, p. 5). The aim of the White Paper was to make the Commission a better administration de gestion in order for it to have the time and resources to fulfil its mission. Despite the reforms being NPM-based, there is one main reason why they did not achieve this freeing-up of ideas and resources which would have given officials more flexibility to manage and think of policy conception: the ‘lourdeur’ of the processes and procedures introduced by the White Paper associated with the development of a culture of control. The case studies revealed the same recurrent criticism of this reform, no matter whether it had been internalised by officials or not. Despite the different contexts, it is interesting to note that the SG and both DGs highlight how cumbersome the processes and procedures have become and how control has tightened. It has to be mentioned that the interviewees were mainly HoUs, middle managers, who have been hit most severely by the reform in terms of administrative workload. They are the ones who have to organise the CDRs yearly, whereas the former personnel appraisal system happened every two years. They are in charge of implementing the Activity-Based Budgeting. They also coordinate the identification of priorities for the AMP as well as the

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output and impact indicators. Overall, a HoU estimated that he spent 60% of his time doing administrative work (Interv L14, 2006; see also Bauer, 2006). If DG TREN officials complained a lot about the bureaucratisation of procedures and the rigidity of processes, DG REGIO officials, on the other hand, looked at both sides of the coin. They made the same comments as their counterparts in DG TREN, yet they also acknowledged that DG REGIO and the Commission in general needed to have irreproachable processes and procedures in order to regain their credibility and institutional legitimacy. The SG, who is central in the unfolding of the SPP cycle, had a schizophrenic approach to ABM and indicators, finding them more relevant to the work of other DGs than their own. The co-lateral consequence of cumbersome procedures has been the development of a culture of control and auditing which has made officials even more risk-averse rather than risk-taking. The last step in the control of the best use of public resources was taken with the explosion of auditing. Peters (2001, p. 41) considers that ‘[a]uditors have now been transformed from their green- eyeshade image to being integral parts of the reform and accountability process in many contemporary governments’. An official in DG REGIO called the auditors the new stars of the regional policy. Each DG, the SG included, has an internal audit capacity and an independent Internal Audit Service has also been created. The events which led to the Commission’s resignation explain why it needed to upgrade dramatically its ‘standards of effectiveness and integrity in the handling of public money’ (European Commission, 2000b, p. 6). But officials agree that the financial reform has over-stepped the mark and has resulted in a lack of spending of programme money due to fear of mistakes in following financial procedures. This audit explosion is typical of NPM reforms and has affected the NPM marketers such as the UK (Hood, 1986; see Day and Klein, 1987). According to the interviewees, the Kinnock reforms have made financial management much more efficient to the extent that the risk of fraud is next to nil, such is control. Only future research will tell if the reforms have transformed the Commission into a control- obsessed administration too slow to remain active in the policy-making domain. At present, it is essential to take the macro-level conclusions on NPM down to the meso-level and analyse why institutional change has been differentiated across the Commission and what it means for the institution.

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Differentiated institutional change: the challenge of reform in a multi-organisation Even though the Commission’s resignation was the catalyst for the reforms to be revolutionary in their process and represent a major departure from previous macro-level institutional patterns, an analysis of implementation at meso-level and its impact in terms of institutional change reveals a more contrasted picture. The use of intervening variables in order to understand the translation process, which the reforms underwent in Directorates- General, has been crucial and highlighted the overall significance of human agency in the homogeneity of change. The limits of historical institutionalism in explaining patterns of change In a 2008 article Kassim tries to theorise the Kinnock reforms, which he regards as ‘an impressive achievement’. He argues that the Commission case is important because it defies the expectations of the main theories, which he lists as the Weberian orthodoxy, the classic principalagent model, HI and sociological institutionalism. He identifies four aspects of the Kinnock reforms which he argues cannot be explained by any of the main theories of administrative reform, including HI: the origin of the reform agenda, the civil servants’ motivations, the multiple nature of organisations and effective leadership. Taking the analysis from macro- to meso-level, this study has revealed how different institutional change has been in the SG, DG REGIO and DG TREN. In contrast with Kassim’s assessment, this research insists that HI gives many more necessary tools to explain the Kinnock reforms and their implementation, in all their variations, than he acknowledges. Firstly, Kassim considers that the reform agenda was shaped inside the European bureaucracy, which HI does not accept. This research takes the viewpoint that pressure for change was clearly exogenous and that the overall structure of the reform package was imposed by the CIE’s second report. It is true that, from the moment the Prodi Commission was appointed, an institutional dynamism developed which allowed internal actors for change to take over and clearly go beyond what the CIE or the EP had requested. Yet it is misleading to ignore the external input, from the CIE in particular, in the Kinnock reforms. Secondly, Kassim contends that HI sees bureaucrats as inherently in favour of the status quo and therefore interpreting reform ‘through preexisting norms and values, resulting in at most incremental change’

