* Lecture given at the Schuman-Seminar: 'Maastricht in Maastricht, the Treaty Revisited', held at the Provincial Government House, Maastricht (NL) on 13 May 1996

The Maastricht Treaty contained a commitment to convene an Inter-Governmental Conference in 1996. The stated purpose of the 1996 IGC, (Maastricht II), is to examine 'the extent to which the policies and forms of cooperation introduced by this Treaty may need to be revised with the aim of ensuring the effectiveness of the mechanisms and the institutions of the Community'. Such an initiative is long overdue. A thorough examination of the requirements of effective performance in the EU is urgently needed as part of the general process of institutional reform. Inadequate administration and 'Eurobureaucracy' have always provided easy targets for opponents and critics of European integration. The organizational deficiencies of the Commission as well as fraud and misuse of Community funds regularly attract adverse comment and public criticism. In addition, the EU has set itself enormous challenges. Aside from its existing commitments, it is embarking on major new policy initiatives and opening up the prospect of a significant and difficult round of enlargement.

While reform is urgently needed, past experience suggests that the need to build capacities to match new demands will be treated superficially. Political debate about institutional reform typically centres on the desirability of alternative models of integration without an in-depth analysis of what is needed to ensure their effectiveness. There is extensive discussion of the EU's democratic deficit, but little serious consideration of its management deficit. Consequently there is a widening gap between increasing responsibilities and the limited capacities available for fulfilling them. None of the three pillars of the Maastricht Treaty has sufficient institutional strength to bear the loads it is supposed to carry. Even in the core area of economic integration the tasks often outrun the capacities available. Initiatives such as the completion of the Internal Market, Monetary Union, police cooperation in dealing with drugs and terrorism, or the incorporation of Central and East European countries require innovative institutional and management solutions.

There is a further, and less obvious, aspect of the management deficit. Aside from ensuring that the new institutional architecture works when completed, the design and development of these new systems of governance involves extraordinarily difficult problems of managing change. European integration is not just reprogramming established administrative machines with new European policies. It involves major reorganizations and significant institutional development. Large numbers of organizations in the administrations of the Member States have to learn to work together with each other and with the European institutions. European integration involves the management of change on a grand scale. There are no real precedents or blueprints to work from. Making European policies work effectively involves designing and constructing organizational networks capable of functioning across all the existing Member States and flexible enough to incorporate a dozen or more additional countries in the future. New thinking is required to design and implement appropriate solutions.

Effectiveness or Efficiency?

The obligation of Maastricht II to address the question of effectiveness might seem to guarantee that the management deficit would be a central issue on the agenda. But, it is far from obvious that this is so. There are worrying signs that the intended focus on effectiveness is being lost. The Turin meeting of the European Council at the end of March, which launched the IGC, was distracted by the competing claims of problems as different as structural unemployment and 'mad cow' disease. Of course, institutional reform always has to compete for political attention with substantive problems. But even allowing for this, there are clear indications of a retreat to a limited and inadequate diagnosis of the management deficit. The conclusions of the Presidency after Turin set out an agenda which stresses 'the need to look for the best means to ensure that (the EU institutions) function with greater efficiency, coherence and legitimacy.' Along with reforms of the Parliament, the Court and the Council of Ministers, the 'Conference will have to examine how the Commission can fulfil its fundamental functions with greater efficiency, having regard also to its composition and taking account of its representativity'.

At first glance this may seem quite consistent with the Treaty commitment to evaluate the effectiveness of the system. But, on further consideration, two important restrictions are apparent. The first is the shift in terminology from effectiveness to efficiency. These terms are often used interchangeably, but in public management reform there is a fundamental distinction between them. Efficiency is largely a matter of how well an existing system works. Effectiveness is a much more complex matter of redefining objectives in the light of changing needs and conditions and the development of new systems and structures appropriate to new tasks. Efficiency-oriented reforms focus on operational management within an established framework of objectives and policies. Effectiveness-oriented reforms address strategic management issues involving the adaptation and development of organizational structures and management capacities to serve new objectives.

