Debates 1991 to 1998

It is interesting to trace the beginnings of the discourse surrounding the liberalization of the gas market (Figure 32). The two crucial topics that dominated the debate were the usage of the Article 90 by the Commission and the regulations of the Third Party Access (TPA), one of the most important elements of liberalization. The debate regarding the Article 90 was observed also by other scholars (Matlary, 1997; Schmidt, 1998), who saw in the decision of the Commission not to use the Article 90 a retreat and the major victory of the opponents of liberalization.

However, the explanation why the Commission could not withstand the pressure from opposing member states and did not choose the approach of the Article 90 is not clear. Given the knowledge about the changes in the structure of the market described in Chapter 6.2.1, it can be suspected that the Commission was expecting certain market changes and hoping for a broader coalition of supporters. Therefore, the Commission’s decision in this light might have been a clever long-term strategy and not a defeat as it was at first presented in the media and in the literature, especially given the progress it could later achieve.

Moreover, the Figure 32 allows locating first possible coalitions of proponents and opponents of liberalization. It can be seen that the majority of the member states were opposing liberalization with the exception of the UK, which even presented its own proposal for the new possible regulations. The liberalization of the European gas market was an essential policy for the UK

66 The program is a free java based software that can be downloaded through the homepage: http://visone.info/. [Last

access: July 2013].

straight from the beginning as can be traced in the media. During its Presidency in the second half of 1992, it organized an expensive conference, where all energy ministers and other stakeholders were invited to (Energy, 1992). This, however could not stop “A French-led rebellion” (Strain, 1992) as was also later argued by many other scholars (Matlary, 1997).

Figure 32 Debate in 1991

The typical division between consumer and producer interest groups is also apparent. So for instance, the Fertilizer industry, which is one of the main consumers of natural gas, signaled its full support for a complete TPA along with the car industry and the International Federation of Industrial Energy Consumers. On the other hand gas suppliers and producers were displaying their opposition as can be expected from the theoretical considerations and other empirical observations (Eikeland, 2011). Generally, we see that the coalition of the status quo proponents dominates the discourse but that the issues discussed are very simple and low in number.

The discourse that was unfolding during 1992 resembles the tendencies observed in 1991 but reveals new actors and debates (Figure 33). The European Commission early on tried to connect the debate to the environmental aspects and highlight that gas is environmentally friendly and that in the future many market shifts towards higher consumption on natural gas are to be expected (issue linkage strategy). The central issue in the debate has become the proposal of

1992 that was supported by the Commission and the UK but not by many other countries with the exception of Denmark, Ireland and Portugal. At this stage the European Parliament, whose position was not clear during 1991 has revealed its oppositions towards the Commission’s first proposal.

Figure 33 Debate in 1992

Moreover, additional domestic actors have entered the discourse stage such as German Chemical Industry Association, which welcomed liberalization, and French Unions, which staged protest and signaled a complete opposition towards the Commission’s plans. These domestic actors are important to understand the unfolding dynamics in the French as well as German positions – depending on the party in government, it was either siding with constituencies, which welcomed liberalization or with constituencies, which were completely opposing it (similar ideas (Schumann & Widmaier, 2003). The patterns of the debate however suggest that at this point the debate was “stuck” as each actor was presenting her own new issues without much connection to the rest of the debate and that there was lots of disagreements accompanying the negotiations.

The developments in the year 1993 on the other hand are characterized by a broader agreement but over slightly different issues (Figure 34). Decisive for this sudden turn of the discourse is the

introduction of the term “flexible liberalization”, which was sufficiently abstract and broad for the opponents of the liberalization, who this way could circumvent the total blockade without making any real concessions. A Belgian MEP, Claude Desama, who was the rapporteur for the European Parliament, has introduced this term (Energy, 1993c). It was also supported by the Belgian Presidency, which at this point tried to break the complete stalemate that has evolved in 1992 (Energy, 1993b). The TPA was also shifted to less strict forms of liberalization such as

“voluntary basis TPA” or “negotiated TPA”. The time plan, which initially hoped for the full market liberalization in 1993 was stretched towards a so-called “transition period” in years 1994 to 1998. These suggestions were in the end welcomed by the Commission, which hoped to reach a compromise and start the envisioned process. These developments signal transition of the coalition supporting SQ to a coalition supporting a “pro forma” liberalization. It also marks a decisive year, a turning point, for the coalition, which was opposing liberalization.