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(2008, p. 662). According to him, the reform in the Commission involved ‘genuine change’ which does not equate with the HI analytical lens. Yet, as discussed in chapters 6, 7, 8 and 9, two significant aspects of the reform have been interpreted through the Commission’s institutionalised value framework: ABM and CDRs. Regarding ABM, research has shown that Commission fonctionnaires have not internalised the objective-setting practice which is required of them in the AMP. An overwhelming majority of HoUs interviewed stated that they went through the motions of identifying objectives and indicators but they also admitted that they considered the whole exercise rather cosmetic and formal with little managerial added-value. Staff are still processing the ABM cycle through bureaucratic values which contest explicit standards and measures of performance. The same conclusion is even more relevant for the CDRs. This is the typical example of a NPM reform, focusing on merit, performance and evaluation, which ended up being intensely bureaucratized by DG ADMIN, and over time the introduction of the averaging of marks and the system of points. This new personnel assessment mechanism was clearly re-interpreted through a very bureaucratic lens, a dominant norm in the Commission. Yet research has also drawn attention to two crucial limits of HI. First, it does not apprehend the internal diversity of an institution and of its staff who might not all value the same norms. HI studies institutions as homogenous entities which does not match the case of the Commission, this multi- cultural, multi-national and multilingual organisation. Indeed, the Commission is not only composed of horizontal and vertical services but its vertical services are either policy-making or programme-managing. Second, the EU counted 15 Member States when the Kinnock reforms were launched in 2000 and was facing the largest enlargement of its history, which brought the number of Member States to 25 on 1 May 2004 and then to 27 on 1 January 2007. ‘The House’ has always been a cauldron of nationalities and cultures. Despite a certain degree of socialization into a ‘European spirit’ (Shore, 2000), there is no evidence of a European administrative culture whereas national cultures are still very alive among officials’ everyday interactions. Hooghe (2001) demonstrated that the Commission has difficulty shaping its officials’ preferences, which end up being extremely varied depending on a series of personal internalised values. The second limit of HI is that it does not give enough of a role to human agency in institutional change. Yet, effective leadership by Kinnock was crucial in the implementation of the reforms and similarly,

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leadership proved to be central in explaining the depth of change in DG TREN compared with DG REGIO. Similarly, the appointment of Catherine Day as the new Secretary General has given a new impetus to cultural change within the service. Authors of new institutionalism like Di Maggio and Powell (1991) have paid more attention to ways in which actors and institutions contribute to institutional change. The definition of institution includes a cultural dimension which is based on people’s beliefs and values. These beliefs and values can be shaped by the institution as well as by key stakeholders such as leaders. As the case studies showed, the role of leadership proved to be significant in shaping officials’ views on the validity of the reform measures and their subsequent internalisation. The introduction of an informal cultural dimension in the definition of institution therefore allows us to integrate the role of human agency as a factor of institutional change since norms and values require the medium and interpretation of people to be passed on. However, the boundaries of HI were pushed back with a dual level approach which required the use of intervening variables in analysing the translation of the Kinnock reforms from Commission to DG level. These intervening variables have permitted the introduction of leadership as a key factor of institutional change at DG level. The significance of translation: the role of intervening variables Kassim (2008) takes a macro-level stance and states that the Commission, in its organisational and institutional structure, has undergone deep change. The image of the Commission which has emerged in the literature (Cram, 1994, 1999; Caremier, 1997; Nugent, 2000, 2001) is that of a heterogeneous organisation with conflicting interests and cultures. Many national administrations are also heterogeneous in some ways. However, this aspect is magnified in the case of the Commission due to the institution’s functions and the diversity of nationalities, languages and cultures. Kassim’s wide lens used to assess the ‘success’ of the implementation of administrative change at macro-level artificially erases the complex and multi- organisational nature of the Commission and hides the reality of change in practice. This research has taken the analysis to the meso-level in order to assess the dynamic of change across the Commission. It has involved looking at implementation of the reforms at DG level and the translation of policy into practice. In testing the hypothesis that the translation of the White Paper into practice at organisational level has produced differentiated institutional change, four intervening variables need to be taken

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into account to explain why and to what degree change was different in the SG, DG TREN and DG REGIO: ● ● ● ●

The DG’s organisational context. The DG’s implementation capacities. The power struggles in which the DG is involved. The leadership support demonstrated by the Director- General.

Comparing the DGs’ organisational function brings to light their very distinct position in the European institution. DG TREN was concerned with policy-making and had very few dealings with policy-managing whereas DG REGIO’s tasks are mostly about managing European Union programmes and getting them implemented by Member States. The SG is the central horizontal service of the Commission, concerned primarily with coordinating other DGs’ work. This functional opposition is reinforced by the DGs’ financial management structure. DG TREN worked with a small budget, close to €1.5 billion in 2007, but operated entirely on the basis of direct financial management. The SG operates an even smaller budget, around €9 million. On the other hand, DG REGIO’s 2007–2013 benefits from a €347 billion budget, but its management is shared with Member States. Whereas DG TREN had to account for the ways it spent EU monies itself, DG REGIO is ultimately financially responsible for Member States’ actions since they manage 80% of the DG’s funds. This puts the DGs in very different positions regarding the translation of the Kinnock reforms. The second intervening factor in the translation of the Kinnock reforms into practice is intimately linked to the organisational context and relates to the DG’s implementation capacities. Since DG TREN was a policy-making DG which worked on the basis of direct financial management, it had to rely on its own internal structures, processes and procedures to implement the reforms. Once again, the SG is in a similar position of self-reliance. In contrast, DG REGIO is dependent on the Member States when it comes to collecting data and signing off on the AAR. Due to the size of its budget and its shared financial management, DG REGIO had already developed practices around planning and programming, evaluation through indicators and monitoring prior to 2000. The Kinnock reforms forced them further in this direction, even leading to the indirect consequence of tougher supervisory procedures with Member States. The SG’s and DG TREN’s function and financial management structures meant that constant evaluation and monitoring of their activity was not at the forefront of the services’ preoccupations.

