Analysis of Greece’s financial meltdown has tended to focus on the deficiencies of the Economic and Monetary Union, but the crisis was also the result of failures by the Eurozone’s leadership in terms of co-ordination and communication, explain Prof Dimitris Papadimitriou and Dr Sotirios Zartaloudis. And they argue the results of this European failure of leadership will be felt in this month’s European Union elections.
European policy makers failed to manage the Eurozone crisis effectively and only eventually acknowledged that the European Union lacked the necessary tools to deal with the scale of financial meltdown evidenced in Greece. This followed a long period in which European leaders denied the reality of the problem and were unable to control complex and rapidly changing events.
The creation of the European Financial Stability Facility in May 2010 was portrayed as a means of dealing with the ‘exceptional’ Greek case. Politicians and officials chose to treat the Greek crisis as a product of specific local circumstances and an example of poor EU oversight over an ‘unruly pupil’, not as a symptom of a wider European economic malaise.
During 2011 as the government of George Papandreou struggled to fulfil the conditions of the first bailout package at home, Europe’s leaders’ comments about Greece grew increasingly hostile, as they resorted to the ‘politics of blame’.
Following Papandreou’s resignation in November 2011, and throughout the protracted instability that ensued, another systemic taboo was broken: the threat of a Greek exit from the Eurozone (‘Grexit’) was explicitly deployed as a means of disciplining Greece’s quarrelling political class. Although still not entirely dismissed, the ‘Grexit’ discourse only began to subside in the aftermath of the June 2012 election as European leaders sought to support Greece’s fragile pro-bailout coalition government under Antonis Samaras.
The scale as well as the nature of the financial implosion in Greece provided a challenge that Europe’s political elite were unable to meet. They proved unable to react adequately either in terms of their capacity to co-ordinate a response, or to communicate in ways that soothed the crisis. Yet the timing and intensity of the Greek crisis provided a critical moment at which the governance of the Eurozone needed to be re-articulated.
The co-ordination challenge was substantial. The decision to involve the International Monetary Fund (IMF) in the Greek bailout programme through the so-called ‘Troika’ – the IMF, the European Commission and the European Central Bank – introduced an element of external interference in the governance of the Eurozone, which would have been totally unthinkable a decade earlier.
The communication challenge was also substantial. During the course of the crisis, three shifts in focus emerged. There was increasing scepticism regarding the Euro’s capacity to act as a ‘hard’ currency underpinned by sound economic fundamentals. This was followed by a growing suspicion regarding the rigour and impartiality of the policing of the ‘rules of the game’ – both prior to and after the establishment of the Eurozone. Thirdly, and, crucially, there was an explicit acknowledgement of the possibility of a Euro-exit, despite unequivocal Treaty clauses specifying this was impossible.
The Eurozone crisis is not fully over, nor fully resolved – systemic responses are still evolving and the political repercussions are felt in the domestic politics of Member States, as well as in the relationships between Member States. The long lasting effects of the Greek crisis on the concept and structure of the Economic and Monetary Union are yet to be fully manifested.
In terms of co-ordination, recent agreements on the strengthening of economic governance within the Eurozone – with further Treaty changes scheduled in the near future – appear to suggest that the crisis has galvanised a magnitude of change.
A similar argument can also be made regarding communication. The polarisation of responses during the Greek crisis may not necessarily be proof of the EU’s terminal descent towards disintegration, but it certainly reflects an increasingly hard line insistence by policy makers on the need for Eurozone competiveness and Member State ‘self help’. This approach is mirrored by the growing influence of ‘Euro-sceptic’ political parties that challenge the status quo in many Member States.
What this means in terms of the ultimate political shape and ambition of the European Union remains much contested and is likely to dominate European politics for several years to come. The events in Greece, and the related crisis across the Eurozone, are bound to have a major impact on the results of this month’s elections to the European Parliament.
|Table: Mentions of the Word ‘Crisis’ in Euractiv.com Article Titles
|Source: Authors’ own calculation from the search engine of Euractiv.com
Note: These comments are based on key findings of an ongoing research project which examines the evolution of European discourses on the ‘rescue’ of Greece. Our analysis is predominantly focused on discourses by senior EU officials, rather than the wider public debate on the fate of Greece which also included the media and other more specialised epistemic communities. We draw evidence from an extensive dataset of media reports from one of the largest databases on EU affairs, Euroactiv, and other leading European newspapers.