Figure 34 Debate in 1993

Even though this pattern suggests that policy change could be possible, the negotiations on the liberalization of the gas market were paused as the energy community decided to concentrate on the liberalization of the electricity market first. Possibly, this represents a missed opportunity from the British and Commission’s side as they were hoping for much larger concessions and were still reluctant to “get whatever they could get” at this point. For this reason the discourse in 1994 does not display any interesting elements (Figure 35), except for a direct confrontation between the UK and France over the type of TPA to be included in the proposal and the Commission’s threats over possible legal actions. In particularly, the Competition Commissioner, Karel van Miert, has warned six member states (Denmark, France, Ireland, Italy, The Netherlands and Spain) over possible complains to the European Court of Justice, if they do not find a compromise during the next Energy Council meeting (Energy, 1993a). It can be however speculated that these threats did not seem credible at this point, as the member states were still not willing to display any compromise.

Figure 35 Debate 1994

Similarly to 1994, the position of Germany regarding liberalization seems to stay inconsistent in 1995 (Figure 36). This is an interesting observation, given that many studies assume that Germany was one of the main opponents of liberalization along with France (Dreyer, et al., 2010). It indicates internal fights between energy intensive industry lobby and energy producers

(as well as parties in government) and might suggest that instead of being a major opponent of liberalization, Germany was taking a role of a broker; at times connecting the different camps that have crystalized by 1995 – a coalition of supporters of “flexible liberalization” and a coalition of supporters of full liberalization. The patterns of 1995 suggest that the debate has reached a new round but that an agreement is not probable given that powerful states such as France, Spain and Italy still voiced opposition towards liberalization and did not relate anymore to the “flexible liberalization” as they were doing in 1993.

Figure 36 Debate 1995

In 1996 France has increased the complexity of the debate by starting a discussion about the role of long term contracts and long term investments (Figure 37) that were, in France’s opinion, a major guaranty of stability in the provision of public service goods (Energy, 1996). It can be speculated that France was postponing the agreement in the Council due to upcoming elections in 1997⁶⁷ as the final compromise was reached only in 1998. Similarly, to 1994 and 1995, Germany has remained inconsistent by supporting France to a certain degree but at the same time

67 This homepage offers an overview of parliamentary elections in France:

http://www.parlgov.org/stable/data/fra/election-parliament.html. [Last Access: July 2013].

promising full market opening in Germany by 1997. Guenter Rexrodt, the German Economics Minister in 1996, was even quoted saying “we have not moved ahead for decades. Now we are on the verge of a breakthrough and I want to use it” (Presse, 1996).

Figure 37 Debate 1996

In 1997 the first signs of a possible compromise emerged by actors voicing agreement with the idea of liberalization and more importantly with a group of actors who agreed that the future development of the market should be regulated and not left disharmonized and disintegrated (Figure 38). Moreover, more light is shed on the position of Germany regarding liberalization as a senior general manager of Ruhrgas, Wilfried Czernie, has voiced his major concerns over the liberalization of the market by stating that “Transparency and unbundling given non-European Union (EU) exporters give a competitive edge and entail red tape and expenditure for EU companies” (Knott, 1996, p. 23). It thus can be assumed that the German government – at that

time a coalition between Christian Democrats and FDP⁶⁸ – given their general political orientation supporting liberalization were in favor of the European plans (especially signaled by the implementation of the electricity directive from 1996) but were met by the opposition from the gas companies. The opposition in Germany nonetheless seems not as strong as in France.

Figure 38 Debates in 1997 and 1998

The consolidation of the debate and less general opposition towards liberalization finally has led to a compromise during the Energy Council on December, 8, 1997 (Gas, 1997a) and thus less vivid debate in 1998. Even though it is not reflected in the depicted debates, the media mentions that the planned gas interconnector between Belgium and the UK to be launched in October 1998 was an important source of pressure to reach an agreement in 1998 (Gas, 1997b).

To sum up, the discourse precluding the directive 98/30/EC was most of the time dominated by France (the main opponent of liberalization) and shifting debates that would complicate and in turn prolong the duration of negotiations. The observers of the process concluded in a similar vein that in the negotiation process there was one clear winner: France, who even “demanded and obtained agreement to an initial opening of the gas market of only 20%”⁶⁹(Petroleum, 1998).

The overall observations made in this time period are mostly in line with the observations made by Leifeld (2013) and Hurka & Nebel (2013) in that: (1) policy change was postponed by adding

68See: http://www.parlgov.org/stable/data/deu/cabinet-party.1.html [Last access: July 2013].

69 Instead of the initially suggested 30 %.

new issues on the discussion table (increasing complexity of the debate) and (2) the final compromise was possible due to changes in domestic policies (after French parliamentary elections; new German government supporting liberalization).