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In contrast, DG REGIO’s organisational context was more receptive to the ideas and measures included in the Kinnock reforms since some of them mirrored existing local practices. Yet implementation capacities put this DG in a more shaky position. The third element that affects the translation process is the power struggles in which the DGs are involved. Due to the circumstances in which the Commission resigned in 1999 and the CIE’s (1999) subsequent damning conclusions on the issue of the institution’s responsibility in shared management instances, DG REGIO has been engaged in an intense political opposition with the ECA which has raised political mobilisation across the service. In 2005, for the twelfth successive financial year, the ECA issued a DAS which was qualified for payments relating to all parts of the general budget of the European Union except administrative expenditure. The qualified DAS reflects the complexity met by the Commission in implementing the EU budget, and the challenge DGs like DG REGIO face in providing satisfactory audit evidence to the Court, particularly regarding Member States’ management of European monies. As a result, the ECA has refused to issue a positive DAS, highlighting year after year ‘the continuing weaknesses in Member States’ management and control systems and the Commission’s supervisory role’ (European Commission, 2007, p. 27). As a consequence, the Commission and the ECA have been at loggerheads over the positive DAS. In its 2006 AAR, DG REGIO clearly states its fundamental disagreement with the Court over the effectiveness of the supervisory controls carried out by the Commission (European Commission, 2007, p. 27). Since the Commission has linked obtaining a positive DAS to an increase in its legitimacy in the institutional triangle, DG REGIO HoUs are acutely aware of the importance of the practical translation of the Kinnock reforms in order to present an irreproachable front to the outside world and the ECA specifically. DG TREN, however, does not seem to be entangled in similar disputes with outside European institutions which means that its translation of the reform programme was not influenced by any specific political mobilization. The SG is not embroiled in any direct power struggle with other institutions but several officials pointed out the pressure put on the Commission by the EP’s COCOBU. Due to its position in the institution and its fight to establish itself as a ‘Cabinet Office’, the SG has led by example on the implementation of the Kinnock reforms even if it was not convinced of its relevance for the service. Finally, looking at the type of leadership which shaped the DGs’ management style and cultural environment gives the best understanding

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of the different dynamics at work and explains how human agency affected staff’s internalisation of change. The lack of leadership support from the French Director- General Lamoureux, in post from 1999 to 2006, considerably slowed the substantive implementation of the reform. Kinnock himself acknowledges that there was some friction with Lamoureux who was the first Director- General to organise resistance to some reform measures he deemed ‘Anglo-Saxon’. A look at the DG’s organigramme leads to the conclusion that there was an overrepresentation of officials from Southern European Member States. It is also interesting to note that DG TREN is a very francophone administrative service since Lamoureux insisted on using French as the working language. At the end of Lamoureux’s term there was not a single British, Irish or Swedish HoU (Interv L5, 2006). As a result, when Lamoureux was head of DG TREN, the ABM cycle was not considered a priority because of a lack of interest in management matters (Interv L4, 2006). Despite the arrival of Matthias Ruete as Director- General in 2007, the core of DG TREN officials were opposed to this ‘Anglo-Saxon’ reform and cultural change did not happen. DG REGIO also experienced a change in leadership with German official Ahner replacing Englishman Meadows as Director- General in January 2007. Yet both officials were ideologically sympathetic and committed to the reform and supported and facilitated its translation into the DG’s existing working practices. This resulted into a substantive practical implementation of reform measures in DG REGIO as well as a genuine ownership of the reform by HoUs. The SG’s leadership was always sympathetic to the Kinnock reforms and cultural implications since its head, until 2005, was David O’Sullivan, an Irish official, who had been Prodi’s head of cabinet. The four elements framing and constraining translation of the Kinnock reforms explain why DG REGIO underwent a more effective translation of the Kinnock reforms in practice, with officials internalising reform measures and their rationale rather than formally implementing them. DG REGIO’s organisational environment, power struggle with the ECA over a positive DAS and its supportive leadership all favoured substantive and internalised change. In contrast, the reform did not seem to fit DG TREN’s everyday business as well and created extra work for HoUs who did not accept it as well as HoUs in DG REGIO, since they considered it more superfluous. The SG’s effective translation of the reforms reveals a contrasted picture half-way between that of DG REGIO and DG TREN. Like DG TREN, the SG considered that the Kinnock reforms were ill-adapted to the work and

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mission of a horizontal service. Yet there was no cultural or ideological opposition to the programme itself. The SG understood that it needed these structures, processes and procedures to regain institutional legitimacy and carry on to set itself up as a real ‘Cabinet Office’.

