Europeanization, Whitehall Culture and the Treasury as Institutional Veto Player: A Constructivist Approach to Economic and Monetary Union
| DOI | http://doi.org/10.1111/1467-9299.00236 |
| Date | 01 December 2000 |
| Published date | 01 December 2000 |
| Author | Kenneth Dyson |
EUROPEANIZATION, WHITEHALL CULTURE
AND THE TREASURY AS INSTITUTIONAL
VETO PLAYER: A CONSTRUCTIVIST
APPROACH TO ECONOMIC AND MONETARY
UNION
KENNETH DYSON
This article examines Europeanization in Whitehall, using EMU as a case study. It
argues that how the EMU policy community has developed within Whitehall, and
its outcomes, cannot be captured using a narrow, rationalist game-theoretic frame-
work. Although strategic behaviour is important, as Dyson and Featherstone (1999)
argue, the primary question is how Whitehall players have defined British interests,
formed a collective identity and given a specific meaning to the EMU game. The
article applies a cultural approach to Whitehall, focusing on the macro structures
of belief within which EMU policy is made.
The process of EMU has, in general, had radical implications for European
states. These implications did not just become apparent on 1 January 1999,
when stage 3 began with an independent European Central Bank (ECB)
operating a single monetary policy. They were bound up in a process of
economic convergence associated with joint management of the exchange-
rate mechanism (ERM) since 1979 (Dyson 1994). For France the key turning
point in domestic policy learning about the implications of EMU can be
seen as 1983; for Italy, 1992 and 1996; for the Netherlands 1981–82. The
implications were radical in that economic and monetary policies were
‘Europeanized’, meaning a process by which the values of European inte-
gration were internalized by domestic e
´lites. Europeanization took two
forms: direct, through first the freedom of movement of capital and then
the centralization of monetary policy in the ECB, thereby constraining and
reshaping domestic policies; and indirect, through the transmission into
domestic policy processes of a European policy paradigm of ‘sound’ money
and ‘sound’ finance (Dyson 2000). EMU was for most states associated with
an economic policy revolution, involving paradigm change. It was bound
up with a critical juncture for economic policy ideas and discourse.
In this process two European states stand out as distinctive – Britain and
Germany. They share the distinctiveness of not relying on the EMU process
to bring about radical domestic policy change. ‘Sound’ money and finance
Kenneth Dyson is Professor of European Studies at the University of Bradford.
Public Administration Vol. 78 No. 4, 2000 (897–914)
Blackwell Publishers Ltd. 2000, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street,
Malden, MA 02148, USA.
898 KENNETH DYSON
ideas in Britain were part and parcel of a domestic policy of structural
economic change that gathered momentum under Thatcher and Major and
was continued by the Blair government after 1997. These ideas owed
nothing to EMU. Germany was the template for designing EMU. German
cognitive leadership for the process, not least through the D-Mark’s role as
the anchor currency of the ERM, suggested that the burden of adjustment
would be born by others (Dyson 1994). The paradox is that, whilst both
countries seemed ideologically proximate in their celebration of ‘sound’
money and finance, they were divided rather than united by the EMU pro-
cess. EMU was bound up with Germany’s search for a European identity,
a political will to define German interests in European terms and a domestic
‘permissive’ consensus on European integration. In Britain, by contrast,
domestic policy was not embedded in the EMU process. Whitehall stood
apart from the Europeanization processes at work in EMU in both senses –
direct, through the opt-out, and indirect.
This article offers a constructivist interpretation of how Whitehall minis-
ters and officials behave over EMU (Wendt 1999). At the level of micro-
structure it examines how the behaviour of players in the Whitehall EMU
policy community is conditioned by beliefs. These beliefs affect how minis-
ters and officials view EMU, define British interests, and behave. Attention
is drawn to a defensive and cautious culture of ‘constructive engagement’
in EMU, the Treasury’s role as institutional veto player, and the consequent
tensions and conflicts that beset Whitehall’s attempts to play a ‘two-level’
game. The Whitehall EMU policy community is seen as embedded in larger
macro-level structures of belief that have constitutive effects on how minis-
ters and officials view and play the EMU game. These wider structures of
belief explain why domestic policy has continued not to be embedded in
the EMU process. Conflict and confusion within Whitehall has continued
to be framed within a larger continuity at the level of ideas. In consequence,
Europeanization of domestic economic and monetary policies has remained
minimal, and a nervous silence prevailed over EMU.
DOMESTICATION AND EUROPEANIZATION
Seen at a European level, EMU appears as more than just a material
phenomenon involving greater economic interdependence, convergence
and competition and thereby subjecting the behaviour of European govern-
ments to new constraints. It is, above all, a macro-cultural form with its
own systemic properties (Dyson forthcoming). Its effects are constitutive,
shaping how domestic policy makers define their interests and identities
(cf. Wendt 1999). EMU has a cognitive dimension, with shared ideas
impacting on domestic politics. Hence ‘sound’ money and ‘finance’ have
a new prescriptive status via the Maastricht Treaty’s stipulations on the
independence of the ECB, the ‘no bail out’ provision, and the convergence
criteria; via the Stability and Growth Pact’s commitment to enforcing bal-
anced budgets over the economic cycle; and via the new ‘policy-pushing’
Blackwell Publishers Ltd. 2000
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