Aiding the State : Administrative Capacity and Creative Compliance with European State Aid Rules in New Member States

The article advances a new explanation of the role of administrative capacity in compliance with European Union (EU) rules. I argue that strong administrative capacity fosters not only compliance but creative compliance where capable civil servants aid determined governments in following formal EU rules while challenging their substance. I develop this argument by comparing two new member states that increased levels of state aid post-crisis but on different types: ‘neoliberal’ Estonia reporting proportionally more on ‘bad’ vertical aid than ‘illiberal’ Hungary. Drawing on original empirical data, I explain that Hungary has engaged in more creative compliance due to more cohesive ideological commitment to state intervention (a will) and stronger administrative capacity to achieve objectives while minimizing EU scrutiny and sanction (a way). Creative compliance with single market rules presents another challenge to the EU’s ability to enforce uniform rules to ensure a ‘level playing field’ within the single market.