Conclusion Institutional change in the Commission as a result of the Kinnock reforms cannot be denied. Empirical results have confirmed the three hypotheses made at the start of this book. They have highlighted the significance of the Commission’s resignation as a political opportunity which broke the path dependency of reform attempts in the Commission. It clearly explains why singificant institutional change happened at that time and in that way. This research has gone beyond the statement of organisational change at macro-level and looked indepth at the organisation at a meso-level. This has revealed that despite being a Commission-wide reform programme, the translation of the White Paper has generated significant varying degrees of change in the SG, DG REGIO and DG TREN. Internalisation of the reforms by staff have mainly been dependent on the type of leadership within the DG. At a macro-level, leadership can be used as an explanation for the farreaching implementation of the White Paper. Yet when the same argument is used at a meso-level, it sheds light on the variance in ownership of the reform by staff and the resulting uneven practical change. Bauer (2006, p. 27) argues that following the Kinnock reforms, ‘the Commission will probably become more introverted, and the responsible individuals will have less time for policy content than in the past’. It is true that analysis of the Kinnock reforms demonstrates how cumbersome and time- consuming a lot of the new procedures are and the increased workload that HoUs, specifically, are facing. Yet this research would argue that the local implementation of the reforms has revealed some room for manoeuvre when it comes to putting in place structures or training programmes suited to the DG’s needs. If the reforms at first inspired fear among staff, who felt the weight of financial responsibility and accountability, a second phase has now started with the use of the reforms to reclaim legitimacy externally. It could be argued that the reforms, through stricter impact assessments, indicator-based monitoring and strategic programming will improve the quality of policy outputs. The risk of a Commission stifled by procedures and centralised management has always been brandished since the 1960s (Schön- Quinlivan, 2006). The introduction of

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the White Paper clearly states goals that aim to improve the administration de mission and reconcile it with the administration de gestion which the Commission has de facto become over the years. The question is whether the NPM reforms managed, as promised, to instigate institutional change which gives more flexibility to managers, makes the hierarchical structure flatter and allows administrators to dedicate more time to policy-making while delegating programme-managing to atarm’s-length bodies. The creation of executive agencies has attempted to separate policy-managing and policy-making with the idea of freeing-up time and resources to perform the former. However, evidence shows an increasingly bureaucratised administration obsessed with procedures and control. Only future research will indeed tell if the reforms have transformed the Commission into an administration de contrôle too slow to invest the policy-making domain, therefore leaving this political space to the Council and the European Parliament, or whether this is an adjusting phase which the Commission will overcome to strike the right balance between stricter control and greater flow of ideas.

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Sources Notes Preface 1. Translation of the quotes is the sole responsibility of the author.

1 Introduction: How to Analyse Administrative Reforms in the European Commission 1. Auswärtiges Amt was the West German Foreign Ministry.

2

1950–1984: Constructing the Administrative Commission

1. The High Authority stayed in existence until 1965 when the Merger Treaty was signed, which marked the birth of the Commission of the European Communities. This second chapter only analyses the early years of the High Authority in order to set the creation of the European Commission in 1958 against a contextual background which will provide understanding for the organisational choices made. 2. Members of the High Authority were appointed for six years and renewed by thirds every two years. 3. M. Noël was appointed Secretary- General in 1958 and kept this post until he retired in 1987. 4. This was the case until the Prodi Commission was appointed in 2000. Prodi decided then to streamline the organisation and make it more readable. The numbers used to designate DGs were dropped and replaced by titles summarising their area of expertise. 5. See Quatrième Rapport Général, avril 1956, point 11, p. 24. 6. F. Bloch Lainé used to call Monnet ‘un homme de l’oral’ (quoted in Mioche, 1987, p. 92). See also R. Poidevin and D. Spierenburg (1993, p. 72). 7. Poidevin and Spierenburg (1993, p. 73) explain that Monnet ‘does not want to be trapped in a rigid organisation; he prefers informal meetings and ad hoc commissions, a method which to some extent annoys some of his colleagues who are used to more formality’. 8. The Auswärtiges Amt is the equivalent of the Foreign Affairs Ministry. 9. The Table ronde des huit was composed of four members appointed by the Commission – MM. Lambert, Janz, Mercereau, Schloesser – and four personnel representatives – MM. Ferraton (SGPOE.), Holtz (FFPE), Scheuer (SFIE), Silletti (SGPOI). 10. The Groupe des Dix was composed of five members appointed by the Commission – MM. Lambert, Janz, Mercereau, Schloesser, Strasser – and five personnel representatives – MM. Ferraton (SGPOE), Holtz (FFPE), Mandler (Comité central du personnel), Scheuer (SFIE), Silletti (SGPOI). 11. From a structural viewpoint, the report recommended the streamlining of DGs in a two-phased approach. From the 29 DGs which existed in 1979, the

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Sources review group suggested the organisation should regroup around 12 DGs by 1981 corresponding to eight portfolios, streamlining it even further by 1986, bringing the number of DGs to ten in line with ten portfolios. Suggestion was made to organisationally improve coordination within the fragmented Commission through strengthening the Presidency which would be solely responsible for directing coordination. This Presidency would include the President of the Commission as well as a Vice-President, with no other portfolio but coordination.

