EU Railway Policy-Making

On Track?

H. Dyrhauge

• Publisher: Palgrave Macmillan
• Year: 2013
• ISBN:
  9781137274496
• Topic: Politics & International Relations
• Subtopic: European Politics
• Index: Politics & International Relations

Through policy and intervention national governments in Europe have long held an active interest in railways, an interest that has transferred to the supranational level via the EU commission. This book explores why the EU Commission has been so slow in creating an EU railway policy, pointing the finger at strong resistance by national governments

1
Introduction

The railways’ heyday in the latter part of the 19th century and early 20th century is long past, while competition from road and air transport has marginalised the railways in terms of modal share. Yet there continue to be strong national political commitments to the railways as public service providers. Moreover, the European Commission (hereafter the Commission) and national governments believe that the railways have a role to play in the 21st century, especially as an ‘environmentally friendly’ alternative to the more polluting road and air transport modes, and both European Union (hereafter EU) and national policy-makers place the railways at the heart of a sustainable transport system. Through EU railway market opening, the Commission aims to establish a competitive sector which is able to compete with short-haul air travel and with road haulage. This strategy is integral to the ‘common transport policy’, where air transport market opening has led to increased demand for cheap travel, which is evident with the arrival of low cost airlines, and where the Single European Market has contributed towards growth in the road haulage sector. Moreover, as a major polluter, transport plays a central role in the current climate change agenda, where rail travel is being presented as an alternative and more environmentally acceptable form of travel not only at the national level but also at EU level. It is therefore not surprising that transport, and especially railway transport, is integral to the Gothenburg Conclusion on Sustainable Development Objectives, the Lisbon Strategy and the 2020 Strategy.

Indeed, the railways have a long history as being part of public policy, and historically they were closely associated with industrialisation and state building in the 19th century. The role of railways in public policies were further strengthened around World War II when many railways were nationalised. As part of nationalisation most railways became state monopolies and subsequently were subject to direct government intervention with the result that many state railways ended up being overstaffed, inefficient, reliant on state financing and incurring large debts. Despite the financial crumbling of the state railways, the EU member states have rejected several attempts by the Commission to deregulate the sector. Since the 1960s the Commission has been trying to create an EU railway policy, and although some regulations were adopted in the late 1960s, they had no impact on the running of the railways as national governments continued to take an active interest in their state railway monopolies. By the 1980s many railways were facing serious financial problems, due to investments in new assets that were intended to enable the railways to compete with the increasingly competitive road sector. But the investment did not turn the railways around and with no real revenue many railways continued to rely on state funding.

At the same time other transport modes, particular road and airline, were being liberalised and a general momentum was gaining speed towards further EU integration leading to the subsequent implementation of the Single European Market. These external factors in addition to the changes in preferences amongst national governments towards their railways and changes within the rail industry itself enabled the adoption of Directive 91/440, which requires rail operation to be financially separated from infrastructure management. The directive has been fundamental in shaping subsequent railway policy developments both at national and EU level. Following the adoption of Directive 91/440 the Commission made further proposals to open the railway markets but these were rejected by the Council and it was only after the Commission changed its strategy from a ‘big bang approach’ to a step-by-step approach that it was able to proceed with EU railway market opening. The first railway package was adopted in 2001 and followed by another two packages – the second railway package in 2004 and the third railway package in 2007. Despite the progress towards market opening there are still substantial issues surrounding the implementation of the first railway package, which has delayed the development of competition within the sector. Consequently the Commission in 2008 initiated two processes simultaneously to address the lack of progress towards a ‘Single European Railway Area’: infringement proceedings against several member states and recasting the first railway package to address the failings in the rail markets. These processes were followed up by a fourth railway package, published in January 2013, which aimed to strengthen the regulatory structure and break down state monopolies.

