The Defense of Economic Interests in the European Union: The Case of Hedge Fund Regulation

First lines of the introduction: IntroductionAfter an initial shock caused by its inability to provide a collective response to the financial crisis, the European Union (EU) reacted by drawing up an impressive list of regulatory initiatives (see Quaglia in this volume). The roadmap ranges from financial supervision to the regulation of financial services, covering areas such as capital requirements, deposit guarantee schemes, bank remuneration and credit rating agencies. While some seemed to provide rather technical solutions to problems that were unveiled by the crisis, other proposals were accused of being politically motivated and driven by a pro-regulatory agenda. The financial crisis, the argument went, gave momentum to member states in favor of tighter supranational regulation and disfavored countries with a more light touch ap-proach to financial regulation (Quaglia 2011). In addition, it provided European institutions with an opportunity to seize power and expand their activities, even when there was no direct need for supranational intervention.The regulation of hedge funds through the so-called Alternative Investment Fund Managers (AIFM) directive adopted in November 2010 seems to be em-blematic of this development. Highly politicized, the member state negotia-tions, that lasted for 18 months, pitted most notably France against the United Kingdom. Since even the Commission's original proposal acknowledged that hedge funds were not responsible for the financial crisis (European Commission 2009b: 3), the battle seemed to represent an ideological commitment to suprana-tional regulation on the one hand, and national autonomy and a continued lack of intervention on the other.