3 1985–1998: The Foundations for the Kinnock Reforms 1. The Spierenburg report stressed that ‘each time the Commission is renewed, the content of portfolios is the subject of difficult negotiations which lead to portfolios being allocated despite their significance being very unequal. These variations have generated discontinuity in organisation which is detrimental to carrying out tasks properly [ ... ] The number of portfolios cannot be extended indefinitely without the risk of damaging organisational coherence’ (1979, p. 33). 2. MEP James Elles was the rapporteur for the discharge of the 1998 budget which was refused by the European Parliament and sparked the events which ended with the Commission’s resignation. 3. In 1985, the Council approved proposals for introducing ‘special and temporary measures to terminate the service of certain officials in the scientific and technical services’ and for clarifying work contracts and pension and social security rights of the temporary staff (19th General Report of the EC, 1985, p. 44). In 1987, the Council adopted a regulation with regard to the recruitment of overseas staff who represent the Commission abroad, as well as a regulation applicable to officials serving in non-member countries (20th General Report of the EC, 1987, p. 39). In 1989, the Council further agreed to a regulation which allowed the termination of service of scientific and technical officials of the Communities (23rd General Report of the EC, 1989, p. 45). 4. A consolidated version of the report presented to the Commission on 21 June 1995 was then published on 11 July 1995 (SEC (95) 1013/5). 5. This was a significant problematic area in the Commission’s financial management since 80% of the European monies is handled by Member States. 6. The process by which representatives of various projects in a similar technical area meet together to discuss results and common problems. 7. The evaluation report drew specific attention to ‘the reduction from 60% to 10% in 1999 in the number of transactions subject to ex- ante control by Financial Control’ (1999, p. 3). 8. The five Directors- General groups each covered one of the following areas: programming and planning; training; mobility of staff; informatics; cutting red tape by way of empowerment, and simplification of procedure (SEC (98) 557). 9. Georgakakis (2000, p. 62) highlights the high percentage of officials who followed the call for industrial action. However, Stevens and Stevens (2001, p. 49) also point out that trade unions carefully chose the date of the strike in order to maximise numbers: 30 April 1998 was a Friday, eve of a long week end.

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4 A Novel Strategy for Reform 1. Hermanin (2006, p. 56) in particular points out that ‘[i]l est curieux de remarquer que l’introduction d’une carrière complètement linéaire pour la fonction publique européenne n’a pas été une invention du commissaire Kinnock. Déjà en 1982, l’ancien directeur de la DG IX J.- C. Morel, l’avait proposée à un colloque sur la fonction publique. Cf. Morel (1985)’. 2. The DAS, from the French Déclaration d’Assurance, is the annual Statement of Assurance issued by the court of Auditors regarding the way the Commission has managed the European budget. 3. The TFAR was dismantled in July 2002 before implementation was completed.

5 Reforming Public Administrations: New Public Management and the White Paper 1. The IRMS was never used by the DGs throughout the Commission since it was rapidly criticised for being ‘une usine à gaz’ (Interv L4, 2006). Part of the IRMS, ‘Agenda Planning’, which is a simple tool for programming and includes the drafting of a roadmap, is used by all DGs in their communication with the Secretariat- General and other European institutions. 2. The Method is a very complex system used to adjust remuneration annually. The review of remuneration is based on ‘an index prepared by the European Community Statistical Office in agreement with the national statistical offices of the member states. The formula involves looking both at the cost of living in Brussels and at changes in the purchasing power of official salaries in national administrations. The intention is that officials of the Union should enjoy a comparable standard of living regardless of where they work’ (Stevens and Stevens, 2001, p. 48). 3. The Commission does not have a tradition of social conflicts (Georgakakis, 2002b).

6 From Policy to Practice: Operationalising NPM 1. Because of the constraints imposed by Article 24 of the Financial Regulations (which state that internal audit is the responsibility of the Financial Controller) applicable at the time the Commission adopted its decision, the separation of the Internal Audit Service from the Directorate- General for Financial Control could not be established straight away.

7 The Secretariat- General: a Case Study in Innovation 1. In 2005, the Directorate Resources and General Matters was Directorate E. It was only in 2007 that it became Directorate R, keeping the same title and inner structure of units. 2. When action 78 from the White Paper on setting standards for internal control was implemented, 24 internal control standards (ICS) were devised. It was only in 2007 in an attempt to increase flexibility that these ICS were revised and reduced to 16 (SEC (2007) 1341, 16/10/2007). 3. See Revision of the ICS and underlying framework, Appendix 2 – Full set of internal control standards for effective management, requirements and optional effectiveness guidance, (SEC (2007) 1341, 16 October 2007).

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Sources

4. Established by Commission decision on 31 October 2000, (SEC (2000) 1808/3). 5. Europa Press Releases RAPID, IP/00/1241, 31 October 2000. 6. This composition was correct until January 2010. 7. Information note from the President to the Commission: ‘Enhancing quality support and control for Commission Impact Assessments – The Impact Assessment Board’ – SEC (2006) 1457, Annexe. 8. Revision of the Internal Control Standards and underlying framework, SEC (2007) 1341, 16 October 2007, p. 4. 9. Revision of the Internal Control Standards and underlying framework, SEC (2007) 1341, 16 October 2007, p. 5 and p. 33.

8 DG Regional Policy: a Case Study in Adaptation 1. A Solidarity Fund was created in 2003 as well as pre-accession tools, IPA and ISPA. 2. A more detailed definition of shared management is given by the CIE in its second report: ‘shared management will be understood to refer to the management of those Community programmes where the Commission and the Member States have distinct administrative tasks which are inter- dependent and set down in legislation and where both the Commission and the national administrations need to discharge their respective tasks for the Community policy to be implemented successfully’ (1999b, 3.2.2.). 3. See Council Regulation (EC) No. 1083/2006, 11 July 2006, Article 63. 4. See Council Regulation (EC) No. 1083/2006, 11 July 2006, Articles 48 and 49. 5. For more detail, see AAR 2007, p. 16. 6. DAS is the French acronym for Déclaration d’Assurance.