The aim of establishing a genuine internal market for rail is, according to the Commission, to be achieved through transparent and fair access to services and infrastructure at national level, to establish a regulatory structure that promotes competition and enabling cross-border services that compete with other transport modes thus facilitating modal shift (CEC 2010: 4). On a technical level this requires an integrated infrastructure throughout the EU and interoperability which enables cross-border services within the EU and to neighbouring countries. However the process of developing such an internal market for railways has been very slow, especially compared to other market liberalisation processes. During the first stages of the market opening process the focus has been on technical issues, but more recently the Commission is addressing the regulatory issues which have hindered the creation of an internal market for railway. One of the main factors obstructing the market opening is the strong path-dependent national policy preferences, which influence the EU decision-making. These divergent national preferences amongst EU actors are evident in the EU legislative procedures and in the Commission’s infringement measures against member states. Thus by analysing EU decision-making processes it is possible to gain deeper understanding of the limited institutional changes that have occurred in the regulation of railways.

Since the Commission is a central actor in terms of agenda setting and in enforcing EU legislation, especially as an economic and competition regulator, this book uses the Commission, most notably Directorate-General for Mobility (the Directorate-General has had several names, for simplicity the book will hereafter use DG Transport), as point of departure for analysing the institutional changes in the EU railway policy and regulatory reform of the national railway governance systems. By focusing on the relationship between the Commission, the member states, the European Parliament, the Council and the rail industry the book is able to demonstrate how these actors’ strong policy preferences have influenced actual institutional changes and regulatory reform.

As such the EU railway policy is framed through technical issues but is a highly political contested policy, which is why there has been limited institutional change in most member states and limited regulatory reform at EU level. The reasons are twofold. Firstly, it is evident in the varying national policy preferences, which have emerged as a consequence of the member states’ different governance systems and consequently have established strong path-dependent railway policies. These national preferences are ‘uploaded’ to EU level and thus influence EU policy-making. Secondly, the political emphasis on railways depends on several external factors, such as the creation of the Single Market, the wider goals of the common transport policy and since 1992 the increased emphasis on sustainable development, which have all influenced the EU railway policy.

Given that an actual EU railway policy only emerged over the past ten years and market opening was only a reality for freight services in 2007 and for international passenger services in 2010 there has not been much research into the topic from an EU governance perspective. Moreover, by using the Commission’s strategy to link EU railway market opening to the climate change debate this books places EU railway policy in a wider context of EU integration and explains the relevance of EU railway policy for understanding current policy discussions.

What ‘derails’ rail?

Overall the book maps the development of the EU railway policy and explains why rail struggles to become a competitive sector that is able to compete with other transport modes, such as road and air transport. A crucial factor in the market opening process is the diverging preferences of central actors, which have constrained EU decision-making and impacted the market opening process. Indeed many state railways continue to have a dominant position in their domestic markets and many national authorities continue to support their incumbent state railways, and there is little cross-border cooperation between national authorities to promote international services. Thus the two central arguments of the book are: firstly, that national governments, as a consequence of their political systems, have over the long-term established strong path-dependent railway policies and governance systems which have become closely associated with the state. Secondly, the Commission’s ability to create and regulate a competitive railway market is constrained by these national railway policies. In other words, the main obstacle to EU railway market opening has been the limited changes in the governance structure of railways and the resistance towards change amongst some actors.

Railway policy in the research context

The relationship between state and society shapes how countries perceive problems and how they subsequently respond to these perceived problems (Dobbin 1994: 22). The different national political perceptions of the role of railways as public service providers unsurprisingly have created diverse national approaches and strong path-dependent railway policies, which in turn have affected the EU market opening process especially in allowing new entrants into the market and thus introduce competition.

Moreover, as part of the EU decision-making processes member states will attempt to ‘upload’ their national preferences to prevent costly institutional change at national level. Subsequently many of them did not correctly implement the required legislation despite EU framework directives enabling differentiated implementation to suit national preference, and this has had implications for the opening up of the market and thus the railway sector’s competitiveness both between railway operators and vis-à-vis other transport modes. Clearly Europeanisation is not a top-down process it is also dependent on existing national policy paths and national actors’ willingness to change their policy paths (Héritier et al. 2001). Moreover, as a result of the differentiated implementation of EU railway legislation the Commission continues to use its infringement powers to pursue member states which have not implemented the EU railway acquis.