The second restriction is the concentration on the Commission (along with the other EU institutions) as the object of reform. While the Commission is the main institution responsible for managing European policies, it does not have an exclusive competence and usually has to work with and through national administrations. The Commission alone can never 'manage Europe'. European public management is very much a matter of getting things done through networks of other organizations rather than centralizing everything within the Commission itself. A major factor contributing to the EU's management deficit is that these multilevel, multinational networks of organizations are often fragmented and inadequately developed. The effectiveness of the European policy process as a whole depends on designing and developing networks of organizations capable of working together in the formulation and implementation of European policies.

If the IGC only examines 'how the Commission can fulfil its fundamental functions with greater efficiency', the results will be disappointing. Minor adjustments to the number of Commissioners or tinkering with the internal structure of the organization might achieve marginal improvements in efficiency but will make little impact on the effectiveness of the system. Merely making the Commission more efficient at doing what it currently does will not reduce the EU's management deficit. Indeed, it might have the perverse effect of increasing it.

Reinventing the Commission as a Network Organization

My purpose in this paper is to argue that to reduce the management deficit the Commission needs to be reinvented as a network organization. Surprisingly, the Commission has never undergone a major overhaul since its creation. It was designed in the 1950s to serve the needs of a relatively homogeneous group of six countries just embarking on a limited programme of economic integration in what turned out to be a period of stable and rapid economic growth. Yet, basically the same organization is expected to serve the needs of 15 much more diverse countries engaged in an advanced process of integration in a far less benign economic environment.

The term network organization is currently used in two different ways in business and government. The most common usage denotes a flexible, adaptive form of business organization which can accommodate rapid change and exploit the opportunities that change in the environment presents. This micro-management concept of a network organization gives businesses a competitive advantage over their rivals. The fashion for network organizations is part of a search for forms of organization that are able to adapt to change because they have greater internal flexibility or because they are better at managing external networks of suppliers, subcontractors and distributors. Regarding the Commission as a network organization builds on a different tradition concerned with developing macro-management capacities for cooperation among organizations involved in managing public policies (Metcalfe; 1976, 1992). With this second usage of the term, the focus is on the functioning and effectiveness of a whole network of organizations. The role of a network organization, in this sense, is not to direct change or centralize power, but to ensure that the organizations in a network develop capacities for working together effectively as well as carrying out their specific operational management tasks. Since European public management depends on 'getting things done through other organizations' the issue is whether the Commission can diagnose obstacles to effective collaboration and instigate action to remedy them.

Before explaining further what is involved in reinventing the Commission as a network organization it is useful to establish two reference points. One is the existing functions of the Commission; the responsibilities that have been assigned to it under the Treaties. In large part these have remained unchanged since the creation of the Commission though, of course, the workload has increased over the years. The other is a diagnosis of the EU's management deficit. The sources of the management deficit are only partly attributable to the weaknesses and deficiencies of the Commission as such. In the main they are structural features of the European policy system as a whole and correcting them will require changes in the whole process of European policy management.

The Functions of the European Commission

The striking feature of the Commission as a supranational organization is the combination of important functions it performs. A standard analysis distinguishes five functions: policy initiation, mediation, external representation, management of European policies and guardian of the Treaties (Coombes (1970); Edwards and Spence (1994)). For present purposes, these functions can be subsumed under the headings of the leadership role and the management role. The leadership role of the Commission as the 'engine of integration' or the EU's policy entrepreneur, is the more prominent of the two. It embraces the Commission's almost exclusive right of policy initiative, buttressed by the mediation and representation functions. Most of the achievements of the Delors era depended on exploiting the possibilities and opportunities of the Commission's leadership role. The '1992' programme, the Single European Act, the accession of Spain and Portugal and, subsequently, Austria, Finland and Sweden, together with the Maastricht Treaty commitments to monetary union and further political union represent substantial advances which would not have been achieved without effective leadership.