Keys to interviews Interview with Lord Kinnock on 22 November 2006, London. Interviews D1 to D12 with SG officials in March 2008, Brussels. Interview H1 with an official of OLAF on 13 February 2006, Brussels. Interview H2 with DG ADMIN official on 13 February 2006, Brussels. Interview H3 with DG ADMIN official on 16 February 2006, Brussels. Interview H4 with former member of the Kinnock Cabinet on 14 February 2006, Brussels. Interview H5 with DG BUDG official on 15 February 2006, Brussels. Interview H6 with IAS official on 15 February 2006, Brussels. Interview H7 with former member of the Kinnock Cabinet on 17 February 2006, Brussels. Interview H8 with DG ADMIN official on 16 February 2006, Brussels. Interview H9 with DG ADMIN official on 16 February 2006, Brussels. Interview H10 with DG ADMIN official on 13 February 2006, Brussels. Interview H11 with DG BUDG official on 15 February 2006, Brussels. Interview H12 with DG ADMIN official on 16 February 2006 , Brussels. Interview H13 with ESC official on 13 February 2006, Brussels. Interview K1 with trade unionist on 20 March 2006, Brussels.

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Sources 215 Interview K2 with a MEP on 21 March 2006, Brussels. Interview K3 with a trade unionist on 21 March 2006, Brussels. Interview K4 with a MEP on 21 March 2006, Brussels. Interview K5 with a trade unionist on 22 March 2006, Brussels. Interview K6 with an official of an executive agency on 22 March 2006, Brussels. Interview K7 with a MEP on 22 March 2006, Brussels. Interview K8 with former member of the TFAR on 22 March 2006, Brussels. Interview K9 with former member of the TFAR on 23 March 2006, Brussels. Interview K10 with trade unionist on 23 March 2006, Brussels. Interview K11 with official from an executive agency on 24 March 2006, Brussels. Interviews L1 to L9 with DG TREN officials from 12 to 20 July 2006, Brussels. Interview L10 with DG TREN official on 25 July 2006, Luxembourg. Interviews L11 to L16 with DG TREN officials from 12 to 20 July 2006, Brussels. Interviews N1 and N2 with ECA officials on 25 and 26 July 2006, Luxembourg. Interview M1 with former member of the Kinnock Cabinet on 18 July 2006, Brussels. Interview M2 with former member of the Kinnock Cabinet on 2 July 2007, Brussels. Interviews P1 to P15 with DG REGIO officials from 14 to 20 March 2007, Brussels. Interview T1 with an official of an executive agency, by email, 21 July 2010. Interview T2 with DG MOVE/ENERGY official, by email, 21 July 2010. Interview T3 with DG MOVE/ENERGY official, by email, 5 July 2010. Interview T4 with DG MOVE/ENERGY official, on phone, 5 and 7 July 2010. Interview T5 with DG REGIO official, on phone, 22 June 2010. Interview T6 with DG REGIO official, on phone, 1 July 2010. Interview T7 with DG REGIO official, by email, 23 June 2010.

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Index

accountability Activity-Based Budgeting, 156 Annual Activity Report, 156 DG TREN, 181, 182, 183, 186 executive agencies, 117, 169–70 financial management, 94 managerial, 80, 88–9, 100, 118–19 New Public Management, 80, 81, 83, 84, 85, 88–9 political, 80, 88–9 White Paper, 90, 96–7, 100, 105, 116, 118–20, 197, 198, 209 activity-based budgeting, 106, 134, 201 activity-based management DG REGIO, 147, 153–6, 198 DG TREN, 175–9, 198, 208 implementation, 104–7 New Public Management, 98, 114, 115 Secretariat General, 129, 132–4, 202 White Paper, 75, 91–3, 192 administration de gestion, 3–5, 200–1, 210 administration de mission, 3–5, 14, 33, 196, 200–1, 210 Alliance, l’, 108, 116 Amsterdam Treaty, 58 Andreasen, Marta, 112 annual activity report audit, 150–3 DG REGIO, 153–6, 164, 169–70, 206–7 DG TREN, 173, 177–8, 182 New Public Management, 113, 119 Secretariat General, 125, 127, 133–5 White Paper, 92, 105 annual management plan DR REGIO, 151, 154–5, 157 DG TREN, 176–8, 180, 199 New Public Management, 113, 119 Secretariat General, 127, 133–4, 136, 198

White Paper, 92 annual policy strategy, 92, 105, 114, 133, 175, 192 audit, 25, 49, 120, 156 DG REGIO, 154, 155, 156, 157, 164, 165, 170 financial control, 67, 110, 171 Internal Audit Capability, 95, 111, 113, 125–8, 150–3, 173–4, 202 Internal Audit Service, 95, 97, 100, 110–11, 119 New Public Management, 85, 88, 113, 202 PCG on audit, 75 resignation, 59, 62, 65 Barroso, Manual, 124, 129 Bouckaert, Geert, 68, 72, 80, 197, 199, 200 Bulmer, Simon, 7 Burch, Martin, 7 Campbell, L. John, 7, 10 Career Development Review marking system, 94, 139–40, 159, 161 points, 114, 138–40 promotion, 113–14, 138–9, 140, 141, 159, 160–1, 180, 197 self-evaluation, 138, 159 Christophersen, Henning, 14, 38, 40 collegiality, 20, 23, 66, 124 Comité de rationalisation, 16 Committee of Independent Experts composition, 67, 71 European Parliament, 61, 71 financial control, 67, 152 mismanagement, 63–5, 70 reform, 56 responsibility, 66, 100, 119 second report, 62, 203 visa, 147, 171 Coombes, David, 4, 32

