Geoscience Reference
In-Depth Information
protect core members while interregional transfers work to reduce the popula-
tion flows expected at the time of full incorporation to the Union. In the case
of Spain, the free circulation of workers was brought forward two years, from
1994 to 1992, in the context of the negotiations about the monetary union,
and coincided in time with a large increase in interregional transfers.
As Schneider has recently unveiled (Schneider
2009
), this diversity of goals
and interests creates an important distributive conflict between current and
future beneficiaries of transfers on the one hand, and between net contribu-
tors and current beneficiaries on the other. The budgetary conflict during the
Mediterranean enlargement was solved by increasing the overall budget of the
Union so as to prevent a zero-sum distributive conflict between Ireland and
Greece, and Portugal and Spain. Ireland and Greece were able to extract sig-
nificant compensation for their acceptance of Spain and Portugal. The latter,
in turn, received significant funds to pursue their structural adjustments and
facilitate a smoother economic integration once the restrictions in place during
the transitory period expired.
An insider to the Union since 1986, Spain gained bargaining leverage in sub-
sequent rounds of negotiations about interregional transfers, in particular dur-
ing the process leading to the European monetary union (Maastricht) the treaty
became feasible only when the concerns of Southern European economies as to
how the regulations under discussion were going to affect their economies were
compensated (Lange
1993
; Scharpf
1997b
). In practical terms, this implied a
large increase in the participation of Spain, Greece, Italy and Ireland in the
benefits of the interregional redistributive programs (Structural Funds).
Late developing economies had regularly used currency devaluations as a
strategy to boost competitiveness. By joining the European Monetary System
(EMS), modeled after the German Bundesbank, these economies committed
not to make use of this tool any longer, thereby renouncing their monetary
policy autonomy. In exchange, Germany and France, direct beneficiaries of
the EMS, accepted to “pay” these countries with the creation of the Cohesion
Fund, meant to overcome the potentially negative consequences of adopting a
tighter monetary regime, and to bridge, along with other components of the
Structural and Cohesion policies, the economic gap between different members
of the Union. In short, interregional redistribution creates incentives for poorer
members of the Union to accept regulations and economic policies not always
befitting the short terms needs of their domestic economies. Again, both the
logic of compensation and the logic of insurance apply here.
To put it in terms of the topic's argument, Maastricht was approved because
wealthy European nations, Germany in particular, agreed to pay to reduce the
gap in terms of economic structures between Southern European countries and
the rest of the Union. Despite being a net contributor, Germany's support for
the Spanish proposal at the Edinburgh Summit was critical to reach an agree-
ment on the Cohesion Fund and the monetary union more generally. The latter,
in Kohl's view, could not function in the absence of a stronger and more inte-
grated Europe. Bridging the gap between North and South was critical in this