If the Commission's strengths come to the fore when it acts as the engine of integration, its weaknesses are most evident when its management role is considered. The management role includes the functions of managing European policies and acting as guardian of the Treaties. Difficulties are immediately apparent. Resources are limited and power is dispersed. Contrary to the frequent criticisms of a huge, unaccountable and ever-growing 'Brussels bureaucracy' the Commission is a small organization by governmental standards. It has a total staff of about 15,000 of which about 4,000 are engaged in translation work among the eleven official languages and some in scientific research. The operational staff are distributed across 24 Directorates General (DGs) plus specialist and common services. Most DGs only have a few hundred staff. Furthermore, the Commission does not have exclusive responsibility for the management of European policies in the way that it has the independent right of policy initiative. Responsibilities for managing European policies are shared in two ways with the Member States; through the structures of comitology which link the Commission and the Council of Ministers in policy management and second, through reliance on national administrations in the formation as well as implementation of policies.

Thus the Commission has very little direct operational management responsibility. In large part it must work through networks of organizations. However, the Commission is inhibited from building up more effective networks and strengthening relationships with and among national administrations. First, there is a conflict between its responsibilities for policy management and for acting as guardian of the Treaties. The former requires a willingness to develop close working relationships based on mutual trust and involving the sharing of responsibility for effectiveness. The latter predisposes the Commission towards maintaining an arms-length relationship with national governments and an attitude of watchfulness if not mistrust towards their behaviour. Mistrust is often reciprocated. Furthermore, the Commission is hesitant about building networks and developing intergovernmental capacities because it has no legal authority to do so.

Sources of the Management Deficit

Three structural factors create a built-in bias towards widening the management deficit. The first is the legal orientation of the EU policy process. Legal thinking tends to equate advances in integration with transfers of legal competences to the European level. This may lead to the false assumption that there are management capacities to give effect to new competences. Even worse, it may lead to the assumption that centralized capacities are appropriate. Regulatory policy-making is an important example of the way that a gap between competences and capacities adversely affects effectiveness. Regulation appears to require strong central capacities at the European level. But, as Majone observed, the capacities required for managing regulatory policies are much more decentralized; 'the real costs of most regulatory programmes are borne directly by the firms and individuals who have to comply with them. Compared with these costs, the resources needed to produce regulations are trivial...not only the economic, but also the political and administrative costs of enforcing regulations are borne by the Member States.' (Majone 1991,96).

A second structural source of the management deficit is the priority accorded to policy invention rather than innovation in the EU policy process. Invention, as the initiation of new policies, is valued much more in the Commission culture than innovation, as the development of capacities to implement them. As the foregoing discussion of the Commission's functions has shown leadership is more valued than management. The Commission is a remarkable vehicle for policy invention. But making European policies work effectively also involves a deliberately managed process of institutional innovation to create Europe-wide administrative systems, by adapting existing organizations to new tasks, forming new organizations and developing new interorganizational regimes.

A third important source of the management deficit is that the negative integration benefits of new policies are played up and the positive integration costs are played down. The '1992' programme was presented and packaged as a deregulatory process of negative integration designed to eradicate the 'costs of non-Europe'. The emphasis was on the removal of national non-tariff barriers, the elimination of the delays and obstacles to trade caused by national customs controls and the savings to industry of no longer having to comply with different, inconsistent, national regulatory regimes. But negative integration only achieves its widely proclaimed benefits if the removal of national obstacles to the free movement of goods, services capital and people is accompanied by measures of positive integration to build a firm institutional framework at the European level. The 'costs of Europe', such as the construction of new European regulatory regimes have to be included in the account.

The Trajectory of Integration

The proposition that the Commission should be reinvented as a network organization makes an assumption about the trajectory of integration that conflicts with conventional thinking. In a nutshell, the effectiveness of European policies depends on interorganizational management through networks rather than control through a unified hierarchy with the Commission as a strong central authority. However, the orthodox assumption is that European integration is set on a trajectory leading to the eventual formation of something like a European federal state. The second and third pillars of the Maastricht Treaty are typically regarded as inferior and weaker forms of intergovernmental integration in comparison with the supranational character of the first pillar. Stronger and more effective integration is equated with enhanced central authority at the European level.