There exists a body of research which has mainly focused on how national railway policies have changed over time and more recently on how governments have adjusted their railways to accommodate EU legislative requirements. As a result the literature on this topic mainly covers national railway policies; comparative politics and Europeanisation (see Dobbin 1994; 2001; Héritier et al. 2001; Gómez-Ibáñez and de Rus 2006). Each field looks at different aspects of railways and contributes towards our understanding of the role of railways at the national level. However the literature does not directly address policy-making at EU level, instead previous researchers have analysed how national railways have developed and how their relationships with the state have changed. More recently scholars have turned to EU railway decision-making in the form of national transposition (Kaeding 2008) and in relation to trans-European infrastructure (Stephenson 2010, 2012). Overall, this literature mainly contributes towards our understanding of national railway policies and the general functioning of the railway sector instead of the EU railway policy and EU decision-making, which is increasingly influencing national railway policies. Moreover, national preferences are important during EU railway policy-making where the Commission and the European Parliament (hereafter the EP) tries to push the member states towards more integration and faster market opening. This is precisely what this book primarily focuses on and thus it contributes new insights into the role of the railways in the 21st century.

The book’s second argument focuses on the relationship between actors within the EU institutional settings, specifically focusing on the Commission as a policy entrepreneur and as a regulator, especially in relation to market regulation and implementation. The emphasis is on the relationship between the legislative actors (the EP, the Council of Ministers (hereafter the Council)) and the Commission. The EP has traditionally pushed the Council towards more integration and faster EU railway market opening, resulting in the three railway packages all ending up in the Conciliation Committee. Although, the EP has been critical of the Commission it has often supported the Commission’s railway proposals. Indeed the role of the Commission as policy entrepreneur has been discussed extensively by the scholarship which has already looked at how the Commission has developed individual policies such as regional and cohesion policy (Smyrl 1998; Hooghe 1998), competition policy (McGowan 2000; Cini 2000; Cini and McGowan 2009) environmental policy (Cini 2000), social policy (Cram 1994) and air transport (Kassim and Stevens 2010). Overall, these publications are linked by their emphasis on the role of the Commission as a policy entrepreneur in the EU policy-making processes, whilst also recognising the role of member states in the policy processes and in establishing an EU level policy. This book builds on this work but also places EU railway policy development in the context of EU integration and wider policy agendas.

The EU railway policy must be seen in the wider context of EU integration and policy agenda, such as the creation of the Single Market, the wider goals of the common transport policy and since 1992 the increased emphasis on sustainable development and environmental protection, which have all influenced the EU railway policy. Indeed as a supply-side policy the EU railway policy facilitates the trade created by the Single Market, however the lack of interoperability between neighbouring networks and lack of cross-border cooperation between national authorities have made it difficult for international services to take off. Additionally, national authorities have often favoured the state-owned incumbent over new entrants. As demand for goods has increased and the roads have become congested the railways are presented as an alternative to road haulage. This links into the increasing focus on climate change, where the transport sector represents 20 per cent of emissions.

This places the EU railway policy in the broader climate change discussion where the increased focus on sustainable transport has generated renewed interest in railways as an alternative to road haulage and short-haul air travel. This emphasis puts political pressure on the railway sector to become competitive. In other words, the Commission has framed railway market opening in the context of the wider climate change debate, specifically the EU sustainable development strategy and the EU’s environmental targets. Crucially, this strategy assumes that the railways are concerned with environmental protection whereas the actual railway policy discussions and the rail sector’s focus are centred on the market and economic efficiencies within the rail sector. Indeed the EU railway policy is mainly located within the context of the common transport policy and as a supply policy to the Single Market, but the climate change agenda provides impetus for the Commission to put pressure on the railway sector to become more competitive and on national authorities to provide a governance framework to encourage intra-modal competition which in turn will lead to inter-modal competition.

