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Sozialtourismus' ('social tourism') was selected as the negative German buzzword of the year. Commissioner Reding, in contrast, argued that EU law provides sufficient safeguards against abuse, and member states were themselves at fault: 'As you know, social security is not harmonized at EU level, each and every Member State decide [sic] on its own social security and assistance rules. Each and every Member State also decide [sic] under which conditions it grants access to this or that benefit to non-nationals.' 2 This article seeks to move beyond populist hysteria about 'social tourism' without denying the real challenges that ECJ case law on the free movement of EU citizens, and on their access to social benefits, poses for EU member states. The welfare system serves an important legitimating function for states. The underlying idea of a social contract and welfare services that are either contributory or tax-financed emphasizes the principles of reciprocity and solidarity. This legitimating function explains why the EU's member state

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In his 1986 White Paper on completing the single market, Lord Cockfield ailed mutual recognition as the miracle formula for the much needed liberalization of services markets. Twenty years later, the European Union is passing a services directive where the principle of mutual recognition is conspicuously absent, at a time when effective liberalization seems ever more necessary. How do we explain this puzzle? Why has mutual recognition been put on "trial"?We make three interrelated arguments. First, the initial draft directive overlooked the EU's prior experience in this area which is one of "managed" mutual recognition. Secondly, the political context had changed significantly, with enlargement exacerbating the distributional consequences of the adoption of mutual recognition. Thirdly, the final compromise succeeded precisely because it recovers the spirit of the managed mutual recognition, albeit in a mini-