229

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230 Index Council of Ministers, 22, 58, 72, 75, 139, 177 Cresson, Edith, 60, 61, 62, 65 critical juncture Kingdon, 7, 56, 63, 69, 77 merger, 34, 195 Day, Catherine, 124, 125, 134, 143, 205 decentralisation executive agencies, 113, 115 financial management, 111, 112, 125–6, 165, 168 Déclaration d’Assurance positive, 152, 160, 162–5 refusal, 152, 207 DECODE, 46, 54–5, 57, 66, 91, 104 Delors, Jacques, 14, 35–45, 55, 57, 58, 70, 124, 146, 185 ECHO, 62–4 economy, 46, 78, 81–2, 84, 96 effectiveness financial, 197, 202, 207 Internal Control Standards, 127 New Public Management, 81–2, 84, 96 SEM 2000, 46, 51 White Paper, 78, 90, 97, 113, 135, 152, 201, 202 efficiency Career Development Review, 138 financial, 106, 113 inefficiency, 142 Internal Control Standards, 127 New Public Management, 58, 78, 81, 84, 89, 97 transparency, 120 White Paper, 90, 91, 94, 183–4, 186, 201 Elles, James, 60, 61, 212, 218 Ersboell group, 108, 192, 197 European Coal and Steel Community, 10, 15 administrative organisation, 15–17 European Court of Auditors Committee of Independent Experts, 67 creation, 25

Déclaration d’Assurance, 72 DG REGIO, 152, 157, 160, 163–6 DG TREN, 174 member states, 51 power struggle, 207, 208 reports, 45, 49, 64, 92 Secretariat General, 127 whistleblowing, 60 European Parliament budget, 25, 60, 64, 92 COCOBU, 59–61, 64, 71, 133, 207 Commission, 74, 76–7, 93, 133, 186 Committee of Independent Experts, 61, 71, 72 discharge, 60, 71, 152 inter-institutional agreement, 104 mismanagement, 64–5 evaluation, 49–51, 68, 151 Career Development Review, 114, 138, 159 programmes, 157, 192 Secretariat General, 137 executive agencies creation, 97, 99, 106 decentralisation, 113, 115 DG TREN, 168–70 nature, 117 New Public Management, 85, 96, 196, 199, 200, 210 recruitment, 116 externalisation, 85, 91 contracting out, 114 DG TREN, 167 executive agency, 99, 113, 116, 168 New Public Management, 197 White Paper, 96, 106 Financial Control DG, 40, 59, 68 audit, 65, 173 decentralisation, 111, 112, 125–6, 165, 168 ex ante visa, 147, 171 Financial Regulations, 48, 119, 141–2, 172, 194, 199 governance, 76, 82, 83, 87 depoliticisation, 87–8, 98, 99, 116–18 good governance, 90, 100, 121, 181

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Index 231 Gradin, Anita, 36, 47, 48, 49, 55, 58, 68, 74 Green, Pauline, 59–61 Hall, Peter, 8 Hallstein, Walter, 4, 16, 18, 20, 22–3, 30–1, 33, 34 Hay, Richard, 14, 38, 41 High Authority administration de mission, 3, 10 Commission, 22, 33, 70 processes, 17–20 structures, 15–16 supranational, 14, 21 historical institutionalism definition, 5–6, 191 limits, 203–5 human resources Career Development Review, 109, 113–14, 132, 138–40, 143, 157, 182, 187, 196, 204 career structure, 93, 109, 139 Ersboell group, 108, 192, 197 flexi-time, 107, 162 merit, 93, 97–8, 109, 113–14, 138–9, 158, 161, 180, 196, 200 mobility, 29, 49, 54, 93, 109, 141, 153, 160–1, 191–2 promotion, 113–14, 138–9, 140, 141, 159, 160–1, 180, 197 recruitment, 17–19, 28, 32–3, 39, 41, 108, 120, 140 training, 28, 33, 41, 47, 48, 54, 93, 95, 108–9 impact assessment, 132, 134, 136, 138, 179 Impact Assessment Board, 128, 129, 213 implementation Activity-Based Management, 105–7 administration de mission, 4 administrative reforms, 13 financial management, 110–12 human resources, 107–10 New Public Management, 82, 112–21 White Paper, 9, 10, 84, 90, 102 institutional change, 5–7, 8, 9–11, 13, 56, 77

barriers, 184 critical juncture, 6–8, 34, 56, 63, 77, 194–5 cultural dimension, 20–3, 30–3, 42–4, 52–5, 140–4, 160–5, 181–7 evolutionary, 6–7, 191–3 heterogeneous, 205–8 nature, 83–4 path dependency, 6–7, 13–14, 190–1, 209 regulative dimension, 17–20, 26–30, 39–42, 48–51, 132–40, 153–60, 174–81 revolutionary, 193–5 structural dimension, 7, 15–17, 24–6, 36–9, 44–7, 125–32, 147–53, 168–74 institutions, 6–8, 87, 194, 204–5 Intelligent Energy Executive Agency, 106, 117, 167 Internal Audit Service, 110, 111 Jenkins, Roy, 28, 33, 37 Kassim, Hussein, 55, 107, 124, 129, 130–1, 203, 205 Kingdon, John, 5, 7–8, 56, 77, 194–5 Kinnock, Neil appointment, 62, 72 Committee of Independent Experts’ report, 66 communication, 74, 76, 90 financial training, 47 leadership, 69, 72, 76, 77 New Public Management, 75, 84 Staff Regulations, 75 suggestions, 71 trade unions, 75 White Paper, 5, 29, 55, 68 Lamy, Pascal, 38, 40, 44, 74 leadership, 10, 30, 32, 166, 187 Delors, 36, 39, 43–6 Directors-General, 205–6, 208–9 Kinnock, 72, 76, 191, 195, 203–4 Santer, 52 Leonardo da Vinci programme, 59, 62, 63, 65