Overall, the success of EU railway policy and market opening depend not only the member states in the Council to adopt the Commission’s proposals but also on national implementation. Predictably national policy paths continue to strongly influence the member states’ positions in the Council, and they continue to be detrimental to EU railway policy-making, as their implementation affects integration and thus overall policy development. In short the member states continue to play a central role in EU railway policy-making and EU railway market opening process. This book includes the latest developments in EU railway policy available at the time of writing to present a coherent and contemporary picture of EU railway policy-making and the emerging EU railway governance system.

Historical institutionalism and rational choice institutionalism: The theoretical framework

This book’s focus on actors, their preferences and how they navigate the various EU institutions naturally lends itself to an institutional analysis. Indeed, EU railway policy has previously been discussed in chapters of edited books (see Andersen and Eliassen 2001; Kohler-Koch and Eising 1999) which apply ‘new institutionalism’ to analyse EU policy developments. New institutionalism provides a comprehensive framework for analysing EU policy developments by focusing on EU policy-making processes – both formal and informal rules. Whilst variants of new institutionalism share the notion that institutions matters because they affect the political outcome they differ in terms of how institutions matter.

Defining institutions in EU policy-making

Institutions within this book refer to a broad range of mainly formal policy processes at EU level, such as the Commission’s inter-service consultation, the ordinary legislative procedure (previously co-decision procedure) and infringement processes. These formal institutions have changed over time as a result of formal treaty changes, ambiguity in the application of rules to bargaining between EU actors and changes within the institutional setting due to integration and enlargement. Indeed institutional change occurs both as a result of exogenous changes in member states’ interests and through the endogenous negotiation processes amongst the Commission, the Council and the EP as part of the legislative decision-making procedures (Farrell and Héritier 2007: 228). Moreover, the legislative and daily decision-making processes are also influenced by other formal institutions, such as comitology and the Commission’s regulatory powers regarding the market and national implementation of the EU railway acquis, and informal institutions, such as various interest groups who lobby the Commission and informal policy networks within the Commission and between EU actors as part of EU decision-making processes.

Initially the common transport policy, including railway policy, was decided by consultation procedure, this changed in 1992 (Maastricht Treaty) to cooperation. Since the Amsterdam Treaty (1997) the EP has been a co-legislator with the Council as part of the co-decision procedure. Moreover, the Amsterdam Treaty introduced qualified majority voting in the Council but only for some areas of transport. The Nice Treaty (2001) extended qualified majority voting to all aspects of transport except on fiscal issues. Since most of the EU railway policy was adopted from 2001 onwards, the development of the policy has occurred through inter-organisational negotiation between the three EU actors – the Commission, the EP and the Council and intra-organisational bargaining within the EP and the Council, as part of the co-decision procedure now the ordinary legislative procedure. Indeed the Members of the European Parliament (MEPs) have, with support from the Commission, pushed the Council for faster market opening.

Overall, these institutions are important for determining the relationship between the involved actors within the institutional setting and thus gaining insight into why certain policy outcomes are favoured over others. This book views institutions as rule-based processes, which can be both formal and informal. Formal institutions are intentional creations and strictly enforceable, whereas informal institutions are both intended and unintended consequences of patterns which have been established over time due to repeated interaction between actors (Stacey and Rittberger 2003: 861). In the long term, institutions ‘help establish identities and categories of actors and their range of possibilities, hence the scope and content of preferences’ (Katznelson ...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of Tables
• Preface and Acknowledgements
• List of Abbreviations
• 1 Introduction
• 2 Diverging National Railway Policies
• 3 The Early Days of EU Integration 1956–1991
• 4 Towards Market Opening 1992–2007
• 5 Towards a Competitive Railway Sector 2007–2012
• 6 State Aid in an Open Market
• 7 Creating a Single European Infrastructure
• 8 Modal Shift to Environmentally Friendly Rail
• 9 The Past, the Present and the Future Railways
• Notes
• Bibliography
• Index