Greece’s creditors claim that they are acting on a mandate from the EU’s citizens by refusing to be flexible. But public opinion in the union is not so hostile argue Michael Bechtel, Kirk Bansak, Jens Hainmueller and Yotam Margalit.
Michael Bechtel is Professor of Political Science at the University of St. Gallen, Kirk Bansak is a PhD candidate in Political Science at Stanford University, Jens Hainmueller is associate Professor of Political Science at Stanford, and Yotam Margalit is Associate Professor of Political Science at Tel Aviv University and Columbia University.
Greece’s clear no vote on the latest bailout plan has further raised fears of the country’s exit from the eurozone. The emergency meeting of German Chancellor Angela Merkel and French President Francois Hollande will likely form the start of another period of crisis diplomacy. What are the prospects for reaching a sustainable agreement with Greece in these upcoming negotiations? A striking feature of the unfolding crisis in Greece is how little ground the Eurogroup countries have agreed to cede to Greece’s demands. Despite numerous rounds of bargaining, European leaders have hardly budged on any of the major components of the deal. This tough bargaining stance has proven fruitful ground for Prime Minister of Greece Alexis Tsipras to portray his country as facing “blackmail and injustice”, rhetoric that likely contributed to the clear no in the Greek referendum.
Many attribute the Eurogroup’s insistence on a strict austerity plan for Greece to strong opposition among publics in the donor countries, which are widely viewed as hostile to making concessions to Greece. Indeed, in a 24 June parliamentary address, Italian Prime Minister Matteo Renzi described “great pressure from part of the European public opinion, from some countries in particular” as an impediment to sweetening the deal for Greece.
The argument that public opinion is a straightjacket limiting the Eurogroup’s leeway may be accurate. Alternatively, it may simply reflect a bargaining strategy, whereby being perceived to be operating under severe constraints helps the Eurogroup’s negotiators put further pressure on Greece. With the Greek public having directly rebuffed the Eurogroup’s demands in Sunday’s referendum, understanding what electorates in Europe are willing to accept is now more important than ever for ascertaining the prospect of a mutually agreeable deal between Greece and the Eurogroup.
To determine policymakers’ room for manoeuvre in the ongoing crisis, we recently surveyed national samples of voters in the United Kingdom, France, Italy, and Spain, the European Union’s four largest economies after Germany. Over 2,000 voters were surveyed per country, and we asked them whether they thought the eurozone should be willing to extend concessions to Greece. We distinguished between two different types of concessions that are central to the current debate: relaxing Greece’s austerity conditions, and outright forgiveness for Greece’s debt. The results of our survey surprised us: in all four countries, only a minority of voters were opposed to relaxing the austerity measures required by Greece’s bailout agreement. In the United Kingdom, for example, only 30% of all voters oppose making concessions on the austerity conditions required from Greece. Clearly, one may attribute this to the fact that the UK is not a eurozone member, and therefore, its citizens are less worried about the consequences of a Grexit. Yet we found similar patterns in the major eurozone countries that we surveyed. For example, in France only 27% oppose relaxing the austerity measures, while 42% actually support weaker demands for Greece (the remaining group was indifferent). In Spain, only 18% were opposed to sweetening Greece’s austerity deal, and in Italy only 12%.
In all countries, those who want to stand firm on not making any austerity concessions are disproportionately located on the political right. Yet even among the far right – the group of voters most averse to concessions – we find that those hostile to relaxing Greek austerity still represent a minority. Notably, these results hold for all the four countries we surveyed.
These results can help European leaders avoid acting under the misguided premise of an intransigent public, and it appears that concessions in the austerity package currently demanded from Greece may be viable domestically. However, austerity alone may not be enough to overcome the current crisis. The International Monetary Fund recently admitted that Greece may need a large-scale debt relief in addition to another loan. Furthermore, Greece’s former finance minister Yanis Varoufakis declared he would rather “cut off his arm” than agree on another bailout proposal without debt relief. Here, however, public opinion may indeed be stacked against Greece, because the picture that arises from our data differs strongly with respect to forgiving some of Greece’s debt. In this case, opposition was substantially greater. In fact, a majority (53%) of the survey takers in France were opposed to debt forgiveness, while in Italy, Spain, and the United Kingdom that number was 34%, 44%, and 46% respectively. Consistent with this opposition to offering Greece a debt relief, Eurogroup leaders have reportedly agreed that writing off debt as part of a new bailout program is simply a “no-go”.
On the one hand, the European public’s attitudes toward the crisis in Greece seem to draw the contours of a viable compromise: creditor countries could hold fast to their demand that Greece service its debt in full, without any direct measures of debt relief, but offer to loosen the austerity conditions that have provoked a public backlash in Greece. After all, the extensive austerity measures already implemented in Greece, and not the debt itself, are the main reason Greek leaders and voters are facing off against the rest of Europe. On the other hand, however, Greece’s ability to achieve long-term financial stability may crucially depend upon some form of debt relief. However, this could also be implemented in the form of long-term loans with zero interest. Given the IMF’s recent warning and the Greek public’s latest rejection of further austerity, it is clear that the Eurogroup’s most recent proposal will not help in solving the crisis; if the goal is to keep Greece in the Eurozone, further negotiations are necessary.
Since the publics in creditor countries are not as fundamentally opposed to compromise as recent conventional wisdom suggests, policymakers have more room for manoeuvre than currently perceived. It would be wise for European leaders to take this to heart.