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Vrije Universiteit Amsterdam
Research Centre for Corporate Governance Regulation
SPRING 2006
NEWSLETTER
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2005,
No. 3 April, 2006 |
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Editorial: ‘Growing pains’ of the European Liberalisation Project? Article: Cultural Good or Merchandise? Report:
International
Studies Association, San
Diego Report: DVPW International Relations Meeting, University of Mannheim Report: UK Department of Trade and Industry, London Report: European Sociology Association, Torun Report: ECPR Annual Conference, Budapest Report: ECPR Joint Sessions, Granada Upcoming events involving ARCCGOR researchers Publications of interest and links
SUBSCRIPTIONS The newsletter is
distributed electronically to academics and practitioners active in
corporate governance (regulation) and to interested individuals.
Please send an email to James
Perry if you wish to be
added to or removed from the mailing list. |
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WELCOME!
This
newsletter series published by the Amsterdam Research Centre for Corporate
Governance Regulation (http://www.arccgor.nl/).
The Centre is part of the Political Science Department at Vrije
Universiteit Amsterdam. The
newsletter provides you with information on our current research projects
and events taking place. Each issue also includes an editorial and, from
time to time, short articles by our researchers. Disclaimer |
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EDITORIAL
‘Growing
pains’ of the European Liberalisation Project? Evidence from the Energy
Sector Angela Wigger Readers
of the international (financial) press could easily be forgiven for
thinking recent developments in the consolidation of the European energy
market and other sectors represent a crisis so fundamental that the
breakdown of the European Union is imminent. ‘Economic patriotism’ is
the new anathema, and if we are to believe the pundits, the basic freedom
enshrined in the European Union, the free movement of capital, is
endangered. Yet
the developments that triggered the political reactions by France, Spain,
Luxembourg and Poland are, in fact, a testimony to how far the
liberalisation of European markets has already progressed. Cross-border
mergers and takeovers are indeed a socio-economic reality in the European
Union, and most take place without prompting any political controversy.
Are the current disputes therefore merely ‘growing pains of the internal
market’, as European Commission president Jose Manuel Barroso maintains?
Or are they in fact signs of deeper crisis at the heart of the European
liberalisation project? In
recent months, there has been intense
political controversy over hostile bids in a variety of the EU’s
industrial sectors – most notably Mittal’s bid for Arcelor (steel) and
the offer by the Italian bank Unicredito for BPH, a subsidiary of the German
HVB banking group. Alongside steel and banking, takeovers in the EU’s energy
sector are also creating considerable controversies. These developments
need to be understood in the wider political context of utility sector
privatisations ranging
from electricity, natural gas and water, to telecoms, postal services,
rail transport and aviation. From
the mid-1980s onwards, the privatization of previously state-owned
industries was proclaimed as the only way ahead. The European
Commission’s DG Competition, under the lead of Comissioner Sutherland,
endorsed the so-called Privatization
Directives, a previously unused policy device of the Commission, to
break up state monopolies in the utility sector. In doing this, the
Commission conquered a new field of regulatory control where Commissioner
Sutherland apparently foresaw a political storm brewing. At the time, he
described the move as being ‘as close as you can get to touching
the nerve of national sovereignty’ (FT, September 28 1987). The
privatization of public monopolies in the energy sector and the commitment
to a more market-based approach was deemed vital in the establishment
of a genuine EU internal market. The
advantages were considered to be twofold: First, new competitors,
especially smaller and medium-sized market players, would benefit from the
newly created market access. Cross-border
competition would be significantly enhanced and force
corporations to be more efficient since consumers would be free to buy in the
cheapest market.
Such efficiency gains would, in turn, translate into lower bills both for
private households and businesses, with savings being invested elsewhere
and hence further increasing EU competitiveness. At least, so the story
went. However,
the neo-liberal faith in the free market and its expected benefits
contrasts with the political-economic reality. The liberalization of the
energy market has been an arduous project from the beginning, creating
intense controversies between the staunchly free market-orientated
Commission and the more reluctant Member States, which continued to
heavily subsidize the energy market and hold ‘golden’ shares. The
rationale of most member states was that the neither universal provision
or security of supply should be threatened by commercial profit motives.
