Misleading narratives on the causes of the eurozone crisis have played into the hands of those campaigning for Brexit
The eurozone crisis has played into the hands of those campaigning for Brexit. Whilst, fanciful headlines on ‘federal Europe plots’ and gushingly Eurocentric hot-takes have dominated the referendum campaign, those who have been paying attention to the fates of countries like Greece and Ireland over the past six years have pointed to ‘brutal EU austerity programmes’ as one reason (among many more) for Britain to walk away from the EU. Such views are the product of misguided narratives about the causes of the eurozone crisis. Whatever the result this week, these narratives will continue to influence the debate taking place across Europe in multiple member states about the attractiveness of leaving the EU and ‘going it alone’.
The experience of the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain) during the eurozone crisis feeds into a broader critique of the EU as a transnational elite driven neoliberal project. Ireland was allegedly blackmailed into a calamitous state guarantee of its banking sector by the ECB. The EU’s intransigence towards Greece suggests an obsession with damaging policies of austerity as well as a cavalier attitude towards national democracy. Moreover, as I have written about in a previous SPERI blog, ‘following the rules’ of European integration has been one of the main causes of fragile patterns of economic growth developing in Portugal, Greece, and Ireland. Perhaps Owen Jones was right, ‘[p]rogressives should be appalled by European Union’s ruination of Greece. It’s time to reclaim the Eurosceptic cause’.
These criticisms of the EU are not wrong. Nor should they be downplayed or glossed over. But neither are they the entire story. The problem is that many left-wing advocates of Brexit (or ‘Lexit’) are at least partially motivated by problematic and misleading narratives of ‘victimisation’ towards countries in Europe’s periphery (although these arguments by no means begin and end with Greece). The twin myths of the ‘lazy PIIGS’ and the German ‘big bad wolf’ have resonated for years through commentary on the Eurozone crisis. In the case of the Brexit debate, they create two central misunderstandings.
First of all, countries in Europe’s periphery did not passively participate in a project of European integration that was tailored to ‘core Europe’ simply because it was in the interests of the more powerful core for them to do so. Rather, they actively and enthusiastically participated because they believed that ‘tailoring’ themselves to core Europe would lead to their own modernisation. As Greek PM Costas Simitis put it in 2005, Greece’s participation in the integration process was the ‘strongest lever for our exit from a reality of economic and social retardation’. For Ireland, Europe appeared to ensure that Ireland would have an ‘industrial rather than a pastoral future’.
Generally speaking, political elites across the European periphery have always tended to view EU membership as a chance to allow external forces to re-shape them as modern, mature, and in reality, neoliberal European economies. Peripheral elites were actively complicit in these agendas, and often used the EU as a ‘vincolo esterno’ to attempt to push through damaging and unpopular agendas of privatisation, liberalisation and deregulation. The EU certainly provided a clear ‘one size fits all’ blueprint for neoliberal style restructuring. But narratives of victimisation tend to gloss over the fact that peripheral elites eagerly shared this vision. As Lee Willinscroft-Ferris has recognised, ‘[t]he European Union as we know it reflects the philosophies of the national governments of its member states, the vast majority of which are currently conservative in nature’. Brexit, or indeed Grexit, is hardly likely to be sufficient in escaping deeper, path dependent national agendas of neoliberalism or austerity. After all, Ireland and Portugal have been among Greece’s harshest critics and austerity’s biggest defenders.
Second, European integration has never had straightforwardly uniform effects, either across or within member states. Member states have had a certain degree of agency in adapting to Europe. As I’ve argued elsewhere, in the case of Ireland, EU-driven reforms relating to banking and finance contributed to a move away from one of the most heavily regulated banking systems in Europe to Ireland’s infamous system of ‘light touch regulation’. Yet on the other hand, Ireland’s export-oriented strategy of modernisation is intimately bound up in the country’s experience of European integration. Ireland’s Celtic Tiger was made possible by long standing state-led innovations to attract foreign direct investment, but only fully activated once Ireland joined the Single Market, thus becoming a uniquely attractive location for inward investment from the USA. As such, the historical reality of Ireland’s integration has been more complex and contradictory than was perhaps realised at the time. The EU has been a necessary and indispensable part of Ireland’s 1990s export-led growth, and yet, at the same time, Ireland’s eagerness to adapt to the European model created the conditions for a severe banking crisis a decade later.
Similarly, the impact of European integration on Greece has never been entirely consistent. Greece may have been considerably less successful than other countries in tackling structural problems relating to pension reform, tax collection and public debt and fiscal consolidation but it nevertheless succeeded in adopting the various principles relating to banking and finance set out by the Single Market project. In the process, the Greek economy lost competitiveness by transforming into an economy based strongly on domestic consumer demand and import penetration. Yet at the same time, Greece’s poor record in implementing reforms relating to pension provision, tax collection and privatisation contributed to its fiscal and sovereign debt crisis in 2009. As such, Greece’s crisis can be understood as stemming from a combination of adopting certain EU-driven changes, while resisting others. European integration may have created detrimental common pressures, but peripheral agency helped determine the precise form that the crisis took in Greece and in Ireland.
The eurozone crisis has thrown the EU’s design flaws, democratic deficit, obstinate promotion of austerity and neoliberal agenda into sharp relief. Brexit is welcomed by some as a chance to ‘shatter the instruments of transnational elite rule’. Yet, narratives of victimisation are actually standing in our way of understanding how inequality, hierarchy, austerity and neoliberalism are produced within the EU. In an important way, Greece and Ireland have never been passive victims. EU member states have always been complicit in these EU agendas. Agendas, moreover, that have never had uniform effects on member states. This matters for how optimistic we should be about states ‘going it alone’. Brexit, Lexit, or Grexit are not only misguided answers to these (very real) problems. They are compounding our misunderstandings of how these problems actually emerge in the first place.