There are two things wrong with this. First, it assumes that the trajectory of integration is geared towards the amalgamation and merger of existing (and future) Member States into a unified government. It is this fixed view of the eventual goal of European integration which does so much to excite 'fear of federalism' among opponents of integration. As the difficulties over the ratification of the Maastricht treaty showed, there is considerable political resistance to change in this direction in several countries. More recently, the economic policy measures necessary to meet the Maastricht criteria for monetary union have also met opposition, most dramatically in France. But even if the obstacles and opposition could be overcome, it is by no means certain that the resulting system would be the most effective possible. The scale and diversity of the EU with its present fifteen Member States and even more if there is a significant enlargement seems to require a more imaginative response than merely reconstituting the nation state at the European level.

An alternative view is that European integration is set on a pluralistic trajectory (Deutsch, et al, 1968). Rather than merging into a European federal state, the Member States will retain their separate identities and find alternative ways of coping with interdependence. Arguably, this is more in accord with the actual evolution of European integration than amalgamation and merger. The founding fathers were more concerned with supporting the nation state than supplanting it. And, the hybrid structure of the European institutions gives national governments a strong influence on decisions at the European level. The challenge that a pluralistic trajectory presents is to develop new forms of organization and models of management that enable European policies to be implemented effectively without depending on a unitary management structure. This calls for new thinking about forms of federation among nations and the effectiveness of different institutional configurations (Burgess and Gagnon, 1993). Paradoxically this would require more rather than less of national administrations as integration progresses.

The Core Competences of the Commission: Regimes, Partnerships and Coordination

The Commission is involved in organizational networks in virtually all phases of its work in the formulation and implementation of European policies. But it is not a network organization. It does not have an acknowledged role in developing the interorganizational management capacities required to cope with the workloads generated by integration. Nor is it equipped to do so. Although it has been at the forefront of policy initiatives which require major structural transformations of immensely complex economic and social systems, it has never acquired or built up a body of expertise in developing governance capacities.

Acting as a network organization at the European level implies a radically new reform strategy. The difference can be highlighted by pointing first to a sea change in business management thinking from slimming down established organizations to developing core competences (Hamel and Prahalad, 1994). Successful businesses have recognized that the organizational capacities and management systems required to sustain long-term effectiveness are different from those that suffice to achieve short-term cost reduction and operational efficiency. Long-term effectiveness requires the development of core competences in the key areas of knowledge and generic expertise that enable organizations to meet emerging challenges. These core competences provide the organizational learning capacities to cope flexibly and effectively with change, steering rather than reacting. In a business context their key contribution is to strengthen competitive advantage.

In the European policy context, the objective is quite different. Reducing the EU's management deficit depends on building collaborative advantage. This means creating conditions in which the organizations responsible for managing particular policies are able to work together effectively (Huxham, 1989). Developing collaborative advantage involves promoting cooperation and identifying areas of interdependence and common interest. This does not preclude competition, but it does represent a deliberate commitment to strengthening cooperation. In broad terms, the development of collaborative advantage requires the Commission to develop expertise in ensuring the coherence and reliability of European management networks. The following sections review three strategically important ways in which the Commission as a network organization can develop core competence to build collaborative advantage: (1) the construction of policy regimes; (2) the design of administrative partnerships; and (3) the development of coordination capacities to ensure that the partnerships constituting a regime function effectively.

Regimes as Organizational Networks

The mission of the Commission as a network organization might be defined as transforming intergovernmental networks into European management regimes. The patchworks of existing governmental organizations and intergovernmental relations have to be shaped into effective regimes. The effectiveness of the Commission as a network organization should be judged by how well the organizations constituting specific European regimes understand their own roles and how well they work together. The term 'regime' is already in common currency in many fields of European policy to describe, for instance, the public procurement regime, the telecommunications regime, the social policy regime or even, in the CAP, the sheep-meat regime. More precisely and fully, a regime is a set of values, norms, principles and practices which guide and govern the behaviour of a network of actors. Regimes, in this sense, do not depend primarily on hierarchical controls. Instead, they provide 'governance without government' (Rosenau and Czempiel, 1992).

If they are to work effectively and reliably across fifteen or more countries, regimes must be more than just disembodied systems of rules and norms. Ensuring the effectiveness of a regime in a political system as large and complex as the EU depends on establishing a foundation of credibility and mutual trust among decision-makers in different countries. Will product standards set in Germany be readily accepted in Portugal and vice versa? Will decisions made in Greece and Finland achieve mutual recognition and be equally likely to secure compliance in other countries? In order to achieve this degree of credibility, a regime must be embodied in a defined network of organizations in which it is clear who is responsible for what.