The energy industry, for its part, argued that a competitive market with
multiple suppliers would be impossible and endanger supply in the long
run, for technical reasons, and also because of the reluctance of the
private sector to invest in distribution infrastructure. Thus, a
full-blown liberalization in the EU energy market was politically
unfeasible, and so instead a half-way house was chosen. In Euro-Jargon this
is referred to as ‘Third Party Access’, which forces
state-owned or state-controlled energy
monopolies to open their networks to third party competition. The
promise of lower prices
for consumers could not be kept as the experience of the German and Dutch
energy markets clearly illustrates. Although costs per kilowatt hour have
indeed fallen in recent years, prices for consumers have moved into the
opposite direction, generating immense profits for the private energy
oligopolies. Similarly, the promise of new entrants in response the EU’s
Third Party Access provision has not materialized. On the contrary,
former public monopolies are being replaced by private oligopolies which
generally control both the production and distribution networks. For
example, in Germany, an oligopoly of four suppliers controls more than 90%
of production and all of the network infrastructure. The recent takeover
bids in the energy sector illustrate that the current process of market
concentration is likely to continue. The efforts of German Eon
to acquire Spanish Endesa
marks only the beginning of a belligerent take-over binge planned by
giant Eon in the near future. Likewise, in France the take-over of Suez
by the state-controlled Gaz de
France will create one of the world’s largest energy corporations. Apart
from the change of ownership (from state to private), nothing seems to
have changed. Or has it? The nationality of the owner really appears to
matter as is clear from the political storm which has arisen in out of the
latest bout of predatory moves by EU energy companies. If state monopolies
are no longer permissible in the internal market, then ‘private’
champions should at least reflect a national colour, so the national
governments say. The
takeover bid by Eon for Endesa
has led the Spanish government to favour an (equally hostile) offer
from Gas Natural, another
Spanish energy company. This decision is all the more politicised since
the European Commission, and subsequently the European Court of Justice,
had already reproached the Spanish government for the golden shares it
holds in Endesa in 2003. A similar preventive scoop surfaced in the Suez-Gaz
de France take-over, where the Italian Enel,
initially planning a bid in tandem with the French Veolia,
saw its plans thwarted when Veolia
bowed out of the deal due to political pressures straight from Paris. With
a new blocking minority of 40% of the shares of Suez-Gaz de France, the French government continues to hold the
reins in a sector the French never wanted to privatize anyway. The same is
true in some other Member States. The
heavy handed intervention of the French government, and the general
reluctance to privatise strategic sectors such as energy, is not
surprising if placed in a wider geopolitical context. Whereas Chinese
investors are rapidly extending their presence and influence in Africa
with the aim of securing access to resources which can satisfy its growing
thirst for energy. Venezuela’s president Hugo Chavez has just
appropriated two privately owned oil fields, and more will follow. These
are the largest
energy resources in the Americas, and the president’s aim is clearly to
control energy exports destined for the US. In Bolivia, president Evo
Morales has announced plans to re-nationalize the natural gas reserves (the
second largest on the continent),
which were sold in 1996 to an oligopoly of Total
(France), Petrobras (Brazil), BG (UK) and Repsol (Spain). Meanwhile,
Russian president Vladimir
Putin’s government
owns and controls Gazprom, the
world’s largest gas producer and operator of most pipelines in the
former Soviet Union. This is a form of power which Moscow does not shy
from using to ‘regulate’ the loyalty of its former satellites.
