Suspending vetoes: how the euro countries achieved unanimity in the fiscal compact

ABSTRACT

At the beginning of 2012, the 17 countries of the eurozone and eight of the ten remaining countries of the EU reached an agreement on the Treaty on Stability, Co-ordination, and Governance in the Economic and Monetary Union (TSCG, known as the Fiscal Compact). The article traces six successive drafts of the agreement to discover how these countries reached agreement. We argue that there are three different procedures that can lead different actors with veto power over an agreement to suspend their veto – they increase, decrease or preserve the dimensionality of the underlying space. We call the three methods compensation, elimination and compromise respectively, and discover that in the Fiscal Compact the agreement was achieved mainly though elimination.

KEY WORDS:

• Compensation
• compromise
• dimensionality
• elimination
• policy space
• international treaties
• veto players

ACKNOWLEDGEMENTS

We would like to thank Jean Clipperton for her comments and help, as well as the four JEPP referees for their insightful comments.

Notes

1 As we will see below, provisions were made so that the Fiscal Compact could go into effect even if some countries would not approve it. We will focus on that issue when we discuss Article 14(2) of the Treaty.

2 See Diver (1983, 1989), Kaplow (1995) and Ogus (1992) for related discussions.

3 They argue, and empirically show that the length of a law serves as a useful, appropriate proxy for the extent to which it constrains agency policy-making; that is, ‘longer statutes provide more detailed instructions, and hence provide greater constraints on the actions of bureaucrats and other political actors’ (Huber and Shipan 2002: 77).

4 They explain this variation by institutional factors including the agency problem of judicial interpretation.

5 See Frieden (1992); Lange (1993); Martin (1992, 1993); Poast (2012); Tollison and Willett (1979); Weber and Wiesmeth (1991).

6 These concepts are selected for their pleasing formal properties such as symmetry.

7 Greenberg (1979) has proven that to ensure that a q-majority core exist, one must satisfy the condition q > n/(n+1,) where n is the number of dimensions of the policy space.

8 See Moravscik (1993), and Hug and König (2002) for the exception.

9 Note that only the provisions which went through any modification are included in our dataset. For example, Article 14 (4) and Article 14 (5) are briefly mentioned in this press release, but they are not included in our dataset as they did not go through any modification over the negotiation process. For the details, please refer to Tsebelis's website, available at http://sitemaker.umich.edu/tsebelis/fiscal_compact_data.

10 This number cannot be larger than the number of players involved in the decision minus one. As a first consequence of this statement, if the decision was to be made by n players and is now to be made by n + m players, the corresponding maximum number of dimensions changes by m (whether m is positive or negative). In the Treaty under consideration the number of required signators or ratifiers changes several times.

11 See Cooter and Ginsburg (2003), Huber and Shipan (2002) and Voigt (2009).

12 First, there is a negative association between the increase in the number of words and the increase in ambiguity (r = –0.23), and a positive association between the increase in the number of words and the reduction of scope (r = 0.26). As a result, the increase in the length of a provision has much less or no association with elimination (r = 0.12) which includes both the reduction of the scope and the increase in the ambiguity, compensation (r = –0.04), or compromise (r = 0.03).

13 For example, Huber and Shipan (2002) use the number of words when comparing legislation on a similar topic. Because of the inherent complexity and potential for multidimensionality within Treaties, we do not observe or expect length to correlate to the types of modifications we seek to explain.

14 The empirical correlation between Tsebelis's measure of imprecision and that of elimination is 0.24.

15 Details and representative examples regarding our coding method can be found in supplementary information available at http://sitemaker.umich.edu/tsebelis/fiscal_compact_data.

16 For example, both Article 12 (3) and Article 14 (2) went through two modifications over the negotiations. However, the final version of Article 12 (3), which addresses the participation of non-eurozone countries in the Euro Summit meeting, was negotiated until the last moment (on 30 January 2012) whereas Article 14 (2), which is regarding the countries required to ratify for the Treaty to come into force, took its final form by the second round of amendment, i.e., at the third draft.

17 To analyze our count data, we used the negative binomial analysis with robust standard errors, The dependent variable is the number of modifications over the negotiation process, and the independent variable is related to the significance of the provision based on the three category: not-enforceable (i.e., preamble) 0, enforceable but less significant 1, enforceable and more significant 2. The coefficient for the independent variable is 0.21, and its p-value is 0.002. We also examine the difference in the number of modifications between the preamble (not enforceable) and non-preamble provisions (enforceable). The result is consistent with the first result. The coefficient for the independent variable is 0.33 and its p-value is 0.013.

18 To analyze this duration data, we estimated the Cox proportional hazard model with robust standard errors. As there are six drafts, a provision can be subject to up to maximum five rounds of amendments. The dependent variable of this regression estimation indicates when the given provision's final version is adopted (for example, the first round of negotiation = 1, and the last negotiation = 5). The independent variable is related to the significance of the provision based on the three categoriesy: not-enforceable (i.e., preamble) 0; enforceable but less significant 1; enforceable and more significant 2. The coefficient for the independent variable is 0.04, and its p-value is 0.79. This result was consistent when we use an alternative independent variable, Preamble. The coefficient for the independent variable is –0.02 and its p-value is 0.94.

19 We used logit analysis. Each observation is classified either unidirectional (i.e., only one method among compensation, elimination and compromise is used) or not, in terms of its dimensional change, as the dependent variable is whether its dimensional change is unidirectional or not (1 if unidirectional, otherwise 0).

Additional information

Biographical notes

George Tsebelis is Anatol Rapoport Collegiate Professor of political science at the University of Michigan.

Hyeonho Hahm is a Ph.D. candidate in political science at the University of Michigan.