Defining regimes as organizational networks provides a common factor around which the Commission can develop a core competence. No matter whether integration proceeds on the basis of a single-speed, two-speed, variable geometry or an à la carte approach, decisions have to be made about the differentiation and integration of organizational roles within purpose-designed regimes. All regimes involve a set of organizations and the network of links among them. The variety of tasks in which the EU is engaged means that different forms of governance are needed. Rather than relying on an obsolete 'one-best-way' model of management the regime concept offers a flexible way of generating design options and acquiring skills in managing the construction of a variety of tailor-made administrative networks.

Designing Administrative Partnerships

Regimes are institutional frameworks for managing European policies through interorganizational cooperation. Their integrity and effectiveness depends on good working relationships at the micro level among their constituent organizations. In the absence of an all-inclusive hierarchy, individual organizations must develop and manage relationships with each other to serve their own objectives and to make the regime as a whole function effectively. This is much easier said than done. Good working relationships among organizations do not develop spontaneously in any context. In European policy management there are particular difficulties in managing interdependence. Because they are embedded in different national institutional contexts with disparate administrative traditions and capacity it is often difficult for the organizations in a regime to know what to expect of each other. As with the better-understood ­ and less difficult ­ problems of managing multinational corporations, deliberate efforts are needed to overcome mistrust among counterpart organizations in different countries and build relationships which ensure that simple misunderstandings do not flare up into diplomatic incidents. Typically, too little effort goes into developing sound working relationships, with the result that gaps and weaknesses are overlooked, overlap and duplication cause confusion and conflict, and performance suffers.

The idea of partnership has been invoked as a means of meeting the challenges of managing interdependence without resorting to centralized hierarchical structures. Partnership is a recurrent theme in public administration and it is not new in European public management. In the EU, the administration of the Structural Funds is based on partnerships between the Commission and national administrations. The concept of partnership was a theme of the Sutherland Report (1992) on the implementation of the Internal Market. Administrative partnerships have had to be formed among tax authorities, immigration authorities, police services and government statistical organizations as well as customs services at the national level. Aside from arousing strong political reactions, any attempt by the Commission to centralize all of these functions would overload its very limited capacities.

Administrative partnerships are the building blocks of regimes. Designing administrative partnerships can become a core competence of the Commission only if the options are clearly identified. Political rhetoric gives a misleading impression that all partnerships are voluntary, user-friendly arrangements. To be reliable building blocks in the construction of European policy regimes, partnerships need to be firmly specified. Reliability in a European policy context means that the division of labour and the sharing of responsibilities between partners has to be worked out carefully with reference to the capacities of the organizations concerned and the needs of the regime as a whole. Carefully designed networks of interlocking administrative partnerships can ensure that regimes are robust enough to cope with a wide range of cross-national differences and also sufficiently flexible to be able to adjust to change over time. Partnerships are governance frameworks, which define the terms of cooperation among organizations in areas of interdependence and common interest without prescribing in detail how they all should act under all circumstances.

Regimes do not just involve a substitution of partnerships for hierarchical controls. One of the reasons they can contribute to effectiveness is that they are not all of a kind. Different types of partnerships provide design options and choices that can be combined in different ways in different regimes (Metcalfe, 1981). Some familiar forms of partnership, applicable to the construction of European policy regimes include purchaser-provider, customer-contractor and principal-agent relations. Partnerships between professionals involved in the same policy field but working in different national contexts have a particularly important role in EU policy process. These partnerships, based on common interests and similar responsibilities rather than an organizational division of labour are important both in the formative stage of policy making where expert groups are formed and in policy implementation where consistent responses to common problems are needed.

If regimes are viewed as interlocking networks of organizational partnerships, it is important that the Commission develops a core competence in designing administrative partnerships. This aspect of the network organization role would involve advising on the choice of partnership framework from a range of options and assisting in their implementation at the micro level and ensuring that the combinations of bilateral and multilateral partnerships forming a particular regime make up a coherent and effective whole. With a wealth of experience to draw on, the Commission could develop a unique core competence in both the substance and process of designing administrative partnerships.