Similarly, the Yukos affair demonstrates the iron hand of the Kremlin
against what was previously Russia’s biggest private oil company,
whereas foreign investors face a difficult time when attempting to enter
Russia’s highly protected energy market. Set against all these
government interventions, the wave of protectionism enacted recently by EU
Member States should come as no surprise. What is surprising, however, is that the European Commission remains a fervent free market advocate, not only in intra-national European arena, but also at an international level. Acting as if recent turmoil had never occured, President Barroso even visited Putin in mid-March to convince him of the merits of privatising Russia’s state-owned energy suppliers and of opening its energy market to foreign competitors. The European Commission actively engages in the promotion of an ever-bigger borderless market for European champions and evangelises free market competition as the only way to go. Since the liberalized EU single market is vulnerable on its own, as an island in protected waters, the Commission is opting extend the neoliberal project by convincing everyone else to follow its example. With its ‘crisis’ rhetoric regarding economic patriotism and protectionism in Member States, the Commision is now beginning to resemble a sort of geopolitical Don Quijote. Return to newsletter contents |
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Cultural
Good or Merchandise? On higher education, globalisation and international relations theory Although not strictly-speaking a corporate governance issue, we feel this topic will be of great relevance to many reading this newsletter. We are thus very pleased to present a summary of the inaugural speech given by Henk Overbeek upon being made Professor of International Relations at the Vrije Universiteit Amsterdam in a ceremony held on 25 October 2005
Henk
Overbeek Summary
of the inaugural lecture on the occasion of the public acceptance of the
Chair in International Relations at the Faculty of Social Sciences
(Department of Political Science) of the Vrije Universiteit Amsterdam, 25
October 2005. Higher education is displaying an undeniable trend towards commercialisation. Degree programmes are increasingly seen as ‘products’ that must be ‘marketed’, students are increasingly addressed as ‘consumers’. The valuation of higher education as a cultural good, of the university as an intellectual free haven, of academic education as a source of civilisation, is on the wane and its place is taken by the image of higher education as a commodity, as a ‘financial product’ in which one invests with an eye to the career prospects and earning capacities it provides. The call for ‘fair competition’ between publicly funded institutions and ‘private providers’ is getting louder. Does all this imply that higher education changes from cultural good to business, from culture to good business? The trend towards commercialisation of higher education can be observed throughout the world, and its intensification is clearly related to what is commonly known as globalisation. Globalisation is a multifaceted phenomenon that is difficult to define briefly. However, for the purpose of this talk, it suffices to highlight six points:
When looking at higher education, we can see that the general global context of the commercialisation process is defined by the GATS, the General Agreement on Trade in Services (1995). GATS codifies a progressive liberalisation regime for the international supply of services, and excludes only services supplied in the exercise of governmental authority which are supplied neither on a commercial basis nor in competition with other service suppliers. Given the nearly universal trend for universities to charge tuition fees and to offer commercial courses (such as MBA programmes) besides more traditional degree programmes, it is very doubtful whether in the longer term GATS offers any meaningful protection at all to classical publicly funded (higher) education. The GATS logic of progressive liberalisation is reproduced within the European Union by the combination of the Single European Market on the one hand and the so-called Bologna Process on the other. The Bologna Process, originally conceived as a way to protect European higher education from the onslaught of private (American) providers expected in the wake of GATS, has itself recently been redefined as a key component of the EU strategy to strengthen the competitiveness of the EU economy (the so-called Lisbon Strategy). All these trends towards liberalisation en privatisation threaten to erode the public nature of higher education and to subordinate academic teaching and research to the exigencies of private capital. These trends will have negative consequences for the general accessibility of higher education (thus reinforcing trends towards increasing income inequality) and for the internal governance of universities, including for the autonomy of the academic professions and for academic freedom more generally.
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CONFERENCE REPORTS
International Studies Association, San Diego, 22- 25 March 2006 Arjan Vliegenthart
Andreas
Nölke and Arjan Vliegenthart presented a paper at the ISA conference in
San Diego. In the panel “Historical
Long Term” they discussed the developments in East-Central
Europe, raising the question what kind of capitalism is to emerge in this
part of the world. They combined the Varieties of Capitalism approach with
World Systems Theory in
order to add their comparative advantages. Based on their common grounding
in historical sociology, they were utilised to make sense of current
processes of capitalist development. Their main conclusion was that
ECE witnesses the emergence of a third variety, a dependent market economy
(DME) type of capitalism. In
a very constructive comment, Jon D. Carlson of the University
of California, Davis, discussed the main findings and gave useful insights
on how the paper could be enriched using development literature and
dependency theory. The ISA conference itself was well attended and offered a lot of interesting panels. It offered a lot of insights into the current development in the field of IR. Furthermore, the conference provided inspiration for further research.
