Governing in the Shadow of Intergovernmental Hierarchy: Delegation Failure and Executive Empowerment in the European Union

Abstract This paper develops a model of executive empowerment to explain how and why the European Council has become increasingly involved in ‘policy-setting’ and ‘policy-shaping’ decisions in the European Union (EU). Rather than being driven by intergovernmental power politics, we draw upon rational choice approaches to attribute this to three characteristics of the EU's economic reform agenda: the domestic distributional consequences; the horizontal functional interdependencies; and divergent national policy preferences. The paper suggests that these contribute to two types of delegation failure at the EU level: agenda failure (in the Commission) and negotiation failure (in the Council of Ministers). Utilising principal–agent analysis, we argue that EU-level agents have sought to overcome delegation failure by transferring functional tasks – policy initiation and decision-making – upwards to Member State principals in the European Council. We refer to this counter-intuitive process of reverse delegation as ‘Commission cultivation’ and ‘Council escalation’. These are illustrated using examples from both the Lisbon Strategy (the Services Directive) and Europe 2020 (the Europe 2020 poverty target). The paper contributes to our understanding of EU governance by reasserting the importance of intergovernmental hierarchy in securing credible political commitments at the European level.