Developing Coordination Capacities

If partnerships are the building blocks of management regimes, it is coordination that bonds them together. Coordination makes an indispensable contribution to collaborative advantage and hence to effectiveness. Inadequate development of capacities for interorganizational coordination is a major factor in the EU's management deficit. Either there are gaps because no-one accepts responsibility or there are unresolved conflicts because of disagreements about overlapping jurisdictions and misunderstandings over policies. In many European policy fields, significant institutional, cultural and linguistic obstacles have to be overcome before organizations can work together effectively. But what form should coordination take? Coordination is often equated with central control. This casts the Commission in the role of coordinator. But even if it were politically acceptable for the Commission to develop a hierarchical coordination role, it would not be an efficient or effective way of managing regimes characterized by high organizational interdependence.

The core competence of the Commission needs to be defined in terms of developing coordination capacities in organizational networks rather than attempting to provide them directly; teamwork rather than central control. An approach developed in a comparative study of European policy coordination in national administrations offers useful guidance (Metcalfe, 1994). Rather than viewing coordination in the customary top-down way this approach starts from the assumption is that individual organizations act independently and evolve means of managing coordination in response to increasing interdependence. The organizational division of labour determines what is to be coordinated within organizations and what tasks remain for interorganizational coordination. The coordination capacities required for managing progressively more complex interdependence can be visualized as a series of qualitatively distinct steps on a Policy Coordination Scale as set out in the following diagram.

POLICY COORDINATION SCALE (Adapted from Metcalfe, 1994)

9. Unified Strategy

8. Setting Common Priorities

7. Establishing Common Parameters

6. Arbitration of Organizational Conflicts

5. Search for Policy Consensus (Conflict Management)

4. Avoiding Policy Divergences (Speaking with One Voice)

3. Consultation among Organizations (Feedback)

2. Exchange of Information among Organizations (Communication)

1. Organizations Manage Independently within their Jurisdictions

The effectiveness of higher levels of coordination such as establishing common priorities and parameters depends on the effectiveness of lower level processes such as communication and consultation and a willingness on the part of organizations to ensure that open divergences of policy are avoided, and conflicts are resolved directly or by arbitration. If organizations cannot, at least, avoid overt conflict and speak with one voice in public (level 4) it is very difficult for them to confront and resolve the conflicts that arise in formulating common policies. Strengthening lower level capacities not only solves simpler coordination problems but also develops habits and practices of teamwork which make it easier to deal with more difficult problems when they arise. The development of coordination capacities along these lines is in accord with a pluralistic trajectory of integration. Strengthening collaborative advantage by enabling the organizations participating in European policy regimes to manage coordination with each other should become a core competence of the Commission.

Conclusions

The future development of the European Union depends on how the 1996 IGC addresses the question of effectiveness and whether it leads to action to reduce the EU's management deficit. It is far from certain that it will do either. Disputes and disagreements among the Member States over the pace of integration and future shape of Europe may deflect Maastricht II from its intended focus on effectiveness. Even if these political obstacles are overcome, there is still a danger that the need to develop new methods of governance and models of management will be underestimated and misunderstood. Maastricht II will almost certainly begin considering institutional reforms from the reassuring standpoint of well-worn proposals that have never been acted on. Since they take for granted the existing functions of the Commission and the established priorities among them, they would reinforce its strengths without correcting its weaknesses. The management deficit would widen because the existing system is geared to policy invention rather than organizational innovation and expanding legal competences rather than building management capacities.

This paper has argued that dealing with the management deficit and ensuring the effectiveness of European integration in an unpredictable and evolving environment requires a more flexible contingency approach, centred on developing capacities. To this end, the Commission should be reinvented as a network organization to prompt and guide the development of the capacities for managing the organizational networks. This presumes that European integration is set on a pluralistic trajectory which is leading towards federation among countries rather than merger into a single federal state. The primary task of the Commission as a network organization is to strengthen collaborative advantage. Rather than acquiring capacities for managing European policies itself, the Commission should develop core competences in constructing decentralized management regimes, designing administrative partnerships and developing coordination capacities for managing European policies.

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