DVPW
International Relations Meeting at the
University of Mannheim, October 6-8 ‘Europaforschung
trifft (Internationale) Politische Ökonomie: Perspektiven des Rheinischen
Kapitalismus in der EU
I&II’ Angela Wigger As
one of the most important German conferences in the sub-field of
International Relations (IR) and International Political Economy (IPE),
the DVPW Sektionstagung ‘Internationale Politik’ of 2005
brought together both established and PhD-level political scientists from
the broad thematic array of IR/IPE studies, not only from Germany, but
also from other European countries. The vast amount of the panels were
organized around six overarching areas of research, including War and
Securities Studies, Foreign Policy, International Institutions and
International Policy Areas, European Integration Studies, IR Theory, as
well as studies in the field of IPE. The
two connected panels ‘Europaforschung trifft (Internationale)
Politische Ökonomie: Perspektiven des Rheinischen Kapitalismus in der EU
I&II’ - organized by Andreas Nölke, also at ARCCGoR, were
embedded in the ‘International Political Economy’ branch of the
conference. The panels attracted scholars exploring contemporary
substantive shifts in the different policy domains of economic governance
in Europe. The goal of the panels consisted of linking these shifts to the
‘variety of capitalism’-debate by in particular highlighting the
broader impact on the European way of capitalist organization, or what is
generally referred to as the Rhenish or the coordinated model of
capitalism. As the rather
static, comparative character of the ‘variety of capitalism’-approach
is hardly able to account for transnational developments, including those
forces that threaten to erode the distinct national models, the panels
attempted to cross-fertilize the debate by contributions from IPE
scholars. The
issues addressed in the two panels included:
The
panels stimulated a fruitful and highly interesting debate on the
direction of change of the current transformations in European business
regulation. A range of important questions have been raised with regard to
whether it is (still) justified to evaluate the significance of these
changes against the background of the ‘Rhenish’, or the coordinated
model of capitalist organization, as the most dominant pattern in the
European context, and whether we indeed observe an erosion of the
‘European model’. One of the many conclusions that can be extracted
from the discussions is that the structural
explanation of the variety of capitalism approach complemented by a more
actor-based account can significantly contribute to the longstanding
convergence debate, which tended to attribute regulatory changes foremost
to anonymous market forces of economic and financial globalization.
Some of the panel papers can be downloaded at the conference website. Return
to newsletter contents
Department of Trade and Industry (DTI) Corporate Governance Research Conference, London, 30 September 2005 With
the UK holding the EU presidency in the second half of 2005, the DTI
organised a whole range of corporate governance events and conferences.
Among them the Corporate Governance Research Conference, aimed at bringing
together practitioners and academics to discuss approaches and issues in
corporate governance. The keynote speech was held by Antonio Borges, Vice
Chairman of Goldman Sachs and Member of both the ECGI and the European
Corporate Governance Forum. In the ensuing presentations and discussions,
it became once again clear that only through dialogue between regulators,
practitioners and academics can the really pressing issues in corporate
governance be effectively tackled. This of course strongly resonates with
ARCCGOR’s approach of actively seeking contact with regulators and
practitioners.
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to newsletter contents
European Sociology Association / Critical Political Economy Network, Torun, 9-12 September 2005 Bastiaan
van Apeldoorn
Last
year’s annual convention of the European Sociology Association (ESA),
held in the . Polish town of Torun, witnessed
the first meeting of the Critical Political Economy network, founded in
2005 on the initiative of Jan
Drahokoupil (Central
European University, Budapest), with founding members of the network
including Bob Jessop (Lancaster University), Magnus Ryner (Birmingham
University) and ARCCGOR member Bastiaan van Apeldoorn. The latter
presented a joint paper with Laura Horn on the ‘Marketisation of
European Corporate Control. Horn was also co-author of a paper presented
by the third ARCCGOR member present at the conference, Arjan Vliegenthart
– their paper dealing with the role of the EU in the transformation of
corporate governance regimes in East Central Europe. These first meetings
of the network, which were attended by about a dozen of the growing
network’s members, proved to be very productive – intellectually
stimulating and developing new, as well as consolidating existing,
transnational ties amongst researchers sharing not only a broadly critical
perspective, but also a substantive interest in the changing European
political economy. Indeed, the network’s sessions proved to fulfil
precisely the kind of function that such a research network is supposed to
fill. Building upon this success, the network is now organising a second
meeting in the form of a workshop to be hosted by ARCCGOR and the
Department of Political Science later this year (see elsewhere in this
newsletter). Return to newsletter contents
ECPR
Annual Conference, Budapest, 8-10
September 2005 Arjan Vliegenthart
ARCCGoR researcher's James Perry, Arjan Vliegenthart and Laura Horn presented papers at the ECPR Conference in Budapest. James Perry presented a paper analysing current developments in global accounting standards and their governance, while Arjan Vliegenthart and Laura Horn discussed the role of the European Union in the transformation of corporate governance regulation in Central Europe. Both panels were well attended. From the conference it became clear that corporate governance regulation is currently receiving a lot of scholarly attention, which inspires our work on it. At the same, the need for a political analysis of the current developments was stressed by many of the attendants as this issue is too important to leave to economists alone.