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232 Index Liikanen, Erkki, 36, 47 communication, 76 DECODE, 55 New Public Management, 68 reform process, 48, 49, 58 SEM 2000, 50 Maastricht treaty (Treaty of the European Union), 35, 45, 57, 70, 146 MAP 2000, 46, 52–5, 57, 68, 74, 75, 78 Merger Treaty, 14, 18, 32, 78 critical juncture, 34, 123 implementation, 30 report, 27 structures, 22, 24, 34 Metcalfe, Les, 35 ‘Method’, the, 94, 107, 109, 213 mobility DG REGIO, 153, 160–1 Secretariat General, 141 SEM 2000, 49 Spierenburg report, 29, 192 White Paper, 93, 108, 109, 191, 192 Williamson report, 54, 192 Monnet, Jean, 2, 5, 15–23, 34, 123, 201 new institutionalism, 205 New Public Management accountability, 80, 81, 83, 84, 85, 88–9 audit, 85, 88, 113, 202 democratic dimension, 81–3, 84–6, 118–21, 190, 196, 198 leadership, 72 organisational dimension, 81–3, 88–9, 96, 97–8, 112–15, 190, 196, 198 political dimension, 81–3, 86–8, 115–18, 190 transparency, 81, 83–4, 88–9, 198 Noël, Emile, 4, 18, 23, 124, 144 organisations, 85–6 Ortoli, François-Xavier, 16, 25, 27, 32, 37 Paris, Treaty of, 21 Pierson, Paul, 5–7, 197

policy-making, 11, 99, 115, 116, 117, 135, 198, 210 policy-managing, 99, 135, 187, 206, 210 political opportunity, 8, 10–11, 45, 56, 77–8, 189–91, 194–5, 209 Pollitt, Christopher, 68, 72, 80, 197, 199, 200 privatisation, 99, 116, 199 Prodi, Romano Administrative Reform portfolio, 73 cabinets, 117, 186 communication, 74, 76, 107, 108 ethics, 91, 193 strategy for reform, 5, 62, 71, 72 Prodi Commission, 68, 91, 193, 201, 203 recruitment ad hoc, 17 concours, 19, 29 embargo, 140 Ersboell group, 108 procedure, 19, 33, 41–2, 169 Reichenbach, Horst, 73 resignation, 57–63 external pressure, 64, 74 internal pressure, 72, 74 legitimacy, 152 political opportunity, 8, 10, 11, 65, 77, 78, 189, 195, 203 responsibility, 69, 81, 83, 88, 89 centralised, 16 Committee of Independent Experts, 66–8 cultural shift, 197, 200 decentralisation, 168, 173, 200 financial, 100, 118–19, 125, 162, 209 lack, 28, 66 managerial, 90, 100, 118 New Public Management, 84 Reuter, Paul, 21 Rome, Treaty of, 1, 3, 23, 146 Santer, Jacques, 53, 59, 62, 66, 70 appointment, 35, 44–5, 70 collegiality, 66 motion of censure, 61 SEM 2000, 192 whistleblowing, 59

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Index Santer Commission efficiency, 45, 51, 57 ethics, 91, 193 financial management, 48 resignation, 10, 54, 62, 66, 91 SEM 2000, 46–53, 57, 68, 74, 90, 192, 194 Single European Act, 36, 146 Spierenburg report, 14, 27–9, 33, 34, 37, 68, 191–2, 195 Staff Regulations, 19, 30, 41, 42, 53, 69, 74–5, 94, 107–9 strategic planning and programming cultural resistance, 115, 121 DG REGIO, 154–6 DG TREN, 175–6 impact assessment, 137 implementation, 105 Secretariat General, 92, 129–30, 134 supranationalism, 20, 22 Task Force for Administrative Reform, 69, 73–4, 76, 84 trade unions, 75, 76, 94, 107, 108 l’Alliance, 108, 116 Renouveau et Démocratie, 116 Union Syndicale, 53 training, 28, 33, 41, 47, 48, 54, 93, 95, 108–9 DR REGIO, 161–2

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DG TREN, 186 financial, 47, 95, 170, 197 Internal Control Standards, 181 Secretariat-General, 142 translation process, 9, 11–12, 190, 203, 205–9 transparency, 137, 139 Activity-Based Budgeting, 106 Annual Activity Report, 155 Annual Management Plan, 155 Kallas, Siim, 143 Kinnock, Neil, 69, 75–6 New Public Management, 81, 83–4, 88–9, 198 Nordic countries, 46 SEM 2000, 52 White Paper, 90, 96, 100, 104, 120–1, 181, 184, 198 Trojan, Carlo, 54, 59 Van Buitenen, Paul, 59–61 visa, 94, 111, 147, 171 White Paper, 90 Activity-Based Management, 91–3 ethics, 73, 91, 103, 174, 191, 193 financial management, 94–5 human resources policy, 93–4 Williamson, David, 54, 91, 192

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