Return to newsletter contents
ECPR Joint Sessions in Granada, 15-19 April 2005 Workshop
#23: Transnational
Private Governance in the Global Political Economy Workshop Directors: Dr. Jean-Christophe Graz, Institut d’études politiques et Internationales, Université de Lausanne Dr.
Andreas Nölke, ARCCGoR, Department
of Political Science The workshop explored a variety of forms of transnational private governance where non-state actors co-operate transnationally to establish rules and standards accepted as legitimate by agents not involved in their definition. Non-state actors not only formulate norms, but often have a key role in their enforcement. Transnational private governance is a core feature of the devolution of power that we observe in the global realm and that is bringing about new forms of authority. Existing research on transnational private governance is in its infancy and remains very much fragmented between approaches in comparative political economy (CPE), focused on institutional arrangements and coordinating logics of economic actors across nations, and studies in global political economy (GPE), trying to identify the constitutive elements of patterns of authority mediating between the political and the economic spheres of a transnational space. The workshop pooled researchers from both communities and from different fields within political science to stimulate cross-fertilisation. Participants combined empirical work on particular cases of transnational private governance with a more general, theoretical question. Three types of issues were of particularly relevance to the workshop: theoretical conceptualizations of transnational private governance (in particular its relationship with public actors); empirical framework conditions for the relevance of private governance; and normative considerations about the significance of transnational private governance for the transformation of global capitalism, but also about the democratic legitimacy of transnational private governance. Each of these issues has been raised for each of the main empirical domains of the workshop, namely the financial sector, codes of conduct, internet governance, transnational business power and conflict resolution.
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We
are happy to announce the membership of our Advisory Board which will meet
in June 2006: Prof.
Dr. J. Klaassen, Emeritus Professor Accounting, Vrije Universiteit
Amsterdam |
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UPCOMING EVENTS INVOLVING OUR RESEARCHERS
'IPE in Amsterdam'. A workshop organised by PhD students at the University of Amsterdam (UvA) and the Vrije Universiteit Amsterdam (VUA). To be held in the Political Science Department of VUA on May 12
'Beyond the Crisis of the European Project? The Political Economy of EUrope and the Political Economies in Europe in (post-)disciplinary perspectives'. A workshop organised by the European Sociological Association (Critical Political Economy Research Network) at Vrije Universiteit Amsterdam, August 31 - September 2
'The Rule of Numbers'. A conference organised by Johann-Wolfgang-Goethe University, Frankfurt/Main, Germany, November 16-17
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RECENT PUBLICATIONS RELATED
TO ARCCGoR’S RESEARCH
Recent publications relating to ARCCGoR research
Botzem, Sebastian and Quack, Sigrid. 2005. 'Contested Rules and Shifting Boundaries: International Standard Setting in Accounting', WZB Berlin Discussion Paper Series. Available online - click here
Mattli,
Walter and Büthe, Tim. 2005. 'Accountability in Accounting? The
Politics of Private Rule-Making in the Public Interest', Governance Vol
18 No 3.
Recent
publications By ARCCGoR Staff
Apeldoorn, Bastiaan van and Laura Horn (2005) La Direttiva u.e.
sulle Acquisiszioni e sul Controllo Societario, In: Il Lavoro Pubblico.
Note e analisi del centro formazione studi e ricerche 78 (16), May
2005 (Journal of Italian Public Employees Union, translation provided by
the journal) Nölke, Andreas (2005) 'Introduction to the Special Issue: The Globalization of Accounting Standards', Business and Politics, Vol. 7 (2005) No. 3
Overbeek, Henk (2005) ‘Class, hegemony and global governance: a
historical materialist perspective’, in M. Hoffmann and A. Ba, eds., Contending
Perspectives on Global Governance: Coherence, Contestation, and World
Order, London, Routledge, 39-56.
Perry, James and Nölke, Andreas (2005) 'International Accounting Standard Setting: A Network Perspective', Business and Politics, Vol 7 No 3
LINKS The Amsterdam Center for
Law & Economics See http://www.kernbureau.uva.nl/acle/ Return to newsletter contents
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AMSTERDAN RESEARCH CENTER FOR CORPORATE GOVERNANCE REGULATION Department
of Political Science, Vrije Universiteit Postal
Address
Visiting Address De
Boelelaan 1081c
Buitenveldertselaan
3 1081
HV Amsterdam
1082 VA Amsterdam The
Netherlands Telephone:
+31 20 444 6894/6852 Fax:
+31 20 444 6820 |
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